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The Court held that a conjoint reading of the complaint, the sanction order, and the order passed by the learned Commissioner of Income Tax, at this stage, sufficiently complied with the requirements for holding a person as being in charge and responsible for the affairs of the company. The averments in paragraphs 6 and 8 of the complaint, along with the sanction order, met the requirements mandated by paragraph 39 in the case of National Small Industries Corporation Limited. While acknowledging the similarity in language to Section 141 of the Negotiable Instruments Act, 1881, the Court distinguished that in Income Tax Act prosecutions, the sanction order and the Commissioner's order indicated a prima facie application of mind by the statutory authorities before initiating the complaint. Therefore, the respondent No.1 had made out a sufficient case for proceeding against the petitioner. Regarding the petitioner's contention of residing in the Netherlands, the Court noted the sanction order provided an address in Navi Mumbai and stated that whether the petitioner was actually residing in the Netherlands for six years would be decided at the trial or an appropriate stage. The scope of inquiry at this stage was limited to ascertaining if the complaint averments constituted the alleged offences. Consequently, no interference was called for in the order of issuance of process.
The High Court held that the CBDT Guidelines dated June 14, 2019, which impose a time limitation for filing compounding applications, do not take away the jurisdiction of the authorities under Section 279(2) of the Income Tax Act to entertain an application for compounding at any time during the pendency of proceedings. The Court clarified that the condition in paragraph 7(ii) of the guidelines is not a rule of limitation but a guideline for the authority. The Court also found that the impugned order was unsustainable as it was based on an erroneous factual assumption that the petitioner had been convicted under laws other than Direct Taxes Laws. The Court noted that the petitioner had deposited the TDS along with penal interest and had filed a reply to the show cause notice. Given that the prosecution was still pending and not resulted in conviction, and considering the earlier order dated February 16, 2018, the Court directed the respondent authorities to consider and deal with the petitioner's application for compounding in accordance with the observations made. The authorities were permitted to levy interest as mentioned in the earlier order. The writ petition was allowed, and the impugned order was quashed and set aside. The petitioner was directed to pay the compounding charges, after which they could approach the Magistrate's Court for disposal of the pending prosecutions.
The Bombay High Court allowed the writ petition, setting aside the notice dated March 31, 2021, and the order dated March 11, 2022. The Court found that the reasons recorded for reopening were vague and ambiguous, lacking a live link or nexus to escaped income. The information from the INSIGHTS PORTAL, stating 'Account Balance or value at the end of the reporting Period' of Rs. 103,79,33,586/-, was insufficient to form a belief of escaped income. The Court noted a departure from the initial reasons when the order disposing of objections mentioned 'cash credits and subsequent debits' without substantiation. Furthermore, the Court found that the cash deposits mentioned (Rs. 11.52 Crores) were not a large sum for a retail business with a turnover of Rs. 189 Crores and that the period of deposits did not fall within the assessment year under consideration. The Court also observed a lack of application of mind by the approving authority (Respondent No. 2) and noted that some accounts mentioned did not belong to the petitioner. The ratio is that reopening of assessment requires tangible material and a rational connection between the information and the belief of escaped income, which was absent in this case.
The High Court quashed and set aside the ruling dated February 10, 2020, passed by the Authority for Advance Ruling (AAR). The Court held that the AAR failed to consider crucial aspects, including Circulars 682 of 1994, 789 of 2000, press releases concerning TRCs, and the landmark decisions in Union of India v. Azadi Bachao Andolan and Vodafone International Holding B.V. v. Union of India. The Court found that the AAR had overlooked the "look at" principle and the importance of corporate business purpose, as discussed in the Vodafone case, which supports the Petitioner's position. The judgment also noted the applicability of the Limitation of Benefits (LOB) clause and press releases dated March 1, 2013, and August 29, 2016, which grandfathered investments made before April 1, 2017, making them exempt from capital gains tax in India. Since the investment and sale occurred prior to April 1, 2017, the Petitioner's case appeared to align with these provisions. Consequently, the matter was remanded back to the AAR for reconsideration.
The High Court held that the reassessment proceedings were initiated based on a 'change of opinion' and lacked the jurisdictional foundation required under Section 147 of the Income Tax Act, 1961. The Court found that there was no new material in the possession of the Assessing Officer, nor had any new facts or change in law occurred that warranted reopening the assessment. The reasons recorded for reopening were based solely on the material already on record during the original assessment proceedings. The Court noted that the Assessing Officer had sought clarifications regarding sister concerns and their transactions during the original assessment, indicating that these issues were already examined. The statement of an employee during a survey of Jet Airways was deemed insufficient to form the basis for reopening. The Court concluded that the petitioner was justified in charging lower commission rates to its related party, Jet Airways, due to its sole GSA status and the significant turnover it generated. The Court set aside the impugned notice dated March 11, 2021, and the order dated January 25, 2022, staying all further proceedings.
The High Court allowed the writ petitions and set aside the impugned notice dated 31st March 2021, the reasons recorded dated 9th January 2022, and the order dated 9th March 2022 disposing of objections. The Court held that the reopening of assessment was a clear case of change of opinion, as no new material had been discovered by the Assessing Officer. The application of another section of the Income Tax Act to the same facts was considered a change of opinion, not new material. The Court found the revenue's emphasis on the petitioner's failure to disclose facts to be baseless, as the single transaction of capital reduction had been fully considered in the original assessment under Section 143(3). The Court relied on the Full Bench decision of the Delhi High Court in CIT v/s. Kevinator of India Ltd. and the decision in Jindal Photo Films Ltd. Vs. Deputy Commissioner of Income Tax, which held that reopening based on a different method of computation or application of a section constitutes a change of opinion, impermissible in law. The Court concluded that the Assessing Officer lacked jurisdiction to initiate proceedings under Section 147/148 due to the absence of material supporting the "reason to believe."
