Loading High Court cases…
539 orders · Page 3 of 11
The High Court held that the issue was no longer res integra in light of the Supreme Court's judgment in Civil Appeal No. 5783 of 2022 dated 23.8.2022. The Supreme Court had concluded that the 2016 Amendment Act prescribed substantive provisions and that its in rem forfeiture provisions, being punitive, could only be applied prospectively. Consequently, authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to 25.10.2016, and all such proceedings shall stand quashed. Applying this ratio, the High Court quashed the impugned attachment order and all consequential proceedings. The court also noted that questions left open by the Supreme Court in paragraph 18.1(f) of its judgment would apply to the present facts.
The High Court held that the issue was no longer res integra in light of the Supreme Court's judgment in Civil Appeal No. 5783 of 2022 dated 23.08.2022. The Supreme Court had concluded that the 2016 Amendment Act prescribed substantive provisions and that its in rem forfeiture provisions, being punitive, could only be applied prospectively. Consequently, authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to 25.10.2016, and all such proceedings shall stand quashed. Applying this to the present case, the High Court held that the impugned attachment order and all consequential proceedings initiated pursuant thereto were squarely covered by the Supreme Court's declaration and were therefore quashed. The Court also noted that questions left open by the Supreme Court in paragraph 18.1(f) of its judgment would also be applicable to the facts of this case.
The High Court held that the issue was no longer res integra in light of the Supreme Court's judgment in Civil Appeal No. 5783 of 2022 dated 23.8.2022. The Supreme Court had concluded that the 2016 Amendment Act prescribed substantive provisions and that its in rem forfeiture provisions, being punitive, could only be applied prospectively. Consequently, authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to 25.10.2016, and all such proceedings shall stand quashed. Applying this ratio, the High Court quashed the impugned attachment order and all consequential proceedings. The court also noted that questions left open by the Supreme Court in paragraph 18.1(f) of its judgment would apply to the present facts.
The High Court held that the issue was no longer res integra in light of the Supreme Court's judgment in Civil Appeal No. 5783 of 2022 dated 23.8.2022. The Supreme Court had concluded that the 2016 Amendment Act prescribed substantive provisions and that its in rem forfeiture provisions, being punitive, could only be applied prospectively. Consequently, authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to 25.10.2016, and all such proceedings shall stand quashed. Applying this ratio, the High Court quashed the impugned attachment order and all consequential proceedings. The court also noted that questions left open by the Supreme Court in paragraph 18.1(f) of its judgment would apply to the present facts.
The Gujarat High Court held that the reopening of the assessment for AY 2014-15 was beyond the period of four years from the end of the assessment year and that the assessee had discharged its onus by furnishing details regarding the source of funds and mode of receipt of amounts transferred to the firm by its partners. The Court noted that the original assessment under Section 143(3) had already considered the explanations and materials produced by the petitioner regarding credits in the capital account of the partners. Therefore, the Assessing Officer's belief that income had escaped assessment based on the partner's failure to explain transactions amounted to a change of opinion, which is not a valid ground for reopening an assessment, especially when the issue was already considered. The Court relied on the Apex Court's decision in Commissioner of Income tax v. Kelvinator of India Ltd. to emphasize that the Assessing Officer has no power to review and that reopening must be based on fulfilling pre-conditions, with 'change of opinion' acting as an in-built test against abuse of power. Consequently, the impugned notice and the order rejecting objections were quashed and set aside.
The High Court held that the impugned notice dated March 31, 2021, issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for AY 2013-2014, is illegal and quashed. The Court reasoned that for reopening an assessment beyond four years, two conditions must be satisfied: (1) the Assessing Officer must have reason to believe that income has escaped assessment, and (2) such escapement must be occasioned by the assessee's failure to furnish a return or to disclose fully and truly all material facts. In this case, the entire material was available to the Assessing Officer during the original assessment, and the assessee had not failed to disclose material facts. The reopening appeared to be based on a change of opinion, relying on an investigation report without new tangible material. The Court cited Commissioner of Income Tax v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) to emphasize that a mere change of opinion cannot be a ground for reopening, especially beyond four years, as it would grant arbitrary powers. The Assessing Officer's attempt to re-verify facts already considered during the original assessment was not permissible. Consequently, the order dated December 20, 2021, disposing of the petitioner's objections was also set aside.
The High Court held that the impugned notice dated March 31, 2021, issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for AY 2015-2016, is illegal and liable to be set aside. The Court found that the Assessing Officer had all the material on record during the original assessment proceedings under Section 143(3) and had consciously considered the issue of Section 54B exemption. The reasons provided for reopening were based on the same material that was already examined, indicating a mere change of opinion rather than the discovery of new tangible material suggesting escapement of income. The Court relied on the Supreme Court's decision in Commissioner of Income Tax v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC), which states that a "mere change of opinion" cannot be a reason to reopen an assessment. The Court noted that the land was agricultural land at the time of sale on October 4, 2014, and was converted to non-agricultural land much later, on November 3, 2016. Therefore, the AO could not have had a reason to believe that income had escaped assessment based on the existing material. The petition was allowed, and the impugned notice was set aside.
