Income Tax Appellate Tribunal
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Income Tax Appellate Tribunal (ITAT), Hyderabad: While deciding the instant appeal in the backdrop of Corporate Insolvency Resolution Proceedings (CIRP) pending against the assessee before the National Company Law Appellate Tribunal (NCLAT), the Bench of Rama Kanta Panda (Accountant Member) and K. Narasimha Chary (Judicial Member), held that once the proceedings have commenced by institution of application under Sections 7 or 9 or 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter IBC or the Code), the continuance of pending proceedings in any Court of law or Tribunal is prohibited.

The Tribunal observed the issue in the light of Sections 13 and 14 IBC 2016 and stated that under Section 13 of IBC, 2016, the adjudicating authority after admission of the application under Sections 7 or 9 or 10 of the Code, shall declare a moratorium which shall include the prohibition of the institution of suits or continuation of pending suits or proceedings against the corporate debtor in any court of law or tribunal

The Tribunal relied upon Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657 wherein it was held that once a resolution plan is duly approved by the Adjudicating Authority under Section 31 (1) of the Code, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors including the Central Government, any State Government or any local authority, guarantors and other stakeholders. All the dues including the statutory dues owed to the Central or any State Government, local authority (if not part of the resolution plan), shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued.

Decision:With the afore-stated observations and noting that there is an ongoing proceeding before the NCLAT instituted under the IBC, 2016, the Tribunal dismissed the appeals in limine.

The parties were granted leave to seek restoration of the appeals only if it is necessitated by the orders of the Corporate Insolvency Resolution Proceedings.[Deccan Chronicle Holdings Ltd. v. ACIT, 2022 SCC OnLine ITAT 474, decided on 22-07-2022]


Advocates who appeared in this case :

Assessee: S.Rama Rao, AR

Revenue: Y.V.S.T.Sai, CIT-DR


*Sucheta Sarkar, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: In the case where the Revenue had challenged Bombay High Court’s judgment affirming Income Tax Appellate Tribunal (ITAT)’s order for writing off assessee’s ₹ 10 crores as a bad debt, the 3-judge bench of UU Lalit, S. Ravindra Bhat* and Sudhanshu Dhulia, JJ has summarised the law on writing off a bad debt and has held that merely stating a bad and doubtful debt as an irrecoverable write off without the appropriate treatment in the accounts, as well as non-compliance with the conditions in Section 36(1)(vii), 36(2), and Explanation to Section 36(1)(vii) of the Income Tax Act, 1961 would not entitle the assessee to claim a deduction.

The Court explained that before the amendment in 1989, the law was that even in cases where the assessee had made only a provision in its accounts for bad debts and interest thereon, without the amount actually being debited from the assessee’s Profit and Loss account, the assessee could still claim deduction under Section 36(1)(vii) of the Act. With effect from 1 April 1989, with the insertion of the new Explanation under Section 36(1)(vii), any bad debt written-off as irrecoverable in the account of the assessee would not include any ‘provision’ for bad and doubtful debt made in the accounts of the assessee. In other words, before this date, even a provision could be treated as a write off. However, after this date, the Explanation to Section 36(1)(vii) brought about a change. As a result, a mere provision for bad debt per se was not entitled to deduction under Section 36(1)(vii).

After going through the scheme of the Act and various authorities of the Supreme Court, the Court summarised the following points:

(i) The amount of any bad debt or part thereof has to be written-off as irrecoverable in the accounts of the assessee for the previous year;

(ii) Such bad debt or part of it written-off as irrecoverable in the accounts of the assessee cannot include any provision for bad and doubtful debts made in the accounts of the assessee;

(iii) No deduction is allowable unless the debt or part of it “has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year”, or represents money lent in the ordinary course of the business of banking or money-lending which is carried on by the assessee;

(iv) The assessee is obliged to prove to the AO that the case satisfies the ingredients of Section 36(1)(vii) as well as Section 36(2) of the Income Tax Act, 1961.

Coming to the facts of the case, the assessee had contended that an amount of ₹ 10 crores was deposited with one M/s C. Bhansali Developers Pvt. Ltd. towards acquisition of commercial premises in 2007. It was contended that the project did not appear to make any progress, and consequently, the assessee sought return of the amounts from the builder. When the latter did not respond, the assessee resolved to write off the amount as a bad debt in 2009. It was also contended that the amount could also be construed as a loan, since the assessee had ‘financing’ as one of its objects.

The Assessing Officer as well as the Appellate Commissioner of Income Tax [CIT(A)] had disallowed the sum of ₹ 10 crores claimed as a bad debt in determining its income under “Profits and Gains of Business or Profession”. The ITAT, however, allowed the assessee’s plea.

The Court noticed that there was nothing on record to suggest that the requirement of the law that the bad debt was written-off as irrecoverable in the assessee’s accounts for the previous year had been satisfied. Another reason why the amount could not have been written-off, was that the assessee’s claim was that it was given to M/s Bhansali Developers Pvt. Ltd. for acquiring immovable property – it therefore, was in the nature of a capital expenditure. It could not have been treated as a business expenditure.

Hence, it was held that the assessee’s claim for deduction of ₹ 10 crore as a bad and doubtful debt could not have been allowed. The findings of the ITAT and the High Court, to the contrary, are therefore, insubstantial and have to be set aside.

[CIT v. Khyati Realtors Pvt Ltd, 2022 SCC OnLine SC 1082, decided on 25.08.2022]


*Judgment by: Justice S Ravindra Bhat


For Petitioner(s): ASG N. Venkataraman, Advocate H. Raghavendra Rao and AOR Raj Bahadur Yadav

For Respondent(s): AOR Kavita Jha and Advocate Aditeya Bali

Income Tax Appellate Tribunal
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Income Tax Appellate Tribunal (ITAT), New Delhi: While deciding the instant appeal pertaining to the Assessment Year 2015-16 where the Revenue challenged the decision of CIT(A) for deleting the addition of Rs 4,33,18,870 made on account of unsecured loan under Section 68 of the Income Tax Act, 1961, the Bench of Shamim Yahya (Accountant Member) and Yogesh Kumar US (Judicial Member) held that the non-existence of the parties who have given loan to the assessee, clearly indicates their nature being prima facie bogus. Furthermore, non-discussion of the financials further cast doubt on the lender's creditworthiness.

Facts and Legal Trajectory of the case: The Assessing Officer (hereinafter AO) noted that the assessee had received unsecured loan during the Financial Year 2014-15 from approximately 26 people. The assessee was also asked to submit ITR of the relevant years for all the parties to prove their creditworthiness. The AO issued summons under Section 131(1A) to several parties at the address provided by the assessee, requesting their personal deposition and information. During the analysis of the bank statement of the parties concerned, the AO noted that the amount forwarded to the assessee was received by the lenders from some other accounts just before it was forwarded. However, neither anyone attended on the date given nor was any information requested by the summons filed.