The High Court found merit in the petition and quashed the impugned notice and order. The Court relied on the judgment in CIT v/s. Institute of Banking Personnel Selection (IBPS), which held that income derived from trust property should be computed on commercial principles, and adjustment of expenses incurred in earlier years against subsequent year's income is considered application of income for charitable purposes. This adjustment should be excluded from income under section 11(1)(a). The Court also referred to the well-settled proposition in Director of Income-tax(Exem) v/s. MIDC and the Supreme Court's decision in Director of Income-tax v/s. Society for Applied Microwave Electronic Engineering & Research, which allowed carry forward of deficit. The Court noted that the original assessment order under section 143(3) acknowledged the trust's registration and claim for exemption. The reasons for reopening, based on a 'perusal of records', did not indicate any failure to disclose material facts. The Court concluded that the impugned notice was a case of change of opinion and that the AO's reason to believe was not based on new tangible material. Therefore, the petitioner had rightly claimed the carry forward and set-off of deficit, and the order rejecting objections was set aside.
The High Court allowed the writ petitions. It held that the respondents were unjustified in rejecting the exemption solely because the accounts of SAIESF, a foreign entity, could not be certified. The Court reasoned that the respondents' concern should be limited to the application of income in India by ASB, as ASB was not transferring any money outside India. The Court emphasized that the receipts and expenses of SAIESF were a matter between SAIESF and the authorities of its country. Furthermore, the Court noted that ASB had consistently received exemptions for other assessment years, substantiating its non-profit educational purpose. The Court also distinguished the case from the Supreme Court's ruling in New Noble Education Society, stating it was prospective and thus not applicable. The Court found no merit in the revenue's contentions. The operative direction was to grant the exemption as prayed for.
The High Court held that the impugned notice under Section 148 and the subsequent assessment order under Section 143(3) read with Section 147 were invalid and quashed them. The Court found that the reopening was based on a 'change of opinion' by the Assessing Officer, as the issue regarding the sale of shares and the resulting capital loss had been considered during the original assessment proceedings under Section 143(3). The AO had sought clarifications on the sale of property and transfer of shares, and the assessee had provided detailed explanations and documents. The Court noted that a presumption arises that an order passed under Section 143(3) is done after due application of mind. In the absence of any new tangible material coming to the AO's notice, and given that the AO had already inquired into the matter, the reopening was deemed to be an invalid review of the earlier order. The Court relied on judgments such as Kelvinator of India Limited, Tata Sons v/s. DCIT, and Joint Commissioner of Income Tax v/s. Cognizant Technology Solutions India Pvt. Ltd. The proviso to Section 147 was also invoked, indicating no failure on the part of the petitioner to disclose material facts.
The High Court held that it would be slow to entertain a writ petition when the challenge to the show-cause notice is based on disputed questions of fact, especially when the decision of the authority is susceptible to appeal under Section 246 of the Act. The Court noted that there was prima facie material on the basis of which the notice for reopening of escaped assessment was issued. It was for the petitioner to demonstrate that there were no reasons for reopening or that the valuation of escaped assessment was less than Rs.50 Lakhs, disentitling reopening after the statutory period. The Court found it difficult to render findings on the correctness of the grounds in the show-cause notice. If the Authorized Officer formed an opinion of escaped income and necessity of reassessment, based on material and recorded reasons, it was for the petitioner to establish that this view was contrary to the record or perverse. Therefore, the Court was not inclined to entertain the writ petition.
The High Court allowed the petition, quashing the impugned notice dated March 30, 2015, and the order dated January 18, 2016, disposing of objections. The Court held that the legality of a notice issued against a non-existing company is untenable, citing the Supreme Court's judgments in Saraswati Industrial Syndicate Ltd. v/s. CIT and Principal Commissioner of Income Tax, New Delhi V/s. Maruti Suzuki India Ltd. The Court distinguished the present case from Skylight Hospitality LLP, noting that in this case, there was no material to suggest the notice was intended for Siemens Limited. The notice, reasons for reopening, and the approval for reassessment all specifically named M/s. Morgan Construction. Since M/s. Morgan Construction had amalgamated with Siemens Limited and ceased to exist, and this fact was intimated to the Assessing Officer, the jurisdictional requirement of serving notice under Section 148 could not have been fulfilled, rendering the proceedings void. The Court found no basis to apply Section 292B as the error was not a mere clerical mistake but a fundamental flaw in invoking jurisdiction against a non-existent entity.
The High Court held that the contentions assailing the legality and validity of the Section 148 notice and the consequential assessment order dated December 29, 2019, were the subject matter of the pending appeal before the appellate authority. Therefore, it would not be appropriate for the High Court to deal with these contentions on merits in its writ jurisdiction. The petitioner was relegated to advance such contentions in the pending appeal. The Court considered the challenge only to the extent of the order dated January 28, 2022, on the stay petition. The Court noted that the petitioner had approached the Principal CIT for stay, was given opportunities for hearing, and the order directing a 20% deposit with installments was passed on consent recorded by the petitioner's authorized representatives. Since the petitioner had not disputed these facts and the order was invited by consent, the discretion exercised by the authority in granting the stay subject to deposit could not be said to be arbitrary. Consequently, no interference under Article 226 was warranted. The writ petition was dismissed, but the petitioner was granted liberty to apply for an extension of time to deposit the amount, which the respondents were directed to consider in accordance with law.
