Loading High Court cases…
486 orders · Page 7 of 10
The High Court disagreed with the stand taken by the Assessing Officer. The Court held that for an assessee to effectively respond to a show-cause notice issued under Section 148A(b), it must be provided with the documents that are relied upon to allege escapement of income. Without these documents, the assessee cannot effectively respond. Consequently, the Court quashed and set aside the order dated March 31, 2023, passed under Section 148A(d). The Court directed the Assessing Officer to provide the requested documents to the Petitioner within two weeks. The Petitioner was then given two weeks to respond, after which an order under Section 148A(d) was to be passed on or before June 15, 2024. A personal hearing was also mandated before passing the final order, with at least five working days' notice.
The High Court quashed and set aside the order dated 28th March 2023 passed by Respondent No. 3. The Court held that Respondent No. 3, as a subordinate authority, was bound by the orders of the Income Tax Appellate Tribunal (ITAT), Pune, based on the principles of judicial discipline and the Supreme Court's decision in Union of India and Others v. Kamlakshi Finance Corporation Ltd. The mere fact that an appellate order is not 'acceptable' to the department does not provide a ground for not following it, unless its operation has been suspended by a competent court. The Court emphasized that failure to follow higher appellate orders leads to undue harassment of assessees and chaos in tax administration. Consequently, the matter was remanded to Respondent No. 3 for de-novo consideration, with a direction to follow the law laid down by the ITAT. Respondent No. 3 is also directed to provide a personal hearing to the Petitioner and pass a reasoned order by 30th June 2024.
The High Court held that the notice issued under Section 148A(b) and the subsequent order under Section 148A(d) by the Assistant Commissioner of Income Tax (ACIT), Circle-32(1), Mumbai, were invalid and without jurisdiction. The Court found the ACIT's stand that the Petitioner had not substantiated his NRI claim to be dishonest, noting that the Petitioner's returns and the e-filing portal consistently showed him as a Non-resident, including intimations for subsequent assessment years. The Court observed that the ACIT, in his order, implicitly admitted to having no jurisdiction but proceeded due to time constraints, citing the urgency of the limitation period expiring on March 31, 2023. The Court was not satisfied with the explanation of shortage of time as a basis for assuming jurisdiction. Relying on the Supreme Court's decision in CIT v. M.I. Builders (P.) Ltd., the Court held that a notice issued by an officer without jurisdiction is void ab initio, and subsequent proceedings are invalid. The Court emphasized that there cannot be simultaneous jurisdiction of two Assessing Officers over an assessee. Therefore, the fact that the Petitioner was an NRI and the Income Tax Officer (International Taxation) had jurisdiction was undisputed. The Court made the rule absolute, quashing the notice dated March 25, 2023, the order dated April 12, 2023, and the notice dated April 12, 2023.
The High Court held that the petition would be covered by the judgment in Godrej Industries Ltd. v. The Assistant Commissioner of Income Tax. Consequently, the impugned notice dated 17th May 2022 issued under Section 148A(b) of the Income Tax Act, 1961, the impugned order dated 29th July 2022 passed under Section 148A(d) of the Act, and the notice dated 29th July 2022 issued under Section 148 of the Act were quashed and set aside. Any consequential notices or orders were also quashed and set aside. The Court explicitly stated that the petition was disposed of only on the issue of limitation, and the petitioner was free to raise other contentions independently if the need arose in another matter. The ratio decidendi is that if a matter is covered by a binding precedent on a specific issue (in this case, likely related to reassessment proceedings and limitation), the same relief should be granted.
The High Court held that the issue in the petition was covered by its recent judgment in Godrej Industries Ltd. V/s. The Assistant Commissioner of Income Tax, Circle 14(1)(2), Mumbai and Ors. Consequently, the impugned order passed under Section 148A(d) of the Income Tax Act, 1961, and the notice issued under Section 148 of the Act were quashed and set aside. Any consequential notices or orders also stood quashed and set aside. The Court explicitly stated that the petition was disposed of only on the issue of limitation. It further clarified that the petitioner could raise other contentions independently if the need arose in other matters, indicating that those issues were not decided in this petition.
