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The High Court dismissed the writ petitions. Regarding the first issue, the Court acknowledged the assessee's contention that the notice was issued to an entity that had ceased to exist. However, it held that this objection could be raised before the Assessing Officer. The Court also noted that the notice mentioned that proceedings were initiated based on material collected during the survey under Section 133A, and sufficient information was available. The Court refrained from interfering at this intermediate stage, stating that the reassessment proceedings are underway and may prejudice the parties if observations were made on merits. Concerning the second issue, the Court found that the assessee had not approached the Court promptly to challenge the constitutional validity of Explanation 2(ii) to Section 148, nor had they provided sufficient pleadings and material to sustain such a challenge. Therefore, the Court deemed it not fit to examine the constitutional validity of the provision. The Court concluded that there was no valid reason to interfere with the jurisdiction exercised by the Department at this stage.
The High Court dismissed the writ petitions. Regarding the first issue, the Court acknowledged the assessee's contention that the notice was issued to an entity that had ceased to exist. However, it held that this objection could be raised before the Assessing Officer. The Court also noted that the notice mentioned that proceedings were initiated based on material collected during the survey under Section 133A, and sufficient information was available. The Court refrained from interfering at this intermediate stage, stating that the reassessment proceedings are underway and may prejudice the parties if observations were made on merits. Concerning the second issue, the Court found that the assessee had not approached the Court promptly to challenge the constitutional validity of Explanation 2(ii) to Section 148, nor had they provided sufficient pleadings and material to sustain such a challenge. Therefore, the Court deemed it not fit to examine the constitutional validity of the provision. The Court concluded that there was no valid reason to interfere with the jurisdiction exercised by the Department at this stage.
The Court held that the proceedings under Section 148A were initiated to provide an opportunity of being heard. A show-cause notice dated 31.03.2026 was issued, asking the assessee to explain why the difference between stamp duty value and sale consideration should not be treated as income chargeable under "Capital Gains" as per Section 50C. The assessee replied on 21.04.2026, stating the property was stock-in-trade and offered under Section 44AD, with the entire value considered for taxable income. However, the impugned order noted that the material on record did not substantiate this claim. The property had been held since 2008, and there was no evidence of conversion into stock-in-trade or inclusion in regular business inventory. No books of account, stock register, or other documentary evidence were furnished. The Court found that mere disclosure under Section 44AD does not alter the nature of the asset or establish business income. The AO also noted that the Section 44AD receipts pertained exclusively to the property sale, with no other business receipts disclosed. The Court concluded that the material did not establish the petitioner was in the business of dealing in immovable properties or that the property was stock-in-trade. Therefore, the Court found no error in the AO's order for reopening the assessment and no procedural error. The petition was dismissed.
The Court noted that the petitioner had withdrawn the relief sought for the release of seized cash, gold, and silver ornaments. The primary remaining prayer was for a decision on the representation dated 12.06.2026. The Revenue correctly pointed out that the representation was addressed to the Principal Commissioner, while the assessment proceedings were being conducted by the Assistant Commissioner. In light of this, the Court directed the petitioner to make a fresh application as provided under Section 132B of the Income Tax Act, which can include an application for condonation of delay, to the appropriate authority. This application is to be decided on its merits after affording the petitioner an opportunity of hearing. The petition was disposed of with these observations.
The High Court held that the rectification application filed by the petitioner under Section 154 of the Income Tax Act, 1961, necessarily requires to be dealt with by the respondents. The Court observed that the petitioner had filed its return claiming depreciation under Section 32(1) and later sought rectification to claim additional depreciation under Section 32(iia) due to an inadvertent omission. Despite the reassessment proceedings initiated under Section 148 and the filing of a revised return, the original rectification application remained undecided. The Court acknowledged the respondent's submission that the application must be dealt with. Therefore, the petition was disposed of with a specific direction to the respondents to decide the rectification application in accordance with law within four weeks from the date of receiving the court's writ. No specific finding was made on the merits of the rectification claim itself, as the focus was on the procedural obligation to decide it.
