Gujarat High Court Judgments — 2015

The High Court held that the respondent, the Assessing Officer, was legally obligated to refund the amount of Rs. 17,08,78,351/- to the petitioner without any adjustment against likely future demands. The Court found that Section 240 of the Income Tax Act, 1961, mandates the refund of amounts due to an assessee as a result of appellate orders, and the Assessing Officer must refund such amounts without requiring a claim, unless exercising powers under Section 245 for set-off against existing tax liabilities. The Court noted that the respondent could not point to any provision of law that permitted retaining the refund against potential future demands. Furthermore, the Court observed that Section 241, which allowed withholding refunds when other proceedings were pending, had been omitted. The Court concluded that the respondent's action of retaining the refund was without authority of law and appeared to be an attempt to defeat the petitioner's rightful claim. The Court directed the respondent to refund the entire amount with interest under Section 244A within fifteen days, without any adjustment for demands arising after the order.

The High Court held that the impugned notice dated 31st March, 2014, issued under section 148 of the Income Tax Act, 1961, is unsustainable and quashed and set aside. The Court reasoned that the Assessing Officer had called for necessary details regarding the land brought in as capital by Babubhai Desai and other material during the original assessment proceedings under section 143(3). This material included details about the capital gain offered for tax in assessment year 2007-08. Despite considering this material, the AO did not deem it fit to assess capital gain under section 45(2) of the Act, nor was this aspect discussed in the assessment order. Therefore, the AO was seeking to examine the same material from a different angle, which constituted a mere change of opinion. The Court reiterated the principle that a mere failure of the AO to raise a specific query or consider a certain element or angle during the original assessment does not authorize reopening, especially when the claim was processed at length and accepted. The decision in Cliantha Research Limited v. Deputy Commissioner of Income-tax was found squarely applicable. The assumption of jurisdiction by the AO was held to be without authority of law.

The High Court held that the notice issued under section 148 of the Income Tax Act, 1961, was invalid and quashed it. The court found that the reasons recorded for reopening the assessment were not based on the AO's formation of belief that income chargeable to tax had escaped assessment. Instead, the assessment was sought to be reopened merely on the insistence of the Audit Department. The court noted the AO's consistent communications expressing his opinion that the audit objection was not acceptable and that no case was made out for reopening. The AO's subsequent action to reopen the assessment was solely to comply with the audit objection, demonstrating a lack of independent belief. The court relied on its own decisions in Adani Exports v. Dy. CIT (Assessments) and Cadilla Healthcare Ltd. v. Assistant Commissioner of Income-Tax, which established that reopening of assessment requires the AO's independent belief that income has escaped assessment, and mere opinion of the audit party cannot form the basis for reopening, especially beyond four years. Therefore, the primary requirement for reopening under section 147 was not satisfied.

The High Court held that the amount of Rs. 3,51,308/- received by the assessee was not taxable under Section 17(3)(i) of the Income Tax Act, 1961. The Court agreed with the Calcutta and Delhi High Courts that for a payment to be considered 'compensation' under Section 17(3)(i), the employee must have a right to receive it, and it must be paid to discharge a legal duty or obligation on the employer. In this case, the assessee's services were terminated under Rule 44 of the Service Rules, and the employer had fulfilled its obligation by paying three months' salary in lieu of notice. The subsequent payment was made pursuant to a settlement arrived at during the pendency of litigation, to bring an end to the dispute. There was no pre-existing legal obligation on the employer to make this payment. The employer voluntarily agreed to pay the amount to end the litigation. Therefore, the payment was voluntary and without any obligation, and did not constitute 'profits in lieu of salary' as contemplated under Section 17(3)(i). The Tribunal was not justified in holding the amount as taxable. The appeal was allowed, the Tribunal's order quashed, and the Commissioner (Appeals)'s order restoring the deletion of the addition was upheld.

The High Court held that the respondent authorities are no longer authorized to continue with the seizure of the silver ornaments. The reasoning was based on the fact that the assessment for the relevant assessment year (2012-13) was framed by the Assessing Officer at Varanasi, who, after taking note of the seizure made by the authorities at Surat, accepted the petitioner's return without making any addition on account of such seizure. Therefore, the court concluded that the respondent authorities cannot continue with the seizure. The operative direction was to forthwith return the seized silver ornaments to the petitioner. The court explicitly stated that it was not entering into the merits of the validity of the authorization issued under Section 132A of the Act.

The High Court held that the respondent authorities had not applied their minds to the relevant facts necessary for deciding the stay petition under Section 220(6) of the Act. The Court noted that the petitioner is a local authority and its income was previously assessed as 'Nil', with the current assessment arising from the proviso to Section 2(15) of the Act. Given the similarity to the case of Surat Urban Development Authority, the Court decided to pass a similar order. Since the petitioner had already paid two installments, amounting to approximately 25% of the demanded amount, no further deposit was required as a condition for stay. The Court directed that the petitioner would not be treated as an assessee in default until the final disposal of its appeal before the Commissioner (Appeals). The Commissioner (Appeals) was directed to dispose of the appeal within four months. The petitioner was to cooperate with the appellate proceedings, and if the appeal was not disposed of due to the petitioner's default, the respondents could approach the court for modification.