The High Court held that the contentions assailing the legality and validity of the Section 148 notice and the consequential assessment order dated December 29, 2019, were the subject matter of the pending appeal before the appellate authority. Therefore, it would not be appropriate for the High Court to deal with these contentions on merits in its writ jurisdiction. The petitioner was relegated to advance such contentions in their pending appeal. The Court considered the challenge only to the extent of the order dated January 28, 2022, on the stay petition. The respondents submitted that the petitioner had approached the PCIT for stay, was given opportunities of hearing, and their representatives attended and made submissions. The order sheet indicated that the order was passed on consent recorded by the representatives of the assessee, with signatures of the Chartered Accountant and Chief Accountant appearing on the order sheet. The petitioner did not dispute these facts. The Court found that the discretion exercised by the authority in granting the stay subject to the deposit of 20% of the demand with installments, when the order was invited by consent, could not be said to be arbitrary. Consequently, no interference was warranted under Article 226 of the Constitution. The writ petition was dismissed, but the petitioner was granted liberty to apply for an extension of time to deposit the amount, which the respondents were directed to consider in accordance with law.
The High Court held that the Petitioner's eligibility for settlement under the Act was not in dispute. While the Petitioner did not deposit the entire amount within the specified or extended period, the short payment of Rs. 300/- was clearly an inadvertent error, neither deliberate nor intentional. Considering the purpose and spirit of the Direct Tax, Vivad Se Vishwas Act, 2020, which aims to unlock disputed tax amounts and end litigation, issuing a writ of mandamus to accept the balance payment would be in furtherance of the Act's objectives. The Court directed Respondent No. 1 to accept the balance payment along with interest at 10% per annum on the unpaid amount from the date of Form-3 issuance, and thereafter issue Form-5. The writ petition was allowed.
The High Court allowed the petition, setting aside the impugned notice dated March 31, 2021, under Section 148 and the order dated February 8, 2022, rejecting the objections. The Court held that the jurisdictional conditions for reopening were not met. Firstly, the reasons recorded did not establish a failure on the part of the assessee to disclose fully and truly material facts. Secondly, the material relied upon by the Assessing Officer (information from the Investigation Wing) did not demonstrate that this issue was not considered during the original scrutiny assessment. The Court found that the Assessing Officer had elicited and received details of all transactions from the petitioner during the original assessment. Therefore, initiating reassessment on the same issue amounted to a 'change of opinion', which does not constitute a valid basis for reopening. The Court cited Aroni Commercials Ltd. and Commissioner of Income Tax V/s. Kelvinator of India Ltd. to support its reasoning that reassessment must be based on tangible material and a live link with the formation of belief, and that 'change of opinion' is an in-built test against abuse of power.
The High Court held that the jurisdictional preconditions under Section 147 of the Income Tax Act, 1961, were not satisfied. The Court found that the AO failed to establish any failure on the part of the assessee to disclose fully and truly any material fact. The Court noted that all relevant facts had not only been disclosed but had also been considered by the AO during the original assessment proceedings while considering the deduction under Section 35(2AB). Furthermore, the impugned notice was issued without any tangible material, as the AO relied on material already on record. No new information was received between the original assessment order and the reopening notice. This was considered a mere 'change of opinion,' which does not provide jurisdiction to the AO to initiate proceedings under Section 147, citing the ratio in Hindustan Lever Ltd. V/s. R. B. Wadkar and Jindal Photo Films Ltd. Vs. Deputy Commissioner of Income Tax. Consequently, the petition was allowed, and the notice under Section 148 and the order rejecting objections were set aside.
The High Court held that the reassessment proceedings were unsustainable. The reasons recorded by the AO for reopening were based solely on a 'perusal of the record' and indicated a change of opinion regarding the allowance of deduction under Section 80P(2)(d). The original assessment under Section 143(3) had specifically considered the Petitioner's claim for deduction under Chapter VI-A, including Section 80P, following a notice under Section 142(1) and the Petitioner's detailed reply. The Court found that the AO did not have any tangible material to form a reason to believe that income had escaped assessment. Furthermore, since the reopening was sought beyond four years from the end of AY 2014-15, it was incumbent upon the AO to establish the Petitioner's failure to disclose fully and truly all material facts. No such averment was made in the reasons recorded. Citing Hindustan Lever Ltd. V/s. R. B. Wadkar, the Court emphasized that the reasons must be clear, unambiguous, and based on evidence, establishing a vital link between the reasons and evidence, which was absent here. Consequently, the notice under Section 148 and the assessment order dated March 30, 2022, were set aside.
The High Court allowed the petition and set aside the impugned orders. The Court found that the Assessing Officer (AO) had not sufficiently demonstrated that the non-recovery of tax dues from KAPL was attributable to the petitioner's gross neglect, misfeasance, or breach of duty. The petitioner had discharged her initial burden by explaining her lack of control and operational independence within the company, particularly in light of the Joint Venture Agreement which vested significant control with the investor, KFI. The AO's order focused on the petitioner's participation in the company's functioning rather than establishing the crucial element of 'gross neglect' or 'breach of duty' that directly led to the non-recovery of taxes. The Court relied on the ratio of *Maganbhai Hansrajbhai Patel* and *Ram Prakash Singeshwar Rungta & Ors.*, which held that for liability under Section 179 to arise, the revenue must prove gross negligence, misfeasance, or breach of duty on the part of the director that caused the non-recovery of tax dues. The AO failed to highlight any specific incident, decision, or action by the petitioner that constituted such gross neglect or breach of duty with the potential to result in the non-recovery of tax. Therefore, the orders were deemed unsustainable.
