This weekly round-up analytically summarises the key tax judgments of the Supreme Court and all High Courts reported at Taxscan.in during the previous week from February 9th to February 16th of 2024.
The Supreme Court of India dismissed a special leave petition (SLP) filed by the Income Tax Department regarding the deletion of an addition on submission of a proper cash book. The petition arose from a final judgment of the High Court of Gujarat, which found no defects in the cash book submitted by the assessee and upheld the deletion of the addition. Justices Pamidighantam Sri Narasimha and Aravind Kumar observed that they were not inclined to interfere and dismissed the SLP.
The Supreme Court of India disposes of the Special Leave Petition ( SLP ) filed by the Income Tax Department in the challenge regarding the interpretation of Section 32(2) of the Income Tax Act, 1961. The SLP arose out of impugned final judgment and order dated 05-02-2018 in ITA No. 46/2018 passed by the High Court of Gujarat at Ahmedabad. A Two-Judge of the Supreme Court of Justice Pamidighantam Sri Narasimha and Justice Aravind Kumar observed that “In view of the order passed in PCIT vs. Petrofils Co-operative Ltd, the Special Leave Petitions are disposed of. Pending applications, if any, shall stand disposed of.”
The provision for permitting depreciation is included in Section 32 of the Income Tax Act of 1961. This section is governed by Rule 5 of the Income Tax Rules, 1962. The Income Tax Act permits the deduction when the cost of the tangible or intangible asset utilised by the assessee decreases. The income-tax department determines the depreciation at the time of the deduction based on the asset’s life cycle cost, not the asset’s total cost.
The Delhi High Court directed the release of the seized currency as there is no justification in the respondent’s holding that the payment has not been made and the option has lapsed. The respondents denied the redemption of goods by stating that the petitioner did not avail of the option within the prescribed period of three months or even 120 days as directed under Section 125 of the Customs Act, 1962.
A division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja observed that “Since the currency was already lying with the department and only the balance amount was to be released after adjusting the redemption fine and penalty, no further option was to be exercised by the petitioner.”
The Allahabad High Court, while staying the impugned order issued by the Goods and Services Tax ( GST ) authorities on 29.12.2023 has connected and listed the present matter with the lead case M/s Graziano Trasmissioni.
The bench of Justice Manjive Shukla and Justice S.D. Singh ordered that “ Connect and list thereafter alongwith Writ-Tax No. 1256 of 2023. For reasons contained in the order passed in the lead case and subsequent orders passed in other cases where similar orders are under challenge, till the next date of listing, effect and operation of the impugned order dated 29.12.2023 shall remain stayed.”
The Delhi High Court modified the order cancelling Goods and Service Tax ( GST ) Registration retrospectively without a valid reason. The court observed that a taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and warranted.
A division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja observed that the taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and warranted. The Court modified the order of cancellation to the extent that the same shall operate with effect from 30.06.2020, i.e., the date on which the petitioner discontinued the business. To Read the full text of the Order CLICK HERE
The Telangana High Court has held that a different view taken by the arbitrator is not a ground to set aside the award. It was viewed that the Arbitrator after considering all the aspects has passed the impugned Award, which was confirmed by the II Additional District & Sessions Judge.
A single bench of Justice M G Priyadarsini observed that the Arbitrator after considering all the aspects has passed the impugned Award, which was confirmed by the II Additional District & Sessions Judge, Rangareddy District at LB Nagar. The appellant failed to make out any of the grounds to set aside the impugned Award, which was confirmed by the II Additional District & Sessions Judge, Rangareddy District at LB Nagar.
The Delhi High Court has held that sales tax subsidy/incentive is a capital receipt and upheld the order of the Income Tax Appellate Tribunal ( ITAT ). The argument advanced on behalf of the appellant/revenue that a perusal of the 1993 Scheme would show that the incentives were tied in with production is untenable.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the respondent/assessee was entitled to avail of sales tax subsidy/incentive under two eligibility certificates [ as amended ] for 14 years and 13 years & 11 months, respectively, subject to a maximum entitlement of 110% of capital investment made in setting up of the industrial units.
The Kerala High Court has set aside the assessment order as no draft assessment order was prepared as mandated under Section 144B of the Income Tax Act, 1961, and a copy of the draft assessment order was not provided.
The single bench of Justice T.R.Ravi observed that respondents are granted permission to issue new assessment orders, provided they adhere strictly to the procedures outlined in Section 144B of the Income Tax Act, 1961.