The High Court held that the assessee society was exempted under Section 10(23C)(iiiab) of the Act. The disallowance of depreciation amounting to Rs. 5,72,14,721/- was made because the assets were acquired out of Central Government funds, rendering their actual cost for depreciation purposes as NIL. Although the assessee claimed depreciation without considering Section 43(1) and later realized the mistake, accepting the disallowance without challenge, the Court found no deliberate attempt to conceal income or furnish inaccurate particulars. Since the assessee is totally exempted from income tax, there was no mens rea to commit a deliberate act to pay less tax. Therefore, the CIT(A) and ITAT rightly held that there would be no penalty under Section 271(1)(c) for a bona fide/inadvertent/human error. The penalty of Rs. 2 Crore was imposed to bring the case within jurisdiction, despite the tax effect being zero. The Court found no substantial question of law involved and dismissed the appeal.
The Tribunal held that the "Reference" facility in the ERP is not intended for filing documents on which parties seek to place reliance. These documents cannot be treated as part of the record maintained by the High Court under the M.P. High Court Rules, nor can they be regarded as forming part of the writ petition or the reply, as they were neither supported by an affidavit nor certified as true copies. Consequently, the petitioner was granted liberty to submit a fresh representation along with the aforesaid documents before the competent authority. The respondents were directed to consider and decide the fresh representation in accordance with law. With this liberty and direction, the writ petition was disposed of. No specific finding was made on the return of the seized material itself, as the matter was remitted for a fresh representation.
The High Court, without entering into the merits of the rival contentions, directed Respondent No. 2 (Deputy Commissioner of Income Tax) to consider the reply/objection submitted by the petitioner vide Annexure P/6 within 30 days of receiving a copy of the order. The Court clarified that this direction was solely to decide the petitioner's objection in response to the demand notice and did not grant liberty to file an appeal against the original assessment orders dated 11.07.2012 and 20.04.2011, nor did it extend any limitation period for challenging those orders. The ratio decidendi is that authorities must consider objections filed against recovery notices, even if the underlying demand is old, but this does not automatically revive time-barred appeals or grant new rights to challenge original assessments.
The High Court held that the proposed questions of law were not questions of law but were based on facts concurrently found by the CIT(A) and the ITAT. The Court found no perversity in these findings, noting that the assessee had filed various documents, including the lender's confirmation, bank statement, ITR, audited financial accounts, MCA portal data, and Form 16A for TDS. The lender, M/s East West Finvest India Limited, was an RBI-registered NBFC, and its return of income and NBFC certificate were provided. The Court found that the assessee had discharged its onus under Section 68 by submitting documentary evidence, including the lender's balance sheet showing sufficient funds. The Court also noted previous ITAT decisions in cases involving M/s East West Finvest India Limited, which held it to be a genuine company. The Court further observed that the tax effect of Rs. 1,82,61,900 was below the CBDT's prescribed limit of Rs. 2,00,00,000. Consequently, the Court found no substantial question of law involved and dismissed the appeal at the admission stage.
The High Court dismissed the writ petitions with costs. Regarding the first issue, the Court held that the ITSC has exclusive jurisdiction over the case once an application is allowed to proceed. It can direct its own machinery, including the DIT/Additional DIT (Investigation), to carry out verifications and enquiries emanating from the facts before the Commission. The Court relied on the Delhi High Court's decision in M/s. Omax Ltd. vs. ACIT, which held that the Settlement Commission can direct its own machinery for verifications. The Court clarified that while Section 245D(3) outlines procedures for calling records from the Principal Commissioner or Commissioner, the Settlement Commission also possesses the power to direct its DIT or Additional DIT (Investigation) to verify facts, which does not fall under Section 245D(3). On the allegation that the ADIT prepared the draft order, the Court found it unfounded, noting that the main order was written by a member of the Commission and the Chairman made his own observations. The report from the Additional Director was annexed as an exhibit. The Court also noted that the petitioners had enjoyed an interim order for approximately 10 years without paying tax liability, leading to the dismissal of the petitions with costs of Rs. 1,00,000/- to each petitioner.
