Category: In the High Courts: Part A-Reported Decisions

66. Principal CIT vs. Goldsukh Developers (P) Ltd.: (2025) 483 ITR 715 Bom): 2023 SCC OnLine Bom 3282: (2024) 2 Mah LJ 32

A. Y. 2014-15: Date of order 10/07/2023

S. 245D of ITA 1961

Settlement Commission — Settlement of cases — Rectification of order of settlement u/s. 245D(6B) — Period of limitation — Application beyond six months of order — Barred by limitation —Petition of the Revenue was dismissed.

The Respondent assessee had filed an application before the Settlement Commission for settlement, and the application of assessee came to be disposed of by an order dated September 20, 2016 wherein the assessee’s application was allowed u/s. 245D(4) of the Income-tax Act, 1961.

The said order was challenged by the Revenue by way of writ petition on February 10, 2017. The challenge in the petition was on the ground that there was failure on the part of assessee to make full and true disclosure of income. The assessee raised a preliminary objection on the ground that the said order was passed by consent of both the Revenue (petitioner) and the assessee (respondent No. 1.).

It was the petitioner’s case in the said writ petition that the settlement recorded by the Commission on the consent of the parties was to be ignored because it did not reflect the correct position. It was the case of the Revenue that it had consistently opposed the application of respondent No. 1 for settlement in view of the alleged failure to make full and true disclosure of income.

The High Court dismissed the petition on June 21, 2018, holding that it was not open to the Revenue to challenge the correctness of the fact recorded in the said order by the Commission, particularly when it was not even remotely the case of the Revenue that the consent was given/made on a wrong appreciation of law. The court, of course, held that the remedy for the Revenue would be to move the Commission to correct what, according to the Revenue was an incorrect recording of consent in the impugned order.

Following this, the Revenue (petitioner) filed an application u/s. 245D(6B) on November 22, 2018 before the Settlement Commission for rectification. By the impugned order dated January 15, 2019, the Commission dismissed the application of the petitioner. The Commission came to the conclusion that even if it excluded the time spent pursuing the writ petition from February 10, 2017 to June 21, 2018,the rectification application had still been filed beyond the six months period stipulated in section 245D(6B) and was thus barred by limitation.

The Revenue filed another writ petition challenging this order. The Bombay High Court dismissed the petition and held as under:

“i) We find no error in the finding of the Commission.

ii) Though it was not argued before us and we would keep it open to decide in a proper case, we have our own reservations as to whether the grievance raised by the petitioner before the Commission and in the said writ petition that the consent as recorded was not given would qualify to be a “mistake apparent from the record” which is the only thing the Commission may rectify.”

BCAJ Admin

65. Ramesh Madhukar Deole vs. Principal CIT: (2025) 483 ITR 802 (Bom): 2024 SCC OnLine Bom 5145

A. Y. 2018-19: Date of order 18/11/2024

Ss. 54F, 142(1) and 264 of ITA 1961

Revision of order u/s. 264 — Power of Commissioner — Assessee filed return in wrong Form and later corrected it, claiming exemption u/s. 54F — Assessee’s CA failed to respond to notice u/s. 142(1) resulting in passing of assessment order ex parte making additions — Revision application u/s. 264 filed before Principal CIT with all materials — Principal CIT accepted assessee’s case on merits in order but rejected revision application as not maintainable — Rejection based solely on earlier failure to respond to notice during assessment proceeding proceedings — Power of Commissioner u/s. 264 wide to remedy bona fide mistakes — Earlier non-compliance with notice cannot render subsequent revision application not maintainable — Order rejecting revision application quashed and matter remanded to Principal CIT.

For the A. Y. 2018-2019, the assessee filed the return of income in wrong Form and subsequently filed the corrected return of income under ITR-3, wherein he claimed deductions and exemptions from capital gains u/s. 54F of the Income-tax Act, 1961. The assessee’s Chartered Accountant failed to respond to the notice u/s. 142(1) of the Act. Consequently, the Assessing Officer passed an ex parte assessment order u/s. 143(3) making additions.

Therefore, the assessee filed revision application u/s. 264 of the Act, praying for deletion of additions. The petitioner submitted all materials in that support of the claim. The Principal Commissioner accepted the assessee’s case on merits but rejected the revision application as not maintainable solely on the ground that the assessee had failed to produce certain materials in response to the notice u/s. 142(1) during the assessment proceedings.

The assessee filed a writ petition challenging the order of rejection. The Bombay High Court allowed the writ petition and held as under:

“i) The Principal Commissioner of Income-tax should not have rejected the petitioner’s revision application as not maintainable. We are of the clear opinion that the cause in the present case warranted that the revision be decided on merits and more particularly considering the case of the petitioner, which although was noticed in paragraph 6 of the impugned order, was not taken to its logical conclusion, merely on an erroneous presumption in law that the revision is not maintainable for a reason that the petitioner had failed to produce certain materials in response to notice u/s.142(1) of the Act. In our opinion, there is a manifest error on the part of the Principal Commissioner of Income-tax in coming to such conclusion to hold the revision not maintainable in the facts of the present case.

ii) The impugned order dated March 24, 2023 is quashed and set aside. The petitioner’s revision application are remanded to the Principal Commissioner of Income-tax to be decided in accordance with law and an appropriate order be passed thereon within a period of three months from today.”

BCAJ Admin

64. Principal CIT vs. Britannia Industries Ltd.

(2025) 346 CTR 242 (Cal.)

A. Y. 2018-19: Date of order 09/07/2025

S. 263 of ITA 1961

Revision — Erroneous and prejudicial order — Lack of proper enquiry — Initiation of 263 at the instance of the AO cannot be done — Finding of the Tribunal well founded — Reliance upon notes submitted by the assessee before the AO — Cannot be stated that the AO did not consider all the factors and accepted the plea of the assessee and completed assessment — CIT is required to consider the explanation offered and take a decision — Failure to render any finding by CIT — Revision u/s. 263 not sustainable.