The High Court held that the orders passed by the respondents under section 220(6) of the Income Tax Act, 1961, were mechanical and perfunctory, lacking application of mind to the relevant factors for granting a stay. The court noted that the respondents failed to consider the guidelines in CBDT circulars, particularly the requirement for a speaking order and the examination of relevant factors. While ordinarily, such orders would be remanded, the court, having heard arguments on merits and stay, found a prima facie case for stay. Consequently, instead of remanding, the court directed the petitioner to deposit 10% of the demand within four weeks. The Commissioner (Appeals) was directed to dispose of the appeal within four months. The court did not decide the substantive issue of whether the petitioner's activities fall under section 2(15), as the primary focus was on the procedural impropriety of the stay orders.

The High Court held that the substantial question of law is concluded against the assessee in view of the Supreme Court's decision in Commissioner of Income Tax, Delhi vs. Bhagat Construction Company (P) Ltd. (2015). The Court noted that it is not in dispute that the assessee was served with Form No. I.T.N.S.150, which was signed by the Assessing Officer and contained particulars of the interest charged under Section 234B. The Supreme Court, in the cited case, held that interest under Section 234B is mandatory and automatic. Furthermore, if Form No. I.T.N.S.150, detailing the interest, is served, it is considered part of the assessment order, making the assessee liable to pay the interest. The learned advocate for the assessee was not in a position to dispute this. Therefore, the Tribunal's finding that the assessee is liable to pay interest under Section 234B was upheld. The appeal was dismissed. No issue was expressly left undecided.

The High Court held that the amount collected by the assessee from its customers towards interest tax, as permitted by RBI guidelines, did not constitute interest accruing or arising to the assessee. The Court relied on the principle that if income is diverted before it reaches the assessee, it is deductible, whereas if it is to be applied after reaching the assessee, it is not. In this case, the assessee collected the amount not as part of its income but on behalf of the Government. Therefore, the income never truly reached the assessee. Consequently, the explanation to Section 6 of the Interest Tax Act, which disallows deductions other than those specified, was held to be inapplicable because the amount in question was not 'interest accruing or arising to the assessee'. The Court also noted that treating this amount as chargeable interest would lead to further interest being payable, frustrating the RBI guidelines. The substantial question of law was answered in favour of the assessee.

The High Court held that the ITAT could not dismiss an appeal for non-prosecution without adverting to the merits of the case. Relying on Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, and the Supreme Court's decision in CIT v. S. Chenniappa Mudaliar, as interpreted by this court in Sanket Estate & Finance (P.) Ltd. v. Commissioner of Income-tax, the court found that Rule 24 mandates that the Tribunal must dispose of the appeal on merits after hearing the respondent, even if the appellant fails to appear. Therefore, the impugned order of the ITAT was unsustainable. However, acknowledging the delay in the petitioner approaching the court and the petitioner's responsibility for not informing the Tribunal of its address change, the court found the revenue's request for costs reasonable. The court quashed the ITAT's order and restored the appeal to the ITAT for fresh adjudication on merits, imposing costs of Rs. 10,000/- on the petitioner.

The High Court held that the Tribunal was justified in its order. The court analyzed the principle of diversion of income by overriding title, citing the decision in Commissioner of Income Tax v. Bank of Madura Limited. It held that if income is diverted before it reaches the assessee, it is deductible, but if it's an obligation to apply income after receipt, it is not. In this case, the amount collected by the assessee towards interest tax never truly reached the assessee as its income; it was collected on behalf of the government. Therefore, it was not an application of the assessee's income. Regarding the Explanation to section 6 of the Act, the court found it applicable to 'interest accruing or arising to the assessee.' Since the interest tax collected was not interest accruing or arising to the assessee, the Explanation did not apply. The court also noted that considering this amount as chargeable interest would lead to further interest liability, frustrating RBI guidelines. The substantial question of law was answered in favour of the assessee.

The High Court held that the Tribunal's order was not based on conjectures or surmises. It found that the Tribunal had considered all relevant material and based its conclusions on its appreciation of the record. The court noted that the assessee had failed to prove the source of the gifts, specifically that the financial capacity of the donors had not been duly established. The court distinguished the present case from Murlidhar Lahorimal v. Commissioner of Income Tax, where the donor's identity and genuineness were established, and the donor had provided evidence of the source of funds. The court found no cogent material on record to prove the financial capacity of the NRI donors or the genuineness of the gifts, and therefore, no case was made out for restoring the matter to the Tribunal. The question of law was answered in favour of the revenue. The appeal was dismissed.

The High Court held that the approach adopted by the ITAT in rejecting the assessee's application under section 254(2) was unreasonable. The Court reasoned that when the order forming the subject matter of the appeal before the ITAT had been rectified and merged with a subsequent order of the CIT(A), it ceased to have independent existence. Therefore, the ITAT was not justified in not recalling its previous ex parte order. The Court found that the mere absence of sufficient cause for non-appearance was not a ground to reject the application, given the circumstances. Furthermore, the Court noted that the revenue had already filed an appeal against the subsequent rectified order, which was pending before the ITAT, and this fact was not brought to the Tribunal's notice. Consequently, the High Court allowed the petition, quashed the impugned order of the ITAT, and recalled the ITAT's earlier ex parte order. The Court clarified that this decision would not prejudice the revenue's appeal against the rectified order.