The High Court dismissed the writ petitions. Regarding the first issue, the Court held that the ITSC has the exclusive jurisdiction to exercise powers of an income tax authority once an application for settlement is allowed to proceed. It relied on the Delhi High Court's decision in M/s. Omax Ltd. vs. ACIT, which held that the Settlement Commission can direct its own machinery, such as the DIT/Additional DIT (Investigation), to carry out verifications and inquiries. The Court clarified that while Section 245D(3) outlines procedures for calling records from the Principal Commissioner or Commissioner, the Commission also has the power to direct its DIT or Additional DIT (Investigation) for factual verification, which does not fall under Section 245D(3) in a restrictive sense. The Court found the petitioner's objection on this ground to be already considered and rejected by the Delhi High Court. On the allegation that the ADIT prepared the draft order, the Court found no evidence, noting that the main order was written by a member of the Commission and the Chairman made his own observations. The report of the Additional Director was annexed as an annexure. The Court also noted that the petitioners had enjoyed an interim order for approximately 10 years without paying tax liability, leading to the dismissal of the petitions with costs.
The High Court dismissed the writ petitions with costs. Regarding the first issue, the Court held that the ITSC has exclusive jurisdiction over the case once an application is allowed to proceed. It can direct its own machinery, including the DIT/Additional DIT (Investigation), to carry out verifications and enquiries emanating from the facts before the Commission. The Court relied on the Delhi High Court's decision in M/s. Omax Ltd. vs. ACIT, which held that the Settlement Commission can direct its own machinery for verifications. The Court clarified that while Section 245D(3) outlines procedures for calling records from the Principal Commissioner or Commissioner, the Settlement Commission also possesses the power to direct its DIT or Additional DIT (Investigation) to verify facts, which does not fall under Section 245D(3). On the allegation that the ADIT prepared the draft order, the Court found it unfounded, noting that the main order was written by a member of the Commission and the Chairman made his own observations. The report from the Additional Director was annexed as an exhibit. The Court also noted that the petitioners had enjoyed an interim order for approximately 10 years without paying tax liability, leading to the dismissal of the petitions with costs of Rs. 1,00,000/- to each petitioner.
The High Court held that there was a concurrent finding in favour of the assessee. The Court noted that the Assessing Officer's findings were based solely on the Investigation Wing's record, indicating a lack of independent inquiry. The Court observed that M/s Safal Herbs Ltd. had negligible profits between 2012-2016, with a sudden 119% share price increase in 2015-2016, which was not attributable to the respondent/assessee, a small commodity trader. The Court further stated that the respondent had discharged their liabilities under Section 68 by submitting proof of investment through banking channels/DEMAT. The Department had not filed any documents relating to the conclusions in the matters of Sanjay Shah and Jignesh Shah of Ahmedabad, with whom the appellant's name was connected by the Investigation Wing. Consequently, the High Court found no ground to interfere with the ITAT's order dated 30.09.2025 and dismissed the appeal.
The High Court observed that the petitioner had already preferred an appeal against the order passed under Section 148A(d) of the Income Tax Act, 1961. The Court noted that the writ petition had not seen any progress. Therefore, the High Court directed that the petitioner could place reliance on the Supreme Court judgment in "Union of India Vs. Rajeev Bansal" before the Appellate Authority, as this judgment is binding on the Appellate Authority. The Court held that since an appeal has already been preferred and is pending, the appeal should be decided in accordance with the law. The writ petition was disposed of on this basis, without deciding the merits of the challenge to the show cause notice or the order under Section 148A(d).
The High Court of Madhya Pradesh at Indore overruled its own office objection regarding territorial jurisdiction, finding that the cause of action having arisen within its jurisdiction was sufficient to entertain the writ petition. Following this, the petitioner sought to withdraw the petition. The court granted the withdrawal with liberty to the petitioner to raise all objections, including those related to the limitation of the issuance of notices and pecuniary jurisdiction, before the assessing authority. The authority was directed to decide all objections raised by the petitioner before proceeding further with the matter, in accordance with the law. No decision was made on the merits of the challenge to the Section 148 notice.