The High Court of Judicature at Bombay quashed and set aside the impugned notice dated 22nd April 2021 issued under Section 148 of the Income Tax Act, 1961, the impugned show-cause notice dated 26th May 2022 issued under Section 148A(b) of the Act, and the impugned order dated 19th July 2022 passed under Section 148A(d) of the Act. Consequential notices or orders, if any, were also quashed and set aside. The Court disposed of the petition. The decision was based solely on the issue of limitation, as the matter was covered by the Court's recent judgment in Godrej Industries Ltd. v. The Assistant Commissioner of Income Tax, Circle 14(1)(2), Mumbai and Ors. The petitioner was permitted to raise other contentions independently if the need arose in another matter. The ratio decidendi is that if a case is covered by a binding precedent on a specific issue, the impugned notices and orders related to that issue should be quashed and set aside.
The Bombay High Court held that the issue in all the writ petitions would be covered by the recent judgment of the Court in Godrej Industries Ltd. V/s. The Assistant Commissioner of Income Tax, Circle 14(1)(2), Mumbai and Ors. Consequently, the Court quashed and set aside the impugned orders passed under Section 148A(d) of the Income Tax Act, 1961, and the notices issued under Section 148 of the Act. Any consequential notices or orders also stood quashed and set aside. The Court explicitly stated that the petitions were disposed of only on the issue of limitation, and petitioners were at liberty to raise other contentions independently if the need arose in other matters. The ratio decidendi is that if reassessment proceedings are found to be invalid based on a binding precedent concerning limitation or procedural validity, such proceedings should be quashed.
The Bombay High Court, in its order dated 27th March 2024, quashed and set aside the impugned orders passed under Section 148A(d) and the notices issued under Section 148 of the Income Tax Act, 1961, in both writ petitions. This decision was based on the Revenue's submission that the petitions were covered by the judgment in the case of New India Assurance Co. Ltd. V/s Assistant Commissioner of Income Tax. The Court also set aside any consequential notices or orders. All other rights and contentions raised by the Petitioner in the petitions were expressly kept open. The petitions were disposed of.
The Bombay High Court, in its order dated 27th March 2024, quashed and set aside the impugned orders passed under Section 148A(d) and the notices issued under Section 148 of the Income Tax Act, 1961, in both writ petitions. This decision was based on the Revenue's submission that the petitions were covered by the judgment in the case of New India Assurance Co. Ltd. V/s Assistant Commissioner of Income Tax. The Court also set aside any consequential notices or orders. All other rights and contentions raised by the Petitioner in the petitions were expressly kept open. The petitions were disposed of.
The High Court held that the petition would be covered by the judgment in New India Assurance Co. Ltd. V/s Assistant Commissioner of Income Tax, Circle 3(2)(1), Mumbai & Ors. Consequently, the impugned order dated 29th July 2022 passed under Section 148A(d) of the Income Tax Act, 1961, and the notice dated 29th July 2022 issued under Section 148 of the Act were quashed and set aside. Consequential notices or orders, if any, were also quashed and set aside. The court also kept open all other rights and contentions raised in the petition. The principle derived is that if a case is squarely covered by a precedent, the authorities should act in accordance with that precedent, and the court will quash proceedings that do not adhere to it.
The High Court held that the issue of improper sanction, as decided in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., squarely applies to the present petition. The Court reiterated its finding in the precedent case that for Assessment Year 2016-2017, sanction should have been granted under Section 151(ii) and not Section 151(i) of the Income Tax Act, 1961, rendering such a sanction invalid. Consequently, if the sanction is invalid, the notice issued based on it is also invalid and must be quashed. The Court further reasoned that if the notice is quashed, any subsequent assessment order passed relying on an incorrect sanction would also have to be quashed. Therefore, all notices and orders impugned in the petition, along with any consequential notices and assessment orders, were quashed and set aside. The Court clarified that other grounds could be raised in future proceedings.
The High Court held that the notice issued under Section 148 of the Income Tax Act, 1961, for AY 2013-2014, was beyond the period of limitation. The Court reasoned that the time limit to issue a notice under Section 148 for AY 2013-14 had already expired on April 1, 2021. The Court found the Revenue's arguments regarding the applicability of TOLA and the interpretation of Notifications No. 20 of 2021 and 38 of 2021 to be flawed. It emphasized that the Supreme Court in Ashish Agarwal (Supra) had granted liberty to assessees to raise all defenses, including those under Section 149, and that accepting the Revenue's contention would render these defenses useless and be contrary to established legal principles. The Court noted that the Supreme Court's powers under Article 142 cannot be used to ignore substantive rights or statutory provisions. Consequently, the impugned notice was quashed and set aside. The Court explicitly stated that it was not discussing other grounds of challenge raised in the petition, as the decision was based solely on the issue of limitation.