The scrutiny assessment for A.Y. 2018-19 was completed u/s. 143 of the Income-tax Act, 1961 by an order dated 22/03/2021. Subsequently, notice u/s. 263 of the Act was issued, requiring the assessee to show cause why the assessment order should not be treated as erroneous or prejudicial to the interest of the Revenue. The assessment order was sought to be revised on, inter alia, applicability of section 56(2)(x) to the acquisition of leasehold land and building and the disallowance of claim u/s. 43B in relation to reversal or write back of provision for liabilities. Though the assessee filed a response objecting to the revision of the assessment order, the Principal Commissioner passed an order u/s. 263 setting-aside the assessment order and directing the Assessing Officer to pass the order afresh after considering the issues on which revision was sought to be made.

Against the said order of revision, the assessee filed an appeal before the Tribunal, which was allowed.

The Calcutta High Court dismissed the appeal of the Department and held as follows:

“i) A reading of s. 263 of the Act would clearly show that unless and until the twin conditions are satisfied that the assessment order should be erroneous and it should be prejudicial to the interest of Revenue, the power under s. 263 of the Act cannot be invoked. Apart from that, the statute mandates that the Principal CIT should inquire and be satisfied that the case warrants exercise of its jurisdiction under s. 263 of the Act and such satisfaction should be manifest in the show-cause notice which is issued under the said provision.

ii) The Tribunal considered the factual position and found that out of the five issues which were raised in the show-cause notice issued u/s. 263 of the Act, except for three issues the explanation offered by the assessee in respect of the other issues were accepted by the Principal CIT. Furthermore, on facts, it is clear that the Principal CIT invoked its jurisdiction u/s. 263 of the Act at the instance of the Assessing Officer, which was incorrect. Therefore, the finding of the learned Tribunal that the Principal CIT could not have invoked its power u/s. 263 of the Act solely based upon the reference made by the Assessing Officer is well founded.

iii) As regards the merits of the case, i.e. regarding the applicability of section 56(2)(x) to the transaction of purchase of land by the assessee from Bombay Dyeing & Manufacturing Company Ltd., it is undisputed that all the facts were placed before the AO and they were also disclosed in the notes of the tax audit report and the notes to the computation of income filed along with the return of income and those were scrutinised by the Assessing Officer. In fact, the learned Tribunal has extracted the relevant portion of the notes filed by the assessee before the Assessing Officer. Therefore, it cannot be stated that the Assessing Officer did not take into account all the factors and had accepted the plea of the assessee and completed the assessment. Therefore, the Principal CIT to invoke its power under s. 263 of the Act has to apply its mind to the audit report and record its satisfaction that the twin conditions required to be complied with under s. 263 of the Act have not been satisfied. Therefore, the Tribunal was fully justified in holding that the Principal CIT could not have invoked its power under s. 263 of the Act. Though in the show-cause notice it is alleged that these aspects were not taken into consideration by the Assessing Officer, curiously enough in the order passed u/s. 263 of the Act dated 29/03/2023 the Principal CIT states that the Assessing Officer has not considered these aspects during the course of assessment; he has not made any inquiry on the issue nor did he issue any questionnaire in this regard and also held that the assessee in its reply dated 13/03/2023 did not contradict these facts. This finding rendered by the Principal CIT in its order is factually incorrect and the outcome of total non-application of mind. Therefore, the finding rendered by the learned Tribunal is fully justified.

iv) As regards the disallowance of claim u/s. 43B in relation to reversal or write back of provision for liability, the Principal CIT, while passing the order u/s. 263 of the Act miserably failed to render any finding despite the fact that the assessee placed reliance on the decision in the case of Principal CIT vs. Eveready Industries India Ltd. and, accordingly, set aside the order passed by the Assessing Officer with a direction to the Assessing Officer to examine whether the decision in the case of Eveready Industries India Ltd. would be applicable to the case of the assessee or not after giving due opportunity of being heard to the assessee. The manner in which the Principal CIT has dealt with this issue is wholly untenable and, therefore, the learned Tribunal was justified in setting aside the order passed by the Principal CIT on that score. Tribunal was right in allowing the assessee’s appeal and setting aside the order passed by the Principal CIT.”

BCAJ Admin

63. Nuziveedu Seeds Ltd. vs. CCIT

TS-150-HC-2026(Tel.)

A.Ys.: 2012-13 and 2013-14: Date of order 30/01/2026

Rule 29 of the Income Tax Appellate Tribunal Rules, 1963

Power of Tribunal — Admission of additional evidence — Rule 29 of ITAT Rules, 1963 — Admission only at the instance of the Tribunal — Parties to the appeal are not entitled as a matter of right to produce additional evidence — Order of the Tribunal allowing the admission of additional evidence held to be in gross violation of the procedure contemplated under Rule 29 — Order of the Tribunal liable to be set-aside.

The assessee, a public limited company, engaged in the research, production and sale of hybrid seeds and crops. In the scrutiny assessment for A. Y. 2012-13 and 2013-14, addition and disallowance was made u/s. 10(1) and section 14A of the Act.

On appeal before the CIT(A), the appeal of the assessee was partly allowed, wherein the addition made u/s. 10(1) of the Act was deleted and the disallowance made u/s. 14A of the Act was confirmed. Against the order of the CIT(A), cross appeals were filed by the assessee and the department. The Tribunal remanded the matter to the Assessing Officer with a direction to examine the nature of business of the assessee and to determine whether the nature of the business was agricultural or not, and also to recompute the disallowance depending upon the determination of the nature of the business of the assessee.

During the pendency of the appeal before the Tribunal, a search was conducted at the business premises of the assessee, wherein certain incriminating material was found. Thereafter, notice u/s. 153A of the Act was issued. Pending the appeal before the Tribunal, the Department filed an application before the Tribunal for admission of additional evidence to bring on record before the Tribunal, the alleged incriminating material / documents found during the course of search. Despite the assessee’s opposition to the admission of the incriminating material as additional evidence, the Tribunal allowed the application. On the basis of the said documents, the Tribunal concluded that the addition u/s. 10(1) was not sustainable and remanded the matter to the AO as regards the disallowance u/s. 14A of the Act.

On appeal before the High Court, the assessee challenged the order of the Tribunal on the ground that the Tribunal was not justified in invoking Rule 29 of the ITAT Rules, 1963 and in accepting the additional evidence since Rule 29 expressly prohibits the department from bringing on record such additional evidence. Further, the assessee also challenged the order of the Tribunal on the ground that the Tribunal was not justified in taking into account the evidence of proceedings u/s. 153A of the Act as the proceedings u/s. 153A are separate and the same could not be relied upon in an appeal before the Tribunal.