The High Court of Madhya Pradesh at Indore dismissed the writ petition. The Court found that the issue raised in the present petition, which was a challenge to the Warrant of Authorization dated 13/3/2014, was already a subject matter for consideration in the pending appeal before the High Court of Gujarat at Ahmedabad. The Court noted that the petitioner had raised a similar issue as an additional ground before the ITAT, and the subsequent appeal before the Gujarat High Court also included a question concerning the ITAT's adjudication of additional grounds without sufficient opportunity for the revenue. Therefore, the High Court was not inclined to entertain the present petition, as the matter was sub-judice in another forum. The Court granted liberty to the petitioner to file an application for framing of additional substantial question of law in the pending appeal if they felt the issue required further framing.
The High Court overruled its own office objection regarding territorial jurisdiction, finding that the cause of action arose within its territorial limits, despite one respondent being outside its jurisdiction. Subsequently, the petitioner sought to withdraw the petition with liberty to raise all objections, including those related to the limitation of issuing notices and pecuniary jurisdiction, before the assessing authority. The Court granted this liberty and disposed of the petition. The authority was directed to decide all objections raised by the petitioner before proceeding further in the matter, in accordance with law. No decision was made on the merits of the Section 148 notice itself.
The High Court of Madhya Pradesh at Indore overruled its own office objection regarding territorial jurisdiction. The Court found that the cause of action had arisen within its jurisdiction, which was sufficient to entertain the petition, notwithstanding the residence of one of the respondents outside the Bench's territorial limits. Subsequently, the petitioner's counsel sought permission to withdraw the petition with liberty to raise all objections, including those related to the limitation of issuing notices and pecuniary jurisdiction, before the concerned authority. The Court granted this liberty and disposed of the petition. The authority was directed to decide all objections raised by the petitioner before proceeding further in the matter, in accordance with law.
The High Court overruled the office objection regarding territorial jurisdiction, finding that the cause of action arising within its territorial limits was sufficient to entertain the petition, notwithstanding the residence of one of the respondents outside its jurisdiction. Following this, the petitioner sought to withdraw the writ petition. The court granted the petitioner's request for withdrawal with liberty to raise all objections, including those concerning the limitation period for issuing notices under Section 148 and pecuniary jurisdiction, before the assessing authority. The authority was directed to decide all objections raised by the petitioner before proceeding further in the matter, in accordance with the law. No decision was made on the merits of the Section 148 notice itself.
The High Court overruled the office objection regarding territorial jurisdiction, finding that the cause of action arose within its jurisdiction. However, the petitioner subsequently prayed for withdrawal of the petition with liberty to raise all objections, including those related to the limitation of notice issuance and pecuniary jurisdiction, before the assessing authority. The Court disposed of the petition with this liberty, granting three days for the petitioner to file objections. The authority was directed to decide all objections raised by the petitioner before proceeding further in the matter, in accordance with law. No decision was made on the merits of the territorial jurisdiction or the Section 148 notice.
The High Court of Madhya Pradesh held that the cause raised in the writ petition did not appear to survive. This conclusion was reached based on the repeated adjournments sought by the petitioner to ascertain the status of the matter, the lack of appearance by either party on multiple dates, and the observation that the disputed income tax demand was only Rs. 1,62,710/-, which the petitioner claimed as a refund. The Court found that the petition had been rendered infructuous and was also dismissed for want of prosecution. No specific findings were made on the merits of the refund claim itself, as the petition was disposed of on procedural grounds.
The High Court dismissed the appeals filed by the Commissioner of Income Tax (TDS). On the first question of law, the Court held that the assessee (NHAI) could not be held to be in default under Section 201(1) and Section 201(1A) of the Income Tax Act, 1961. The reasoning was based on the proviso to Section 201, which states that a person shall not be deemed to be an assessee in default if they furnish a certificate from an accountant to the effect that the payee has complied with certain conditions. More importantly, the Court affirmed the ITAT's finding that the certificate issued under Section 197 for an entire assessment year is valid for that entire year, as per Rule 28AA(2), unless cancelled. Therefore, the lower deduction rate applied by NHAI was justified for the entire assessment year. Consequently, on the second question of law, the Court found that the ITAT was justified in deleting the interest levied under Section 201(1A) because the assessee had a valid certificate for the entire assessment year.