Several reminders were issued, no one gave their personal attendance, but details and alibis were submitted through their authorized representative. In view of this conduct the AO raised doubt regarding their identity. The AO rejected the submissions of some of the parties that it was their saving from which they have given loan. Hence, the AO found the source to be unexplained and found 10 people to be of dubious credit. The AO also raised questions upon the genuineness of the transactions was not successfully explained by the assessee.

The assessee challenged the findings via an appeal to the CIT(A) who noted that the assessee had stated that all the details were given to the Assessing Officer. Furthermore, the CIT(A) observed that the assessee had precisely given the details and documents filed during the assessment proceedings for each party. Therefore CIT(A) rejected the AO's assessment and held that the assessee had proved the identity and genuineness of the transaction and creditworthiness thereby discharging the onus.

Contentions: Aggrieved with the afore-stated decision by the CIT(A), the Revenue appealed before the ITAT contenting that the CIT(A) erred in deciding the issue by ignoring the fact that the income of some of the parties/lender was not proportionate to the loan amount provided to the assessee.

It was further argued that that merely because identity of creditor is disclosed, the burden of assessee to explain money in his hands would not be discharged if the donor's creditworthiness is not proved to the satisfaction of the AO. It was submitted that the instant matter is a classic case of routing of unaccounted money in circuitatious manner.

Observations

  • Perusing the facts and the contentions, the Tribunal noted that the people who gave the loans were not present at their address, which clearly shows the lack of genuineness of the transactions.

  • It was also pointed out that only part figures for the financial were available and the entire financials of the loan given were not on record and the CIT(A) decided the genuineness of the transactions and the creditworthiness of the lenders relying upon the documents and data picked from here and there. The Bench was perplexed as to- “Without examining the entire financials of the parties, how their creditworthiness has been accepted by the CIT(A) itself is a mystery”.

  • The Tribunal expressed its confusion over the findings by the CIT(A) stating that “The powers of the CIT(A) is co-terminus with that of the Assessing Officer. In the appeal, if the CIT(A) was of the opinion that further enquiry was required, the same should have been done by the CIT(A) himself”.

Decision: With the afore-stated observations, the Tribunal remitted the issue to the AO and directed the assessee to cooperate and produce cogent evidence in support of identity, creditworthiness and genuineness of the transaction.

[ACIT v. Hare Krishna Orchid, ITA No.662/DEL/2020, decided on 12-08-2022]


Advocates who appeared in this case :

Revenue – Gayasuddin Ansari, Sr. DR;

Assessee – R.S. Singhvi, CA, Rajat Garg, CA and Satyajeet Goel, CA.


*Sucheta Sarkar, Editorial Assistant has prepared this brief.

Income Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Income Tax Appellate Tribunal (ITAT): While deciding the instant appeal wherein the relevant question arose that whether the interest paid on late payment of TDS after deduction can be claimed as expenditure for determining the taxable income; the Bench of A.D. Jain (Vice President) and Dr B.R.R Kumar (Accountant Member) examined the issue of allowability as per the provisions of Income Tax Act and various judicial pronouncements. The Bench held that interest payment on late payment of TDS is not eligible business expenditure for deduction and it is not compensatory in nature. Payment of interest on late deposit of TDS levied under Section 201(1-A) is neither an expenditure only and exclusively incurred for the purpose of the business and therefore the same is not allowable as deduction u/s 37(1) of the Act.

Facts of the case: The assessee via its letter dated 12-03-2015 submitted copy of ledger account of interest on TDS. The assessee itself agreed that interest on TDS amounting to Rs. 9,70,248 was not added back in the computation of income. Interest on TDS is not allowable as per provision of Income Tax Act, 1961. Accordingly, expenses of Rs. 9,70,248 were disallowed and added back to the income of the assessee.

Observations: The Tribunal considered the question of allowability notwithstanding the contentions of the assessee before the Revenue. Some of the salient observations made by the Bench are as follows-

  • Section 201(1-A) of the Income Tax Act mandates assessee to pay simple interest at 1.5% per month or part of the month in case of delay in remittance of TDS amount deducted, to the treasury of the Central Government. For claiming expenditure and arriving at the taxable income, the Income Tax Act states twin conditions – allowance of expenditure as per Sections 30 to 37 and non-allowable expenditure as per Sections 40, 43B. The same are applicable for claiming the interest paid on late remittance of TDS.

  • Interest as defined in Section 2(28A) of Income Tax Act means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized. Section 36(1)(iii) of the Act provides deduction of the interest paid in respect of capital borrowed for the purpose of the business or profession.

  • Interest on late payment of TDS is not covered under Sections 30-36 of the Act and thus qualifies for consideration under Section 37. It is neither capital expenditure nor personal expenditure of the Assessee. The Tribunal pointed out that Courts have time and again held that interest expenses on late payment of taxes which are compensatory in nature, should be treated as expended wholly and exclusively for the purposes of the business or profession, since responsibility of payment of taxes including deduction and remittance of TDS is part and parcel of the business operations and the assessee has no right to utilize such monies collected from others on behalf of the government.

  • The Tribunal relied on the judicial pronouncements of Lachmandas Mathuradas v. CIT, (2002) 254 ITR 799; Commissioner of Income-Tax v. Chennai Properties and Investment Ltd., 1998 SCC OnLine Mad 1095; Velankani Information Systems Ltd. v. CIT, 2018 SCC OnLine ITAT 17731 wherein the issues vis-à-vis disallowance of interest on TDS payments were addressed. The Tribunal observed that, “Payment of interest takes colour from the nature of the levy with reference to which such interest is paid and the tax required to be but not paid in time, which renders the assessee liable for payment of interest was in the nature of a direct tax and similar to the income-tax payable under the Income Tax Act. The interest paid under Section 201(1A) of the Act, therefore, would not assume the character of business expenditure and cannot be regarded as a compensatory payment”.

[Universal Energies Ltd. v. DCIT, ITA No. 2761/Del/2018, decided on 26-07-2022]


Advocates appearing in the case

Assessee by: Sudesh Garg, Adv. and Sahil Aggarwal, CA

Revenue by:  K. A. Manu, Sr. DR


*Sucheta Sarkar, Editorial Assistant has prepared this brief.

 

 

Income Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Income Tax Appellate Tribunal (ITAT), Mumbai: While deciding the instant appeal wherein a major issue that came before Tribunal was whether receipts received by the assessee on sale of alleged carbon credit is revenue in nature or capital in nature. The coram of Kuldip Singh (Judicial Member) and Gagan Goyal (Accountant Member), held that by the virtue of S. 115BBG of Income Tax Act, sale of Renewable Energy Certificate (Carbon Credit) of income received by the assessee is a capital receipt and cannot be considered business receipt or income.

Facts of the case: The assessee-company filed its return of income for the Assessment Year (AY) 2015-16, declaring a total loss of Rs. 229,54,99,761. The case was selected for scrutiny under CASS. During the year under consideration, the assessee was engaged in various business like -raising of Ore; manufacture of Nitrogen Gas & Ferro Alloys; trading of Iron Ore & Ferro Alloys to name a few. During the scrutiny assessment various additions were made by the Assessing Officer. Upon preferring an appeal to CIT -(A) against the order of the Assessing Officer, the assessee got substantial relief.