The Telangana High Court decided the appeal, in favour of the assessee and held as follows:

“i) A perusal of Rule 29 of the Rules, makes it clear that the very foremost words of the Rule explicitly provide that the parties to an appeal are not entitled, as a matter of right, to produce additional evidence, either oral or documentary, before the Tribunal. The Rule further makes it clear that it is the Tribunal alone, which is competent to direct either party to produce any witness to be examined or affidavit to be filed or may allow such evidence to be adduced.

ii) Rule 29 of the ITAT Rules, abundantly makes it clear that neither of the parties to the appeal can independently file additional evidence, either oral or documentary and it is only the Tribunal on its own can direct either of the parties to produce any documents or witness or any affidavit to be filed for determination of the dispute and if the income tax authorities decide the case without giving sufficient opportunity to the assessee either on the points specified or not specified, the Tribunal may, for reasons to be recorded, permit the production of such evidence by the assessee. The words envisaged in Rule 29, therefore leaves no scope for either the Revenue or the assessee to file applications to adduce evidence as a matter of right. Only the learned ITAT alone is empowered to direct either of the parties to produce additional evidence and only in the cases where there is total denial of giving sufficient opportunity to the assessee, the assessee has got a right to file such application seeking permission to adduce additional evidence.

iii) The learned ITAT exceeded in its jurisdiction and acted in gross violation of Rule 29 by allowing the application filed by the Revenue in a routine manner and remanding the matter to the Assessing Authority for fresh determination.

iv) The judgements relied upon by the department were distinguishable on the ground that in those cases, the discretion of the Tribunal was exercised to admit additional evidence for substantial causes or where the evidence could not be produced before the lower authorities due to genuine difficulties, such as non-retrievability of emails or documents. The Tribunal, in those cases, acted after determining that the evidence was necessary for proper adjudication. Further, many of those judgments arose under different statutory provisions, such as Order XLI Rule 27 and or other laws, and did not specifically consider Rule 29 of the Rules as that fall for consideration in the instant case. None of the judgments expressly held that either party could file an application for additional evidence as a matter of right under Rule 29

v) In the instant case, the application filed by the Revenue as a matter of right, was allowed by the learned ITAT, without proper appreciation of Rule 29, which is impermissible in law. We are of the considered view, that the impugned orders of the learned ITAT are in gross violation of procedures contemplated under Rule 29 of the Rules and the learned ITAT exceeded its jurisdiction and thus, the impugned order are liable to be set aside.”

BCAJ Admin

62. Bax India Ventures Pvt. Ltd. vs. CPC

2026 (2) TMI 319 Bom.

Date of order: 02/02/2026

Ss. 143(1) of ITA 1961

Intimation u/s. 143(1) — Adjustment to the return of income — First proviso — Mandatory in nature — No adjustment to be made unless an opportunity is given to the assessee — No prior opportunity to the assessee before making adjustment — Intimation u/s. 143(1) is liable to be quashed and set-aside.

The Assessee company filed its return of income u/s. 139(8A) and claimed the benefit of lower rate of tax as per section 115BAA of the Income-tax Act, 1961. Along with the return filed u/s. 139(8A), the assessee also filed Form 10-IC which was mandatory as per section 115BAA of the Act. However, the Assessee’s claim was denied, and an adjustment was made in the Intimation order u/s. 143(1)(a) of the Act.

The Assessee challenged the said Intimation order by way of writ petition before the High Court on the ground that the assessee was not given prior intimation about the proposed adjustment and therefore the Intimation order passed u/s. 143(1)(a) of the Act was not sustainable and ought to be set-aside.

The contention of the Department was that the present case was that of denying the beneficial rate of tax to the assessee and not that of adjustment to the total income or loss and therefore there was no need to provide an opportunity to the assessee. Further, since the assessee had failed to file the return of income along with Form 10-IC by the due date mentioned u/s. 139(1), the tax was correctly levied at the normal rate of tax.

The Bombay High Court allowed the petition of the assessee and held as follows:

“i) Admittedly, no intimation was given to the assessee as contemplated in the first proviso to Section 143 (1) (a). The first proviso, in our opinion, is clearly mandatory in nature, as it clearly stipulates that no adjustment ‘shall be made’ unless an intimation is given to the assessee of such adjustment either in writing or in electronic mode. Once this is a mandatory provision, no Intimation order u/s. 143(1)(a) can be passed, making any adjustment in the Return of Income filed by the assessee, unless such proposed adjustment is first intimated to the assessee and he has been given a chance to respond thereto.

ii) In the facts of the present case, no intimation as contemplated under the first proviso to Section 143(1)(a) was ever issued to the Petitioner. This is an undisputed fact. On this ground alone, the Intimation order dated 1st December, 2025, issued u/s. 143(1)(a), is liable to be quashed and set aside.

iii) We are unable to agree with the submission of the learned Advocate appearing on behalf of the Revenue that this exercise would be an exercise in futility because in the facts of the present case, admittedly, Form 10-IC was not filed by the due date. There could very well be a case where, after belatedly filing a return and belatedly filing Form 10-IC, and before the Intimation order is passed u/s. 143 (1)(a), the Petitioner could have obtained an order seeking condonation of delay in filing form 10-IC u/s. 119(2)(b) of the Act. This could possibly be the response that the assessee may give to the CPC in respect of the notice issued under the first proviso to Section 143(1) (a) and contend that the proposed adjustment ought not to be made. It is therefore incorrect to suggest that the intimation proposing an adjustment, as contemplated under the first proviso to Section 143(1)(a), would be an exercise in futility. Once we find that the said provision is mandatory in nature, the same has to be complied with by the Revenue. The Revenue cannot decide in which case it would be futile and in which case it would not.

iv) The Department is free to issue a notice to the assessee as contemplated under the first proviso to Section 143(1)(a) as well as take the response of the Petitioner, if any, into the consideration, and only thereafter pass a fresh Intimation order as contemplated u/s. 143(1)(a)”

BCAJ Admin

61. Group M Media India (P) Ltd. vs. Dy. CIT (International Tax): (2025) 483 ITR 593 (Bom): 2023 SCC OnLine 2740: (2024) 336 CTR 270 (Bom)

A. Y. 2018-19: Date of order 18/12/2023

S. 244A of ITA 1961 and Ss. 164(i), 165, 166 and 168(1) of the Finance Act, 2016

Equalisation levy — Refund — Interest on refund — Refund granted as excess Equalisation levy paid by assessee after three years — Obligation on Department to pay interest as compensation for use and retention of money collected in excess — Department’s contention that statute does not provide for payment of interest on refund of equalisation levy not tenable — High Court directed the Department to pay interest at the rate of six per cent from April 1 of the year following the financial year in which excess payments made by assessee till date of actual refund.