The High Court dismissed the appeals filed by the Commissioner of Income Tax (TDS). On the first question of law, the Court held that the assessee (NHAI) could not be held to be in default under Section 201(1) and Section 201(1A) of the Income Tax Act, 1961. The reasoning was based on the proviso to Section 201, which states that a person shall not be deemed to be an assessee in default if they furnish a certificate from an accountant to the effect that the payee has complied with certain conditions. More importantly, the Court affirmed the ITAT's finding that the certificate issued under Section 197 for an entire assessment year is valid for that entire year, as per Rule 28AA(2), unless cancelled. Therefore, the lower deduction rate applied by NHAI was justified for the entire assessment year. Consequently, on the second question of law, the Court found that the ITAT was justified in deleting the interest levied under Section 201(1A) because the assessee had a valid certificate for the entire assessment year.
The High Court dismissed the appeals filed by the Commissioner of Income Tax (TDS). Regarding Question 1, the Court held that the respondent (NHAI) could not be held as an assessee in default under Section 201(1) and Section 201(1A) of the Act. The Court reasoned that the certificate issued under Section 197 was valid for the entire assessment year, as per the provisions of the Act and Rule 28AA(2). Therefore, the assessee was entitled to deduct tax at the rate specified in the certificate throughout the assessment year. Consequently, for Question 2, the ITAT was justified in deleting the interest levied under Section 201(1A) because the assessee possessed a valid certificate for the entire assessment year. The Court found no error in the ITAT's conclusion that the assessee was not in default.
The High Court dismissed the appeals filed by the Commissioner of Income Tax (TDS). On the first question of law, the Court held that the assessee (NHAI) could not be held to be in default under Section 201(1) and Section 201(1A) of the Income Tax Act, 1961. The reasoning was based on the proviso to Section 201, which states that a person shall not be deemed to be an assessee in default if they furnish a certificate from an accountant to the effect that the payee has complied with certain conditions. More importantly, the Court affirmed the ITAT's finding that the certificate issued under Section 197 for an entire assessment year is valid for that entire year, as per Rule 28AA(2), unless cancelled. Therefore, the lower deduction rate applied by NHAI was justified for the entire assessment year. Consequently, on the second question of law, the Court found that the ITAT was justified in deleting the interest levied under Section 201(1A) because the assessee had a valid certificate for the entire assessment year.
The High Court dismissed the appeals filed by the Commissioner of Income Tax (TDS). Regarding Question 1, the Court held that the respondent (NHAI) could not be held as an assessee in default under Section 201(1) and Section 201(1A) of the Act. The Court reasoned that the certificate issued under Section 197 was valid for the entire assessment year, as per the provisions of the Act and Rule 28AA(2). Therefore, the assessee was entitled to deduct tax at the rate specified in the certificate throughout the assessment year. Consequently, for Question 2, the ITAT was justified in deleting the interest levied under Section 201(1A) because the assessee possessed a valid certificate for the entire assessment year. The Court found no error in the ITAT's conclusion that the assessee was not in default.
The High Court dismissed the appeals filed by the Commissioner of Income Tax (TDS). Regarding Question 1, the Court held that the respondent (NHAI) could not be held as an assessee in default under Section 201(1) and Section 201(1A) of the Act. The Court reasoned that the certificate issued under Section 197 was valid for the entire assessment year, as per the provisions of the Act and Rule 28AA(2). Therefore, the assessee was entitled to deduct tax at the rate specified in the certificate throughout the assessment year. Consequently, for Question 2, the ITAT was justified in deleting the interest levied under Section 201(1A) because the assessee possessed a valid certificate for the entire assessment year. The Court found no error in the ITAT's conclusion that the assessee was not in default.
The High Court dismissed the appeals filed by the Commissioner of Income Tax (TDS). Regarding Question 1, the Court held that the respondent (NHAI) could not be held as an assessee in default under Section 201(1) and Section 201(1A) of the Act. The Court reasoned that the certificate issued under Section 197 was valid for the entire assessment year, as per the provisions of the Act and Rule 28AA(2). Therefore, the assessee was entitled to deduct tax at the rate specified in the certificate throughout the assessment year. Consequently, for Question 2, the ITAT was justified in deleting the interest levied under Section 201(1A) because the assessee possessed a valid certificate for the entire assessment year. The Court found no error in the ITAT's conclusion that the assessee was not in default.