The instant appeal was directed against CIT-(A) Order dated 05-02-2021 for Disallowance of common expenses against deduction claimed under S. 80IA of Rs. 5,92,7000 and Carbon Credit treated as revenue income under S. 28 of Rs. 102,05,87. Regarding Carbon Credit getting treated as revenue, the assessee stated that CIT (A) erred in confirming the disallowance of the claim of Carbon Credit Income as Capital Receipt.

Observations and Decision: The Tribunal observed that the issue regarding the taxability of Carbon Credit received by assessee is whether the receipts received by the sale of carbon credit can be considered revenue in nature or capital in nature.

The Tribunal noted that Legislature itself made provision for taxation of such receipts at the rate of 10 per cent from the assessment year 2018-19. Thus, any sum received on account of carbon credit or protecting the environment is not included in the business income. However, with the insertion of S. 115BBG [inserted via Finance Act, 2017 w.e.f 01-04-2018]; whereby the income by way of transfer of carbon credit has been given a special treatment as chargeable to tax at 10% and not as part of the normal business income of the assessee. The Tribunal also pointed out that the said Amendment was made prospective in nature and therefore cannot be applied to the assessment years under consideration in the appeal. It was also observed that Carbon Credit was neither directly linked with the business of the assessee, nor was any asset generated in the course of business.

The Tribunal further relied on the decisions by co-ordinate Bench of the Tribunal in DCIT v. Dawarkesh Sugar Industry Ltd., ITA No. 312/Mum/2019 and decision by the Andhra Pradesh HC (now Telangana) in CIT v. My Home Power Ltd., 2014 SCC OnLine AP 1315. It was observed that these cases raised identical issues as in the instant appeal and the same was decided in the favour of the assessee.

With the afore-stated observations, the Tribunal partly allowed the appeal and stated that the Carbon Credit of income received by the assessee is a capital receipt. Therefore, the addition of Rs. 10,20,587/- by the Assessing Officer from the sale of Carbon Credit and confirmed by the CIT(A) is not sustainable.

[Essel Mining & Industries Ltd. v. Dy. 2022 SCC OnLine ITAT 311, decided on 27-06-2022]


Advocates who appeared in this case :

Yogesh Thar, Advocate, for the Appellant;

Amol B. Kirtane, Advocate, for the Respondent.


*Sucheta Sarkar, Editorial Assistant has prepared this brief.

Income Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Income Tax Appellate Tribunal (ITAT), Bangalore: The coram of N.V. Vasudevan (Vice President) and Padmavathy S. (Accountant Member), considered the instant appeal, wherein, the issue that came to the forefront was when can a loss due to embezzlement, be allowed as a deduction during computation of income tax. It was held that the loss should be allowed as a deduction in the year in which the embezzlement was discovered.

Facts and Submissions: Relating to the Assessment Year 2011-12, the matter concerned a District Central Co-operative Bank [Assessee]. The assessee had been conducting the banking business governed by Karnataka State Co-operative Societies Act, 1959 and the rules and regulations of NABARD and RBI Guidelines for Banking activities. The assessee had debited an amount of Rs.7,50,99,000/- as provision for misappropriation in the P&L [profit and loss] account and computed income from business after such deduction.

The assessee had reduced this amount from loans and advances in the balance sheet. It was explained by the assessee that the Co-op Department of Government of Karnataka conducted an enquiry on misappropriation in one of assessee’s branch at Honalli. The assessee submitted that a fraud occurred in the bank and was under enquiry by the Co-operative Societies Enquiry Office as per the provisions of S. 64 of Karnataka Co-operative Societies Act, 1959. It is very difficult to recover the amount misappropriated, as such a recovery depends upon the enquiry report as per the afore-mentioned provision.

The Assessing Officer [A.O.] however, had a contrary opinion after examining the assessee’s claim and held that there was a reasonable prospect of getting the misappropriated amount back since, the bank has already attached the assets of the persons who indulged in fraud.

Aggrieved by the order of the AO, the assessee preferred appeal before the Commissioner Income Tax (Appeals). The CIT(A) deleted the addition made by the AO and held that the assessee is entitled to claim deduction of bad debts purely based on mere write- off. Aggrieved by this decision, the Revenue preferred the instant appeal.

Observations and Decision: Upon perusing the facts and submissions, the Tribunal observed that the CIT(A) had proceeded on an erroneous presumption that the sum claimed as a deduction was on account of write- off bad debts; the presumption being factually wrong because it was a case of embezzlement by the employee of the assessee which resulted in a loss to the bank.

The Tribunal then pointed out that neither A.O. nor the CIT (A) had considered a crucial question as to when a deduction on account of a loss due to embezzlement can be allowed as a deduction. The Tribunal noted that the Central Board of Direct Taxes issued a Circular- No. 35-D (XLVII-20) [F. No. 10/48/65-1T(A-0], dt. 24-11-1965, which specifically pertains to the query raised by the Tribunal. Upon examining clause-1 of the Circular, the Tribunal pointed out that loss due to embezzlement by employees should be treated as a loss incidental to business.

It was thus noted by the Tribunal that there is no doubt that the assessee suffered a loss on account of embezzlement, in the sense that a fraud was carried out in one of its branches. Therefore, as per the afore-mentioned CBDT Circular, the loss by the assessee should be allowed as a deduction.

The Tribunal decided that since the above aspect was not examined by anyone involved in the matter (assessee or A.O. or CIT), it is appropriate that the A.O. considers the matter afresh in the light of the referred CBDT circular, only on the question as to in which year the loss has to be allowed as a deduction. The Tribunal also directed the A.O. to allow deduction in the year in which the embezzlement by the employee was discovered by the assessee.

The appeal of the Revenue was allowed for statistical purposes.

[ACIT v. Davangere District Central Co-op Bank Ltd., 2022 SCC OnLine ITAT 264, decided on 17-06-2022]


Advocates who appeared in this case :

Sanjay Kumar S. K, CIT(DR)(ITAT), for the Revenue;

Suresh Muthukrishnan, CA, for the Assessee.


*Sucheta Sarkar, Editorial Assistant has reported this brief.

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT)


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Competition Commission of India (CCI)


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Income Tax Appellate Tribunal (ITAT)


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Whether expenditure incurred on replacements of old truck bodies will be treated as revenue expenditure?

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Delayed payment of employee’s contribution to EPF/ESIC is not disallowable as amendments to S. 36(1) (va) and S. 43B effected by Finance Act, 2021 were applicable prospectively; appeal allowed

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Insolvency and Bankruptcy Board of India (IBBI)


Name and Designation of Officers of IBBI is exempted under S. 8(1)(j) of the RTI Act

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National Company Law Tribunal (NCLAT)


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The Coram of Justice Ashok Bhushan (Chairperson) and Dr Alok Srivastava (Technical Member) observed that, provisions of the Limitation Act are applicable to proceedings under IBC.

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Jet Airways Resolution Plan’s implementation is subject to the outcome of?