The petitioner assessee availed “specified services” as defined in clause (i) of section 164 of the Finance Act, 2016, effective from April 1, 2016. Section 164 of the Finance Act, 2016 ((2016) 384 ITR (Stat) 1) provides in clause (i), unless the context otherwise requires, “specified service” means online advertisement, any provision for digital advertising space or any other facility or service for the purpose of online advertisement and includes any other service as may be notified by the Central Government.

For the A. Y. 2018-19, the petitioner filed its statement of specified income originally on June 26, 2018 disclosing the total consideration for specified services at ₹3,99,41,76,889 and equalisation levy of ₹23,96,50,668. After declaring the total levy paid of ₹23,96,50,670, the assessee claimed a refund of ₹4,23,60,940.

By an intimation/order u/s. 168(1) of the Finance Act, 2016 the Department determined the refund at ₹4,23,60,940. However, despite repeated requests, the refund was not given. The assessee therefore filed a writ petition alleging that there is failure on the part of the respondents to release the undisputed refund due and determined by the respondents themselves in the intimation/order issued u/s. 168(1) of the Finance Act, 2016 ((2016) 384 ITR (Stat) 1) for the F. Y. 2017-2018 corresponding to the A. Y. 2018-2019 despite reminders sent and for a direction to the respondents to refund an admitted amount of ₹4,23,60,940 plus interest thereon. After filing the writ petition the Department gave the refund of the amount but refused to give interest on refund.

The Bombay High Court allowed the petition and held as under:

“i) The issue that remains to be decided in this petition is whether the petitioner was entitled to interest on the amount refunded.

ii) The stand of the Revenue is interest is not provided for refund of amounts deposited under the equalisation levy and, therefore, the question of payment of any interest does not arise.

iii) When the collection is illegal, there is corresponding obligation on the Revenue to refund such amount with interest in-as-much as they have retained and enjoyed the money deposited.

iv) In Union of India vs. Tata Chemicals Ltd. [(2014) 363 ITR 658 (SC); (2014) 6 SCC 335; (2014) 3 SCC (Civ) 553; 2014 SCC OnLine SC 176; (2014) 43 taxmann.com 240 (SC).] the apex court also held that refund due and payable to the assessee is debt owed and payable by the Revenue.

v) In the present case, it is not in doubt that the petitioner was entitled to refund of ₹4,23,60,940 because the amount has been paid after the petition was filed. Since the excess amount has been paid over by the petitioner on various dates during the F. Y. 2017-2018, in our view, the refund ought to have been processed and paid latest by July 31, 2018. The interest, therefore, of course, will become payable from April 1, 2018 if we apply the principles prescribed in section 244A of the Act. The amount, as noted earlier, has been paid only on August 21, 2023. Consequently, we are of the view that the petitioner is entitled to interest on this amount of ₹4,23,60,940 from April 1, 2018 up to August 21, 2023 at the rate of six per cent. per annum which is the rate prescribed u/s. 244A of the Act.

vi) This order shall be given effect to and the interest shall be paid over on or before February 15, 2024. If not paid, with effect from February 16, 2024, the rate of interest payable will be at nine per cent. per annum until the date of payment.

vii) This will be in addition to other proceedings to hold the Department and concerned officers to be in wilful disobedience of the orders passed by this court. The difference of three per cent. (nine per cent. – six per cent.) will be recovered from the Officer who will be responsible to have the interest paid.”

BCAJ Admin

89. Principal CIT vs. Vikram Dhirani

[2025] 472 ITR 342 (Del)

A. Y. 2007-08

Date of order: 20^th August, 2024

Ss.132 and 153A of ITA 1961

Search and seizure — Assessment in search cases — Precedents — Additions to income cannot be made on data appearing in pen-drive not unearthed during search which does not constitute incriminating material.

In an appeal by the Revenue, on the question whether the Tribunal erred in deleting the addition made to the income of the assessee in the assessment made pursuant to a search u/s. 132 of the Income-tax Act, 1961 for the A. Y. 2007-08, dismissing the appeal, the Delhi High Court held as under:

“i) Since the assessment initiated in respect of the A. Y. 2007-08 was one which had already stood concluded, the Tribunal had held that since the pen-drive and the data appearing thereon having not been unearthed in the course of the search u/s. 132 of the Act, it would not constitute incriminating material. It had consequently followed the view consistently taken by this court.

ii) The assessment was confined to section 153A and consequently the significance of the incriminating material found in the course of the search alone would be the basis for any additions to the income. Since the pen-drive was an article which was not recovered in the course of the search but constituted material which had been obtained by the Department through the exchange of information route, there was no ground to interfere with the view expressed by the Tribunal.”

BCAJ Admin

88. HansaMetallics Ltd. vs. Dy. CIT

[2025] 472 ITR 737 (P&H)

A. Y. 2012-13

Date of order: 22^nd January, 2024

S. 276C of ITA 1961

Offences and Prosecution — Wilful attempt to evade tax — Delay in payment of tax does not amount to evasion of tax — Prosecution not valid:

The Assessee filed its return of income for A. Y. 2012-13 on 29^th December, 2012 declaring total income at ₹8,20,53,544. As per the return of income, the self-assessment tax was pending. The self-assessment tax was paid belatedly on 10^th July, 2013 along with interest.

The Assessing Officer issued a notice dated 11^th February, 2014 requiring the Assessee and its directors to show cause as to why the prosecution proceedings u/s. 276C(2) should not be initiated. On the basis of legal opinion sought from the standing counsel of the Income-tax Department, a complaint was filed u/s. 276C read with section 278B of the Act.

Thereafter, the Criminal Court came to the conclusion that a case was made out and charges were framed.