The High Court dismissed the appeals filed by the Commissioner of Income Tax (TDS). Regarding Question 1, the Court held that the respondent (NHAI) could not be held as an assessee in default under Section 201(1) and Section 201(1A) of the Act. The Court reasoned that the certificate issued under Section 197 was valid for the entire assessment year, as per the provisions of the Act and Rule 28AA(2). Therefore, the assessee was entitled to deduct tax at the rate specified in the certificate throughout the assessment year. Consequently, for Question 2, the ITAT was justified in deleting the interest levied under Section 201(1A) because the assessee possessed a valid certificate for the entire assessment year. The Court found no error in the ITAT's conclusion that the assessee was not in default.
The High Court held that the benefit of the certificate issued under Section 197 of the Income Tax Act, 1961, is for the entire assessment year. Rule 28AA(2) of the Income Tax Rules, 1962, clarifies that such a certificate is valid for the assessment year specified therein unless cancelled. The assessment for income tax is always for the entire assessment year, and tax liabilities are fixed for the entire year. Therefore, the assessee (NHAI) cannot be deemed an assessee in default under Section 201(1) for failure to deduct tax at a higher rate when a valid certificate for lower deduction was in force for the assessment year. Consequently, the deletion of interest levied under Section 201(1A) by the ITAT was justified because the assessee had a certificate under Section 197 for the entire assessment year. The appeals filed by the revenue were dismissed.
The High Court of Madhya Pradesh at Jabalpur held that it lacks territorial jurisdiction to entertain the Income Tax Appeal. The court relied on the Supreme Court's decision in Principal Commissioner of Income Tax Vs. M/s. ABC Papers Ltd. (2022) 9 SCC 1, which clearly lays down that appeals against every decision of the ITAT shall lie only before the High Court within whose jurisdiction the Assessing Officer who passed the assessment order is situated. The court noted that even if the assessee's case was transferred under Section 127 of the Income Tax Act, the jurisdiction remains with the High Court where the Assessing Officer passed the order. Therefore, the present appeal, where the Assessing Officer is in Dehradun, should have been filed before the High Court of Dehradun. The appeal was dismissed as not maintainable, with liberty granted to the appellant to file it before the appropriate High Court.
The High Court of Madhya Pradesh at Jabalpur held that it does not have territorial jurisdiction to entertain the appeal. The Court relied on the Supreme Court's decision in Principal Commissioner of Income Tax Vs. M/s. ABC Papers Ltd (2022) 9 SCC 1. Paragraph 33 of that judgment clearly states that appeals against every decision of the ITAT shall lie only before the High Court within whose jurisdiction the Assessing Officer who passed the assessment order is situated. Even if cases are transferred under Section 127 of the Act, the jurisdiction remains with the High Court where the Assessing Officer passed the original order. Therefore, since the Assessing Officer was in Mumbai, the appeal should be filed before the High Court of Mumbai. The appeal was dismissed as not maintainable, with liberty granted to the appellant to file it before the appropriate High Court.
The High Court of Madhya Pradesh at Jabalpur held that it does not have territorial jurisdiction to hear the appeal. Citing the Supreme Court's decision in Principal Commissioner of Income Tax Vs. M/s. ABC Papers Ltd. (2022) 9 SCC 1, the Court stated that appeals against every decision of the ITAT shall lie only before the High Court within whose jurisdiction the Assessing Officer who passed the assessment order is situated. This principle applies even if the assessee's case has been transferred under Section 127 of the Income Tax Act. Therefore, the appeal should have been filed before the High Court of Dehradun. The High Court of Madhya Pradesh dismissed the appeal as not maintainable, granting the appellant liberty to file it before the appropriate High Court in Dehradun.