The Coram of Justice Ashok Bhushan (Chairperson) and Shreesha Merla (Technical Member), held that the implementation of the Jet Airways Resolution Plan will be subject to the outcome of appeals filed against the order of National Company Law Tribunal which approved the resolution plan for Jet Airways.

Read more, here…


National Company Law Tribunal (NCLT)


Whether salary during notice period falls within definition of Operational Debt under IBC?

The Coram of H.V. Subba Rao, Judicial Member and Chandra Bhan Singh, Technical Member deliberated on what amounts to a pre-existing dispute.

Read more, here…


Securities Appellate Tribunal (SAT)


Insider Trading | SEBI’s restriction on Infosys employees for trading securities lifted by SAT: Read 5 reasons why SAT lifted restrictions

While lifting the restriction of buying or selling any securities, laid down by SEBI on employees of Infosys for allegedly violating the insider trading regulations, the Coram of Justice Tarun Agarwala (Presiding Officer) and Justice M.T. Joshi (Judicial Member) reiterated the settled law that burden of proof is always upon the prosecution, SEBI to prove that he had access to UPSI.

Read more, here…

Once a statute is repealed, will subordinate legislation made under statute ceases to have effect or can it be avoided by a saving clause?

“A statute after its repeal is completely obliterated as it had never been enacted. The effect is to destroy all inchoate rights and all causes of action that may have arisen under the repealed statute.”

Read more, here…

Logix Insolvent? NCLT initiates insolvency proceedings against Logix City Developers

The Coram of Bachu Venkat Balaram Das (Judicial Member) and Narender Kumar Bhola (Technical Member) initiates insolvency proceedings against Logix City Developers due to default in payment.

Read more, here…


Maharashtra Real Estate Appellate Tribunal


If change of promoter is left to wisdom of society, it will create chaos and uncontrollable situation leaving fate of flat purchasers in doldrum

The Coram of Indira Jain J., (Chairperson) and Dr K. Shivaji, Member (A), expressed that, if the change of promoter without following the procedure prescribed under the law is left to the wisdom of society, it will not only render the relevant provisions of revocation of registration redundant but also create chaos and uncontrollable situation leaving the fate of allottees /flat purchasers in doldrum.

Read more, here…

Income Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Income Tax Appellate Tribunal (ITAT): The Coram of Shamim Yahya, Accountant Member and Narender Kumar Choudhary, Judicial Member, observed that under the Income Tax Act penalty can’t be invoked without relevant documents which substantiate business activities.

Factual Background

M/s GSA Gestions Sportives Automobiles provides the rights to services of qualified motor racing drivers to teams participating in the Federation One 211 Championship. For AY-2012-13, the AO referred to various letters/notes issued to the assessee which remained unresponded.

The AO noted that the assessee is in receipt relating to Indian Grand Prix which was received in connection with business liable to tax @ 40%. Further, he opined that the facts and material indicate to the existence of Permanent Establishment of assessee in terms of Article 5 of India-Switzerland Double Taxation Avoidance Agreement.

Analysis and Decision

Coram had put up a question to counsel for the assessee as to whether the racing car driver in the case before the Tribunal is a driver simplicitor or is he a technical expert. The Counsel could not give a cogent reply, nor he could rebut the proposition that the racing car driver was not a technical expert person.

Moreover, the reference by DRP to OECD commentary in the context of the model tax treaty that the formula one driver was athlete was also germane and had to be considered.

Coming to the AO order passed pursuant to the DRP order, Tribunal noted that there are two limbs. In the first limb, the DRP had accepted that the assessee had no PE existence and the DRP had accepted that the racing car driver came and performed for only three days in India.

Further, a query was raised as to the actual duration of the drivers’ stay in India, the time taken for preparation, finalization and conclusion and the certificate of the said drivers’ arrival in India and departure in relation to the event. But the counsel for assessee was not able to provide any such detail.

Tribunal found that the aforesaid was a crucial aspect and had not been examined by the Revenue authorities below, hence the Coram deemed it proper to remit the file to the AO to examine the issue.

Further, the Tribunal while allowing the appeal granted an opportunity to give the submissions before the AO.

The above-said order applies mutatis mutandis to AY-2013-14. [GSA Gestions Sportives Automobiles SA v. DCIT, ITA No. 1950/Del/2016, decided on 13-5-2022]


ASSESSEE BY: Shri Jay Savla, Sr. Advocate

REVENUE BY: Ms. Meenakshi Singh, CIT DR

Case BriefsTribunals/Commissions/Regulatory Bodies

Income Tax Appellate Tribunal, Delhi (ITAT): Addressing the issue, of whether mere rejection of the claim by an Assessing Officer would ipso facto make assessee liable for the penalty, the Bench of G.S. Pannu (President) and Kul Bharat (Judicial Member) held that it won’t make the assessee liable to a penalty.

Factual Matrix


An assessee had filed its return of income and the assessment under Section 143(3) of the Income Tax Act, 1961 was framed. Thereby, the income was assessed at Rs 2,13,61,910 after making additions in respect of the wrong claim of deduction under Section 24(a) of the Income Tax Act; disallowance of excess depreciation on vehicles and disallowance of interest under Section 36(1)(iii) of the Act.

A further appeal was carried out wherein the disallowance of interest under Section 36(1)(iii) of the Act was deleted.

Subsequently, the Assessing Officer issued a notice under Section 271(1)(c) of the Act to show cause why the penalty should not be levied, for which the assessee stated that deduction under Section 24(a) of the Act was claimed by the assessee through a bonafide and inadvertent error.

AO did not accept the contention of assesse that he had disclosed and furnished correct particulars of his income, hence penalty was levied.

Aggrieved with the above, the assessee preferred an appeal before the CIT (A) who sustained the penalty, therefore the assessee has appealed before this Tribunal.

Analysis and Decision


“There is no straight jacket formula to say that particular act was a bonafide error or another a deliberate act.” 

The Bench noted that the assessee in the present matter had successfully demonstrated that the claim of deduction under Section 24(a) of the Income Tax Act, was made as the rent was offered for tax under the income from house property.

Hence, in view of the Supreme Court decision in Price Waterhouse Coopers (P) Ltd. v. CIT, (2012) 11 SCC 316 the penalty imposed by the AO on the stated issue could not be sustained, therefore, AO was directed to delete the penalty.

Tribunal found merit in the contention of the assessee that,

“…merely because of a claim is rejected by the Assessing Officer, would not ipso facto make the assessee liable for penalty.”

In the Supreme Court’s decision of CIT v. Reliance Petroproducts (P) Ltd., [2010] 322 ITR 588, the levy of penalty was not justified.

Therefore, the Tribunal directed the Assessing Officer to delete the penalty.

Further, it was added that since the notice did not specify the specific charge, hence in light of the Supreme Court decision in PCIT v. Sahara India Life Insurance Company Ltd., ITA No.475/2019, the initiation of penalty proceedings was not in accordance with law.