The High Court held that no substantial question of law arises from the impugned order of the ITAT. The Tribunal had arrived at a finding of fact that the assessee, on realizing the mistake of accounting for provision for interest expenses of Rs. 11.90 crores twice, rectified it by offering the same as prior period income in the subsequent year. The Court inferred that there was no mens rea on the part of the assessee to attract penalty under Section 271(1)(c). The Tribunal's reliance on the Supreme Court decisions in CIT v. Reliance Petro-Products Pvt. Ltd. and Price Watercoopers Pvt. Ltd. v. CIT, which held that a claim not acceptable to the revenue does not automatically attract penalty, particularly when the mistake is rectified, was upheld. The Court found no reason to interfere with the ITAT's order.
The High Court held that the impugned notice dated March 29, 2019, issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for Assessment Year 2013-2014 is illegal and liable to be set aside. The Court reasoned that the Assessing Officer had ignored the crucial fact that the advance of Rs. 50,00,000/- received by the assessee was repaid within 24 hours. There was no material on record to suggest that this amount was utilized for any other purpose. The Court emphasized that when advances are refunded on the next day, nothing remains outstanding in the petitioner's books, particularly at the end of the financial year. Furthermore, the Assessing Officer had already scrutinized all details, including advances, during the regular assessment under Section 143(3). The reopening was based solely on a report received from the DDIT (Investigation) in 2019, which did not constitute new tangible material to form a 'reason to believe' that income had escaped assessment. The Court found that the Assessing Officer had proceeded on a misapplication of facts and that the notice was a mere 'change of opinion', which cannot be a basis for reopening an assessment, citing the Supreme Court's decision in Commissioner of Income Tax v. Kelvinator of India Ltd. The Court concluded that the Assessing Officer cannot assume jurisdiction to reopen the assessment based on a review of facts already considered. The petition was allowed, and the impugned notice was set aside.
The High Court held that the Assessing Officer lacked valid reasons to believe that income had escaped assessment, rendering the reopening notice illegal. The court found that the Assessing Officer's belief was based on information received from the Investigation Wing, which alleged that M/s. Indigo Commodeal Pvt. Ltd. was a shell company. However, the petitioner provided documentary evidence, including ROC filings and an assessment order for AY 2013-2014, indicating that Indigo Commodeal Pvt. Ltd. was an active company engaged in business. The court noted that the Assessing Officer had not established a tangible link between the information and the escapement of income, particularly as the Rs. 40 lakh transaction was squared up within the year. The court relied on the Supreme Court's decision in Commissioner of Income Tax v. Kelvinator of India Ltd., emphasizing that reopening cannot be based on a mere change of opinion without prima facie material. Consequently, the impugned notice under Section 148 and the order disposing of objections were quashed and set aside. The court found no income had escaped assessment except for the single Rs. 40 lakh entry, which alone was insufficient to form a reasonable belief of escapement.
The High Court held that the impugned notice dated March 22, 2019, issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for AY 2014-2015, is illegal and liable to be set aside. The Court reasoned that to reopen an assessment beyond four years from the end of the relevant assessment year, two conditions must be satisfied: (i) the AO must have reason to believe that income chargeable to tax has escaped assessment, and (ii) such escapement must be occasioned by the assessee's failure to furnish a return or to disclose fully and truly all material facts. In this case, the entire material was available to the AO during the original assessment, and the assessee had disclosed all material facts. Therefore, there was no failure on the part of the assessee. The Court found that the reopening was based on an investigation report and appeared to be a change of opinion by the AO, as the issue of the loan was considered during the original assessment. Citing the Supreme Court's decision in CIT v. Kelvinator of India Ltd., the Court emphasized that a mere change of opinion cannot be a valid reason to reopen an assessment, especially when done beyond four years. The AO's attempt to re-verify facts already considered was deemed impermissible. Consequently, the notice was set aside, and the petition was allowed.
The High Court held that the impugned notices issued under Section 148 of the Income Tax Act, 1961, are quashed and set aside. The Court reasoned that the scheme of amalgamation between M/s. Intas Lifesciences Private Limited and Intas Pharmaceuticals Limited (the petitioner) was sanctioned by this Court on September 28, 2015, with an appointed date of April 1, 2014. This amalgamation occurred well before the issuance of the impugned notices. The Court noted that the respondent department was duly informed about this amalgamation on October 30, 2015. The Court relied on the Supreme Court's decision in PCIT vs. Maruti Suzuki India Ltd., which held that a jurisdictional notice issued in the name of a company that has ceased to exist due to an approved scheme of amalgamation is fundamentally illegal and without jurisdiction. Similarly, the Court referred to its own decision in Gayatri Microns Ltd., stating that upon amalgamation, the transferor company ceases to exist and is no longer amenable to assessment proceedings. Therefore, the notices issued to Intas Lifesciences, which had amalgamated and ceased to exist, were invalid.
The High Court held that the Assessing Officer had sufficient information to initiate the reopening of assessment. The court referred to Explanation (1) of Section 148, which defines information suggesting escaped assessment as information flagged in accordance with the Board's risk management strategy. The court found that the Assessing Officer possessed information from an investigation report concerning Shiv Shakti Trading Company, which detailed accommodation entries and fund flows to entities like Talland Data Soft Private Limited, from whom the assessee had received funds. The court concluded that this information was relevant for the assessment year and aligned with the risk management strategy. Therefore, the Assessing Officer was justified in rejecting the assessee's objections and issuing the notice under Section 148. The court found no merit in the petition and dismissed it.