The Assesseecompany and its directors filed a petition for quashing the complaint and all the consequential proceedings arising therefrom. The Assessee’s contention was that there was no evasion of tax at all. Though there was a delay in payment of tax, but the said tax was admitted / acknowledged in the return of income. On the other hand, the Department contended that the Assessee was well within his financial limits to pay the tax at the time of filing return of income, yet it did not choose to pay the tax and thereby caused loss to the revenue.

The Punjab and Haryana High Court allowed the petition and held as follows:

“i) Prosecution u/s. 276C(2) of the Income-tax Act, 1961 read with the other provisions of the Act can only be launched if there was a wilful evasion or attempt at evasion of either tax, penalty or interest. Delay in payment of Income-tax would not amount to evasion of tax.

ii) It was not in dispute that the Income-tax was self assessed and payment thereof was also made, though belatedly. The tax along with interest was paid on July 10, 2013. The show-cause notice for delayed payment was sent only on February 11, 2014 and February 24, 2014 pursuant to which the complaint was instituted. Therefore, by no stretch of imagination could it be held that there was any evasion of tax on the part of the assessees, though there was a delay in the payment of the tax for which interest was paid. The prosection was not valid.”

BCAJ Admin

87. Principal CIT vs. Jupiter Capital Pvt. Ltd.

[2025] 472 ITR 561 (Kar)

A. Y. 2014-15

Date of order: 20^th February, 2023

S. 2(47) of ITA 1961

Investment business — Scope of definition of transfer — Capital loss — Reduction in number of shares and face value of shares remaining same — Change in redeemable value of shares — Extinguishment of rights in shares — No transfer within meaning of s. 2(47).

In an appeal by the Revenue,on the question whether the Tribunal was right in setting aside the disallowance of capital loss claimed by the assessee by holding that there was extinguishment of rights of shares when no such extinguishment of rights was made out by the assessee as required under section 2(47) of the Income-tax Act, 1961 and there was no reduction in face value of shares, dismissing the appeal, the Karnataka High Court held as under:

“i) The undisputed facts were that pursuant to the order passed by the High Court of Bombay, number of shares had been reduced to 9,988. The face value of the shares had remained same at ₹10 even after the reduction. The Assessing Officer’s view that the voting power had not changed as the percentage of the assessee’s share of 99.88 per cent. had remained unchanged was untenable because if the shares were transferred at face value, the redeemable value would be ₹99,880 whereas the value of 14,95,44,130 number of shares would have been ₹1,49,54,41,300.

ii) The Tribunal had rightly followed the authority in Karthikeya vs. Sarabhai v. CIT [1997] 228 ITR 163 (SC); (1997) 7 SCC 524; 1997 SCC OnLine SC 152, with regard to meaning of transfer by holding that there was no transfer within the meaning of the expression “transfer” as contained in section 2(47). There was no error in the order of the Tribunal setting aside the disallowance of capital loss claimed by the assessee by holding that there was extinguishment of rights of shares.”

BCAJ Admin

86. Principal CIT vs. International Coal Ventures Pvt. Ltd.

[2025] 472 ITR 307 (Del)

A. Ys. 2012-13

Date of order: 20^th December, 2024

S.4 of ITA 1961

Capital or revenue receipt — Interest on short-term fixed deposit — Capital work-in-progress — Assessee joint venture formed by public sector undertakings to acquire coal mines overseas — Interest earned on fixed deposit of share capital prior to acquisition of coal mines and amounts returned on abandonment of proposal — Interest earned prior to commencement of business on funds brought in form of share capital for specific purpose — Interest received on fixed deposit part of capital cost and to be treated as capital work-in-progress.

The assessee was a joint-venture company formed by five public sector undertakings, SAIL, CIL, RINL, NMDC and NTPC, for the purpose of ensuring adequate and dependable coal supply for its promoter companies. During the financial year relating to the A. Y. 2012-13, the assessee pursued a proposal to acquire and develop a coal mine overseas and received equity contributions from some of these undertakings. The amounts received from RINL were kept in a fixed deposit with a bank. Subsequently since the proposal for acquisition of the coal mine which was being pursued was abandoned, the assessee refunded the amount received from RINL. Since the assessee had earned interest on the amount received from RINL, it paid interest to RINL which confirmed that the amount received by it was accounted for as income in its hand and tax was paid.

In the appeal by the Revenue, on the question whether interest on funds that were called for and earmarked for a specific purpose of acquiring a coal mine and deposited in the short-term fixed deposit could be construed as incidental to setting up the business of acquisition of a coal mine, dismissing the appeal, the Delhi High Court held as under:

“i) The accounting treatment of capitalising expenses during the preoperative stage of setting up a business, rests on the rationale that the cost incurred for setting up the profit-making apparatus is required to be accounted for as the value of that asset. Such expenditure is incurred for bringing the undertaking into existence. Thus, it would not be apposite to treat such preoperative expenses as revenue expenses since it cannot be matched with the revenue receipts. The amount incurred for construction or acquisition of the asset would necessarily have to be accounted as the cost of that capital asset. This principle applies only in cases where substantial time is required to construct the asset or bring the asset to use. The financial costs for such assets are thus
considered as a part of the intrinsic value of the asset. There is a distinction between the price of an asset and its cost. On the same principles, the amounts received which are directly linked to the
acquisition or construction of the asset, are required to be reduced from the capital cost of the said asset. In one sense, such receipts mitigate the cost of the capital asset and it is essential to reflect the correct cost of the asset.

ii) The Accounting Standard 16 applies to a “qualifying asset”, which is defined as an asset that takes substantial period to get ready for its intended use or sale and also explains that the substantial period of time as contemplated under the standard, primarily depends upon the circumstances of each case. Ordinarily, the same should be considered as twelve months unless a shorter or longer period is justified in the facts and circumstances of the case. It also explains that for estimating this period, “the time which an asset takes technologically or commercially, to get ready for its intended use or sale”, is required to be considered.

iii) Accounting treatment of various items are guided by an overarching principle that final accounts should reflect the true and fair view of the reported entity. In order for a capital value of an asset (which takes a considerable time to bring it to intended use) to be fairly disclosed on historical cost basis, it would be essential to subsume within the cost of the said asset all elements of expenditure, which directly contribute to the cost of that asset. It is for this reason that general administrative cost of an entity which cannot be attributed to a particular asset is not construed as the cost of that asset. But the expenditure that is directly linked to the construction or acquisition of a qualifying asset, is required to be treated as a part of its cost.