The High Court disposed of the writ petition with specific directions. It held that the Assessing Officer (AO) shall dispose of the Petitioner's application under Section 154 of the Act on or before May 31, 2024. Crucially, the AO was directed not to be influenced by any findings made by the Principal Commissioner of Income Tax in the impugned order passed under Section 264 of the Act. Furthermore, the AO is to consider the rectified 26AS statement for AY 2017-18 and pass a revised assessment order accordingly. Before passing any order, the AO must provide a personal hearing to the Petitioner, with at least five working days' advance notice. The Court did not decide the merits of the Section 264 order itself but focused on procedural directions to ensure a fair and timely resolution of the pending applications.
The High Court, without going into the merits of the petition, accepted the submission made by the learned counsel for the Revenue. The Court noted that the Revenue, as an officer of the Court, stated that the Petitioner's grievance was justified. Consequently, the Court quashed and set aside the impugned order dated 18th December 2023. The matter was remanded to the Assessing Officer for de-novo consideration. The Petitioner was directed to respond to the notice dated 2nd August 2023 within two weeks of the order being uploaded. The Assessing Officer was directed to dispose of the show-cause notice on or before 31st May 2024 with a reasoned order, after providing a personal hearing to the Petitioner at least five working days in advance. The Court explicitly clarified that no observations were made on the merits of the matter.
The High Court held that the application filed by the petitioner before the ITAT under Section 254(2) of the Income Tax Act, 1961, was in effect seeking a review of the ITAT's earlier order dated 9th September 2022. The Court found no error in the ITAT's decision to reject this application. The reasoning was that Section 254(2) is meant for rectification of mistakes apparent from the record, not for re-arguing or reviewing the merits of the original decision. Therefore, the ITAT was correct in not entertaining an application that sought to review its previous order. The High Court dismissed the petition, upholding the ITAT's order.
The High Court allowed the writ petition and quashed the impugned notice. The Court found that the notice issued under Section 148 of the Income Tax Act, 1961, for AY 2014-2015 was issued beyond the period of limitation. The Court's reasoning was based on the judgment in The New India Assurance Company Limited (supra), which held that reassessment proceedings initiated pursuant to a notice issued after the amendment to the Finance Act, but based on pre-amendment provisions, would be regarded as beyond the time limit. The Court specifically noted that for AY 2013-14, the time limit to issue a notice under Section 148 had expired on March 31, 2021, and that the assessee had a vested right that could not be taken away. The Court explicitly stated that its decision was restricted to the point of limitation, and other grounds of challenge raised by the petitioner were not discussed. The operative direction was to quash and set aside the impugned notice.
The High Court held that it would not be appropriate to entertain the writ petition, as the petitioner has an alternate and efficacious remedy of appeal to challenge the order dated 15.03.2023. The Court clarified that all contentions of the petitioner, including those challenging the notices for reopening of assessment, are kept open to be raised in the appeal. Similarly, all objections on behalf of the respondents are also kept open, as the Court has not adjudicated on the merits of the rival contentions. The petition was disposed of by relegating the petitioner to avail of the statutory remedies available under the Income Tax Act. No issue was expressly left undecided, as the court chose not to decide on merits.
The High Court held that the issue raised by the petitioner was no longer res integra, meaning it had been decided by previous judgments. The court found that the revenue's advocate was unable to provide any record to substantiate that the impugned notice was issued within three years of the assessment year or that the amount of escaped assessment was more than Rs. 50,00,000/-. Consequently, the court allowed the writ petition in terms of prayer clauses C, C-1, and C-2. The ratio decidendi is that a notice under Section 148 for escaped assessment, when issued beyond three years and for an amount less than Rs. 50,00,000/-, is invalid under Section 149(1)(b) of the Income Tax Act, 1961, unless the revenue can prove otherwise from the record. The operative direction was to allow the petition, implying the quashing of the notice.
The High Court held that the issuance of the notice under Section 148 of the Income Tax Act, 1961, was invalid. The court found that the petitioner's grievance was that the notice was issued beyond three years from the end of the Assessment Year 2016-2017, and the amount of escaped assessment was less than Rs. 50,00,000/-. The court noted that Section 149(1)(b) permits issuance of such a notice within ten years only if the escaped income exceeds Rs. 50,00,000/-. Since the revenue could not demonstrate from the record that the notice was issued within three years or that the escaped assessment exceeded Rs. 50,00,000/-, the court concluded that the notice was not in conformity with the statutory provisions. Consequently, the writ petition was allowed in terms of prayer Clause ‘C’, implying the quashing of the impugned notice.