The High Court allowed the petitions and quashed the impugned notices. The Court held that the notice under Section 147 for AY 2004-05 was issued after approximately eight years, which was beyond the prescribed limitation. The Court found that the ITAT's order in the AY 2003-04 appeal did not contain any finding that the purchase was bogus. The ITAT had merely set aside the addition and remanded the matter for fresh decision, observing that the addition in AY 2003-04 could not exceed Rs. 7,40,977, and the balance could be considered in the year of claimed consumption. The Court concluded that the ITAT had not given any direction that would have a bearing on subsequent years or justify reopening AY 2004-05. The Court relied on the Supreme Court's decision in *Income-tax Officer v. Murlidhar Bhagwan Das* (1964) 52 ITR 335 (SC) and the Kerala High Court's decision in *Consolidated Coffee Limited v. Income Tax Officer* (1985) 755 ITR 729, to hold that the proviso to Section 34(3) of the 1922 Act (analogous to Section 150 of the 1961 Act) does not confer fresh power to make assessments without time limit but only lifts the ban of limitation to give effect to orders within the scope of the appellate authority's jurisdiction. The notice was therefore quashed on the twin grounds of being issued beyond the limitation prescribed under Section 149 and not being in consequence of or to give effect to any finding or direction by the ITAT.

The High Court held that the writ petition filed by the Revenue was not maintainable. The Court relied on the Supreme Court's decision in Chem Amit v. Assistant Commissioner of Income-Tax, which established that in such circumstances, the only remedy available to challenge the ITAT's order is to file an appeal under Section 260A of the Income Tax Act, 1961. The Court also referred to the Gujarat High Court's decision in Saroj Ceramics Industries v. Income Tax Officer, which supported this view. Consequently, the writ petition was dismissed as not maintainable, with the Court clarifying that it had not adjudicated on the merits of the case. The Petitioner was granted the liberty to file an appeal under Section 260A of the Act. The rule was discharged.

The High Court held that the questions framed were concluded by previous Division Bench judgments of the same court. It was held that depreciation is optional for the assessee and cannot be imposed upon them if they do not wish to claim it. The court affirmed the finding that authorities below were correct in law in holding that depreciation which the assessee was not desirous of claiming cannot be foisted on him. The ratio is that the claim for depreciation under Section 32(1) is an allowance that an assessee can choose to avail or not, and the Assessing Officer cannot unilaterally grant it if the assessee has not claimed it, even in the context of block assets. The appeal was decided against the revenue.

The High Court partly allowed the appeal. The Court held that the income received by the assessee from the sale of DEPB cannot be treated as income from business activities and therefore, no deduction can be granted under Section 80-IB. This decision was based on the categorical holding of the Hon'ble Supreme Court in Liberty India V/s. Commissioner of Income-Tax, which stated that duty drawback, DEPB benefits, rebates, etc., cannot be credited against the cost of manufacture of goods debited in the profit and loss account for the purposes of Section 80-IA/80-IB, as such remissions constitute an independent source of income beyond the first-degree nexus with the industrial undertaking. Regarding interest on delayed payment, the Court referred to the Division Bench decisions in Nirma Industries Ltd. and Commissioner of Income-Tax V/s. Nirma Ltd., which held that interest received on delayed payment of sale consideration is derived from the business and eligible for deduction. Therefore, the Tribunal's confirmation of the CIT(A)'s order in favour of the assessee for interest on delayed payment was upheld. The orders of the CIT(A) and ITAT were modified to the extent that the assessee is not entitled to any deduction for income received from the sale of DEPB under Section 80-IB.

The High Court held that the assessee had not fully disclosed the stocks in the books of account, and therefore, the case rightly falls under the proviso of Section 69B. However, the Court found that the CIT(Appeals) and ITAT had erred in refusing to allow the set-off of the excess stock amount against the assessee's losses under Section 71. The Court reasoned that the case of CIT V. Shilpa Dyeing & Printing Mills (P.) Ltd. (supra) was applicable, as it held that excess stock would fall under the definition of income as per Section 14, entitling the assessee to a set-off under the proviso of Section 71. The Court distinguished the case of Attar Singh Gurmukh Singh (supra) as not applicable because the present case did not involve unexplained expenditure. Consequently, the appeals were allowed, setting aside the orders of the ITAT and CIT(Appeals) regarding the refusal of set-off. The penalty notice was also quashed.

The High Court, while acknowledging the remand order by the ITAT, modified the directions. The Court ordered that the Assessment Officer shall decide the case strictly in accordance with law, considering both legal and factual aspects. Crucially, the AO was directed to specifically consider whether the decision in Torrent Financiers v. CIT, reported in 73 TTJ 624 (Ahd), would be applicable to the facts of the present case. The AO was requested to decide the case expeditiously, preferably within six months. The Court explicitly stated that it had not answered the substantial question of law framed at the time of admission and had not expressed any opinion on the merits of the matter, as the case was merely remanded.

The High Court held that the impugned notice under Section 148 is inherently illegal and invalid and cannot be sustained. The Court found that during the search operation, an undisclosed suppressed sale transaction of Rs. 7,98,68,610 was detected, and a gross profit of 26.10% on this amount was assessed. However, the department, through the impugned notice, sought to levy tax on the entire sale transaction amount of Rs. 7,98,68,610, not just the gross profit. Citing the case of Commissioner of Income Tax V/s. President Industries, the Court reiterated that the entire sale transaction cannot be treated as income. Sales represent the price received, and only the realization in excess of the cost incurred constitutes profit. Since the department had already assessed the profit element and now sought to tax the entire sale value, which is not permissible, the notice was quashed. The petition was allowed, and the rule was made absolute.

