Gujarat High Court Judgments — 2025

The High Court allowed the Tax Appeals, holding that the Tribunal erred in restoring the matter to the Assessing Officer. The Court found that the benefit of Article 8 of the India-Singapore DTAA to profits derived from ship operations in international traffic at Indian ports would be governed by Article 8 and not Article 24. The Court relied on its previous decision in M.T. Maersk Mikage (supra) and the certificate dated 09.01.2013 issued by IRAS. The Court held that the Tribunal ought not to have deliberated further on the certificate's language, especially when this Court had already accepted its applicability. The Court reasoned that the IRAS certificate, which confirmed that income earned by ST Shipping from operations in Indian ports was taxable in Singapore on an accrual basis, and thus exempt in India as per Article 8, was sufficient. The Court quashed the Tribunal's order of remand and the subsequent assessment orders, holding that the assessee is entitled to the benefit of Article 8 of the DTAA and Article 24 is not applicable. The question of law was answered in favour of the assessee.

The High Court held that no substantial question of law arose from the ITAT's order. Regarding the issue of additional depreciation, the Court noted that this Court had already considered and decided the matter in Tax Appeal No. 60 of 2009 and other allied matters in the case of CIT vs. Gujarat Gas Company Ltd. In that decision, the Court had affirmed the ITAT's view that the assessee carries out manufacturing activity, making the gas consumable for industrial or domestic purposes. Therefore, the Court found no reason to interfere with the ITAT's decision on this point. Concerning the disallowance under Section 35DD, the Tribunal had recorded a finding of fact that the Assessing Officer had considered the issue during assessment proceedings and found that the assessee had actually paid the stamp duty, leading to the claim being allowed. Consequently, the appeal was dismissed for being devoid of any merit.

The Tribunal held that the notices issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2015-2016, after March 31, 2021, were invalid. This decision was based on the concession made by the Revenue before the Supreme Court in the case of Union of India v. Rajeev Bansal. The Revenue conceded that for AY 2015-2016, all notices issued on or after April 1, 2021, would have to be dropped as they would not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020. The Supreme Court, in the case of Rajeev Bansal and subsequently in Deepak Steel and Power Ltd. v. Central Board of Direct Taxes, quashed and set aside such notices. The High Court, following these Supreme Court decisions and the concession made by the Revenue, allowed the petition and quashed the impugned notice. The operative direction was to quash and set aside the notice issued under Section 148 of the Act for Assessment Year 2015-2016.

The High Court held that the notices issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2015-2016 were invalid. The reasoning was based on the concession made by the Revenue before the Supreme Court in the case of *Union of India v. Rajeev Bansal*. In that case, the Revenue conceded that for Assessment Year 2015-2016, all notices issued on or after April 1, 2021, would have to be dropped as they would not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The Court noted that the impugned notice was issued during the extended period from April 1, 2021, to June 30, 2021, under TOLA, and the six-year period for issuance of notice would have ended on March 31, 2022. Therefore, the notice was time-barred. The Court followed its own decision in *Mayurkumar Babubhai Patel* and similar decisions from other High Courts and the Supreme Court.

The Tribunal held that there was a violation of the principles of natural justice. It was established that the officer who conducted the video conference hearing did not pass the penalty order; instead, another officer did so based on the notes of the first officer. The Tribunal emphasized the salutary principle that 'he who hears must decide' or 'one who decides must hear', as a personal hearing becomes an empty formality if one person hears and another decides. The Tribunal referred to the Apex Court's decision in Automotive Tyre Manufacturers Association, reiterating this principle. Consequently, the impugned penalty order dated March 29, 2023, was quashed and set aside. The matter was remanded back to the Respondent - Assessment/Penalty Unit to provide a fresh opportunity of hearing to the Petitioner by the same officer who conducted the video conference, and thereafter, that same officer should pass a fresh order under Section 271AA(1) of the Act. The Tribunal also directed that necessary instructions be issued to ensure compliance with this principle in future faceless assessments and penalty proceedings.