The High Court held that the AO had not recorded any satisfaction regarding the correctness of the assessee's claim for expenditure incurred in relation to exempt income with reference to the books of account. The AO did not examine the assessee's claim nor recorded satisfaction. Therefore, applying Rule 8D straightaway without considering the correctness of the assessee's claim was against the statutory mandate and legal principles. The Court agreed with the ITAT that the AO had neither examined the claim nor recorded satisfaction. Consequently, the disallowance made by applying Rule 8D was not sustainable. The Court also held that the CIT(A) rightly deleted the addition on account of interest expenditure as the assessee had sufficient interest-free surplus funds to make the investment. The ITAT also rightly deleted the disallowance. Therefore, interest expenditure cannot be disallowed under Section 14A read with Rule 8D(2)(ii) under any circumstances. The appeal was dismissed as no substantial question of law was required to be framed.
The High Court held that the jurisdictional conditions for reopening the assessment under Section 147 of the Income Tax Act, 1961, were not satisfied. The Court noted that the issue concerning the petitioner's investment in NCL Research & Financial Ltd. had been specifically examined and decided in the original assessment under Section 143(3), leading to an addition. The reasons recorded for reopening did not indicate any failure on the part of the assessee to disclose material facts truly and fully, nor did they point to any fresh tangible material that came to the AO's notice. The AO's attempt to re-examine the earlier decision, arguing for a higher disallowance, was considered a mere change of opinion, which is impermissible in law, especially when reopening is sought beyond four years from the end of the assessment year. Consequently, the assessment order dated March 22, 2022, the notice of demand, and the penalty notice were quashed.
The Tribunal held that the impugned notice and order were unsustainable. The reopening was initiated beyond the four-year period, requiring the AO to satisfy two conditions: (1) reason to believe that income had escaped assessment, and (2) failure on the part of the assessee to disclose fully and truly all material facts. The Tribunal found that the reasons recorded by the AO did not specify any new tangible material that had come to light. The AO's reasoning that interest income from cooperative banks did not qualify for deduction under Section 80P(2)(d) was merely a fresh application of mind to the same set of facts that were considered during the original assessment under Section 143(3). The AO had specifically sought details of deductions and exemptions, and the Section 80P deduction was allowed after due consideration. Therefore, the reopening constituted a 'change of opinion', which is impermissible without new tangible material. The Tribunal relied on the principles laid down in CIT v. Kelvinator of India Ltd. and Jindal Photo Films Ltd. v. Deputy Commissioner of Income Tax, emphasizing that reopening must be based on tangible material and not a review of past decisions. Consequently, the notice and order were quashed.
The High Court held that the Assessing Officer (AO) erred in issuing the Section 148 notice on the secondary email address when a primary email address was available. Rule 127(1)(b) of the Income Tax Rules, 1962, prioritizes the email address available in the income tax return furnished by the assessee to which the communication relates, or the email address available in the last income tax return furnished. The Court reasoned that a secondary email address should only be used as an alternative when service on the primary address is not possible. Issuing an email on a secondary address without attempting service on the primary or last filed return's email address lacks prudence. The Court found no prejudice or cost in sending the notice to multiple email addresses in such circumstances. The Court agreed with the petitioner's refusal to participate in proceedings vitiated by invalid service. Citing its own decision in Mrs. Chitra Supekar vs ITO, the Court reiterated that valid service of notice under Section 148 is a condition precedent, and failure to do so constitutes a jurisdictional error. Consequently, the notice dated March 28, 2022, and all consequential proceedings, including the show-cause notice and assessment order, were quashed and set aside. The revenue was granted liberty to proceed with the assessment after issuing a fresh notice in accordance with law.
The High Court held that the notice for reopening the assessment under Section 148 was invalid. The Court reasoned that the issue regarding the deposits made by the petitioner to M/s. Dyaneshwari Multi State Urban Cooperative Credit Society Limited, specifically the amount of Rs. 2,15,50,000, was already considered by the Assessing Officer (AO) during the scrutiny assessment proceedings for AY 2017-18. This was evidenced by the notice issued under Section 142(1) on November 17, 2019, which specifically sought explanations and documentary evidence for these deposits. Since the AO had applied his mind to the issue and passed an assessment order under Section 143(3) after considering the petitioner's replies, the subsequent attempt to reopen the assessment based on the same facts constituted a 'change of opinion'. The Court relied on the judgments of the Delhi High Court in CIT vs. Kelvinator of India Ltd. and the Supreme Court's affirmation of this principle, which states that reassessment must be based on tangible material and not a mere review of opinion. The Court found no new material, change in law, or new information that had come on record between the assessment order and the formation of the belief for reopening. Therefore, the jurisdictional requirement under Section 147 was not met. The impugned notice under Section 148, the order rejecting objections, and the draft assessment order were quashed.