The High Court held that the appeals filed by the revenue were meritless and deserved to be dismissed. The Court agreed with the observations of the Tribunal and the ratio laid down by coordinate benches of the Gujarat High Court in similar cases, as well as the Supreme Court's decision in Commissioner of Income Tax vs. Excel Industries Ltd. The Court noted that both the assessee and the parent company are assessed at the maximum marginal rate, which negates the argument that the service charges were paid at an unreasonable rate to evade income tax. The Court also referred to Circular dated 6.7.1968, which clarifies that transactions between relatives and associates under Section 40A(2) should be treated as bona fide unless there is an attempt to evade tax. Given the consistent view in favour of the assessee in previous years and the lack of material change justifying a different stance, the revenue was not permitted to "flip-flop" on the issue. Therefore, the deletion of the addition by the Tribunal was upheld.

The High Court held that the appeals filed by the revenue were meritless and deserved to be dismissed. The Court agreed with the observations of the Tribunal and the ratio laid down by coordinate benches of the same court in similar cases. The Court noted that both the assessee and the parent company were assessed at the maximum marginal rate, which indicated that the service charges were not paid at an unreasonable rate to evade income tax. The revenue did not dispute this fact. Furthermore, the Court referred to Circular dated 6.7.1968, which clarifies that transactions between relatives and associates under Section 40A(2) should be treated as bona fide unless the officer finds an attempt to evade tax. The Court also cited the Supreme Court's decision in Commissioner of Income Tax vs. Excel Industries Ltd. and Radhasoami Satsang v. CIT, emphasizing that where a fundamental aspect has been consistently decided in favour of the assessee and the revenue has not challenged it in earlier years, it would not be appropriate to allow the position to be changed in subsequent years without any material change justifying a different view. The revenue was not permitted to 'flip-flop' on the issue.

The High Court held that the appeals filed by the revenue were meritless and deserved to be dismissed. The Court agreed with the observations of the Tribunal and the ratio laid down by coordinate benches of the same court in similar cases. The Court noted that both the assessee and the parent company were assessed at the maximum marginal rate, which indicated that the service charges were not paid at an unreasonable rate to evade income tax. The revenue did not dispute this fact. Furthermore, the Court referred to Circular dated 6.7.1968, which clarifies that transactions between relatives and associates under Section 40A(2) should be treated as bona fide unless the officer finds an attempt to evade tax. The Court also cited the Supreme Court's decision in Commissioner of Income Tax vs. Excel Industries Ltd. and Radhasoami Satsang v. CIT, emphasizing that where a fundamental aspect has been consistently decided in favour of the assessee and the revenue has not challenged it in earlier years, it would not be appropriate to allow the position to be changed in subsequent years without any material change justifying a different view. The revenue was not permitted to 'flip-flop' on the issue.

The High Court held that the appeals filed by the revenue were meritless and deserved to be dismissed. The Court agreed with the observations of the Tribunal and the ratio laid down by coordinate benches of the same court in similar cases. The Court noted that both the assessee and the parent company were assessed at the maximum marginal rate, which indicated that the service charges were not paid at an unreasonable rate to evade income tax. The revenue did not dispute this fact. Furthermore, the Court referred to Circular dated 6.7.1968, which clarifies that transactions between relatives and associates under Section 40A(2) should be treated as bona fide unless the officer finds an attempt to evade tax. The Court also cited the Supreme Court's decision in Commissioner of Income Tax vs. Excel Industries Ltd. and Radhasoami Satsang v. CIT, emphasizing that where a fundamental aspect has been consistently decided in favour of the assessee and the revenue has not challenged it in earlier years, it would not be appropriate to allow the position to be changed in subsequent years without any material change justifying a different view. The revenue was not permitted to 'flip-flop' on the issue.

The High Court held that the concurrent findings of the authorities below were not perverse. The Court agreed with the CIT(Appeals) and the ITAT that the income earned by the assessee under various heads was part of its business activity and thus eligible for deduction under Section 32AB. The Court reasoned that the 'profits of business or profession' for Section 32AB are to be computed according to Parts II and III of Schedule VI to the Companies Act, with specific inclusions/exclusions provided in Section 32AB(3). The Assessing Officer has no authority to recompute the net profit shown in the profit and loss account, except to the extent provided in Section 32AB(3). Therefore, the fact that income is shown under a different head does not disqualify it from the benefit of Section 32AB, provided it is earned during the course of business activity. The appeal was dismissed.

The Court held that the petitioners' prayer for regularization is not acceptable and the petitions deserve rejection. The Court reasoned that the Corporation had already taken a one-time measure of regularizing services of those employees who were in service when the decisions in Umadevi and other related cases came. The Court found no basis for directing further regularization, as it is neither a fundamental nor a legal right, especially when appointments might have been made dehors the rules and in contravention of established guidelines. The Court distinguished the present case from those where legislation for regularization was upheld, emphasizing that the appointment process here did not involve competitive selection and the petitioners did not work on sanctioned posts as full-time daily wagers. The Court also noted that the insistence on implementing the 5th July 2010 order, which allegedly counts 1800 part-time days instead of 900 full-time days, is unwarranted and would endorse arbitrariness and back-door entry. The Court suggested that if the petitioners desire regularization benefits, they may approach the concerned authority, which may consider extending settlement benefits bearing in mind the chronology of their employment as part-time daily wagers.