The High Court held that the impugned notices issued under Section 148 of the Income Tax Act, 1961, were liable to be quashed and set aside. The Court noted that the scheme of amalgamation between M/s. Intas Lifesciences Private Limited and Intas Pharmaceuticals Limited (the petitioner) was sanctioned by this Court on September 28, 2015, with an appointed date of April 1, 2014. This amalgamation occurred well before the issuance of the impugned notices. The petitioner had also informed the respondent department about the amalgamation on October 30, 2015. The Court found that despite being duly informed, the notices were issued in the name of Intas Lifesciences, which had amalgamated with the petitioner and ceased to exist as a separate entity, rendering it not amenable to reassessment proceedings under Section 147. The Court relied on the Apex Court's decision in Maruti Suzuki India Ltd. and its own decision in Gayatri Microns Ltd., which established that a jurisdictional notice issued in the name of a company that has ceased to exist due to an approved scheme of amalgamation is fundamentally illegal and without jurisdiction. Therefore, the impugned notices were quashed and set aside.
The High Court held that the present petition was misconceived and not liable to be entertained as it was a repetition of a challenge to an order that had already been set aside. The court observed that the order dated 11.4.2022 passed in Special Civil Application No. 16529 of 2021, which quashed the impugned order of transfer and all consequential proceedings, would also apply to succeeding assessment orders passed in the case of the petitioner, irrespective of the assessment year. Therefore, the submission of the petitioner that the present case concerned a different assessment year was considered misdirected. The petition was disposed of with these observations.
The High Court held that the impugned notices issued under Section 148 of the Income Tax Act, 1961, were liable to be quashed and set aside. The Court noted that the scheme of amalgamation between M/s. Intas Lifesciences Private Limited and Intas Pharmaceuticals Limited (the petitioner) was sanctioned by this Court on September 28, 2015, with an appointed date of April 1, 2014. This amalgamation occurred well before the issuance of the impugned notices. The petitioner had also informed the respondent department about the amalgamation on October 30, 2015. The Court found that despite being duly informed, the notices were issued in the name of Intas Lifesciences, which had amalgamated with the petitioner and ceased to exist as a separate entity, rendering it not amenable to reassessment proceedings under Section 147. The Court relied on the Apex Court's decision in Maruti Suzuki India Ltd. and its own decision in Gayatri Microns Ltd., which established that a jurisdictional notice issued in the name of a company that has ceased to exist due to an approved scheme of amalgamation is fundamentally illegal and without jurisdiction. Therefore, the impugned notices were quashed and set aside.
The High Court condoned the delay of 1018 days in filing the Tax Appeal. The Court found that the applicant Revenue had pursued a remedy bona fide, and the delay occurred due to reasons beyond its control, including the Covid-19 pandemic. The Court also took into consideration the Supreme Court's order directing the exclusion of the period from 15.3.2020 to 28.2.2022 in computing the limitation period. For these reasons, the Court held that sufficient cause was made out. The application for condonation of delay was allowed, and the rule was made absolute. The substantive appeal, which was the subject of this application, would now proceed on merits. No issue was expressly left undecided.
The High Court held that the impugned notices issued under Section 148 of the Income Tax Act, 1961, are quashed and set aside. The Court reasoned that the scheme of amalgamation between M/s. Intas Lifesciences Private Limited and Intas Pharmaceuticals Limited (the petitioner) was sanctioned by this Court on September 28, 2015, with an appointed date of April 1, 2014. This amalgamation occurred well before the issuance of the impugned notices. The Court noted that the respondent department was duly informed about this amalgamation on October 30, 2015. The Court relied on the Supreme Court's decision in PCIT vs. Maruti Suzuki India Ltd., which held that a jurisdictional notice issued in the name of a company that has ceased to exist due to an approved scheme of amalgamation is fundamentally illegal and without jurisdiction. Similarly, the Court referred to its own decision in Gayatri Microns Ltd., stating that upon amalgamation, the transferor company ceases to exist and is no longer amenable to assessment proceedings. Therefore, the notices issued to Intas Lifesciences, which had amalgamated and ceased to exist, were invalid.
The High Court held that the Assessing Officer's order disposing of the petitioner's objections was passed without providing any reasons for rejecting them. While the Assessing Officer mentioned relying on judicial precedents like *ITO Vs. Purushottam Das Bengur* and *Raymond Woollen Mills Ltd. vs. ITO* and stated that the assessee's contention was not acceptable, it failed to give specific reasons for discarding the objections raised by the petitioner. The Court found it in the interest of justice to remand the matter back to the Assessing Officer. The impugned order dated January 25, 2022, was quashed and set aside. The Assessing Officer was directed to pass a detailed order giving reasons for disposing of the objections, considering the assessee's contentions in detail, within 12 weeks. The Court did not enter into the merits of the reopening itself.