The High Court held that the issue raised by the petitioner was no longer res integra (undecided). The court found that the revenue's advocate was unable to indicate from the record that the impugned notice was issued within three years or that the amount of escaped assessment was more than Rs. 50,00,000. Consequently, the court allowed the writ petition. The ratio decidendi is that a notice under Section 148, issued beyond three years for an escaped assessment of less than Rs. 50,00,000, is invalid under Section 149(1)(b) of the Income Tax Act, 1961, unless the revenue can demonstrate otherwise from the record. The operative direction was to allow the petition in terms of prayer clause 'C', which was the substantive prayer to quash the notice.
The High Court held that the issue was no longer res-integra. The Court found that the revenue was unable to demonstrate from the record that the notice under Section 148 was issued within three years of the assessment year or that the amount of escaped assessment exceeded Rs. 50,00,000/-. Consequently, the notice was deemed invalid as per the conditions stipulated in Section 149(1)(b) of the Income Tax Act, 1961. The Court allowed the Writ Petition in terms of prayer Clause 'C', which likely sought the quashing of the notice. No other issues were expressly left undecided.
The High Court held that the issue raised was no longer res integra. The Court found that the Revenue was unable to demonstrate from the record that the impugned notice under Section 148 was issued within three years of the assessment year or that the amount of escaped assessment exceeded Rs. 50,00,000/-. Consequently, the notice was deemed invalid as per the provisions of Section 149(1)(b) of the Income Tax Act, 1961. The Court allowed the Writ Petition in terms of prayer Clause ‘C’, which was the substantive prayer of the Petitioner. The ratio decidendi is that a notice under Section 148 for escaped income below Rs. 50,00,000/- cannot be issued beyond three years from the end of the relevant assessment year.
The High Court held that the issue raised by the Petitioner was no longer res integra. The Court found that the Revenue was unable to provide any material from the record to establish that the impugned notice under Section 148 was issued within three years of the relevant assessment year or that the amount of escaped assessment exceeded Rs. 50,00,000/-. Consequently, the Court concluded that the notice was issued in contravention of the provisions of Section 149(1)(b) of the Income Tax Act, 1961. The writ petition was allowed in terms of prayer clause 'C', which likely involved quashing the notice. The ratio decidendi is that a notice under Section 148 for escaped assessment, when issued beyond three years, must satisfy the conditions of Section 149(1)(b), including the threshold amount of escaped income, failing which it is liable to be quashed.
The High Court held that the issue was no longer res integra. The Court found that the revenue's counsel was unable to demonstrate from the record that the impugned notice under Section 148 was issued within three years of the assessment year or that the amount of escaped assessment exceeded Rs. 50,00,000/-. Consequently, the Court concluded that the notice was issued in contravention of Section 149(1)(b) of the Income Tax Act, 1961. The ratio decidendi is that a notice for reassessment under Section 148, for an escaped income below Rs. 50,00,000/-, cannot be issued beyond three years from the end of the relevant assessment year unless the escaped income is more than Rs. 50,00,000/-. The Writ Petition was allowed in terms of prayer Clause ‘E’, implying the quashing of the impugned notice.
The High Court held that the notice dated March 26, 2021, issued under Section 148 of the Act was invalid. The Court reasoned that a notice under Section 148 could not be issued when assessment proceedings were still pending, particularly when those proceedings were a consequence of a revision under Section 263. The concept of 'reason to believe' that income chargeable to tax has escaped assessment cannot arise so long as the assessment proceedings are ongoing and have not culminated in a final order. Income cannot be said to have escaped assessment if the proceedings related to it are still subsisting. Such proceedings, if initiated, would be ab-initio, void, and illegal. The Court found support for this view in the case of Ador Technopack Ltd. v. Dr. Zakir Hussein, Deputy Commissioner. Additionally, the Court noted that the sanction granted under Section 151 of the Act was invalid, as held in J M Financial and Investment Consultancy Services Private Limited v. Assistant Commissioner of Income Tax, Circle 3(2) (1) and Ors.
The High Court held that the issue in the writ petition was covered by the recent judgment of the Court in Godrej Industries Ltd. v. The Assistant Commissioner of Income Tax, Circle 14(1)(2), Mumbai and Ors. Consequently, the impugned order passed under Section 148A(d) of the Income Tax Act, 1961, and the notice issued under Section 148 of the Act were quashed and set aside. Any consequential notices or orders were also quashed and set aside. The Court explicitly stated that the petition was disposed of only on the issue of limitation. The petitioner was granted liberty to raise other contentions independently if the need arose in other matters. The ratio decidendi is that if a prior judgment of the same High Court covers the issue, subsequent similar matters should follow that precedent, particularly concerning procedural aspects like limitation in reassessment proceedings.