The Court held that the petitioners are not entitled to regularization. It reasoned that regularization cannot be a mode of appointment after filling vacancies by daily or part-time employees in contravention of rules, and while irregular employment might permit regularization as a one-time measure in exceptional cases as per Umadevi and M.K. Kesari, it cannot be a continuous feature. The Court found no basis for the petitioners' insistence on the implementation of the 5th July 2010 order, which stipulated 900 full-time days, as opposed to their claim of 1800 part-time days. It emphasized that the appointment process in this case did not involve competitive selection, and the petitioners were not working on sanctioned posts as full-time daily wagers. The Corporation had already undertaken a one-time measure of regularization for those employed at the time of the Umadevi decision, and no further direction for regularization is permissible. The Court stated that there is no fundamental or legal right to be regularized, especially when appointments are made de hors the rules. The Court also noted that many co-workers had withdrawn their cases and agreed to work for five years as full-time daily wagers to be absorbed, a settlement aimed at industrial peace. The Court dismissed the writ petitions, discharging the rule nisi.

The Court held that the petitioners were not entitled to regularization. It reasoned that regularization cannot be a mode of appointment after filling vacancies by daily or part-time employees in contravention of rules. While acknowledging that irregular but not illegal employment might permit regularization as a one-time measure, as per Umadevi and M.K. Kesari, this cannot be a continuous feature. The Court found that the Corporation's circular of July 31, 2010, was for preparing a select list and did not grant eligibility for regularization. Furthermore, the Corporation had previously issued a resolution in 2004 for regularizing full-time daily wagers who completed 5 years and 900 days, explicitly excluding part-time daily wagers. The Court rejected the petitioners' insistence on implementing the July 5, 2010 order, which equated 1800 part-time days to 900 full-time days, as unwarranted. It stated that allowing the Corporation to continue this policy would endorse arbitrariness and backdoor entry, contrary to Apex Court decisions. The Court also noted that the appointment process did not involve competitive selection and the petitioners did not work on sanctioned posts as full-time daily wagers. Since the Corporation had already taken a one-time measure for regularization, no further direction for regularization was permissible. The Court concluded that the prayers sought were not acceptable and the petitions deserved rejection. The Court did not expressly leave any issue undecided.

The Court held that the petitioners were not entitled to regularization. It reasoned that regularization cannot be a mode of appointment after filling vacancies by daily or part-time employees in contravention of rules. While irregular employment might permit regularization as a one-time measure, as per decisions in Umadevi and M.K. Kesari, this cannot be a regular or continuous feature. The Court found no basis for the petitioners' insistence on implementing the July 5, 2010 order, which was aimed at full-time daily wagers, not part-time ones, and did not permit equating 1800 part-time days with 900 full-time days. The Court emphasized that the appointment process in this case did not involve competitive selection, and the petitioners were not working on sanctioned posts as full-time daily wagers. The Corporation had already undertaken a one-time measure of regularization for eligible employees following the Umadevi judgment. Therefore, no further direction for regularization was permissible as it is neither a fundamental nor a legal right, especially when appointments are de hors the rules. The Court noted that while the petitioners had worked for many years without grievance, they could approach the authority to consider extending settlement benefits, bearing in mind the chronology of their employment as part-time daily wagers.

The High Court held that the impugned notices under Section 148 of the Act are not invalid or wholly without jurisdiction. The Court reasoned that while the assessment for AY 2006-07 could not be reopened due to the bar under Section 149, the AO had reason to believe that income chargeable to tax had escaped assessment for the subsequent years. This belief was based on the non-fulfillment of conditions mentioned in clauses (II) & (III) of sub-section (2) of Section 10A, making the assessee ineligible for the deduction/exemption. The Court found that the original assessments for AYs 2007-08 to 2010-11 involved intimation under Section 143(1) and appeared to have been made mechanically, allowing the exemption solely based on the previous year's claim, which the revenue had now doubted. The Court declined to go into the detailed merits of eligibility at this stage, stating that such questions of fact and mixed law and fact are to be considered by the AO during reassessment proceedings, where the assessee will have ample opportunity to present their case. Therefore, the petitions to quash the notices were dismissed.

The High Court held that the reopening of the assessment for AY 2009-10 was not a mere change of opinion by the Assessing Officer (AO). The Court found that, based on the material on record, including the reasons recorded for reopening, it appeared that the original assessment proceedings did not involve a thorough inquiry or application of mind by the AO specifically concerning the issue of interest-free loans to partners and the corresponding interest disallowance. While the AO had inquired about interest paid to Jivraj Tea Limited, the issue of interest on amounts advanced to partners and the disallowance of interest at 12% per annum was not addressed. The Court noted that the reopening was within the four-year period and that the AO had reasons to believe that interest-bearing funds were used for non-business purposes by giving interest-free loans to partners, leading to an escapement of assessment. Therefore, the AO's assumption of jurisdiction to reopen the assessment was considered valid and justified. The petition was dismissed.