The High Court held that the notice under Section 148 dated March 31, 2021, and the order dated December 14, 2021, rejecting the objections, were unsustainable and quashed. The Court found that the Assessing Officer's reasons reflected a total non-application of mind. Specifically, the contradiction between paragraph 1 (stating scrutiny assessment under Section 143(3)) and paragraph 7 (stating no scrutiny assessment) demonstrated this. The Court noted that for reopening beyond four years, the Assessing Officer must be satisfied of the assessee's failure to disclose material facts fully and truly. However, the reasons provided did not highlight which specific material fact was not disclosed by the assessee. The Court relied on the principle laid down in Hindustan Lever Ltd. Vs. R.B. Wadkar, Assistant Commissioner of Income-tax, which requires reasons to be clear, unambiguous, self-explanatory, and based on evidence, establishing a vital link between the reasons and the evidence, which was found to be lacking in this case. Therefore, the jurisdictional condition for reopening was not satisfied.
The High Court held that the Assessing Officer (AO) lacked the jurisdiction to reopen the assessment for AY 2014-15 under Section 147 of the Income Tax Act, 1961. The Court found that both jurisdictional conditions for reopening were not satisfied by the AO based on the reasons recorded. The Court emphasized that the AO had no power to review and that reassessment must be based on tangible material, not a mere change of opinion. The judgment in Kelvinator of India Ltd. was cited, stating that the concept of 'change of opinion' acts as an in-built test to check the abuse of power by the AO. The Court concluded that the AO's belief that income had escaped assessment was not supported by tangible material, and the notice under Section 148 was issued without the jurisdictional foundation under Section 147. Consequently, the notice and the subsequent proceedings were held to be unsustainable and were set aside.
The High Court held that the notice dated March 20, 2022, under Section 148A(b) was not validly served on the petitioner. Despite the respondents having the petitioner's updated address from January 10, 2021, the notice was sent to the old address. The court found no proof of service in the respondent's affidavit. This non-service resulted in the petitioner being deprived of an opportunity to respond, rendering the notice and subsequent proceedings under Section 148A void due to jurisdictional error. Furthermore, the order dated April 5, 2022, passed under Section 148A(d) was also set aside because it was passed after the three-year period from the end of AY 2018-19, necessitating sanction from the PCCIT under Section 151(ii), which was not obtained. Similarly, the notice dated April 13, 2022, under Section 148 was quashed as its hand delivery on April 21, 2022, was not controverted, and no PCCIT approval was taken for reopening beyond three years. The court emphasized that valid service of notice is a condition precedent for reassessment proceedings. The respondents were granted liberty to proceed after issuing a fresh notice and providing a hearing, to be completed within twelve weeks. The merits of the case were not examined.
The High Court held that the impugned notice under Section 148 and the order on objections were invalid. The Court found that this was a clear case of 'change of opinion'. It relied on the Supreme Court's decision in Kelvinator of India Ltd., which emphasized that a regular assessment order passed under Section 143(3) raises a presumption of application of mind. The Court found no failure on the part of the assessee to disclose material facts, nor any tangible material with the AO to justify reopening. The AO's action was based on the case of Milan Saini, where a different view was taken regarding the head of income. The Court distinguished the case of Phool Chand Bajrang Lal, noting that in the present case, there was a full and true disclosure by the petitioner which was accepted. The Court concluded that merely because another director disclosed income differently could not be a ground for reopening, and the notice was based on borrowed satisfaction, which is impermissible. The petition was allowed, and the impugned notice and order were set aside.
The High Court held that the impugned order rejecting the stay application solely on the ground of non-deposit of 20% of the disputed demand, without considering the petitioner's grounds of financial hardship and alleged errors in the assessment, was unsustainable. The Court found that the PCIT, like the AO, had failed to apply its mind to the specific plea of financial stringency and the merits of the case, thus violating principles of natural justice. Citing its own previous decisions and the guidelines laid down in *Kec International Ltd. v. B. R. Balakrishna and others*, the Court emphasized the need for authorities to provide reasons when rejecting stay applications, especially when financial difficulties are raised. Given the peculiar facts and with the consent of both parties, the Court decided to consider the stay application on merits. It directed the petitioner to deposit 10% of the demanded amount (₹30 lacs within two weeks, and the balance to make up 10% within a further two weeks) as a condition for hearing the appeal on merit. The impugned order on pre-deposit was set aside subject to this condition, and a stay on the demand notices was granted in the meantime. The Court clarified that the merits of the case were not considered, and all contentions were left open.
The High Court held that the respondents (revenue) had indeed received the ITAT order dated February 18, 2010, and their contention that the order was not received was rejected. The court found it unacceptable to extend the time for compliance with the ITAT order for approximately 12 years, which would shift the onus onto the assessee to ensure the Commissioner receives the order. The court stated that the phrase 'is received' in Section 153(3) cannot be construed to extend the limitation in perpetuity and must be within a reasonable period, especially when the respondents were parties to the proceedings. The court noted that the respondents could have requested a copy of the order from the ITAT or the assessee after receiving the petitioner's letter on March 6, 2018. Consequently, the court directed the respondents to issue a refund of ₹7,39,083/- with applicable interest and to release the seized jewellery within two weeks from the date of the order.
The High Court held that for reassessment proceedings initiated beyond four years, besides having reason to believe that income chargeable to tax has escaped assessment, the AO must also be satisfied that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment during the original proceedings. In this case, the court found that during the original assessment under Section 143(3), the AO had called for and received all requisite details, including scrip-wise stock details, Form 10DB, demat account details, and reconciliation statements with the AIR. The court found it difficult to accept the revenue's argument that the petitioner had failed to disclose material facts fully and truly, as all requested information was provided. The court concluded that the AO's presumption of non-disclosure was erroneous and contrary to the record, and that the reassessment proceedings were nothing but a change of opinion. Consequently, the impugned notice and the order of reassessment, along with consequential demand and penalty notices, were quashed and set aside.