The High Court held that the orders passed by the Assessing Officer disposing of the petitioner's objections were not detailed enough and did not provide specific reasons for rejecting the objections. The Court noted that the Assessing Officer had merely stated that his belief of escapement of income was sufficient for issuing the notice under Section 148 and that the assessee was at liberty to prove the genuineness of transactions during the assessment. The Court found this approach unsatisfactory. Consequently, the Court quashed and set aside the impugned orders dated 22.12.2021 and 25.01.2022. The matter was remanded back to the Assessing Officer to pass a detailed order giving specific reasons for disposing of the objections filed by the assessee, after considering the objections and contentions raised by the assessee in detail. This exercise was to be completed within 12 weeks. The Court explicitly stated that it was not entering into the merits of the matter.
The High Court disposed of the Special Civil Application by directing the competent authority of the respondent Income Tax authority to consider the objections dated December 1, 2021, filed by the petitioner against the notice under section 148 of the Income Tax Act, 1961. This consideration is to be done within a period of eight weeks from the date of receipt of the court's order, on its own merits and in accordance with law. The Court explicitly clarified that it had not gone into the merits of the case of either side and had not expressed any opinion on the merits. Consequently, all contentions of the parties were kept open to be raised before the assessing authority.
The High Court held that the notice dated 26.03.2021 issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for AY 2014-2015 was not tenable in law. The Court found that the reopening was based on a mere change of opinion by the Assessing Officer, as the issue of share premium had already been considered during the original assessment proceedings under Section 143(3). The Court emphasized that for reopening an assessment, especially beyond four years, there must be fresh tangible material to indicate escapement of income, and a change of opinion alone does not confer jurisdiction. The Court relied on the Supreme Court's decision in Commissioner of Income Tax v. Kelvinator of India Ltd. to support its reasoning that a "change of opinion" cannot be the sole basis for reopening an assessment and that there must be tangible material. Consequently, the impugned notice of reopening, the order disposing of objections, the assessment order, and the notice of demand were quashed and set aside.
The High Court disposed of the petition by directing the competent authority of the respondent Income Tax authority to consider the objections dated 10.1.2022, filed by the petitioner against the reopening notice under Section 148 of the Income Tax Act, 1961. The authority is required to dispose of these objections on their own merits and in accordance with law within a period of eight weeks from the date of receipt of the court's order. The court explicitly clarified that it had not gone into the merits of the case of either side and that all contentions are kept open for the parties to raise before the authority. Therefore, no specific finding on the validity of the reopening was made, and the matter was remanded to the Assessing Officer for consideration of the objections.
The High Court held that the impugned notice dated March 21, 2021, issued under Section 148 of the Income Tax Act, 1961, was not tenable in law and was accordingly quashed and set aside. The Court reasoned that the Assessing Officer had a change of opinion, as the issue of Mark to Market (MTM) loss not being shown separately under speculative loss had already been considered during the assessment proceedings under Section 143(3). The Court relied on the Supreme Court's decision in Commissioner of Income Tax v. Kelvinator of India Ltd., which emphasizes that reopening of assessment cannot be based on a mere change of opinion and requires tangible material to conclude that income has escaped assessment. The Court found that the Assessing Officer did not possess any tangible material to justify the reopening, especially when the original assessment had already dealt with the derivative losses without making any additions. Therefore, the Assessing Officer lacked jurisdiction to issue the notice under Section 148.
The High Court held that the Assessing Officer's addition of Rs. 15,38,784 was made solely on information from the Maharashtra Sales Tax Department without independent inquiry into the genuineness of the purchases or whether the assessee benefited from bogus billing. Both the CIT(A) and the Tribunal, based on documentary evidence provided by the assessee, concurrently found that while the possibility of the dealer engaging in bogus billing was not ruled out, there was no dependable material for the AO to conclude that the assessee's purchases were entirely bogus. Therefore, the appellate authorities rightly restricted the addition by estimating 5% of the alleged bogus purchases. The High Court distinguished the case of M/s N. K. Industries Ltd. by noting that in that case, material was available during a search that exposed the falsity of entries, leading to a High Court direction to add the entire purchase amount. In the present case, such definitive material was absent. Consequently, the High Court found no error in the impugned order giving rise to a substantial question of law and dismissed the appeal.
The High Court held that the notice for reopening the assessment under Section 148 of the Income Tax Act, 1961, was not tenable in law. The Court found that the Assessing Officer had already considered the issue of share premium during the original assessment proceedings under Section 143(3) and had not made any addition under Section 56(2)(viib). Therefore, the reopening was based on a mere change of opinion, without any fresh tangible material to indicate escapement of income. The Court relied on the Supreme Court's decision in Commissioner of Income tax v. Kelvinator of India Ltd., which emphasizes that reopening of assessment beyond four years requires tangible material and cannot be based on a change of opinion. Consequently, the impugned notice under Section 148 and the order disposing of objections were quashed and set aside. The rule was made absolute.
The High Court held that assessment proceedings cannot be maintained against a dead person. The issuance of a notice under Section 148 to a deceased assessee, without the legal representative submitting to the jurisdiction or participating in the proceedings, renders the notice invalid and the subsequent assessment proceedings without authority of law. The Court relied on the principle that such proceedings are a nullity, akin to passing a decree against a dead person. Section 292B, which validates notices in certain circumstances, was held not to apply when the notice is issued to a dead person and the legal representative objects to its validity. The Court found that the legal heir had intimated the death of the assessee and had not participated in the proceedings, thus the assessment order was illegal and unsustainable. The assessment order dated 23.3.2022 was set aside, and the authorities were directed not to proceed against the dead assessee. No issue was expressly left undecided.