In view of the above, the appeal of the assessee was allowed. [Agarwal Packers & Movers Ltd.,  2022 SCC OnLine ITAT 168, decided on 29-4-2022]


Advocates before the Tribunal:

For the appellant: Ruchesh Sinha, Advocate

For the respondent: Kirti Sankratyayan, Sr. Dr

Income Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Income Tax Appellate Tribunal, Kolkata: The Bench of Sonjoy Sarma (Judicial member) and Rajesh Kumar (Accountant Member) held that the expenditure incurred by the assessee as such on replacement of wooden body of trucks has to be allowed fully against the income of the assessee in the current year.

The present appeal was preferred by the assessee against the order of the Commissioner of Income Tax for the assessment year 2013-14.

Bench noted that there was delay of 32 days in filing the present appeal and after going through the application for condonation of delay and after hearing both the sides, Tribunal opined that the cause for delay was reasonable, so Bench condoned the delay and proceeded to hear the appeal.

Issue

The only issue in the present matter was against the order of CIT(A) confirming the order of AO wherein the expenses of Rs 47,40,701 were treated as capital expenditure as against the assessee’s contention that the same were of revenue nature as being incurred on repairs and maintenance of the trucks etc.

Analysis and Decision

Tribunal noted that the assessee was an operator of trucks and lorries on hire. During the year, the assessee had incurred expenditure on replacements of old truck bodies which was treated as revenue expenditure however wrongly shown under the head depreciation by claiming 100% of the said expenditure as allowable during the year instead of charging the expenditure directly to the profit and loss account as the revenue item.

Bench held that the expenditure incurred by the assessee as such on replacement of wooden body of trucks has to be allowed fully against the income of the assessee in the current year.

Consequently, Tribunal set aside the order of CIT (A) and directed the AO to treat the expenditure as revenue in nature.

Hence, the appeal of the assessee was allowed. [Ashim Krishna Bhatta v. ACIT, ITA No. 40/Kol/2020, decided on 21-4-2022]


Advocates before the Tribunal:

For the Appellant: P Jhunjhunwala, A.R

For the Respondent: Manash Mondal, Addl. CIT

Income Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Income Tax Appellate Tribunal, Chandigarh (ITAT): The Coram of Sanjay Garg (Judicial Member) and Annapurna Gupta (Accountant Member) examined the issue as to the taxability of the amount of gift received by the assessee from his ‘HUF’.

An appeal was preferred by the assessee against the Principal Commissioner of Income Tax against revision order passed under Section 263 of the Act, whereby the PCIT had set aside the assessment order passed by the Assessing Officer with a direction to make the assessment afresh under Section 143(3) read with Section 147 of the Income Tax Act.

Factual Background

The assessee had filed his return of income declaring an income of Rs 14,32,982 and the assessment was completed by the Assessing Officer under Section 143(3) of the Act accepting the returned income.

Subsequently, the assessing officer reopened the assessment under Section 147 read with Section 148 on the ground that the assessee during the year under consideration had received a gift of Rs 5,90,000 from the Hindu Undivided Family.

In the opinion of the Assessing Officer, since the amount of said gift was more than Rs 50,000, hence the same was exigible to tax as ‘income from other sources’ under Section 56(2)(vii) of Income Tax Act.

PCIT while invoking his jurisdiction under Section 263 of the Act, set aside the order passed by the Assessing Officer, held that HUF does not fall in the definition of relative in the case of an ‘individual’ as provided in the explanation to clause (vii) to Section 56(2).

Though, the definition of a relative in the case of a ‘HUF’ has been extended to include any member of the ‘HUF’, yet, in the said extended definition, the converse case is not included that is to say in the case of an individual, the ‘HUF’ has not been mentioned in the list of relatives.

Thus, PCIT formed a view that though a gift from a member to the ‘HUF’ was not exigible to taxation as per the provisions of Section 56(2)(vii) of the Act, however, a gift by the HUF to a member exceeding a sum of Rs 50,000 was taxable.

To claim an exemption under Section 10(2) of the Act, the member ‘HUF’ must receive any amount for consideration out of the income of the ‘HUF’. That since the assessee had received the aforesaid amount of Rs 5,90,000/- without consideration, hence, the same was not tax-exempt.

Further, the PCIT set aside the order of the Assessing Officer and directed the AO to make the assessment afresh.

On being aggrieved with the order of the PCIT, the assessee filed the appeal.

Analysis, Law and Decision

Coram expressed that the order of the Assessing Officer cannot be said to be erroneous and therefore, the PCIT wrongly exercised jurisdiction under Section 263 of the Act and the same cannot be held to be justified.

Assessee had taken a plea that the gifts had been received by the assessee out of the income of the ‘HUF’ and that the same was exempt under Section 10(2) of the I.T. Act. It was noted that there was no rebuttal or denial either in the order of the Assessing Officer or in the order of the PCIT in respect of the contention of the assessee that the amount in question was received out of the income of the HUF. In view of the said, the assessee was entitled to exemption under Section 10(2) of the Act.

In case an individual member throws his elf-acquired property into a common pool of ‘HUF’, the ‘HUF’ or other members of the ‘HUF’ do not have any pre-existing right in the self-acquired property of a member. If such an individual member throws his own/self-earned or self-acquired property in common pool, it will be an income of the ‘HUF’, however the same will be exempt from taxation as the individual members of the ‘HUF’ have been included in the meaning of ‘relative’.

In view of the above, the HUF had not been included in the definition of relative in explanation to Section 56(2) (vii) as it was not so required whereas in case of HUF, members of the HUF find mention in the definition of ‘relative’.

Hence, the amount received by the assessee from the ‘HUF’ , being its members, was a capital receipt in his hands and was not exigible to income tax.[Pankil Garg v. Pr. CIT, Karnal; 2019 SCC OnLine ITAT 13321, decided on 17-7-2019]

Legal RoundUpTribunals/Regulatory Bodies/Commissions Monthly Roundup

Appellate Tribunal for Electricity (APTEL)


State commission disallows benefit of increase in the tariff based on the change in law provision; Tribunal directs reconsideration

A Coram of R.K. Gauba (Officiating Chairperson) and Sandesh Kumar Sharma (Technical Member) decided on an appeal which was filed by Solar Power Project Developer (“SPD”) assailing order passed by respondent Bihar Electricity Regulatory Commission (“the State Commission”) disallowing the benefit of increase in the tariff based on the change in law provision with respect to increased Operation and Maintenance (O&M) costs of its 10MW solar power generating system.

Read full report here…


Armed Forces Tribunal (AFT)


AFT grants war injury pension to soldier who sustained injuries resulting in disability during Operation Hifazat

The Bench of Justice Dharam Chand Chaudhary (Member J) and Vice Admiral HCS Bisht (Member A), granted war injury pension to the ex-serviceman who had sustained injuries resulting in disability during Operation Hifazat.

Read full report here…


Arbitral Tribunal, New Delhi


Arbitral Tribunal finds SJDA at fault; directs to refund bid amount of Rs 84.24 crores to the claimant in New Township Project

“No permission for conversion of land was obtained and, therefore, even if all other conditions were fulfilled, the Claimant-Developer could not have commenced construction activities on the agricultural lands without obtaining conversion of land use.”