The Kerala High Court set aside the assessment order as it deemed the assessing authority’s failure to file objections to the draft assessment order palpably wrong.
The Petitioner was a non-resident Indian and the petitioner was an eligible assessee under Section 144B of the Income Tax Act for finalising the assessment order. The petitioner filed return of her income for the assessment year 2014-15 on 13.08.2014 declaring the total income at Rs. 41,92,510/-.
Justice Dinesh Kumar Singh’s single bench found the assessment order flawed due to the inaccurate claim by the assessing authority that no objection was filed. The bench overturned the order and directed reconsideration by the authority, considering directions from the Dispute Resolution Panel. The writ petition was granted accordingly.
The Gujarat High Court has validated the legality of an Income Tax search conducted at the premises of a practising advocate with the aim of uncovering evidence of tax evasion by his clients.
Following a petition filed by Advocate Maulik Sheth, whose office and residence underwent a four-day search by Income Tax officials, Justices Bhargav Karia and Niral Mehta ruled that the incriminating material seized from the lawyer could be used by the department against third parties, specifically the advocate’s clients, under certain circumstances.
In a recent case, the Allahabad High Court while allowing the writ petition filed by the petitioner observed that the revenue cancelled the Goods and Service Tax ( GST ) refund without affording opportunity for hearing the petitioner. The writ petition was filed by the petitioner Kec International Limited by challenging the order of cancelling the GST refund granted earlier to the petitioner.
The court observed that Section 75(4) of the Act, 2017 gives perfect right to the petitioner to be personally heard before any adverse order may be passed. Therefore the court determined that “Since the statutorily incorporated right of natural justice has been violated for no good reason, we observe that alternate remedy that otherwise exists may not operate as a bar to entertain the present petition”. After analysing the facts and arguments of both parties, a division bench of Chief Justice Satish Chandra Sharma and Justice Tushar Rao Gedela allowed the writ petition and observed that cancellation of Goods and Service Tax ( GST ) refund was without affording opportunity for hearing to the petitioner.
In a significant ruling the Madras High Court observed that the non-production of original tax invoice from registered dealer and reversal of input tax credit ( ITC ) by the Value Added Tax ( VAT ) Department does not amount to double taxation. On 11.03.2009, the third respondent had issued a notice proposing to reverse the Input Tax Credit claimed by the petitioner to the tune of Rs.1,04,673/- for the month of September 2008 on the ground that the registration of the selling dealer was already cancelled.
The Division Bench of Justices D. Krishnakumar and R. Vijayakumar ruled that a registered dealer must strictly adhere to Section 19 of the TNVAT Act 2006 to claim benefits. As the petitioner failed to produce the original tax invoice from a registered dealer, they couldn’t contest the reversal of Input Tax Credit. Additionally, the petitioner made purchases months after the selling dealer’s registration was cancelled, making the allegation of double taxation untenable.
In a recent judgement, the High Court of Kerala remanded the matter of Income tax addition for fresh adjudication as the revenue failed to issue a show cause notice enquiring about details of an unsecured loan received from 5 persons. The Court found that unless and until the petitioner was put to notice, in respect of the transaction of the aforesaid 5 persons, he did not need to give any response in respect of the proposed additions.
The single bench of Justice Dinesh Kumar Singh disposed of the writ petition and the matter was remanded back to the assessing authority, to pass a fresh assessment order. The petitioner is directed to file his response / supporting documents in respect of the loan advanced by the 5 persons. The respondents are directed to activate the link with intimation to the petitioner to enable the petitioner to file his explanation in respect of these 5 transactions only.
A two judge bench of the Delhi High Court allowed the demand of interest on the delayed carry forward of CENVAT credit towards assessee by Revenue. The bench instructed revenue to take necessary steps to pay the delayed carry forward of CENVAT credit in compliance with the law.
The two judge bench comprising Sanjeev Sachdeva and Ravinder Dudeja Instructed the Revenue to take necessary steps to pay delayed carry forward of CENVAT credit in compliance with the law. The assessee was represented by N K Sharma. Revenue was represented by Ruchir Mishra, Mukesh Kumar Tiwari and Reba Jena Mishra.
A Division Bench of the Kerala High Court confirmed demand of luxury tax in the absence of figures substantiated by accounts maintained by the assessee, Bethsaida Hermitage & Tourism (P) Ltd.