The High Court held that assessment proceedings against a dead person are a nullity and without authority of law. The court relied on its previous decision in Himadri Kandarp Mehta L/H of Late Kandarp Yashshvibhai Mehta vs. The Income Tax Officer and Urmilaben Anirudhhasinji Jadeja vs. Income Tax Officer, Ward 7(1)(3). It was reiterated that unless the legal representatives submit to the jurisdiction and participate in the proceedings, a notice issued to a deceased assessee is invalid. Section 292B of the Act, which deals with the validity of notices in certain circumstances, does not apply when the notice is issued to a dead person and the legal representative has not waived the requirement of notice or submitted to jurisdiction. In this case, Surajiben Bachuji Thakor died on 20.08.2016, but the notice under Section 148 was issued on 31.03.2021, and the assessment order was passed on 23.03.2022, after the legal heir had intimated the death. Therefore, the assessment order was held to be illegal and set aside. The Income Tax authorities were directed not to proceed against the dead assessee.
The High Court dismissed the appeal filed by the Revenue. Regarding the disallowance under Section 14A, the Court referred to its order in Tax Appeal No. 349 of 2022 concerning the same issue. While the specific reasoning for the Section 14A deletion is not detailed in this judgment, it is implied that the Tribunal's finding on this issue was upheld. Concerning the depreciation on the Managing Director's residence, the Court noted the Tribunal's finding of fact that the building was used for official-cum-residential purposes with all office facilities. Based on this factual finding, the Tribunal had allowed depreciation at 10%. The High Court found no infirmity in the Tribunal's order on this aspect, considering it a finding of fact. Consequently, no substantial question of law arose for consideration. The operative direction was to dismiss the appeal.
The High Court held that the contentions of the petitioner (assessee) could not be accepted and were rejected. The point formulated regarding the justification for issuing notices under Section 148 was answered in the negative, i.e., in favour of the respondent (revenue) and against the assessee. The Court reasoned that the expression "reason to believe" under Section 147 does not require the AO to have finally ascertained facts with legal evidence; it only requires cause or justification for reopening. The Court found that the notices and reasons assigned clearly indicated that material from the 'insight portal' had come to the AO's knowledge, forming the basis for issuing the Section 148 notices. The Court emphasized that at the stage of issuing reopening notices, the AO is not required to finally ascertain facts or arrive at a conclusion based on evidence, as held in *Assistant Commissioner of Income Tax Vs Rajesh Jhaveri Stock Brokers P. Ltd.*. The Court also noted that in its powers under Article 227 of the Constitution, it cannot take over the decision-making powers of the statutory authority. The Court deprecated the practice of filing numerous repetitive judgments on the same issue, stating that one judgment covering the issue would suffice. The Special Civil Applications were dismissed, and the impugned orders were affirmed.
The High Court held that the notice dated March 27, 2021, issued under Section 148 of the Income Tax Act, 1961, to the petitioner company was unsustainable. The Court agreed with the opinion of the Coordinate Bench and found that the petitioner company had ceased to exist from April 1, 2015, due to amalgamation. This fact was within the knowledge of the jurisdictional Income Tax Officer, as evidenced by the communications dated November 23, 2015, and January 27, 2016. Therefore, issuing a notice to a non-existent entity renders the notice invalid. Consequently, the notice dated March 27, 2021, the show cause notice dated March 21, 2022, and the consequential order dated March 31, 2022, were quashed.
The High Court held that the contentions of the petitioner (assessee) could not be accepted and were rejected. The court answered the formulated issue in the negative, in favour of the revenue. The reasoning was based on the established principle that the expression 'reason to believe' under Section 147 does not require the AO to have finally ascertained facts with legal evidence. It only requires a cause or justification to believe that income has escaped assessment. The court found that the notices for reopening and the reasons assigned clearly indicated that material from the 'insight portal' had come to the AO's knowledge, providing the basis for issuing the Section 148 notices. The court emphasized that at the stage of issuing reopening notices, the AO is not required to finally ascertain facts or arrive at a conclusion based on evidence, as per the Supreme Court's ruling in *Assistant Commissioner of Income Tax Vs Rajesh Jhaveri Stock Brokers P. Ltd.*. Furthermore, the court reiterated that in proceedings under Article 227 of the Constitution, it cannot take over the decision-making powers of the statutory authority. The court also deprecated the practice of filing numerous repetitive judgments on the same issue, noting that one judgment covering the issue would suffice. The impugned orders rejecting the objections were affirmed.
The High Court held that the impugned assessment order and demand notice were passed in violation of the principles of natural justice. The Court found that the respondent had failed to follow the prescribed procedure laid down in Section 144B of the Act for faceless assessment. Specifically, it was not disputed that no draft assessment order along with a show cause notice, as required under Section 144B(1) and Section 144B(7), was provided to the petitioner. This failure denied the petitioner an opportunity to explain the proposed additions during a hearing before the National Faceless Assessment Centre. The Court reasoned that Section 144B(1)(xii) and Section 144B(7) entitle the assessee to furnish a response to a show cause notice and to request a personal hearing in case of variations prejudicial to them. Consequently, the petition was allowed, and the impugned order and demand notice were quashed and set aside. The Revenue was granted liberty to proceed with the assessment as permissible under law, ensuring a show cause notice-cum-draft assessment order and an opportunity of hearing to the petitioner as per Section 144B. The Court explicitly stated that the merits of the case were not examined.