Read full report here…


 Competition Commission of India (CCI)


Apple charging a commission of up to 30% on all payments made through its in-app purchase system, is a violation of its dominant position? CCI orders investigation 

“Some consumers may have preference for closed ecosystem like Apple and others may have a preference for open ecosystems like that of Google.” 

Read full report here… 

Why did CCI suspend the Amazon-Future deal? Detailed analysis of CCI order imposing Rs 202 crores penalty on Amazon

“Amazon had misled the Commission to believe, through false statements and material omissions, that the Combination and its purpose were the interest of Amazon in the business of FCPL.”

Read full report here…

Is Google abusing dominant position in news aggregation? CCI gives prima facie findings; discusses Snippets, Mirror Image Websites, Paywall Options, etc.

“Google appears to operate as a gateway between various news publishers on the one hand and news readers on the other. Another alternative for the news publisher is to forgo the traffic generated by Google for them, which would be unfavourable to their revenue generation.”

Read full report here…


 Customs Excise & Service Tax Appellate Tribunal (CESTAT)


“Obiter dictum” not legally binding as precedent; jurisdictional commissioner cautioned for filing frivolous applications

Suvendu Kumar Pati (Judicial Member) dismissed an appeal which was filed in response to the order passed by this Tribunal for rectification of mistake on the ground that the order to the extent of availment of service of outdoor catering was not proper.

Read full report here…

Jurisdiction for claim of refund filed/initiated to be dealt under the provision Central Excise law and not by the provision of CGST law

Ashok Jindal (Judicial Member) dismissed the application filed by the Revenue (CCE & ST, Panchkula) for ratification of mistake in a final order by the Tribunal which was noticed by the Applicant. The Tribunal dealt with two issues (a) whether to ratify previous order & (b) to deal with the jurisdiction

Read full report here…

Is there any provision under Cenvat Credit Rules, 2004 or Finance Act, 1994 for reversal of CENVAT credit for services provided for which no consideration is received by an assessee? CESTAT analyses

“CENVAT Credit Rules or Finance Act there was no provision for reversal of CENVAT credit for the services provided for which no consideration for service provided was received by an assessee.”

Read full report here…


District Consumer Disputes Redressal Commission, Kolkata


Consumer cannot be forced to pay “service charge” in a restaurant: Consumer Forum finds conduct of restaurant contrary to principles of Consumer Protection Act

“The OPs must have been aware of the guidelines of Fair Trade Practice related to changing of service charge from the consumers by hotels/restaurant issued by Department of Consumer Affairs, Government of India, inter alia, stipulating that service charge on hotel and restaurant bill is “totally voluntarily” and not mandatory.”

Read full report here…


Income Tax Appellate Tribunal (ITAT)


If lessee is not actual owner of property, can actual rental expenses be claimed on return of income? ITAT decides

“The assessee-company has merely taken the assets on lease from the owner, and it is accordingly eligible to claim actual rental expenses in the return of income.”

Read full report here… 

Can merely disowning bank accounts exempt assessee from paying tax? Read why ITAT approved addition of Rs 12.81 Crores under S.68 of Income Tax Act

“Merely disowning the bank accounts by the assessee does not lead to the conclusion that the accounts are not maintained by him when there is a direct evidence contrary to the contention of the assessee.”

Read full report here…


 National Consumer Disputes Redressal Commission (NCDRC)


Homebuyers cannot be expected to wait indefinitely for taking possession: NCDRC allows consumer complaint against Builder, directs refund, imposes costs

Commission dealt with a complaint filed under Section 21 read with Section 2(c) of the Consumer Protection Act, 1986 by the complainant in respect of a plot allotted to him promoted by the OP, claiming deficiency of service due to delay in handing over possession of the plot allotted and claiming refund of amount deposited with compensation.

Read full report here… 

Insurer refuses to issue insurance policy as Risk Confirmation letter obtained on concealment of material fact by Insurance Broker: Policy will be vitiated? NCDRC answers

“Section 19 of Contract Act, 1872, provides that when the consent of an agreement is caused by coercion, fraud, or misrepresentation, the agreement is voidable at the option of the party whose consent is so caused.”

Read full report here…

Plastic pieces found in slices of bread, but compensation denied to consumer. Read why NCDRC set aside State Commission’s order of compensation

Ram Surat Maurya (Presiding Member) addressed a matter wherein Britannia was alleged to have pieces of plastic in its bread, but the complainant failed to prove that the bread was manufactured by the said company.

Read full report here…

Minor treated for “Measles” instead of “Stevens-Johnson Syndrome” due to wrong diagnosis and leading to medical negligence: Read detailed report on NCDRC’s decision

“The patient at her young age of 12 years suffered very serious and potentially fatal SJ syndrome. It was the patient’s sheer good luck that she survived in spite of such grossly inappropriate/inadequate treatment at every stage.”

Read full report here…


National Company Law Appellate Tribunal (NCLAT) 


Is it proper for NCLT to record finding regarding default when RP is yet to consider it and submit report? NCLAT discusses Ss. 95, 97, 99 IBC

“…there cannot be any dispute with the statutory scheme as contained in Section 97 that when application is filed by the Resolution Professional under Section 95, the Adjudicating Authority shall direct the Board within seven days of the date of the application to confirm that disciplinary proceedings pending against the Resolution Professional or not and the Board was required within seven days to communicate in writing either confirming the appointment of the Resolution Professional or rejecting the appointment of the Resolution Professional and nominating another Resolution Professional.” 

Read full report here…

Aggrieved with the categorisation as ‘unsecured creditor’, Tribunal secures ‘secured creditor’, having relinquished the security interest

The Coram of Ashok Bhushan J, (Chairperson), and Dr Alok Srivastava (Technical Member) while accepting the appeal and rejecting the claim of the respondent, the Tribunal was of the opinion that the Adjudicating Authority committed an error in rejecting the claim of the appellant to be ‘secured creditor’.

Read full report here…

Is approval with 90% vote of CoC required before allowing withdrawal of CIRP application even where CoC was not yet constituted? NCLAT clarifies law on S. 12-A IBC 

“…when the application is filed prior to the constitution of Committee of Creditors, the requirement of ninety percent vote of Committee of Creditors is not applicable and the Adjudicating Authority has to consider the Application without requiring approval by ninety percent vote of the Committee of Creditors.”

Read full report here…

Dominant position and Predatory Pricing or Win-Win for riders and drivers? NCLAT upholds CCI’s decision

“We do not think that Ola could operate independently of other competitors in the relevant market, and hence it did not enjoy a dominant position in the market.”

Read full report here…

Once Adjudicating Authority approves Resolution Plan, does it still remains a confidential document? Read what NCLAT says

“The category of creditors including the Members of the suspended Board of Directors or the partners of the corporate persons, who are entitled to participate in the meeting of the Committee of Creditors are entitled to receive copies of all documents.”