The High Court held that the issue of improper sanction, as raised by the petitioner, was squarely covered by its prior decision in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors. In that case, the Court had ruled that for a particular assessment year, the sanction ought to have been granted under Section 151(ii) of the Income Tax Act, 1961, and not under Section 151(i). Consequently, the sanction was deemed invalid, leading to the invalidity of the notice issued. The Court reasoned that if the notice is invalid, any subsequent assessment order passed relying on that incorrect sanction would also be invalid and liable to be quashed. Therefore, all notices and orders impugned in the present petition, along with any consequential notices and assessment orders, were quashed and set aside. The Court clarified that other grounds could be raised in future proceedings.
The High Court held that the sanction obtained for issuing notices was improper. Following its own precedent in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., the Court found that for Assessment Year 2016-2017, the sanction should have been obtained under Section 151(ii) of the Income Tax Act, 1961, and not under Section 151(i). Consequently, the sanction was deemed invalid. The Court reasoned that an invalid sanction renders the notice issued based upon it invalid and liable to be quashed. Furthermore, any subsequent assessment order passed relying on such an incorrect sanction would also have to be quashed. The petition was disposed of by quashing all impugned notices and orders, including any consequential assessment orders. The Court clarified that other grounds could be raised in future proceedings.
The High Court held that the notice dated March 31, 2021, issued under Section 148 of the Income Tax Act, 1961, for AY 2013-14 was unsustainable. The Court found that the notice was issued after the expiry of four years from the end of the relevant assessment year, and an assessment order under Section 143(3) had already been passed. Crucially, the Court noted that the reasons recorded by the Assessing Officer (AO) did not establish a live link between the information received and the formation of the belief that income had escaped assessment. The Court emphasized that a mere 'change of opinion' does not constitute justification for reopening an assessment, especially when the jurisdictional conditions, including the requirement of tangible material and a live link, are not met. The Court concluded that the reassessment proceedings were nothing but a 'change of opinion' and disposed of the petition.
The High Court held that the rental income earned by the assessee, even if assessed under the head 'Income from house property', would qualify for deduction under Section 32AB of the Income Tax Act, 1961. The Court reasoned that the definition of 'eligible business or profession' under Section 32AB(2)(i) is broad and includes all businesses except those specifically excluded. The fact that the income is assessed under a different head does not disqualify it, provided it is part of the assessee's business income as reflected in its accounts prepared in accordance with the Companies Act, 1956. The Court found support in the decisions of CIT v. Apollo Tyres Ltd. and Apollo Tyres Ltd. v. CIT. The Court noted that the revenue did not dispute that the rental income was shown as part of the business income in the assessee's accounts. Therefore, as long as the rental income is part of the business income and not specifically excluded by Section 32AB(2), it will be included in the term 'eligible business'. The substantial question of law was answered in the negative. The appeal was disposed of accordingly.
The Bombay High Court made the rule absolute in both writ petitions. The court agreed with its earlier interim order that the reopening notices were issued beyond four years from the end of the relevant assessment years. Consequently, the proviso to Section 147 of the Income Tax Act, 1961, was applicable, requiring a failure on the part of the petitioner to truly and fully disclose all material facts for reopening to be permissible. The court found that the reasons for reopening were based on an examination of records to form a belief that income had escaped assessment, but this belief was not supported by any material indicating a failure to disclose. Furthermore, the issue regarding the petitioner's entitlement to exemption under Section 11 was already a subject of consideration during the scrutiny assessment proceedings under Section 143(3). Therefore, the reopening was also based on a change of opinion, rendering the notices without jurisdiction. The court quashed and set aside the notices dated March 19, 2015, under Section 148 and the subsequent orders.
The High Court held that the validity of a notice for reopening assessment is to be tested solely by the reasons recorded in support thereof. In this case, the reasons recorded in support of the impugned notices did not prima facie indicate a reason to believe that income chargeable to tax had escaped assessment. The Court noted that the reasons did not specify the premium amount received in excess of the intrinsic value, nor was there any determination of the intrinsic value. Furthermore, the Court reiterated its prior holding in Vodafone Services Ltd. v/s. CIT that the receipt of share premium is on capital account. The Court found no material pointed out by the Revenue to suggest why the Vodafone Services Ltd. decision, holding share premium to be on capital account, would not apply. Consequently, the Rule granted earlier was made absolute, quashing and setting aside the impugned notices and subsequent orders. The petitions were disposed of.