The High Court held that the Tribunal, in exercising its discretion to determine the pre-deposit amount under Section 73 of the Gujarat Value Added Tax Act, 2003, did not adequately consider the assessee's prima facie case. The Court found merit in the assessee's contention that input tax credit should not be automatically denied solely because selling dealers' registrations were cancelled ab-initio, especially if the purchases predated the cancellation. The Court acknowledged that the prima facie case regarding the validity of input tax credit in such circumstances warranted consideration. Consequently, the appeals were disposed of by directing the assessee to deposit Rs. 3,00,000/- in Tax Appeal No. 1184/2018 and Rs. 5,00,000/- in Tax Appeal No. 1185/2018 within six weeks. The matters were remanded to the Appellate Commissioner to decide the appeals on merits after the deposit, without the High Court delving into the merits of the issues raised by the assessee. The Appellate Commissioner was directed to decide the appeals within eight weeks from the date of deposit.
The High Court held that the Tribunal, in exercising its discretion to determine the pre-deposit amount under Section 73 of the Gujarat Value Added Tax Act, 2003, did not adequately consider the assessee's prima facie case. The Court found merit in the assessee's contention that input tax credit should not be automatically denied solely because selling dealers' registrations were cancelled ab-initio, especially if the purchases predated the cancellation. The Court acknowledged that the prima facie case regarding the validity of input tax credit in such circumstances warranted consideration. Consequently, the appeals were disposed of by directing the assessee to deposit Rs. 3,00,000/- in Tax Appeal No. 1184/2018 and Rs. 5,00,000/- in Tax Appeal No. 1185/2018 within six weeks. The matters were remanded to the Appellate Commissioner to decide the appeals on merits after the deposit, without the High Court delving into the merits of the issues raised by the assessee. The Appellate Commissioner was directed to decide the appeals within eight weeks from the date of deposit.
The High Court allowed the petition to the extent of remitting the case back to the competent authority. The court found that the impugned order transferring the assessment proceedings was passed in breach of the principles of natural justice, as the petitioner was deprived of an adequate opportunity of being heard. The court noted that the aspect of the registered email address not being used for the notice could not be disputed. The communication from the department itself indicated that the petitioner did not furnish a reply by the stipulated date, leading to the order. The court emphasized that Section 127 expressly provides for affording an opportunity of hearing. The conclusion by the authorities that the assessee had no objection was deemed arbitrary and a violation of natural justice. Consequently, the impugned order dated 23.2.2021 passed under Section 127(2) was set aside. The competent authority was directed to decide the issue afresh after giving an opportunity of being heard to the petitioner and considering his objections within four weeks. The court explicitly stated that it had not expressed any opinion on the merits of the case.
The Tribunal was justified in deleting the addition made under Section 14A of the Income Tax Act, 1961. The Tribunal relied on the Supreme Court's decision in Maxopp Investment Limited vs. Commissioner of Income Tax, which held that Rule 8D is prospective and not applicable to assessment years prior to its insertion. Furthermore, the Tribunal followed the Gujarat High Court's decisions in Commissioner of Income Tax-4 vs. Sintex Industries Ltd. and Principal Commissioner of Income Tax vs. India Gelatine & Chemicals Ltd. These decisions held that where an assessee has sufficient interest-free funds and makes minor investments from surplus funds, no disallowance of interest or administrative expenses under Section 14A is justified. The Tribunal found that the assessee had surplus funds and no borrowed funds were used for investments yielding exempt income, thus no disallowance was warranted. The addition made by the Assessing Officer was deleted.
The High Court held that in the facts of the case, where the objections submitted by the petitioner in response to the Section 148 notice for Assessment Year 2014-2015 had not been considered and disposed of by the respondent, it would subserve the interests of justice to direct the competent authority to consider and dispose of these objections. The court clarified that it had not expressed any opinion on the merits of the case. Accordingly, the petition was disposed of with a direction to the respondent to consider and dispose of the petitioner's objections dated January 20, 2022, within six weeks from the receipt of the order. No specific finding was given on the validity of the reopening notice itself, as the matter was remitted for consideration of objections.
The High Court held that income tax authorities cannot subject a dead person to assessment proceedings. The notice issued under Section 148 of the Income Tax Act, 1961, to a deceased assessee is a nullity and without jurisdiction. The Court relied on its own decision in Urmilaben Anirudhhasinji Jadeja, which held that proceedings against a dead assessee are void unless the legal representatives participate and submit to the jurisdiction. The Court clarified that mere intimation of death by the legal representative does not amount to participation. Section 292B of the Act, which validates certain procedural defects, was held to be inapplicable in cases where a notice is issued to a dead person, as it constitutes a jurisdictional defect. Since the petitioner merely informed the authorities of the death and did not participate in the proceedings, the notice was deemed invalid, and the Assessing Officer lacked the authority to assume jurisdiction under Section 147. Therefore, the impugned notice and subsequent proceedings were set aside.