The High Court addressed the issues concerning the rate of interest and the overall award. Regarding the rate of interest, the Court noted that while the Tribunal awarded 15% per annum, the claimant argued for 9% per annum based on Supreme Court decisions like Kaushnuma Begum and Patricia Jean Mahajan. The Court found the submission regarding the rate of interest well-founded and accepted that claimants are entitled to interest at a reasonable rate. Considering the accident occurred in 1986, and referencing Supreme Court decisions in Patricia Jean Mahajan & Ors. and S. Kaushnuma Begum, the Court held that 9% interest per annum was considered proper for accidents during the period 1986-1996. However, the Court ultimately modified the award to grant interest at the rate of 10% per annum, finding it would meet the ends of justice, instead of the 15% awarded by the Tribunal. The Court dismissed the claimant's appeal (FA 6462/1999) seeking enhancement of compensation. The owner's appeal (FA 5182/1995) was partly allowed to the extent of modifying the interest rate. The total compensation amount of Rs. 7,30,500/- was upheld, with the Insurance Company's liability restricted to Rs. 1,50,000/-. The Court expressly left undecided the specific quantum of compensation beyond the Tribunal's award, as the claimant's appeal for enhancement was dismissed.

The High Court held that the impugned reassessment order could not be sustained. The Court noted that the AO disposed of the petitioner's objections on March 19, 2015, and then immediately passed the reassessment order on March 20, 2015, without giving the petitioner reasonable time to challenge the notice under Section 148 and the order disposing of the objections. Furthermore, the order rejecting the objections was served on the petitioner only on March 30, 2015, along with the reassessment order dated March 20, 2015. This action deprived the petitioner of its right to challenge the notice under Section 148 after the disposal of objections. Consequently, the reassessment order was quashed and set aside. The matter was remitted to the AO to pass an appropriate order in accordance with law and on merits, after giving sufficient opportunity to the petitioner and granting reasonable time to challenge the notice under Section 148 post-disposal of objections. The Court clarified that it had not expressed any opinion on the merits of the reassessment proceedings or the substantive issues.

The High Court quashed and set aside the impugned orders dated 12.10.2012, 28.3.2014, and 31.3.2014. The Court held that the Assessing Officer could not pass an order contrary to a previous order by a higher forum (the Gujarat Sales Tax Tribunal) unless there were changed circumstances in subsequent assessment years. The Court noted that the revenue had not challenged the 1986 Tribunal order and had consistently granted the exemption. The Court also found that the impugned order was beyond the scope of the show-cause notice, which had proposed taxing 'Maggi Noodles' as 'Farsan and Eatables' at 4%, whereas the impugned order taxed it under the residuary entry at 12.5%. The Court explicitly stated that it had not expressed any opinion on the merits of the 1986 Tribunal order or whether 'Maggi Noodles' is indeed exempted from Sales Tax/VAT, as the impugned orders were set aside on procedural and consistency grounds alone. The State/revenue was granted liberty to take appropriate remedial measures.

The High Court held that the reopening of the assessment for AY 2009-10 was based on a mere change of opinion by the Assessing Officer (AO), which is not permissible under Section 147 of the Income Tax Act, 1961. The Court noted that during the original assessment under Section 143(3), the AO had issued a questionnaire specifically concerning the deduction claimed under Section 80IB(10), and the assessee had provided detailed responses and necessary materials. The AO, after considering this information, had allowed the deduction. The Court relied on the decisions in CIT vs. Kelvinator of India Ltd. and Gujarat Power Corporation Ltd. vs. ACIT, which establish that if an AO scrutinizes a claim, asks queries, and then allows the claim without making additions, it signifies that the AO has formed an opinion. The absence of detailed reasons in the assessment order for allowing the claim does not mean the AO did not apply its mind. Therefore, the subsequent attempt to reopen the assessment on the same issue, without any new material, was deemed illegal and invalid. The Court quashed and set aside the impugned notices under Section 148 and the consequent reassessment proceedings.

The High Court held that the petitioner cannot challenge the notice under Section 148 of the Income Tax Act, 1961, at this stage. The Court reasoned that the petitioner participated in the reassessment proceedings initiated by the Section 148 notice without challenging it. Subsequently, the reassessment proceedings were dropped by the Assessing Officer through a one-line order, which lacked application of mind regarding the Section 10AA exemption. This dropping of proceedings led to a show-cause notice from the Commissioner under Section 263, initiating revision proceedings. The Court found the challenge to the Section 148 notice to be malafide and an afterthought, especially since the petitioner only raised this challenge after the Section 263 notice was issued. Regarding the argument of consistency for Section 10AA exemption, the Court noted that the initial allowance in AY 2007-08 was under Section 143(1) without detailed discussion, and subsequent mechanical allowances in later years did not prevent reopening of the issue, subject to Section 147 conditions. Therefore, the petition was dismissed.

The High Court dismissed the Tax Appeal for non-prosecution. The primary reason for dismissal was the failure of the appellant Revenue to serve the respondent assessee, despite ample opportunities and the respondent being unserved due to a change of address. Additionally, the Court considered Instruction No. 2/2005 issued by the CBDT, which sets monetary limits for filing appeals. The disputed penalty amount of Rs. 59,981 was significantly below the prescribed monetary limit of Rs. 4,00,000 for filing an appeal before the High Court, which had come into effect from October 31, 2005. Therefore, the appeal was not entertained and was dismissed on these grounds alone, without deciding the substantial question of law.