Read full report here…


 National Green Tribunal (NGT)


Rampant noise pollution, incessant use of horns; a Deplorable state of affairs! NGT finds Rajasthan in contempt of Supreme Court’s order 

While addressing the issue of pressure/air horns and motor vehicles being driven with intolerable sound in Rajasthan, the Bench comprising of Justice Sheo Kumar Singh (Judicial Member) and Dr. Arun Kumar Verma (Expert Member) found the State of Rajasthan in contempt of the Supreme Court’s order and issued notice to the state government to reply within three weeks.

Read full report here…


Securities Exchange Board of India (SEBI)


Twitter, Telegram and the tattered chances-Illicit act of swindlers recommending stock tips on social media; Tribunal acts immediately

“The tips circulated through the Channel create an inducing impact which are then followed by the subscribers and ironically, such stock tips may also prove to be true, if large number of recipients of such tips believe it and collectively act on it. Slowly and gradually, after seeing the price of the said thinly traded scrip actually rising, more and more subscribers start believing in the tips and start acting on it, which further strengthens the belief of such tips being genuine, as large number of individuals end up acting on such tips and by their collective buying actions, convert the deceitful, specious and baseless tips to realty”

Read full report here…

‘Billionaire’ dream turns into dread-Unauthorsied investment advisory amounted to fraud & misrepresentation

S.K. Mohanty, Whole Time Member while affirming an ex-parte interim order of SEBI, was of the view that the activities of the Noticees, Billionaire Solutions Pvt. Ltd. (Sole proprietor Akash Jaiswal) was covered within the definition of “fraud” defined under regulation 2(1)(c) of the PFUTP Regulations, 2003. And therefore was held liable for the violation of provisions of Section 12A (a), (b), (c) of the SEBI Act, 1992, Regulations 3 (b), (c) & (d), 4(1), 4(2)(k) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (PFUTP Regulations, 2003).

Read full report here…

Op EdsOP. ED.

Introduction

When determining the constitutional validity of taxation laws, the Court generally analyses whether the challenged provision makes a reasonable classification or not. The general tendency of courts in cases where taxation statutes are challenged on the ground of Article 14[1] of the Indian Constitution (Article 14) can be summed up in the words of the Supreme Court in N. Venugopala Ravi Varma Rajah v. Union of India,[2] which noted as follows– “A taxing statute is not, therefore, exposed to attack on the ground of discrimination merely because different rates of taxation are prescribed for different categories of persons, transactions, occupations or objects.” In this article the recent decision of the Supreme Court in CIT v. Pepsi Foods Ltd.[3] (Pepsi Foods decision), has been analysed in view of the above principle of law.

Relevant jurisprudence

A. Relationship between Article 14 and taxation laws

It is accepted that, “the State is allowed to pick and choose objects for taxation if it does do reasonably.” While the above extract is from the laws of the United States of America, the principle has been reiterated by the Indian courts in many decisions.[4] The Supreme Court in Amalgamated Tea Estates Co. Ltd. v. State of Kerala,[5]  held that, “as revenue is the first necessity of the State and as taxes are raised for various purposes and by an adjustment of diverse elements, the Court grants to the State greater choice of classification in the field of taxation than in other spheres.” They went ahead and in view of the above reasoning declared that, “On a challenge to a statute on the ground of Article 14, the Court would generally raise a presumption in favour of its constitutionality.”

For our analysis, it is pertinent to know that any classification made qua taxation legislature, must be based on “rational” grounds and should not be “arbitrary”. Thereby, what one requires to determine is whether the distinction created by the challenged provision is based on “intelligible differentia”. In such cases, the test of permissible classification dictates that a statute may create a distinction so long as it fulfils the two conditions. These are, first, that the classification must be based upon intelligible differentia and must distinguish persons who are grouped together from the rest and second, that the same must have a rational relationship with the objective sought to be achieved by the statute in question.[6]

The Indian courts have dealt with this proposition of law many times, in some cases even declaring taxation laws as unconstitutional. Some instances as highlighted by the Supreme Court in the Pepsi Foods decision[7] are as follows:

(a) Suraj Mall Mohta v. A.V. Visvanatha Sastri[8]– Section 5(4), the Taxation on Income (Investigation Commission) Act, 1947 was held unconstitutional qua Article 14 on the basis that the procedure was substantially more prejudicial and drastic to the assessee than the one contained under the Income Tax Act. The Court noted that, “Classification means segregation in classes which have a systematic relation, usually found in common properties and characteristics.”

(b) Kunnathat Thatehunni Moopil Nair v. State of Kerala[9]Land revenue/tax called “basic tax” challenged on grounds to have treated unequals equally. Classification made under the Land Tax Act, 1955 held to be creating an improper classification and provision held unconstitutional qua Article 14.  In this case, the Court on the ground that the imposition of the above law was ex facie hard on certain classes of people than the other owing to the productivity of their lands, set aside Section 4 of the Act.

(c) Union of India v. A. Sanyasi Rao[10]Section 44[11], the Income Tax Act held unconstitutional for singling out only certain trade whereby relief under Sections 28[12] and 43-C[13] denied to them. Accordingly, the Court held, that the above was “unfair and arbitrary as denying equal treatment under law”.

B. Law of interpretation of statutes

The “golden” rule of interpretation is relevant to the analysis of the Pepsi Foods decision[14]. The first rule of interpretation is ita scriptum est, which states that the Court must not add/modify the law and should carry out a simple literal or grammatical interpretation. However, Lord Wensleydale, in Grey v. Pearson, noted that in many circumstances grammatical or literal interpretation of statute leads to absurdity, repugnance or inconsistency in regard to the object of the statute.[15] Thus, the Court in such cases where the rule of literal interpretation fails may modify the law only with view to remove the said absurdity.

Background to the case

Section 254(2-A)[16], was introduced via amendment to the Finance Act, 1999[17]. It grants the Income Tax Appellate Tribunal (ITAT) power to pass orders in respect to appeals before it and declares that the same will decide the appeal within 4 years from end of financial year it was filed in. The controversy lies in the third proviso to the same which states, that if the appeal is not disposed within the above, order of stay shall stand vacated even if “delay not attributable to taxpayer.”

The genesis of this proviso may be traced to the decision of the Court in ITO v. M.K. Mohammed Kunhi,[18] where it was held that power granted to the Tribunal under Section 254(2-A), implicates that all incidental and necessary powers as well can be exercised such as the power to grant a stay. Power of stay may be exercised, by the Tribunal, however, not as routine and only when strong reasons support the grant of such a stay. The Tribunal must be convinced that the entire purpose of appeal will be frustrated if stay is not granted and recovery proceedings are allowed to continue.