The High Court held that the notice dated March 30, 2021, issued under Section 148 of the Income Tax Act, 1961, was invalid. The Court found that the reasons recorded for reopening the assessment lacked a direct nexus or live link with the formation of the belief that the assessee's income had escaped assessment. Specifically, the reasons did not clearly establish how M/s Magnum Tradex Pvt. Ltd. was connected to Rajeev Khushwaha, nor did they provide a basis for concluding that M/s Magnum Tradex Pvt. Ltd. was a shell entity or that the transaction was not genuine. The Court emphasized that the validity of reopening must be tested solely on the reasons recorded, which cannot be improved upon by affidavits or oral submissions, citing First Source Solution Ltd Vs. Asst. CIT. Therefore, the conditions precedent under Section 147 were not satisfied. The Court quashed the notice and set aside the order disposing of objections.
The High Court allowed the Petition. The Court applied the principle laid down by the Apex Court in Seshasayee Steels (P.) Ltd. The judgment noted that for Section 53A of the Transfer of Property Act to be attracted, the transferee must have taken possession of the property in part performance of the contract. In the present case, the development agreement explicitly permitted the developer to enter the properties as an 'exclusive licensee' for development. The Court held that granting such a license does not amount to transmitting possession in favour of the licensee within the meaning and spirit of Section 53A of the Transfer of Property Act. Consequently, if there was no transfer of possession under Section 53A, there was no tangible material or reason for the Assessing Officer to believe that income chargeable to tax had escaped assessment. Therefore, the action of the Assessing Officer was without jurisdiction. The impugned notice under Section 148 and the order rejecting objections were set aside.
The High Court held that the Assessing Officer acted in gross violation of the principles of natural justice and the specific directions issued by the Court in the case of Tata Capital Financial Services Limited vs. Assistant Commissioner of Income Tax. The Court found that the Assessing Officer failed to provide the Petitioner with essential documents, including the reasons for reopening, the Principal Commissioner's satisfaction note and approval, the appraisal report, and statements recorded under Section 131. Furthermore, the Petitioner was denied a personal hearing despite requesting it. The Court emphasized that these omissions were contrary to the directions laid down in the Tata Capital Financial Services Limited judgment, which mandates the provision of such documents and a personal hearing. Consequently, the Court quashed and set aside the impugned orders: the notice under Section 148, the order rejecting objections, the assessment order, the notice of demand, and the penalty notice. The matter was remanded back to the Assessing Officer, who was directed to furnish all the withheld documents to the Petitioner, comply with the specific directions from the Tata Capital case, and then pass fresh orders after providing an opportunity of hearing.
The Tribunal held that the notice dated March 27, 2015, issued under Section 148 of the Income Tax Act, 1961, and the subsequent order dated December 16, 2015, rejecting the Petitioner's objections, were invalid. The primary reason for this decision was that the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, as amended on December 10, 2009, and the CBDT Circular No. 5/2012, issued in August 2012, were not applicable to the Assessment Year (AY) 2008-09. The Tribunal emphasized the settled principle that the law applicable is the one in force during the relevant assessment year. The judgment in Apex Laboratories (P) Ltd. relied upon by the revenue was distinguished as it pertained to AY 2010-11, where the amended regulations were indeed applicable. Since the basis for reopening, i.e., the prohibition under the amended regulations and the circular, was not applicable to AY 2008-09, the Assessing Officer lacked the 'reason to believe' that income had escaped assessment. Consequently, the petition was allowed, and the impugned notice and order were quashed.
The High Court allowed the writ petition. It held that the notice dated March 31, 2021, issued under Section 148 of the Income Tax Act, 1961, and the consequential assessment order dated March 31, 2022, passed under Section 147 read with Sections 144 and 144B, were invalid and void. The Court reasoned that the notice was issued in the name of a non-existent entity, Laysin BPO Pvt. Ltd., which had amalgamated with the Petitioner, CLSA India Private Limited. The Court relied on the Supreme Court's decisions in Saraswati Industrial Syndicate Ltd. v. CIT and Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Ltd., which affirmed that proceedings initiated against a non-existent entity, especially after the revenue has knowledge of the amalgamation, are void. The fact that the PAN remained active was not considered an exception to this principle. Consequently, the impugned notice, assessment order, and any consequential demand and penalty notices dated March 31, 2022, were set aside.
The High Court held that the impugned notice dated March 30, 2021, issued under Section 148 of the Income Tax Act, 1961, and all connected proceedings were unsustainable and therefore set aside. The Court reasoned that the issue of large loans/advances was raised during the scrutiny assessment and was specifically responded to by the assessee through clarifications dated June 5, 2017, and August 16, 2017, which led to the passing of the order under Section 143(3). The Court found that between the date of the original assessment order and the date of forming the opinion for reopening, nothing new had happened. There was no new information received, nor was any new material referred to. The AO's basis for reopening was the absence of an agreement between the assessee, Goel Ganga Developers Pvt Ltd, and M/s Nancy Builders and Developers Ltd. The Court observed that it was not the revenue's case that such an agreement existed and ought to have been produced but was not. Instead, the AO seemed to imply that the benefit should not have been granted in the scrutiny assessment due to the absence of such an agreement. The Court concluded that there could be no failure to disclose fully and truly if no such document existed, and this constituted a mere change of opinion, which does not satisfy the jurisdictional foundation under Section 147 of the Act. The petition was allowed.