The High Court of Madhya Pradesh at Jabalpur held that the territorial jurisdiction for hearing the Income Tax Appeal lies with the High Court of Madhya Pradesh bench at Gwalior. The Court relied on the Supreme Court's decision in Principal Commissioner of Income Tax Vs. M/s. ABC Papers Ltd. (2022) 9 SCC 1. The reasoning was that appeals against every decision of the ITAT shall lie only before the High Court within whose jurisdiction the Assessing Officer who passed the assessment order is situated. This principle applies even if the case has been transferred under Section 127 of the Act. Therefore, since the Assistant Commissioner of Income Tax (Central), Gwalior Station, Bhopal, passed the order, and the assessee is a resident of Gwalior, the appeal is maintainable before the Gwalior Bench. The registry was directed to transfer the ITA to the Gwalior Bench.
The High Court held that the appeal was not liable to be dismissed on the ground of tax effect, as cases under Section 263 are exempted under a notification. The Court noted that the assessment order was passed in favour of the assessee, and the CIT only remanded the matter, making the tax effect uncertain. The Court observed that the appeal had been pending for over 28 years, and allowing it would necessitate fresh proceedings for assessment year 1997-98, a period during which Income Tax laws had significantly changed. The Court found that the CIT was required to record reasons as to the extent to which the order was prejudicial to the revenue, and merely a difference of opinion between the AO and CIT did not warrant setting aside the entire assessment order. The Court noted that the AO had examined the books of accounts of partners and the genuineness of cash credits, and that the transactions involved partners investing cash in a firm engaged in the same business. Therefore, the Court found no substantial question of law to be answered in favour of the revenue.
The Tribunal (High Court in this instance, acting as an appellate authority for ITAT judgments) allowed the application for dismissal of the Income Tax Appeal. The reasoning provided is that the appellant (Revenue) has stated that Form-5 has been generated and that the matter has been settled between the parties under the Vivad Se Vishwas Scheme. Therefore, the appeal is finally disposed of on this ground. No specific findings on the merits of the original appeal are recorded, as the disposal is based on a settlement. The operative direction is the dismissal of the appeal. No issues were left undecided, as the appeal was disposed of based on the settlement.
The High Court allowed the application for dismissal of the Income Tax Appeal. The Court noted that the appellant's counsel submitted that Form-5 has been generated. Consequently, the Court held that the present Income Tax Appeal is finally disposed of on the ground that the matter has been settled between the parties under the Vivad Se Vishwas Scheme. The operative direction was to dispose of the appeal as settled. No specific issue regarding the merits of the original assessment or appeal was decided.
The High Court dismissed the appeal, not on merits, but based on Circular No. 5/2024. The Court noted that while the CIT considered contributions for AY 1992-93 to 1997-98, the ITAT's order pertained to AY 1997-98, with a net contribution of Rs. 11,70,373/-. The Court concluded that the tax effect in this appeal was quantifiable, and therefore, the appeal was liable to be dismissed under the said circular. The Court explicitly stated that the questions of law framed at the time of admission would remain open. No decision was made on the merits of the issues raised.
The High Court disposed of the writ petition. It acknowledged the petitioner's submission regarding the potential limitation bar for filing an appeal against the assessment order. The Court granted the petitioner liberty to file an appeal against the assessment order within 15 days from the date of the order. Crucially, the Court directed that if the appeal is filed within this extended period, it shall not be dismissed on the ground of limitation, considering that the petitioner was prosecuting the remedy before the High Court against the notice. The petitioner was also permitted to file an application for interim relief along with the appeal. The Court did not decide the issue of jurisdiction of the Assessing Officer.
The High Court dismissed the appeal, finding no substantial question of law. Regarding the additional evidence, the Court held that the materials were in the appellant's possession and could have been produced before the lower authorities with serious efforts, making it unbelievable that they were beyond reach. The Tribunal's examination of the bank account revealed that the entire money was withdrawn by specific dates in August and September 2012 and remained unutilized, being re-deposited within three months on 05.11.2012. The Court found the Tribunal's observation that the explanation for the Rs. 9 lac deposit in HDFC Bank could not be accepted solely on the ground of lost books of accounts to be correct. The Court also noted the Tribunal's finding that the Rs. 4 lac deposit in Axis Bank was explained as it was out of cash withdrawn by self-cheque, thus accepting the source for that amount. The Court concluded that the explanation for the HDFC Bank deposit was not satisfactory and the Tribunal's reasoning was correct.