The High Court held that the notice dated March 24, 2015, issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for AY 2009-10 was invalid. The Court agreed with the observations made in its earlier order dated April 20, 2016. It found that the Assessing Officer had all the necessary information regarding the software development and maintenance expenses during the original assessment proceedings, which concluded with an order under Section 143(3). Therefore, there was no failure on the part of the petitioner to disclose material facts. Furthermore, the reasons for reopening appeared to be based on a change of opinion, as the very issue was considered during the regular assessment. Consequently, the Rule granted was made absolute, quashing and setting aside the impugned notice and the order rejecting the petitioner's objections.
The Bombay High Court held that the impugned notice dated March 18, 2015, issued under Section 148 of the Income Tax Act, 1961, was without jurisdiction. The Court found that the reasons recorded by the Assessing Officer (AO) did not disclose a reasonable belief that income chargeable to tax had escaped assessment. The AO's reasons merely stated that the intrinsic value of the shares could not justify the premium received, without any exercise to ascertain this intrinsic value. The Court reiterated its earlier decision in Vodafone India Services v/s. CIT (368 ITR 1) and also referred to its recent decision in Godrej Projects Development Pvt. Ltd. v. Income Tax Officer, holding that amounts received on account of share premium are on capital account and not taxable as income. Therefore, there was no tangible material to give the AO jurisdiction to reopen the assessment. The Rule granted was made absolute, quashing the impugned notice.
The High Court partly allowed the Writ Petition. The Court set aside the order dated 05.12.2022 passed by the Income Tax Appellate Tribunal. The Court found that while the Petitioner had deposited the Rs. 25,000/-, the ITAT's dismissal based on the deposit being under 'Basic Tax' was not appropriate, especially in light of the Respondent's subsequent submission that the amount could be utilized for the Petitioner's benefit. The Court directed the Petitioner to deposit Rs. 25,000/- in the High Court within 07 days, which would then be transmitted to the Medical Officer, High Court Dispensary, Aurangabad. The appeal before the ITAT (Appeal No. ITA No.1633/PUN/2017 for AY 2008-09) was remitted back to the ITAT "A" Bench at Pune. The Petitioner was directed to appear before the Tribunal on 01.04.2024, and no fresh notice was required. The Tribunal was to proceed with the hearing in accordance with law.
The Tribunal held that the notice dated March 25, 2021, and the order dated March 3, 2022, rejecting the Petitioner's objections are set aside and the Petition is allowed. The primary reasoning was that there was no live link, which is a sine qua non, between the material before the Assessing Officer (AO) and the belief formed regarding the escapement of income. The Tribunal found that the reasons to believe escapement of assessment merely adverted to information from the Investigation Officer, Kolhapur, regarding cash deposits. However, it was an admitted fact that the Petitioner, a charitable trust, had deposited the cash donations in its bank account and disclosed 'Nil' total income. The accounts were recorded, accounted for, and audited, indicating no undisclosed cash. The Tribunal relied on Supreme Court judgments in "Income Tax Officer, I Ward, Distt.VI, Calcutta and Ors. v. Lakhmani Mewal Das" and "Sheo Nath Singh v. AACIT" to emphasize that reasons to believe must have a rational connection and a live link with the material, and cannot be based on mere suspicion or a fishing enquiry. The Court also noted that the reopening appeared to be a 'review' based on a change of opinion, which is impermissible. The sanction and notice were issued without proper application of mind.
The High Court allowed the interim application for amendment. Regarding the writ petition, the Court noted the petitioner's submission that the basis for issuing the notice under Section 148A(b) was a change of opinion, citing the precedent of Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors. The Court granted the revenue three weeks to file a reply. Until June 30, 2024, the Court granted ad-interim relief, restraining the respondent from taking any steps or proceedings in relation to the impugned order under Section 148A(d) and the notice under Section 148. The petition is listed for admission on May 6, 2024. No final decision on the merits of the case has been rendered.