The High Court held that the impugned show cause notices and the order dated 14.12.2020 issued under Section 179 of the Income Tax Act, 1961, were unsustainable and contrary to the Act. The court reasoned that the show cause notices did not disclose any particulars of the failed efforts to recover tax dues from the delinquent company, which is a mandatory requirement. The court found that while the revenue attempted to provide details of recovery steps in an affidavit-in-reply, this did not meet the requirement of a proper notice to the director. Furthermore, the impugned order failed to record the Assessing Officer's subjective satisfaction, based on material before it, that all steps had been taken to recover dues from the company. This failure to disclose material and record satisfaction was deemed a sine qua non for assuming jurisdiction under Section 179. Consequently, the court quashed and set aside the three show cause notices and the impugned order. The interim applications filed by the company and Samir Savjani were rejected.
The Bombay High Court allowed the writ petition, setting aside the notices issued under Section 148 of the Income Tax Act, 1961, dated June 30, 2021, and June 20, 2022, and the order under Section 148A(d) dated June 30, 2022. The Court reasoned that it is settled law that a notice issued under Section 148 of the Act against a dead person is invalid, unless the legal representatives submit to the jurisdiction of the Assessing Officer without raising any objection. In this case, the legal heir had objected and provided proof of death. The Court relied on the principle established in cases like Income Tax Ward 1(3)(7), Surat Vs. Durlabhbhai Kanubhai Rajpara. The operative direction was the setting aside of the impugned notices and order.
The Bombay High Court held that there was no failure on the part of the assessee to disclose fully and truly the material facts. The Court found that the issue regarding the valuation of shares was indeed a subject matter of scrutiny during the original assessment proceedings, and the petitioner had responded to specific queries and provided a valuation report. The AO had the option to follow either Rule 11UA(2)(a) or Rule 11UA(2)(b) (Discounted Free Cash Flow Method), which the petitioner had adopted and was permissible. The Court relied on the Supreme Court's decision in CIT vs. Kelvinator of India Ltd., which held that there is a difference between the power to review and the power to reassess, and that reopening cannot be based on a mere change of opinion without tangible material. The Court concluded that there was no tangible material with the AO to justify the reopening. Consequently, the notice under Section 148 and the order rejecting objections were set aside.
The High Court found merit in the petition and set aside the impugned notice. The Court noted that the period of four years from the end of the relevant assessment year expired on March 31, 2020. The notice under Section 148 was issued on March 31, 2021, and reasons for reopening were provided on August 28, 2021. The Court observed that the affidavit filed by the respondent indicated that the reopening was primarily a remedial action to settle an internal audit objection. The reasons recorded for reopening did not spell out a failure on the part of the assessee to disclose fully and truly all material facts. The Court concluded that the reopening was sought on the basis of a change of opinion, which is not a valid ground for reopening after four years, especially when the primary facts were disclosed by the assessee. The Court relied on its previous judgment in Ananta Landmark Pvt. Ltd vs. DCIT.
The High Court decided to relegate the petitioner to the remedy of revision under Section 264 of the Income Tax Act, 1961, based on the objection raised by the revenue regarding the availability of an alternate remedy. The Court followed the course adopted by a coordinate Bench in Haren Textile (P) Ltd. The Court explicitly stated that it was not going into the other issues sought to be raised by the petitioner. The petitioner was directed to institute the revision petition within two weeks. The time spent by the petitioner in prosecuting the writ petition was to be excluded for determining the issue of limitation for the revision. The interim relief granted earlier was extended for six weeks or until the revisional authority considered the application for interim relief. The contentions of the parties on merits were left open. No issue was expressly left undecided; rather, the petition was disposed of by directing the petitioner to pursue the alternate remedy.
The Special Court held that the Income Tax Department should be impleaded as a party respondent to MA No. 13 of 2022. The Court reasoned that the Income Tax Department lays a claim competing for the disbursement of the amount under Section 11 of the TORTS Act, and these competing claims deserve to be considered and adjudicated on merits. Therefore, there could be no objection to the impleadment, as the presence of the Income Tax Department would assist the Court in arriving at a just decision. The application for impleadment was allowed. The operative directions were that the State Bank of India shall amend its application to implead the Income Tax Department as a party respondent and serve the amended copy within two weeks. The respondents, including the newly impleaded respondent, were granted three weeks from service to file their respective affidavits-in-reply. The application was disposed of.
The High Court held that a notice issued under Section 148 of the Income Tax Act, 1961, against a dead person is invalid unless the legal representatives submit to the jurisdiction of the Assessing Officer without raising any objection. The Court found that the Assessing Officer had ignored the fact that the assessee had passed away and proceeded to issue the notice under Section 148 in the name of the deceased. The Court relied on its previous decision in Sanket Shailendra Pathare & Ors. V/s. The Income Tax Officer Ward 32(1)(1) Mumbai. Consequently, the impugned order passed under Section 148A(d) and the notice under Section 148, both dated July 25, 2022, were set aside. The writ petition was allowed.