A Division Bench of Dr Justice AK Jayasankaran Nambiar and Dr Justice Kauser Edappagath observed that “It is based on the submissions of the assessee himself and the figures declared by the assessee that the said turnover was subjected to tax under the Kerala Tax on Luxuries Act. In the absence of any figures substantiated by the accounts maintained by the assessee, produced at any stage before the authorities below, we see no reason to doubt the correctness of the decision of the Tribunal confirming the demand of tax under the said head.” “We are of the view that if the petitioner has any grievance regarding the correctness of the said order of the assessing authority, to the extent it does not adhere to the directions of the Tribunal in the order, it is for him to agitate the same before the appellate authority, on merits. Thus, without prejudice to the last-mentioned liberty reserved to the petitioner, we dismiss this OP ( TAX ) as devoid of merit.”
The Kerala High Court dismissed a writ petition as notice of assessment order communicated via email given to the Income Tax Department for communication purposes. The present writ petition has been filed by the petitioner who is an assessee under the provisions of the Income Tax Act, 1961. Against the assessment orders for the assessment years 2011-12 to 2014-15, the petitioner had filed appeals.
A Single Bench of Justice Dinesh Kumar Singh observed that “The petitioner had received the communications in respect of the appeal against the assessment order for the assessment year 2017-18 on the e-mail ‘middleeast132@gmail.com’ and petitioner has also submitted response to the communication sent by the Department.” “Therefore, I am of the view that when the petitioner himself has given multiple e-mail ids and petitioner has responded to the notice issued on e-mail id ‘middleeast132@gmail.com’ on which the several communications for hearing of the appeal were issued, I find the stand of the petitioner not tenable and, therefore, the writ petition is dismissed” the Bench noted.
A division bench of the Delhi High Court has held that Section 64A of Sale of Goods Act has no applicability to the obligation under Section 171 of the Central Goods and Services ( CGST ) Act.
The assessee(s) contended that the levy of penalty and interest cannot be ordered in the absence of corresponding specific substantive provisions under the CGST Act. They submitted that the consequences of the breach of Section 171 of CGST Act should have been provided for in the first instance in the CGST Act itself and such wide and uncontrolled powers could not have been conferred on National Anti-profiteering Authority(NAA) under Rules 127 and 133 of CGST Rules, 2017. The assessee further contended that they were deserving of tax exemption under provisions of section 64 A of Sale of Goods Act.
The bench further observed that tax reduction is given by sacrificing tax revenue and hence the Governments are legally competent to direct the suppliers to pass on the benefit of such tax reduction to the consumers after its notification. Any contract made in violation of public policy of passing on the benefit would be void.
The Delhi High Court granted anticipatory bail to a Chartered Accountant ( CA ) and observed that the allegation of forged Form 15CA/CB Certificate does not amount to a Money Laundering Offence. The applicant filed the bail application under section 438 of The Code of Criminal Procedure, 1973 ( the Code ) for the grant of anticipatory bail registered under sections 3 and 4 of The Prevention of Money Laundering Act, 2002 ( PMLA ).
The counsel for the petitioner argued that the twin conditions as per section 45 of PMLA are not applicable as the petitioner is a sick and infirm person and has already undergone repeated kidney surgeries and requires constant medical supervision and primarily relied upon Kewal Krishan Kumar ( supra ). The medical records/documents submitted by the petitioner reflect that the petitioner is suffering from various ailments including renal problem which requires constant medical treatment. Dr Justice Sudhir Kumar Jain observed that including incriminating material against the petitioner which are the statements made by co-accused/witness under section 50 of PMLA and the fact that their evidentiary value can be tested at the stage of trial, no generation of “proceeds of crime‟ from criminal activity and the petitioner being a sick and infirm person. Further held that “The petitioner, in case of arrest, shall be released on bail on furnishing personal bond in the sum of Rs.1,00,000/- with one surety of the like amount to the satisfaction of the concerned Investigating Officer or any other authorized person under certain conditions.”
In a recent decision, the Bombay High Court observed that the Assessing Officer ( AO ) cannot re-open assessment to remedy errors resulting from oversight in assessment proceedings. The petitioner had filed on 29th September 2015, its return of income for AY 2015-16. Petitioner declared income of ‘Nil’. An assessment under Section 143(3) of the Income Tax Act was made and an assessment order dated 14th December 2017 came to be passed determining Petitioner’s total income at Rs.58,96,900/-. The petitioner thereafter received the impugned notice dated 31st March 2021. Petitioner filed its objections vide letter dated 6th January 2021. Petitioner’s objections came to be rejected by the impugned order dated 25th March 2022.