The High Court allowed the petition. The Court noted that the counsel for both parties agreed that the findings in Writ Petition No. 3780 of 2022 would squarely apply to the present case. Although the assessment order in this case did not specifically discuss the capital loss issue as it did in the related petition, a specific query was raised during the assessment proceedings and answered by the petitioner. Citing the Court's own precedent in Aroni Commercials Limited v. Deputy Commissioner of Income Tax–2(1), the Court held that if a specific query was raised and answered during assessment, it would be a subject of consideration during those proceedings. Therefore, a notice to reopen based on such matters would be considered a change of opinion. The Court quashed the notice under Section 148 and the order on objections, finding them to be without jurisdiction, illegal, and arbitrary. The petition was disposed of in terms of prayer clause (a).
The High Court held that the reopening proceedings initiated under Section 148A read with Section 147 of the Income Tax Act, 1961, were unjustified. The Court agreed with the assessee's submission that if Form-4 had been issued under the Income Declaration Scheme, 2016, there could be no escapement of income as alleged in the information forming the basis of the reopening. The issuance of Form-4 effectively meant that the declaration under IDS was processed or resolved, and therefore, the income declared under IDS could not be treated as escaped income for assessment purposes. Consequently, the Court granted prayer clauses (B) and (C) of the petition, quashing the reopening notices and consequential orders. The Court noted that the issuance of Form-4 addressed the petitioner's primary grievance regarding the IDS declaration and its consequences.
The High Court held that credit for the self-assessment tax of Rs. 15,78,210/- paid for AY 2013-14 must be given. The Court reasoned that any amount paid by the Petitioner for the relevant assessment years should be credited. The Court found support for this view in its own judgments in Kamla Chandra Singh Kabali v. Principal Commissioner of Income Tax-27 & Ors. and CEAT Limited v. Commissioner of Income Tax. Consequently, the assessment order dated March 31, 2022, the demand notice dated March 31, 2022, and the penalty notice dated March 31, 2022, were quashed and set aside. The Respondents were directed to issue Form 4 under the IDS within four weeks from the date of the order, after giving credit for all amounts paid, including the advance tax and self-assessment tax. No issue was expressly left undecided.
The High Court allowed the petitions. The Court found that the entire basis for issuing the notices, which was the alleged non-filing of income tax returns by LSIPL, collapsed. This was because the revenue itself accepted that LSIPL was not required to file its income tax return from the appointed date of amalgamation, which was April 1, 2012. Consequently, the notices issued under Section 148 and the subsequent reassessment and penalty orders were quashed and set aside. The Court did not delve into further averments or grounds presented in the petitions, as the primary issue of the notices being issued to a non-existent entity was decisive. The Petitioner undertook to withdraw pending appeals against the reassessment order.
The High Court allowed the petition. Regarding the first issue, the Court agreed with the assessee that since the notice under Section 148 was issued after four years from the end of AY 2015-16 and a Section 143(3) assessment was already completed, the proviso to Section 147 of the Act would apply. This proviso mandates that reopening is permissible only if there was a failure on the part of the assessee to disclose truly and fully material facts. The Court found the AO's reliance on the Taxation and Other Loss (Relaxation of Certain Provisions) Ordinance, 2020, to be incorrect, noting that the AO sought approval from the Commissioner, which is required for reopening beyond four years, contradicting the claim that the Ordinance negated the proviso. On the second issue, the Court held that the issue regarding the capital loss on the sale of the flat was part of the original assessment proceedings and was accepted by the AO. Therefore, reopening the assessment on this ground constituted a 'change of opinion', which cannot be the basis for reopening an assessment. Consequently, the impugned notice and order were quashed.
The High Court quashed and set aside the order dated March 31, 2023, passed under Section 148A(d) of the Income Tax Act, 1961. The Court found that the Assessing Officer's conclusion that income chargeable to tax had escaped assessment in the petitioner's hands was not sustainable. The primary reason for this decision was that the Assessing Officer himself accepted that the petitioner had not made any payment towards the purchase of the immovable property. The Court noted that the information regarding the source of funds for the property purchase, which was the basis for the reopening, pertained to the petitioner's husband. The Revenue's counsel conceded that such details should be sought from the husband for his assessment, not the petitioner. Therefore, the Court concluded that it was not a fit case for reopening the assessment in the petitioner's name. The petition was disposed of with the operative direction to quash and set aside the impugned order.