iv) If the interest was earned on the amounts which were temporarily kept in fixed deposits in the course of acquisition of the coal mine to set up the assessee’s business, the interest earned would require to be accounted for as the part of the capital value of the business or asset. A caveat was added that such accounting treatment was or would be applicable only if the nature of the asset was such that required time for construction or for putting it in use. Illustratively, the same would be applicable where the asset is to be constructed, developed or is of a nature that required considerable time to bring it to use. In case where a plant is being set up in a factory and the requisite funds for setting up the same are deployed for a period of time, the interest paid on the amount borrowed for the said purpose and interest earned on temporary deposits during the course of deployment are required to be accounted for as a part of the capital costs. This is not true for an off-the-shelf product. Illustratively, if a motor vehicle is purchased from borrowed capital, neither the interest paid nor the interest earned on the funds borrowed for payment of consideration of the same can be accounted for as a part of the cost of the said asset.

v) The assessee was set up to acquire resources to ensure supply of coal and at the material time it was in the process of negotiation for acquiring a coal mine, to set up its business, and thus called for capital from its shareholders for the purpose of payment of the acquisition costs. It was the part of the said funds that were kept in the short-term fixed deposit in the bank for pending payment of the construction. The attempt to acquire the coal mine was aborted and thus the amounts borrowed were repaid to RINL. It was not disputed that the funds in question were not surplus funds of the assessee, the same were called for and were earmarked for acquisition of a coal mine overseas which was to be the assessee’s undertaking as the assessee was formed for the purpose of acquiring and operating a coal mine overseas.

vi) The interest received on borrowed funds, which were temporarily held in interest-bearing deposit, was a part of the capital cost and was required to be capitalised as capital work-in-progress.”

BCAJ Admin

85. World Vision India vs. NFAC

[2025] 472 ITR 564(Mad.)

A. Y. 2018-19

Date of order: 19^th December, 2024

Ss. 37, 142(2A) and 144of ITA 1961:

Best judgment assessment — Estimation of gross receipt — Special Audit Report — Relates only to a particular A. Y. — Special Audit Report for earlier year cannot be the basis to conclude following of similar pattern by Assessee in later A. Y. — Disallowance of administrative and entire salary expenditure —Matter remanded to the AO for re-computation of income.

The assessee filed its return of income for AY 2018-19. The said return was selected for scrutiny assessment. The assessment was completed and order dated 14^th September, 2021 was passed. In the said order, the Assessing Officer relied upon special audit report dated 2^nd June, 2017 as also the assessment orders passed for A. Ys. 2014-15, 2015-16 and 2017-18. The report dated 2^nd June, 2017 was prepared u/s. 142(2A) of the Act for AY 2014-15, pursuant to which the assessment orders for AYs 2014-15, 2015-16 and 2017-18 were passed. The orders for AY 2014-15, 2015-16 and 2017-18 were challenged in appeal before the CIT(A).

In the A. Y 2018-19, the Assessing Officer concluded that the Assessee had applied 67 per cent of the gross receipts for charitable purposes and for the balance the Assessee had failed to establish any documents to substantiate that the amount was utilised for charitable purposes and therefore the demand has been confirmed.

The Assessee filed a writ petition challenging the assessment order mainly on the ground that the basis for coming to the conclusion that the Assessee has failed to utilize the amount for charitable purposes is based on the special audit report dated 2nd June, 2017 which was generated for AY 2014-15. The Hon’ble Madras High Court allowed the petition and remanded the matter back to the AO for the re-computation of income and held as follows:

“i) Prima facie reliance on the special audit report u/s. 142(2A) generated for the earlier assessment years could not be a basis to conclude that the similar pattern would have been followed by the assessee during the subsequent assessment years and to do so would amount to assessment by sampling. The special audit report was for the A. Y. 2014-15. In terms of section 142(2A) the special audit report could relate only for a particular assessment year since the expression used is, “if at any stage of the proceedings before him”, the Assessing Officer, having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialised nature of business activity of the assessee, and the interests of the Revenue, was of the opinion that it was necessary so to do, he may, with the previous approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, direct the assessee to get either or both of, (i) getting the accounts audited by an accountant, as defined in sub-section (2) of section 288 , nominated by the competent authority or (b) getting the inventory valued by a cost accountant nominated by the competent authority.

ii) The assessment order indicated that no allowance had been made for the expenses incurred by the assessee towards administrative and salary expenses of the assessee and had only been allowed to accumulate 15 per cent. of the gross receipt. It was the contention of the Department that if no other amount was to be allowed, the Department had to make best judgment assessment u/s. 144. Therefore, the assessment order was set-aside and the matter was remitted back to the Assessing Officer to pass a fresh order on the merits and in accordance with law independently without getting influenced by the special audit report u/s. 142(2A) generated for the A. Y. 2014-15. Since the re-computation of income required a proper consideration, the assessee was directed to give a proper reply with proper evidence explaining the expenses which it sought to exclude.”

BCAJ Admin

84. Neha Bhawsingka vs. UOI

[2025] 472 ITR 335 (Cal)

A. Y. 2022-23

Date of order: 22^nd November, 2024

Ss.142(1), 143(2), 144, 144B, 156, 271(1)(d) and 271AAC(1) of ITA 1961

Assessment — Faceless assessment — Ex parte assessment order — Notices of demand and penalty — Validity — Notices u/s. 142(1) and 143(2) — Mandatory condition — Failure to serve notices on assessee — Notices sent to unregistered e-mail address though assessment orders for earlier and subsequent A. Ys. sent to correct e-mail address — Reliance on assessee’s permanent account number database or alternate e-mail address cannot substitute for statutory compliance — Procedural irregularities in issuing and serving notices undermine jurisdiction and legality of entire assessment process — Ex parte assessment order and consequent demand, penalty notices quashed — Department given liberty to issue fresh notices if necessary in accordance with law:

The assessee was in trading business. For the A. Y. 2022-23, an intimation u/s. 143(1) of the Income-tax Act, 1961 was sent to the assessee’s registered e-mail address, confirming that the return was processed without any discrepancies. Similar communications for the earlier A. Ys. 2019-20 to 2021-22 and the subsequent year 2023-24 were also sent to the same registered e-mail address. While accessing the Income-tax portal, the assessee’s tax consultant discovered that several notices, including u/ss. 143(2) and 142(1) and show-cause notices were issued against the assessee for the A. Y. 2022-23 and sent to an unregistered e-mail address. The ex parte assessment order was passed u/s. 144 read with section 144B making disallowances on account of purchases as non-genuine and unsecured loan as unexplained credit u/s. 68. Penalty notices u/ss. 271(1)(d) and 271AAC(1) were also issued.