The High Court dismissed the appeal filed by the Revenue. Regarding the deletion of the addition under Section 14A, the Court referred to its order of even date in a related Tax Appeal (No. 349 of 2022) concerning the same issue. For the disallowance of depreciation, the Court noted the ITAT's finding of fact that the Managing Director's residence was used for official-cum-residential purposes, including office facilities. Based on this factual finding by the Tribunal, the Court found no infirmity in the impugned order. Consequently, the Court held that no substantial question of law arose from the ITAT's order, and thus the appeal was dismissed.
The High Court held that assessment proceedings initiated against a dead person are a nullity and without jurisdiction. The notice under Section 148 of the Income Tax Act, 1961, issued to the deceased Goradhandas Madhavji Somaiya, approximately nineteen months after his death, was deemed illegal. The Court relied on its previous decisions in Himadri Kandarp Mehta and Urmilaben Anirudhhasinji Jadeja, which established that proceedings against a dead assessee are void unless the legal representatives have submitted to the jurisdiction and participated in the assessment proceedings. In this case, the legal representative merely intimated the death and did not participate, thus not waiving the requirement of a valid notice. Section 292B of the Act, which deals with the validity of notices in case of certain defects or omissions, was held not applicable as the notice was issued to a non-existent entity. Consequently, the impugned notice was set aside, and the Income Tax authorities were directed not to proceed against the dead assessee.
The High Court held that no substantial question of law arises from the ITAT's order. Regarding the disallowance of expenditure on capital stores and spares, the Tribunal found that for a power generating company, these bucket spares are consumables, notwithstanding their high cost. Their replacement does not increase the power generation capacity, plant efficiency, or life of the plant. The Tribunal relied on Supreme Court decisions in CIT vs. Sarvana Spinning Mills Pvt. Ltd. and Commissioner of Income Tax vs. Sri Mangayar karasi Mills (P) Ltd., holding that replacing parts of a machine does not amount to replacing the entire unit and is essentially repair and maintenance of a recurring nature required for smooth business operations. Therefore, the expenditure was rightly treated as revenue expenditure. Concerning the Section 80IA claim, the Tribunal followed this Court's decision in CIT vs. Gujarat Oil and allied Industries, holding that filing the audit report before assessment completion is sufficient compliance. The Tribunal also considered CBDT Circular No. 1/2016 and the Supreme Court's decision in Assistant Commissioner of Income-tax vs. Velayuthasamy Spinning Mills (P) Ltd. regarding the 'initial assessment year' for claiming deduction under Section 80IA, concluding that the assessee's claim was valid. Thus, the appeal was dismissed.
The Tribunal held that the replacement of parts in a machinery is revenue in nature. For a power generating company, bucket spares are consumables, notwithstanding their high cost. Their replacement, due to prescribed operating life and high working temperatures, does not increase power generation capacity, efficiency, or plant life. The Tribunal relied on Supreme Court decisions in CIT vs. Sarvana Spinning Mills Pvt. Ltd. and Commissioner of Income Tax vs. Sri Mangayar karasi Mills (P) Ltd., which held that replacing parts of an appliance does not amount to replacing the entire unit. The Tribunal also referred to an ITAT Hyderabad decision in DCIT vs. AP Gas Power Corporation Ltd. Thus, the expenditure was considered revenue expenditure, and the addition made by the AO was directed to be deleted. Regarding Section 80IA, the Tribunal followed this Court's decision in CIT vs. Gujarat Oil and allied Industries, holding that filing the audit report before assessment completion is sufficient compliance. For the set-off of losses under Section 80IA(5), the Tribunal, relying on CBDT Circular No. 1/2016 and the Apex Court's decision in CIT vs. Velayuthasamy Spinning Mills (P) Ltd., held that the initial assessment year is the year chosen by the assessee for claiming the deduction, and losses from earlier years cannot be notionally brought forward and set off against the profit of the eligible business if not already done.
The Tribunal upheld the deletion of the addition of Rs. 4,20,18,850/- made by the AO. It reasoned that for a power generating company, the replacement of parts like buckets in a turbine, despite their high cost and critical nature, are consumables and do not increase the power generation capacity, efficiency, or life of the plant. The Tribunal relied on Supreme Court decisions in CIT vs. Saravana Spinning Mills Pvt. Ltd. and CIT vs. Sri Mangayar karasi Mills (P) Ltd., stating that replacing parts of a machine does not amount to replacing the entire unit, and such repairs and maintenance are recurring and essential for business operations. Regarding the Section 80IA deduction, the Tribunal held that filing the audit report before the completion of assessment was sufficient compliance, following the Gujarat High Court's decision in CIT vs. Gujarat Oil and allied Industries. On the issue of set-off of losses under Section 80IA(5), the Tribunal, referencing CBDT Circular No. 1/2016 and the Supreme Court's decision in Velayuthasamy Spinning Mills (P) Ltd., clarified that the 'initial assessment year' is the year chosen by the assessee, and losses from earlier years that were absorbed against other business profits cannot be notionally brought forward. The Tribunal directed the deletion of the addition made by the AO and allowed the Section 80IA claim.