The High Court held that the notice dated March 25, 2021, and the order dated March 3, 2022, rejecting the petitioner's objections, were invalid and set aside. The Court found that the reasons provided for reopening assessment lacked a live link between the material before the Assessing Officer (AO) and the belief of escapement of income. The information from the Investigation Officer merely stated cash deposits, but it was an admitted fact that the petitioner, a Section 12A trust, deposited cash donations in its bank accounts, declared 'Nil' income, and its accounts were audited. Therefore, there was no undisclosed cash beyond regular bank deposits offered for taxation. The Court cited precedents like *Sheo Nath Singh v. AACIT* and *Income Tax Officer, I Ward, Distt.VI, Calcutta and Ors. v. Lakhmani Mewal Das* to emphasize that belief must be honest and reasonable, based on grounds that have a rational connection to the material, not mere suspicion or a fishing enquiry. The sanction under Section 151 and the notice were issued without application of mind. The petition was allowed.
The High Court held that the notices issued under Section 148 of the Income Tax Act, 1961, were invalid and quashed them. The Court found that the reasons recorded for reopening the assessment were based on incorrect facts. The Petitioner had clearly demonstrated that the total cash deposits were Rs. 1,87,39,187/-, not Rs. 3,73,72,707/-, and that this amount represented cash sales which were duly accounted for and offered to tax in the original return. The AO, in his order disposing of the Petitioner's objections, failed to address this crucial factual discrepancy. Citing the precedent in Ankita A. Choksey v. Income Tax Officer, the Court emphasized that the Assessing Officer acquires jurisdiction to issue a reopening notice only when he has reason to believe that income chargeable to tax has escaped assessment, and this belief must be based on correct facts. Since the AO proceeded on fundamentally wrong facts and failed to deal with the Petitioner's assertion of correct facts, there was no valid reason to believe that income had escaped assessment. Consequently, the notices and the order rejecting objections were set aside.
The High Court granted the Petitioner's request to withdraw the writ petition. The Court explicitly stated that the rights and contentions of the Petitioner were kept open to be raised in the appeal before the Commissioner of Income Tax (Appeals). The petition was dismissed as withdrawn. The Court further directed that if the appeal is filed within two weeks from the date of the order, any delay would be deemed condoned. No specific findings on the merits of the case were made.
The High Court allowed the petitions. The Court found that the basis of the notice, which was the alleged non-filing of income tax returns by LSIPL, collapsed in light of the Revenue's own admission that LSIPL was not required to file its income tax return from the appointed date of amalgamation, which was April 1, 2012. Since the Petitioner had duly informed the Revenue about the amalgamation and the appointed date, the notices and subsequent orders issued to LSIPL were rendered invalid. The Court held that there was no reason to delve into further averments or grounds raised in the petitions. The operative direction was to quash and set aside the impugned notice dated March 27, 2021, the reassessment order dated March 27, 2022, and the penalty notices dated March 27, 2022. The Petitioner also undertook to withdraw any pending appeals against the reassessment order.
The High Court quashed and set aside the show cause notice dated August 20, 2022, under Section 148A(b), the order dated September 30, 2022, under Section 148A(d), and the notices dated September 30, 2022, and October 7, 2022, under Section 148 of the Income Tax Act, 1961. The Court found that the allegations in the show cause notice were primarily against JM Financial regarding manipulated accounting and sham transactions. Crucially, the notice did not directly implicate the petitioner in knowingly participating in such sham transactions to reduce tax liability or earn dividend/book loss. Furthermore, the Court noted an inconsistency in the notice regarding the specific fund (JM Balanced Fund vs. JM Equity Hybrid Fund) and the nature of the alleged issue (dividend vs. capital loss), indicating a lack of application of mind by the Assessing Officer. The Court emphasized that while the powers to reopen are wide, they are not plenary, and the "reason to believe" must be based on material having a rational and intelligible nexus with the belief of escaped income. The Court held that the material before the Assessing Officer was too tenuous to form a legally sound basis for reopening the assessment, citing the principle that the link between the material and the belief must be clear and not remote or far-fetched.
The High Court answered both substantial questions of law in the negative, holding that the ITAT was not right in its decisions. Regarding the first issue, the Court followed its own decision in CIT V/s. United Motors (India) Ltd., which held that payments made to workmen for services rendered during the previous year, even if quantified and paid after the year-end, must be deducted in the previous year as the expenditure was incurred for earning the income of that year. The Court found the ITAT's reasoning that the liability arose only upon signing the agreement to be unsustainable on the facts. Concerning the second issue, the Court, after considering its decisions in CIT v. Rajaram Bandekar and Sons (Shipping) P. Ltd. and CIT v. Raghuvanshi Mills Ltd., held that exgratia payments over and above the statutory bonus limits are allowable as expenditure under Section 37(1) of the Act. The ITAT's reliance on Rajaram Bandekar was distinguished based on subsequent rulings. The appeal was disposed of accordingly.