The assessee filed a writ petition contending that the assessment order and demand notices were vitiated since they were not served at the assessee’s registered e-mail address as required u/s. 282 but were sent to an unregistered e-mail address which was not associated with her. The Calcutta High Court allowed the petition and held as under:

i) The assessment order passed u/s. 144 read with section 144B, the consequent demand notice u/s. 156 and the penalty notices u/s. 271(1)(d) and 271AAC(1) were vitiated due to procedural lapses and non-compliance with statutory provisions. The notices u/s. 143(2) and 142(1) were not served to the assessee at her registered e-mail address as mandated u/s. 282 but were sent to an unregistered e-mail address, thereby depriving the assessee of a fair opportunity to respond, violating the principles of natural justice.

ii) The assessee had a legitimate expectation, arising from consistent past practices, that all communications would be sent to her registered e-mail address. The failure to adhere to this established protocol and the absence of proper service of notices invalidated the subsequent assessment proceedings and the ex parte assessment order passed u/s. 144 and 144B. The Revenue’s reliance on the assessee’s permanent account number database or an alternate e-mail address could not substitute for statutory compliance. Procedural irregularities in issuing and serving notices undermine the jurisdiction and legality of the entire assessment process. The assessment order could not be completed without issuance of a notice u/s. 143(2). Hence, the assessment proceedings and the assessment order without issuing the notice u/s. 143(2) were bad in law.

iii) Accordingly, the assessment order, demand notice and penalty notices were quashed and set aside. The authorities were directed to issue fresh notices, if deemed necessary, strictly adhering to the statutory provisions and ensuring proper service to the assessee.”

BCAJ Admin

83. Religare Enterprises Ltd. vs. NFAC

[2025] 472 ITR 329 (Del)

A. Y. 2013-14

Date of order: 28^th November, 2024

Ss. 143(3), 144B and 254 of ITA 1961

Assessment — Faceless assessment — Jurisdiction of NFAC — Exempt income — Jurisdictional AO passing assessment order giving effect to order of Tribunal on issue of disallowance u/s. 14A — Order attaining finality — NFAC cannot continue assessment proceedings in concluded assessment — Assessment Order passed by NFAC set-aside.

The Assessee filed revised return of income for AY 2013-14 declaring total income at ₹2,70,87,75,810. This included income from dividend amounting to ₹4,14,800 which was exempt. The Assessee had not claimed any deduction in respect of expenses amounting to ₹1,83,55,525 u/s. 14A of the Income-tax Act, 1961. The Assessee’s case was selected for scrutiny and an addition of ₹1,93,79,583 was made u/s. 14A of the Act in addition to the amount of ₹1,83,55,525 already disallowed u/s. 14A of the Act. The AO also made disallowances in respect of fines and penalties.

The CIT(A) partly allowed wherein the CIT(A) deleted the additional disallowance made by the AO. In the appeal before the CIT(A), the Assessee had raised an additional ground and claimed allowance of ₹1,83,55,525 which it had not done under the revised return.

The Tribunal remanded the matter regarding disallowance u/s. 14A and disallowance of fines and penalties to the AO for consideration afresh with the direction that the disallowance u/s. 14A was required to be worked out in respect of only those investments which were yielding exempt income. Thereafter, the Assessee filed a Miscellaneous Application requesting that the AO be directed to restrict the disallowance to the extent of exempt income. The Miscellaneous Application was allowed and the Tribunal modified its order and directed that the disallowance u/s. 14A of the Act be restricted to the exempt income.

Pursuant to the aforesaid directions, the Jurisdictional AO passed an order dated 4th February, 2023 to give effect to the directions issued by the Tribunal and restricted the disallowance u/s. 14A to the extent of dividend income. However, the AO did not give any specific findings in respect of fines and penalties. The Assessee also did not file any appeal against the said order.

Thereafter, the National Faceless Assessment Centre (NFAC) issued an intimation informing the Assessee that the assessment would be completed in accordance with the procedure u/s. 144B of the Act. Against this, the Assessee filed its objections for continuing any proceedings pursuant to the order passed by the Tribunal as the Jurisdictional AO had already passed an order to give effect to the order passed by the Tribunal. However, the NFAC passed an order, once again making the same disallowance u/s. 14A and disregarded the directions of the Tribunal. The NFAC also expressly stated that its order would supersede the order of the Jurisdictional AO.

The Assesseefiledwrit petition against the said order of NFAC. The Delhi High Court allowed the writ petition and held as follows:

“i) There is no provision under the Income-tax Act, 1961 for continuing assessment proceedings after an assessment order is passed. Concluded assessments cannot be opened except by recourse to specific provisions including section 147 of the Act.

ii) The issue of disallowance u/s. 14A had stood concluded by the order dated February 4, 2023. The Assessing Officer did not issue any specific findings regarding the fines and penalties amounting to Rs. 35,18,803 and the assessee had not filed any appeal against such decision. Notwithstanding that an order dated February 4, 2023 passed by the jurisdictional Assessing Officer, the National Faceless Assessment Centre had proceeded to pass another order. Although, the jurisdictional Assessing Officer had passed an order giving effect to the order dated February 25, 2021 and the order dated February 25, 2021 as modified by the order dated April 1, 2022 by the Tribunal, the National Faceless Assessment Centre had issued an intimation dated February 15, 2023 informing the assessee that the assessment would be completed in accordance with the procedure u/s. 144B . The assessee had filed its objections for continuing any proceedings pursuant to the order passed by the Tribunal since the jurisdictional Assessing Officer had already passed an order dated February 4, 2023 giving effect to the orders passed by the Tribunal.

