Himachal Pradesh High Court Judgments — 2018

The High Court found no substantial question of law to have been raised in the appeal preferred under Section 260A of the Income Tax Act, 1961. The Senior Counsel for the Revenue sought permission to withdraw the appeal, with liberty to file it afresh after making suitable amendments within four weeks. The counsel for the respondent (M/s Tibetan Children Village Dal Lake, Dharamshala) had no objection. Consequently, the High Court permitted the appeal to be withdrawn, reserving liberty to file it afresh on the same and subsequent cause of action within four weeks. It was clarified that if the appeal was preferred within the stipulated period, the issue of limitation would not be a hindrance, and the appeal would be treated as filed within the limitation period. The appeal was dismissed as withdrawn.

The High Court held that the assessee had failed to discharge its burden of proof in satisfactorily explaining the nature and source of the cash credits. The Court relied on Supreme Court decisions in M/s. Lakhmichand Baijnath, Roshan Di Hatti, and Sumati Dayal. It was noted that Section 68 of the Act allows for sums credited in the books to be charged as income if the explanation offered by the assessee is not satisfactory. The Court found it peculiar that huge cash transactions occurred only in a particular month of the respective years, and the assessee did not provide a satisfactory explanation for this concentration of sales. The Court observed that while the Assessing Officer's satisfaction must be based on material, the formation of opinion must be after objective consideration of all factors. The Court found no merit in the appeals, upholding the authorities' findings. The questions of law were answered accordingly. The issue regarding deduction under Section 80 IC and the attribution of interest income were not explicitly decided as the primary issue of unexplained cash credits was decided against the assessee.

The High Court modified the award. Regarding the contention that the Insurance Company was not given sufficient opportunity to prove the driver's lack of a valid license, the Court found the record showed multiple adjournments and even bailable warrants were issued, yet the Insurance Company failed to produce evidence. Therefore, this argument was rejected. The Court found merit in the claimants' argument regarding future prospects, citing the Pranay Sethi case. Since the deceased was 52 years old and in permanent employment, a 15% increase for future prospects was applied to his established income. The loss of dependency was recalculated. The Court also agreed with the Insurance Company that the Tribunal had erred in awarding excessive amounts for funeral expenses and loss of consortium, reducing them to Rs. 15,000/- and Rs. 40,000/- respectively, as per Pranay Sethi. It noted that no amount was awarded for loss of estate, and awarded Rs. 15,000/- under this head. The interest awarded by the Tribunal was upheld. The appeal was partly allowed, modifying the award to the extent of the recalculations.

The High Court, in view of para-5 of Circular No.3 of 2018 dated 11.7.2018, issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board Direct Taxes, noted that the appeal was not pressed due to the low tax component involved. Consequently, the appeal was ordered to be dismissed on this ground. The Court clarified that the withdrawal of this appeal would not affect the outcome or merits of any other connected matters, if any. No decision on the substantive issues of the case was rendered.

The High Court held that the issues involved in the present appeal had already been adjudicated by the Court in Civil Appeal No. 7208 of 2018, Commissioner of Income Tax versus Classic Binding Industries. Consequently, applying the directions from that precedent case mutatis mutandis to the present appeal, the High Court disposed of the appeal. The reasoning was that since the issues were identical, the outcome should follow the established precedent. The operative direction was to dispose of the appeal in terms of the prior ruling. No issues were left undecided.

The Court decided on several applications. For the PNB/SBI issue, it directed SBI to refund ₹35,10,107/- to PNB with up-to-date interest, acknowledging the admitted error in disbursement. Regarding the workmen's dues and secured creditors' dividend, the Court noted the agreement to disburse the undisputed portion of the sale proceeds (₹14.52 Crore total sale proceeds, with ₹1.5 Crore to be held in abeyance pending an appeal) proportionately to rightful claimants as per law, while keeping the disputed amount aside. For the prosecution against the Official Liquidator, the Court found the explanation for the delayed tax deposit satisfactory, stating it was a case of late deposit with interest paid, not willful evasion. Therefore, permission for prosecution under Section 276C(2) was denied, and the applications were dismissed. The Court also directed the Official Liquidator to pay the Chartered Accountant's bills for services rendered between 2012 and 2015 within one month, finding the fee reasonable given the work performed and the court's earlier order regarding case-to-case remuneration.

The High Court held that the issues involved in the present appeal had already been adjudicated by the same Court in ITA No. 20 of 2015 (M/s Stovekraft India V. Commissioner of Income Tax), and this decision was further modified by the Hon’ble Supreme Court in Civil Appeal No. 4765 of 2018 (Mahabir Industries vs. Principal Commissioner of Income Tax). Consequently, the Court applied the directions from the M/s Stovekraft India case, as modified by the Supreme Court in Mahabir Industries, mutatis mutandis, to the present appeal. The appeal was disposed of accordingly. No specific issue was left undecided; rather, the entire appeal was resolved based on precedent.

The Tribunal held that the present case is a covered case. This conclusion was based on the admission by the revenue that the case is covered by the order dated 30/01/2026 passed by the High Court in ITA 1/2026. The Tribunal further noted that the Supreme Court had not interfered with the order in ITA 1/2026. Consequently, the Tribunal decided to set aside the Provisional Attachment Order dated 25/06/2018 passed by the Initiating Officer and the order dated 05/01/2026 passed by the learned Appellate Tribunal under SAFEMA. The ratio of this decision is that if a case is factually identical to a previously decided case by a higher court or a coordinate bench, and the revenue admits it as covered, then the same relief should be granted. The appeal was disposed of as allowed.

The High Court held that the issues involved in the present appeals had already been adjudicated by the Court in ITA No. 20 of 2015, titled M/s Stovekraft India v. Commissioner of Income Tax, decided on November 28, 2017. Applying the directions from the Stovekraft India case mutatis mutandis to the present appeals, the Court disposed of all five appeals accordingly. The reasoning is that the precedent set in the earlier case is directly applicable to the facts and legal questions presented in these appeals. The ratio decidendi is that judicial precedent, when directly on point, binds subsequent cases before the same court. The operative direction was to dispose of the appeals in line with the previous judgment. No issues were left undecided.

The High Court answered the three substantial questions of law. Regarding the first question on entitlement to benefits of deduction under Section 80IC, the Court held that the matter is squarely covered by its own prior judgment in M/s Stovekraft India V. Commissioner of Income Tax, and the entitlement will be decided by the Assessing Officer. For the second question concerning deduction for duty drawback and interest accrued thereon under Section 80IC, the Court held against the assessee, finding the matter squarely covered by the Supreme Court's decision in Pandian Chemicals Ltd. vs. Commissioner of Income Tax. For the third question regarding deduction of interest accrued on late payments, the Court held in favour of the assessee, stating the issue is no longer res integra and stands decided by the Supreme Court in Commissioner of Income Tax vs. Govinda Choudhury and sons, as well as a co-ordinate bench of the High Court in Commissioner of Income Tax vs. Jai Prakash Hydro Power Ventures Ltd. The appeal was disposed of accordingly.

The High Court held that the issues involved in the present 21 appeals had already been adjudicated by the court in M/s Stovekraft India v. Commissioner of Income Tax, decided on November 28, 2017. Consequently, the court directed that the present appeals be disposed of by applying the directions from the Stovekraft judgment mutatis mutandis. This means the principles and outcomes of the Stovekraft case were to be applied to these appeals without material alteration. The court did not delve into the specific facts of each of the 21 appeals but relied on the established precedent. Pending applications related to these appeals were also disposed of accordingly. No specific amount in dispute was mentioned for these appeals.