The High Court held that the assessment order was liable to be set aside. While acknowledging the revenue's submission that the reply was received after the prescribed time, the Court emphasized that the reply was on record before the final order was passed. Therefore, it ought to have been considered by the Assessment Authority and should not have been discarded mechanically. Furthermore, the Court noted that a previous order dated 12.12.2024 by the Appellate Authority had remanded the matter for a fresh denovo assessment. This implied that the earlier reply filed by the petitioner on 07.03.2023 was liable to be considered. The Court found that the petitioner was unnecessarily harassed. Consequently, the writ petition was allowed, the matter was remitted back to be decided afresh by the Assessment Officer, and the respondents were directed to pay costs of Rs. 25,000/- to the petitioner.
The High Court condoned the delay of 204 days in filing the review petition, finding sufficient grounds presented in the application supported by an affidavit. The Court then considered the prayer for restoration of ITA No. 181/2024. The Revenue had submitted that the actual tax effect of the appeal was Rs. 2,14,24,975/- for AY 2011-12 and Rs. 2,19,91,394/- for AY 2012-13, which was significantly higher than the Rs. 2.0 Crores threshold that led to the dismissal of the appeal. The Court noted that the dismissal order dated January 24, 2025, had granted liberty to the petitioner to file an application if the cause of action survived. Considering the facts and circumstances, particularly the corrected tax effect and the liberty granted, the High Court allowed the review petition. The order dated January 24, 2025, was set aside, and ITA No. 181/2024 was restored to its original number. The ratio decidendi is that where an appeal is dismissed for low tax effect due to an inadvertent error in the appeal memo, and the actual tax effect exceeds the threshold, and liberty was granted to approach the court, the appeal should be restored.
The High Court condoned the delay of 204 days in filing the review petition, finding sufficient grounds in the application supported by an affidavit. The Court allowed the review petition and set aside the order dated January 24, 2025, which had dismissed Income Tax Appeal No. 182/2024. Consequently, the appeal was restored to its original number. The reasoning was based on the Revenue's submission that the tax effect was inadvertently misstated in the appeal memo, and the actual tax effect for the assessment years in question exceeded the threshold of Rs. 2.0 Crores. The Court also noted that liberty was granted to file an application if the cause of action survived. The operative direction was to restore ITA No. 182/2024 to its original number. No issues were expressly left undecided.
The High Court held that the appeal does not involve any substantial question of law. Regarding the addition of Rs. 9,44,138/-, the Court noted that the CIT(A) had examined the matter in detail and, after directing a re-assessment, rightly found an unexplained transaction of Rs. 20,53,984/-. Instead of mechanically approving the AO's addition, the CIT(A) reduced it to Rs. 20,46,184/- and found it justified to apply the net profit ratio to unrecorded sales. Applying the assessee's own declared net profit rate of 26.40%, the unaccounted profit was worked out to Rs. 9,44,138/-. The ITAT also found this correct and approved it. The Court emphasized that there were concurrent findings by both the CIT(A) and the ITAT, and substantial relief had already been granted to the assessee by the CIT(A). Therefore, the admission of the appeal was declined, and the appeal was dismissed.
The High Court found no substantial question of law involved in the appeal. The Tribunal had remanded the matter to the Assessing Officer to adjudicate afresh, allowing the benefit of exemption under Section 11/12 to the assessee. The Court noted that the AO, CIT(A), and ITAT had concurrently held the respondent ineligible for exemption under Section 10(23C)(iiiab). However, the AO had not considered the applicability of Section 11/12. The respondent had been granted registration under Section 12A from 2021 to 2023, and the ITAT relied on its own decision in 'M.P. Raj Open School, Bhopal vs. Deputy Commissioner of Income-tax, Bhopal' and a CBDT Instruction, holding that the assessee is entitled to exemption under Section 11/12. The matter was remanded to the AO to provide an opportunity for the assessee to furnish necessary information for computing exemption under Section 11/12. The Court dismissed the appeal.