The High Court did not decide the substantive issue regarding the deletion of the penalty under Section 271D. Instead, the Court considered the submission made by the Assessee regarding the monetary limit for filing appeals. The Court noted that CBDT Instruction No. 2/2005, effective from 31.10.2005, set a monetary limit of Rs. 4,00,000 for filing appeals before the High Court. As the penalty amount involved in this appeal was Rs. 2,20,000, which was below the stipulated limit, the Tax Appeal was not entertained and was dismissed on this ground alone. The Court explicitly stated that the question of law was kept open.

The High Court held that no substantial questions of law arose in Tax Appeals No. 65, 67, and 69 of 2015, and these appeals deserved to be dismissed. The Court agreed with the view taken by the learned Tribunal and the CIT(A). The reasoning was that the lands were purchased by M/s. Satyanarayan Traders, where the assessee was a partner, and held for a period of 8 years. The assessee's submission that the non-recording of land in individual balance sheets was due to a mistake was not accepted, as the mistake was not explained for multiple years, especially when accounts were audited. The Tribunal's finding that the land was held as 'stock-in-trade' of M/s. Satyanarayan Traders and that the assessee had not declared these lands as investments in earlier years was upheld. The Court noted that it was only after recasting the balance sheet of M/s. Satyanarayan Traders and its partners that the assessee started selling the properties, indicating that business stock was divided into individual ownership and then sold. Therefore, the Assessing Officer's conclusion that the income derived from the sale of these plots of land was income from business was correct. The High Court found no reason to interfere with the ITAT's order treating the profit on sale of land as business income. The decisions of the Madras High Court and Bombay High Court relied upon by the assessee were held to be not applicable to the facts of the case. Consequently, all the Tax Appeals were dismissed.

The High Court, in view of the facts and circumstances, and without expressing any opinion on the merits of the additions made by the Assessing Officer, directed that the petitioner shall not be treated as an assessee in default during the pendency and final disposal of the appeals before the learned CIT(A). This direction was given considering that the petitioner had already deposited 50% of the tax demand for all three assessment years. The Court also directed the learned CIT(A) to decide and dispose of the respective appeals expeditiously, in accordance with law, and on their own merits, without being influenced by the present order. The Court noted the submissions of the petitioner that the issues were concluded in its favour by higher judicial pronouncements and relied on the decision in GSPC Gas Company Ltd. The operative direction is that the petitioner is not to be treated as an assessee in default during the pendency of appeals before the CIT(A), subject to the deposit already made.

The High Court held that no substantial questions of law arose in Tax Appeals No. 65, 67, and 69 of 2015 and dismissed them. The Court agreed with the findings of the learned Tribunal and the CIT(Appeals). Specifically, regarding the lands at Revenue Survey Nos. 287 and 485, the Tribunal noted that these lands were purchased by M/s. Satyanarayan Traders, where the assessee was a partner. The Tribunal found that the assessee failed to demonstrate that the consideration for purchase was paid by the individual assessee rather than the firm. The claim of accounting mistakes for not recording the land in individual balance sheets for years was not accepted, especially as the accounts were audited. The Tribunal's finding that the land was held as 'stock-in-trade' of M/s. Satyanarayan Traders and that sales commenced only after recasting the balance sheets, indicating a division of business stock, was upheld. Consequently, the profit from the sale of these plots was correctly treated as business income. The Court found that the decisions relied upon by the assessee from the Madras and Bombay High Courts were not applicable to the facts of the present case. All other Tax Appeals were also dismissed.

The High Court held that no substantial questions of law arose in Tax Appeals No. 65, 67, and 69 of 2015, and these appeals deserved to be dismissed. The Court agreed with the view taken by the learned Tribunal and the CIT(A). The reasoning was that the lands were purchased by M/s. Satyanarayan Traders, where the assessee was a partner, and held for a period of 8 years. The assessee's submission that the non-recording of land in individual balance sheets was due to a mistake was not accepted, as the mistake was not explained for multiple years, especially when accounts were audited. The Tribunal's finding that the land was held as 'stock-in-trade' of M/s. Satyanarayan Traders and that the assessee had not declared these lands as investments in earlier years was upheld. The Court noted that it was only after recasting the balance sheet of M/s. Satyanarayan Traders and its partners that the assessee started selling the properties, indicating that business stock was divided into individual ownership and then sold. Therefore, the Assessing Officer's conclusion that the income derived from the sale of these plots of land was income from business was correct. The High Court found no reason to interfere with the ITAT's order treating the profit on sale of land as business income. The decisions of the Madras High Court and Bombay High Court relied upon by the assessee were held to be not applicable to the facts of the case. Consequently, all the Tax Appeals were dismissed.

The High Court agreed with the findings of the ITAT and the CIT(A). It was held that the land at Survey Nos. 287 and 485 was purchased by M/s. Satyanarayan Traders, where the assessee was a partner, and held as stock-in-trade. The court found no merit in the assessee's claim that the non-inclusion of these lands in individual balance sheets was a mistake, especially since the accounts of the firm and partners were audited annually. The court noted that the sale of properties began only after recasting the balance sheets, indicating a division of business stock into individual ownership for sale. Therefore, the profit from the sale of these lands was correctly treated as business income. The court also found that the reliance on previous years' acceptance of agricultural income or capital gains was not applicable given the facts. Consequently, the appeals were dismissed as no substantial questions of law arose.