iii) The National Faceless Assessment Centre had passed an order dated March 29, 2023 once again reiterating the disallowance of ₹3,60,51,977 made u/s. 14A, which included an additional disallowance of ₹1,93,79,583 which was made by the Assessing Officer in the assessment order dated March 28, 2016. Although, the National Faceless Assessment Centre had found that the order dated April 1, 2022 passed by the Tribunal had confined the disallowance u/s. 14A to ₹4,14,800, such directions were disregarded and had also expressly stated that its order would supersede the order dated February 4, 2023 passed by the jurisdictional Assessing Officer. The order dated February 4, 2023 passed by the jurisdictional Assessing Officer had set out that it was an order to give effect to the order passed by the Tribunal wherein it was held to the effect that after appeal effect income of the assessee (since merged with REL) for the assessment year 2013-14 was recomputed at ₹2,69,43,53,890 under the normal provisions of the Act. Credit for tax deducted at source, advance tax and regular taxes paid were given after verification and interests u/s. 234A, 234B, 234C and 234D were being charged, as applicable.

iv) Therefore, there was no doubt that the proceedings pursuant to the directions issued by the Tribunal stood concluded by the order dated February 4, 2023. The initiation of further proceedings by the National Faceless Assessment Centre pursuant to the orders passed by the Tribunal was without jurisdiction. The assessment order passed u/s. 143(3) read with sections 254 and 144B was set aside.”

BCAJ Admin

82. Sunshine Capital Ltd. vs. DCIT

[2025] 472 ITR 293 (Del.)

A. Y. 2008-09

Date of order: 16^th April, 2024

Ss.153 and 254 of ITA 1961

Assessment — Order of assessment to give effect to order of Tribunal — Limitation — Commencement of limitation — Receipt of order of Tribunal — Meaning of “received” — Actual receipt of certified copy of the order not necessary — Knowledge of order of Tribunal sufficient.

The case of the Assessee was selected for scrutiny and assessment order u/s. 143(3) of the Income-tax Act, 1961 was passed after making various additions. CIT(A) partly allowed the Assessee’s appeal. The Tribunal, vide its order dated 08-10-2018 remanded the matter to the AO for the purpose of fresh assessment. The Tribunal also deleted the demand reflected on the Income Tax Portal.

Thereafter, the Assessee made several representations from July 2020 to August 2021 to the Department praying for rectification of the error with respect to the demand being reflected on the portal as well as the issue of refund. But there was no action by the Department. Since no reply was received by the Assessee upon representations, the Assessee filed an application in August 2021 in accordance with the Right to Information Act (RTI) to give effect to the order passed by the Tribunal. Pursuant to the RTI application, the AO passed an order in November 2021 wherein it expressed its inability to give appeal effect on the ground that it had not received the order passed by the Tribunal through proper channel. Against this order, the Assessee filed an appeal in December 2021 which came to be disposed vide order passed in January 2022 whereby it was decided that the information provided to the Assessee was adequate.

Thereafter, in February 2022, the Assessee filed an application to the registry of the Tribunal seeking information on service of order passed by the Tribunal. The Assessee was informed by the registry in March 2022 that the order passed by the Tribunal was duly sent to the CIT(Judicial) on 24^th August, 2018 for further action. In March 2022, the Assessee also made subsequent representations to rectify the error with respect to the demand reflected on the portal, but to no avail.

The Assessee therefore filed writ petition challenging the inaction on the part of the Department and contended that despite the order passed by the Tribunal being communicated to the concerned authority of the Income tax Department within stipulated time, the Department failed to pass a fresh assessment order. The Delhi High Court allowed the petition and held as follows:

“i) Section 153 of the Income-tax Act, 1961, stipulates that an order for fresh assessment pursuant to an order u/s. 254 or section 263 or section 264 of the Act may be made at any time before the expiry of a period of nine months. The provision further encapsulates that the period has to be calculated from the end of the financial year in which the order u/s. 254 of the Act is received by the authorities mentioned in the section. Regarding the word “received” the language couched in section 260A of the Act is similar to that of section 153(3). The contextual interpretation of the phrase “received” postulates the time when the parties are notified about the pronouncement and are represented at that instant in the open court. The legislative intent behind the enactment of section 254(3) of the Act does not prescribe shifting of the onus of proving the receipt of the order under the provision on the assessee, the expression “is received” used in section 153(3) of the Act cannot mean to extend the limitation till perpetuity. The expression “received” employed in section 153(3) of the Act would not strictly mean that a certified copy of the order of the Tribunal, in the given facts and circumstances, ought to have been necessarily supplied to the concerned authority through an appropriate mechanism devised by the respondents. Further, section 254(3) of the Act casts a duty upon the Tribunal to send the copy of the orders passed under section 254 of the Act to the assessee as well as to the Principal Commissioner or Commissioner. A conspectus of section 254 read with section 153(3) of the Act would reveal that the provisions cannot be made applicable to the detriment of the assessee.

ii) The material on record showed that the Tribunal sent the order of the remand to the Department on October 24, 2018, but the Department denied having received it. It was sufficient to take note of the Tribunal’s stand of sending a copy of the order to the Department. Moreover, the assessee, as early as on July 30, 2020 itself, made the first communication to the Department to give effect to the order in appeal. The record would show that the subsequent representation sent by the assessee on July 9, 2021 to the Department contained all the requisite information of the orders passed by the concerned authorities in the case of the assessee. No concrete steps had been taken by the Department. Except harping upon the word “received”, the Department had not taken any measure to give effect to the order in appeal. Taking into consideration the Tribunal’s response that the concerned order was sent on October 24, 2018, the Department ought to have passed the order to give effect to the order in appeal within twelve months from then. However, that had not been done by the Department till date.

iii) Since the Department had failed to comply with the order of the Tribunal in passing a fresh assessment order within the stipulated time, the writ petition was to be allowed with the directions to the Department to ensure that the demands of quantum amounting to ₹34.70 crores and penalty amounting to ₹33.98 crores being reflected in the Income-tax Business Application portal were removed within two weeks, that the amount of ₹25,44,671 lying with the Department were refunded to the assessee with applicable interest as per law, that the properties of the assessee were released within two weeks of the passing of this judgment, and that the three bank accounts were defreezed by the Department within two weeks.”

BCAJ Admin