The High Court held that the ITAT had not committed any error in allowing the appeal of the assessee and holding that the expenses incurred for setting up the Soda Ash Project and Lab Frontend Project were revenue in nature. The reasoning was based on the ITAT's findings of fact that these projects were part of the existing business of the assessee, not a new business. The Court relied on its own previous decision in the assessee's case reported in 367 ITR 12 (Guj.), which in turn had considered the tests laid down in Alembic Glass Industries Ltd. and the Supreme Court decision in Dy. CIT v. Core Health Care Ltd. The Court noted that if the projects were an expansion of the existing business, the nature of borrowing (capital or revenue expenditure) becomes inconsequential. Therefore, no substantial question of law arose from the ITAT's order. The appeal was dismissed.
The Tribunal held that the replacement of spares in the machineries is allowable as revenue expenditure. The Tribunal reasoned that for a power generating company, these bucket spares are consumables, notwithstanding their high cost. They are critical components designed for efficient energy conversion and their failure can lead to catastrophic damage. The Original Equipment Manufacturers prescribe an operating life for these buckets, and their replacement after a certain period does not increase the power generation capacity, plant efficiency, or life of the plant. The Tribunal noted that the cost is high due to special metallurgy and manufacturing processes, and import duties. Relying on Supreme Court decisions in CIT vs. Sarvana Spinning Mills Pvt. Ltd. and Commissioner of Income Tax vs. Sri Mangayar karasi Mills (P) Ltd., the Tribunal held that replacing certain parts does not amount to replacing the entire unit. The Tribunal also referred to ITAT Hyderabad Bench decisions which held similar expenditures as revenue expenditure. Therefore, the Tribunal directed the deletion of the addition made by the AO. Regarding Section 80IA, the Tribunal followed the Gujarat High Court decision in CIT vs. Gujarat Oil and Allied Industries, holding that filing the tax audit report during the pendency of assessment proceedings is sufficient compliance. For the set-off of losses under Section 80IA(5), the Tribunal, following CBDT Circular No. 1/2016 and the Supreme Court decision in Assistant Commissioner of Income-tax, Tirupur vs. Velayuthasamy Spinning Mills (P) Ltd., held that the initial assessment year is the year opted for by the assessee, and losses from earlier years absorbed against other business cannot be notionally brought forward. The High Court found no substantial question of law arising from the ITAT's order.
The High Court held that the notice dated 26.03.2021 issued under section 148 of the Income Tax Act, 1961, for reopening the assessment for Assessment Year 2014-2015 is not tenable in law. The Court reasoned that the Assessing Officer had already considered the applicability of section 56(2)(viia) during the original assessment proceedings under section 143(3) and had passed an order without making any additions under that section. The subsequent attempt to reopen the assessment on the same issue, after the original assessment was completed, amounted to a 'change of opinion' by the Assessing Officer. The Court emphasized that a change of opinion, without any new tangible material, cannot form the basis for reopening an assessment, especially when the assessment is sought to be reopened beyond a period of four years. The Court relied on the Supreme Court's decision in Commissioner of Income tax v. Kelvinator of India Ltd. to support its view that reopening requires tangible material and cannot be based on a mere change of opinion. Consequently, the impugned notice under section 148 and the order disposing of objections were quashed and set aside.
The High Court held that the impugned notice under Section 148 of the Income Tax Act, 1961, was not tenable in law and was accordingly quashed and set aside. The Court reasoned that the original assessment under Section 143(3) had already considered the issue of work-in-progress and the reduction of land cost. The Assessing Officer had accepted the assessee's position on this matter during the scrutiny assessment. Therefore, the subsequent attempt to reopen the assessment on the same set of facts constituted a 'change of opinion', which is not a valid basis for reopening, especially when the assessment was sought to be reopened beyond a period of four years. The Court relied on the Supreme Court's decision in Commissioner of Income Tax v. Kelvinator of India Ltd., which emphasizes that reopening must be based on tangible material and not a mere change of opinion, and that the concept of change of opinion acts as an in-built test to check the abuse of power by the Assessing Officer. Consequently, the order dated 22.11.2019 disposing of the petitioner's objections was also quashed and set aside.
The High Court of Gujarat, while hearing the Special Civil Application, noted that the petitioner (revenue) had already preferred an appeal under Section 260A of the Income Tax Act against the ITAT's order dated 6.12.2016. The Court observed that the dismissal of the Special Civil Application was solely on the ground that a substantive appeal was pending. The Court held that all contentions of the petitioner would be open to be raised in accordance with law in the pending appeal proceedings. Therefore, the present petition was disposed of without deciding the merits of the review application. The operative direction was to dispose of the petition, leaving all contentions open for the appeal.
The High Court held that the notice issued under Section 148 and the order rejecting objections were liable to be set aside. The Court reasoned that the Assessing Officer had conducted scrutiny during the original assessment proceedings under Section 143(3) and had specifically inquired into matters related to Section 40A(3) violations. The fact that the AO did not make any addition in the original assessment order, despite having the opportunity to do so after scrutinizing the relevant details, indicated that the AO had formed an opinion on the matter. The Court referred to Supreme Court and its own previous judgments (Gujarat Power Corporation Ltd. Vs. Assistant Commissioner Of Income Tax) which establish that a 'change of opinion' is an inbuilt test to check abuse of power by the AO and that if an AO scrutinizes a claim and does not reject it, it amounts to formation of an opinion. Therefore, reopening based on the same issue amounted to a review, not a reassessment. The petition was allowed, and the notice and the order rejecting objections were set aside.