The High Court agreed with the findings of the ITAT and the CIT(A). It was held that the land at Survey Nos. 287 and 485 was purchased by M/s. Satyanarayan Traders, where the assessee was a partner, and held as stock-in-trade. The court found no merit in the assessee's claim that the non-inclusion of these lands in individual balance sheets was a mistake, especially since the accounts of the firm and partners were audited annually. The court noted that the sale of properties began only after recasting the balance sheets, indicating a division of business stock into individual ownership for sale. Therefore, the profit from the sale of these lands was correctly treated as business income. The court also found that the reliance on previous years' acceptance of agricultural income or capital gains was not applicable given the facts. Consequently, the appeals were dismissed as no substantial questions of law arose.

The High Court held that no substantial questions of law arose in the appeals. The Court agreed with the findings of the learned Tribunal and the CIT(Appeals). The Tribunal had observed that the lands in question were purchased by M/s. Satyanarayan Traders, where the assessee was a partner, and were held for a significant period. The assessee's submission that the non-recording of these lands in individual balance sheets was due to a mistake was not accepted, as the assessee could not demonstrate how such a mistake persisted for years, especially with audited accounts. The Tribunal found that the lands were held as "stock-in-trade" of M/s. Satyanarayan Traders and that the assessee had not declared them as investments. It was further noted that the sale of properties commenced only after recasting the balance sheets of the firm and its partners, indicating that business stock was divided and then sold. Therefore, the profit from the sale of these plots was rightly treated as business income. The Court found no reason to interfere with the ITAT's order and dismissed the appeals.

The High Court agreed with the findings of the ITAT and the CIT(A). It was held that the land at Survey Nos. 287 and 485 was purchased by M/s. Satyanarayan Traders, where the assessee was a partner, and held as stock-in-trade. The court found no merit in the assessee's claim that the non-inclusion of these lands in individual balance sheets was a mistake, especially since the accounts of the firm and partners were audited annually. The court noted that the sale of properties began only after recasting the balance sheets, indicating a division of business stock into individual ownership for sale. Therefore, the profit from the sale of these lands was correctly treated as business income. The court also found that the reliance on previous years' acceptance of agricultural income or capital gains was not applicable given the facts. Consequently, the appeals were dismissed as no substantial questions of law arose.

The High Court held that the reopening of the assessment for AY 2009-10 was impermissible as it constituted a mere change of opinion by the Assessing Officer. The Court noted that during the original assessment proceedings under Section 143(3), the AO had issued a detailed show-cause notice dated December 23, 2011, specifically questioning the eligibility for the deduction under Section 80IB(10) on grounds related to the completion of units, building use permission, and the plot size. The assessee had provided a detailed reply to this show-cause notice, explaining the delay due to a High Court stay and offering other clarifications. After considering these submissions, the AO had allowed the deduction. Therefore, reopening the assessment on the very same grounds after having applied his mind and allowed the deduction amounted to a change of opinion, which is not a valid basis for reopening under Section 147. The Court relied on the catena of decisions from the Supreme Court and the High Court, including *Calcutta Discount Company Limited*, which state that reopening based solely on a change of opinion is not permissible. Consequently, the petition was allowed, and the impugned notice under Section 148 was quashed and set aside.

The High Court held that no substantial question of law arises in the present Tax Appeal. The Tribunal had deleted the addition made by the AO, allowing the deduction in relation to the amount written off as bad debts or irrecoverable. It was not disputed that the assessee had written off the said debt in its balance sheet. The Court relied on the Supreme Court's decision in T.R.F. Ltd. v. Commissioner of Income-Tax, which held that for claiming deduction in relation to bad debts, the assessee is only required to establish that the debt has been written off and it is necessary to establish that the debt has in fact become irrecoverable. In view of this decision, the Court found no error in the Tribunal's deletion of the addition made by the AO. The appeal was dismissed.

The High Court, while noting that the respondent-company was in liquidation and no one appeared for it, decided to consider the main issue on merits. The Court held that the ITAT had not committed any error in directing the AO not to include current profit in accumulated profit for determining deemed dividend under Section 2(22)(e). The Court reasoned that as per Explanation 2 to Section 2(22)(e), current profit was not required to be included in accumulated profit. The Court further cited the Supreme Court decision in Associated Banking Corporation of Ind. Ltd. V/s. Commissioner of Income-Tax, Bombay, which held that profit accrues when books of account are closed. Therefore, the High Court confirmed the ITAT's view, decided the first question in favour of the assessee, and dismissed the appeal. The Court did not explicitly address the procedural issues raised in questions (B) and (C) due to its decision on the merits.

The High Court of Gujarat dismissed the tax appeal filed by the Revenue. The Court referred to its own prior decision in the case of Commissioner of Income Tax V/s. M/s.Comed Chemicals Pvt. Ltd. (supra). In that precedent, the Division Bench had held that excise duty should be excluded from the valuation of closing stock of finished goods. Since the Revenue's counsel could not dispute this binding precedent and no contrary decision was presented, the High Court found the question raised in the present appeal to be against the Revenue and in favor of the assessee. Consequently, the appeal was dismissed. No costs were awarded.