A Division Bench comprising Justice Kamal Khata and Justice KR Shriram observed that “A bare perusal of the reasons recorded would show that there has been no failure on the part of Petitioner to truly and fully disclose material facts. Therefore, it is absolutely clear that the entire basis for forming a reason to believe there was escapement of income is from the records filed by Petitioner with return of income.” “Once all the primary facts are before him, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. If from primary facts, more inferences than one could be drawn, it would not be possible to say that the assessee should have drawn any particular inference and communicated it to the assessing authority” the Court held.
The Gauhati High Court stayed the operation of a show cause notice ( SCN ) seeking reversal of input tax credit ( ITC ) as there was default committed by the supplier. The petitioner in this writ petition has challenged a Show Cause Notice dated 11.01.2024 issued under Section 73[1] read with Section 50 of the Assam GST Act, 2017, whereby the petitioner was called up to show cause within 30 [ thirty ] days from the date of receipt of Show Cause Notice as to why an amount of Rs. 27,25,503/- [ SGST Rs. 11,26,329.00, CGST Rs. 11,26,329.00 and IGST Rs. 4,72,845.00 ] should not be recovered from the petitioner being the Input Tax Credit [ ITC ] excess claimed for the period: 2018-2019 plus interest and penalty.
A Single Bench of Justice Manish Choudhury observed that “The matter would require further examination. As sought by the counsel for the parties, list the case on 22.02.2024. Having regard to the submissions of the learned counsel for the petitioner, it is observed that the respondents shall not act upon the impugned Show Cause Notice dated 11.01.2024 till the next date of listing.”
The Delhi High Court set aside the order rejecting the Goods and Service Tax (GST) refund which was made Without Considering Submissions. It was observed that the order is cryptic as the reasoning does not emanate from the order and there is no specific consideration of the factual matrix or the contentions of the petitioner.
A division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja observed that the order is cryptic, the reasoning does not emanate from the order and there is no specific consideration of the factual matrix or the contentions of the petitioner in the Order-in Appeal. The Court set aside the appeal and restored the record of the Appellate Authority. The Appellate Authority shall decide the appeal afresh and pass a speaking order after giving an opportunity for personal hearing to the petitioner.
The Kerala High Court dismissed the writ petition after determining that the petitioner’s stand was not valid. The petitioner utilized multiple email IDs for submitting Income Tax Returns ( ITR ) and appeals, alleging that the appellate authority did not provide a hearing opportunity and neglected to communicate the order to the petitioner.
The petitioner, an assessee under the Income Tax Act, 1961, filed a writ petition challenging assessment orders for the years 2011-12 to 2014-15. Alleging a lack of opportunity for a hearing and non-receipt of communication from the appellate authority, the petitioner sought redress.
Justice Dinesh Kumar Singh, while rendering judgment, noted that that when the petitioner himself has given multiple email ids and petitioner has responded to the notice issued on e-mail id ‘middleeast132@gmail.com’ on which the several communications for hearing of the appeal were issued and the bench found that the stand of the petitioner is not tenable and, therefore, the writ petition was dismissed.
The Delhi High Court stayed the Show Cause Notice ( SCN ), involving allegations of wrongful use of Delhi Value Added Tax ( DVAT ) credentials for availing Input Tax Credit ( ITC ) under the Central Goods and Services Act ( CGST ), 2017 by third person. The petitioner, Aakash Gupta has challenged a Show Cause Notice dated 27.02.2023, asserting that they never applied for migration to the GST Scheme but were accused of availing ITC.
Considering the request submitted by the Respondent No. 3’s counsel, the bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja adjourned further proceedings on the Show Cause Notice until 21.02.2024. During this period, the proceedings on the Notice will remain stayed, allowing both parties to gather and present necessary evidence.
The Supreme Court of India dismissed a special leave petition ( SLP ) in the challenge regarding the judgment on software firms that purchase computer software from foreign software suppliers exempted from deducting TDS. The Court noted that the issue raised by the Revenue in the present special leave petition is covered against them vide judgment dated 02.03.2021 in the case of Engineering Analysis Centre of Excellence Private Limited vs. The Commissioner of Income Tax & Anr.
A Two-Judge Bench of Justice Sanjiv Khanna and Justice Dipankar Datta observed that “Recording the aforesaid, the special leave petition is dismissed, as the same is covered by the said decision of this Court. In case the review petition on the issue raised in the present special leave petition is allowed, it will be open to the petitioner(s) to get the present special leave petitions revived.”
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