The High Court, considering the limited nature of the controversy, deemed it appropriate to dispose of the matter with a specific direction. The Court directed the concerned assessing officer to consider the petitioner's prayer for the release of the seized jewellery. This consideration is to be made in light of the subsequent developments, specifically the deletion of the demand by the Tribunal's order dated March 7, 2022, and strictly in accordance with the provisions of law. A decision on the release of the jewellery is to be taken by the assessing officer not later than one month from the date of the order. The Writ Petition was disposed of accordingly.
The High Court held that the issuance of the revised Form 3 was unsustainable. The Court reasoned that the rectification order passed under Section 154 of the Income Tax Act, 1961, which corrected the tax treatment from business income to long-term capital gains, could not be disregarded. The Court relied on CBDT Circular No. 9 of 2020, Question No. 25, which clarifies that if a rectification order results in a reduction or increase in income and tax liability, the disputed tax should be calculated after giving effect to the rectification. The respondents failed to consider this circular and the rectification order. Therefore, the Court set aside the impugned orders dated September 20, 2021, and October 29, 2021, and directed the respondents to act in furtherance of the petitioner's declaration by way of Form-3, dated January 18, 2021, in accordance with the clarifications of the Act of 2020 for assessment year 2014-15. No issue was expressly left undecided.
The High Court held that the assessment order was unsustainable and violated the principles of natural justice. The Court agreed with the petitioner's argument that the opportunity granted to respond to the show cause notice would be illusory if the reply and supporting documents were not considered in their entirety. The Court reasoned that if the documents were indeed illegible, the Assessing Officer should have sought legible copies from the petitioner before passing the assessment order. The Court acknowledged that the Assessing Officer might be constrained by limitation periods but emphasized that this cannot justify a violation of natural justice. Consequently, the Court set aside the impugned assessment order and all consequent actions. The Assessing Officer was directed to pass fresh orders after considering the petitioner's reply and legible copies of the documents, which the petitioner was to furnish within one week. The fresh assessment order was to be passed preferably within four months.
The High Court held that the notice issued under Section 148 of the Income Tax Act, 1961, dated April 2, 2022, was invalid because it lacked a manual or digital signature. Relying on the ratio of the Calcutta High Court in B.K. Gooyee and Aparna Agency (P.) Ltd., and the Madhya Pradesh High Court in Umashankar Mishra, the Court concluded that a notice without a signature is effectively no notice in the eyes of law and is not a curable defect under Section 292B. The Court found that the respondents' reliance on Section 292B was misplaced, as the cited cases (Anand And Co. and Sky Light Hospitality) dealt with different factual matrices where signatures were present but their authenticity was questioned, or there were defects in the address, not a complete absence of signature. Consequently, the Court held that the Assessing Officer could not assume jurisdiction to proceed with the reassessment based on an invalid notice. The Court also noted that the notice was issued after three years from the end of the relevant assessment year, further compounding the jurisdictional error. The Court quashed and set aside the notice dated April 2, 2022, under Section 148, the order dated April 2, 2022, under Section 148A(d), and the notice dated March 21, 2022, under Section 148A(b).
The High Court held that the notice dated March 26, 2021, under Section 148 and the order dated March 10, 2022, rejecting the objections, were unsustainable in law and therefore quashed. The Court reasoned that the reasons recorded by the Assessing Officer did not elucidate what material was not disclosed fully and truly, leading to income escaping assessment. The Court referred to its decision in Hindustan Lever Ltd. vs. R.B. Wadnar, which emphasized that reasons for reopening must be clear, unambiguous, self-explanatory, and based on evidence, establishing a vital link between the reasons and the evidence. The Court noted that the reassessment proceedings were initiated based on an audit objection highlighting that a CFS is not an eligible infrastructural facility. However, the Court observed that the Supreme Court had dismissed the Special Leave Petition (SLP) filed by the Revenue in the case of Continental Warehousing Corporation Ltd., which had previously held that CFS is an eligible infrastructure facility and an 'inland port' for the purpose of Section 80IA(4). The Court concluded that even the audit objection no longer furnished a sound basis for alleging escaped assessment, as the basis for the objection (the pending SLP) had been removed by its dismissal. Therefore, the petition was allowed.
The High Court held that the Tribunal was right in applying the ratio of the Bombay High Court judgment in The Commissioner of Income Tax-1, Mumbai vs. M/s. Nikunj Eximp Enterprises Pvt. Ltd. The Court found concurrent findings by the CIT(A) and the ITAT that the Respondent had satisfactorily discharged the initial burden of proving the genuineness of the transactions. The Court noted that Section 69C is attracted when no explanation is offered or the explanation is unsatisfactory. However, the AO must record satisfaction based on material produced by the assessee, not unproved statements from other authorities not put to the assessee. The Court distinguished the NRA Iron and Steel case as factually different. The Court concluded that the substantial questions of law proposed by the revenue did not arise, and therefore, dismissed the appeal.
The High Court held that the notice impugned under Section 148 of the Income Tax Act, 1961, was unsustainable and quashed it. The Court reasoned that during the original scrutiny assessment, the AO had sought details of advertisement and sales promotion expenses, which were furnished by the petitioner. The AO had also applied their mind to the petitioner's claim by disallowing some expenses reflected in the break-up. The reasons recorded for reopening did not disclose what specific material or fact was not disclosed by the assessee, indicating a complete disclosure of primary material facts. Therefore, it could not be said that there was any failure on the part of the petitioner to disclose fully and truly material facts necessary for the assessment. The Court found that the notice did not satisfy the jurisdictional requirement of Section 147 of the Act. The petition was allowed, and no costs were imposed.