The facts relevant to the present case are; the respondent (assessee) was initially a US based company which merged with PepsiCo India Holdings Pvt. Ltd. w.e.f. 1-4-2010, in view of a scheme of arrangement duly approved by Punjab & Haryana High Court. In the Assessment Year 2008-2009, a return was filed declaring the total income. A final assessment award was made against the assessee on 19-10-2012. The assessee filed an appeal before the Income Tax Appellate Tribunal on 29-4-2013. On 31-5-2013 a stay of the operation of the order of the assessing officer was granted for six months by the Tribunal. The stay extended for 6 months, and was subsequently extended till 28-5-2014. Since, the statutory period for extension of stay was to expire as under Section 254(2-A) was to end of 30-5-2014, the assessee filed a writ petition in the Delhi High Court. The Delhi HC struck down third proviso to Section 254(2-A) which did not permit extension of stay beyond 365 days even if assessee was not responsible for delay in hearing of appeal. The bunch of appeals before the Supreme Court which yielded in the Pepsi Foods decision[19], which is analysed in this article, aimed to seek whether Section 254(2-A), the Income Tax Act, 1961 was constitutional vis-à-vis Article 14 and challenged the orders of various High Courts[20] which also declared the provision unconstitutional.

Synopsis of arguments

The table below will illustrate the main arguments led by the counsels.

S. No. In regard to Petitioner Respondent
1. Whether there is a right to “stay”? No right to stay the judgment of appellate proceedings and the same dependent upon discretion of the appellate court, which once exercised the same does result in an automatic extension in cases of expiry of reasonable period. Once discretionary relief granted it would be arbitrary and discriminatory that such stay be vacated automatically without reference to whether or not the assessee responsible for such delay in appellate proceedings.
2. Whether remedy of stay available? Discretionary remedy of stay part and parcel with right to appeal, which is statutory and may be taken away. Once vested right to appeal there is a vested right to seek stay.

 

3. Whether Article 14 may be used to challenge constitutionality of tax legislations? Article 14 cannot be applied mechanically to tax laws. Discriminatory taxation may be struck down under Article 14 qua the test of Manifest Arbitrariness (Shayara Bano v. Union of India[21]).

 

Ratio of the decision[22]

The Court held that the third proviso to Section 254(2-A) is both arbitrary and discriminatory and thereby, offends Article 14 of the Constitution. This is for twofold reason, firstly, it treats unequals as equals. This is for reason that the same treats assessee who is responsible for delay in proceedings with those who are not. The astonishing feature pointed by the Court under Proviso 3 which in itself spells out the said distinction. Secondly, the third proviso was inserted with view to stay achieve speedy disposal of cases wherein stay has been granted in favour of the assessee. The Court noted that such an objective cannot be discriminatory or arbitrary. Therefore, the above distinction does not fulfil the twin test[23] laid down in Nagpur Improvement Trust v. Vithal Rao[24]. Accordingly, the third proviso which stated “automatic vacation of stay on completion of 365 days, whether or not assessee responsible for the same or not”, was held to be prima facie discriminatory and thus, violative of Article 14. Further, the provision was termed to be “capricious, irrational and disproportionate” towards the assessee.

The Court lay their reasoning in bedrock of various decisions outlining necessary facets of the present matter. The Court took reference from the decision in Essar Steel (India) Ltd. v. Satish Kumar Gupta[25], where the term “mandatorily” as used under Section 12(3) of the Insolvency and Bankruptcy Code, 2016[26] was struck down. The aforementioned decision noted that time taken in a proceeding should not operate to harm the litigant for no fault of their own. The Court went ahead and instead of categorising the entire provision as arbitrary only struck down the term “mandatorily” for being manifestly arbitrary and unreasonably excessive. Further, the Court also noted that where the “tax was imposed deliberately with the object of differentiating between persons similarly circumstanced” the same should be struck down.

Conclusion

In view of the above, the Court held that in the present matter, unequals have deliberately been treated as equals qua equating assesses who are responsible for the delay in appellate proceedings with those who are not. Such a distinction was categorised by the Court as arbitrary and discriminatory and accordingly liable to be struck down. The Court thus, upheld the decision of the Delhi High Court and held that the Section 254(2-A) third proviso must be read without the word, “even” and “is not” after the words, “delay in disposing of appeal”. Thereby, the Court following the golden rule of interpretation simply modified the part of the challenged law which created the absurdity. The unreasonable and arbitrary distinction so created on the grounds of being contrary to Article 14 of the Indian Constitution has been transformed instead of being struck down in its entirety. This has been done both to fit the scheme and fulfil objective of the Income Tax Act.


 Associate, Jusip, e-mail: ananyasharma.ail@gmail.com.

[1] <http://www.scconline.com/DocumentLink/h7G5KbD4>.

[2] (1969) 1 SCC 681 : (1969) 74 ITR 49.

[3] 2021 SCC Online SC 283.

[4] Jagannath Baksh Singh v. State of U.P., AIR 1962 SC 1563.

[5] (1974) 4 SCC 415  

[6] Grey v. Pearson (1857) 6 HL Cas 61, 106: 26 LJ Ch 473, 481.

[7] 2021 SCC Online SC 283.

[8] AIR 1954 SC 545 : (1955) 1 SCR 448.

[9] AIR 1961 SC 552 : (1961) 3 SCR 77.

[10] (1996) 3 SCC 465.

[11]  Income Tax Act, 1961, S. 44.

[12]  Income Tax Act, 1961, S. 28.

[13]  Income Tax Act, 1961, S. 43-C.

[14]  2021 SCC Online SC 283.

[15] (1857) 6 HL Cas 61, 106: 26 LJ Ch 473, 481.

[16]  Income Tax Act, 1961, S. 254(2-A).

[17]  Finance Act, 1999.

[18] AIR 1969 SC 430 : (1969) 71 ITR 815.

[19]  2021 SCC Online SC 283.

[20] CIT v. Ronuk Industries Ltd., 2010 SCC OnLine Bom 2064 : (2011) 333 ITR 99; Narang Overseas (P) Ltd. v. Income Tax Appellate Tribunal, 2007 SCC OnLine Bom 671 : (2007) 295 ITR 22; Pepsi Foods (P) Ltd. v. CIT, 2015 SCC OnLine Del 9543.

[21] (2017) 9 SCC 1.

[22] Paras 22 & 23, Pepsi Foods decision, 2021 SCC Online SC 283.

[23] Twin Test – (i) must be founded on intelligible deferential; and (ii) the differentia must have rational relation with the objective sought to be achieved by the legislation.

[24] (1973) 1 SCC 500.

[25] (2020) 8 SCC 531.

[26]  Insolvency and Bankruptcy Code, 2016, S. 12(3).

Case BriefsSupreme Court

Supreme Court: Explaining the scope of jurisdiction of ITAT, the bench of MR Shah* and BV Nagarathna, JJ has held that the powers under Section 254(2) of the Income Tax Act are only to correct and/or rectify the mistake apparent from the record and not beyond that.

In the present case, a detailed order was passed by the ITAT when it passed an order on 06.09.2013, by which the ITAT held in favour of the Revenue. The said order was then recalled on 18.11.2016. It is pertinent to note that the order was recalled while exercising the power under Section 254(2) of the Act as the Assessee had filed miscellaneous application for rectification under Section 254(2) of the Act. While allowing the application under Section 254(2) of the Act and recalling its earlier order dated 06.09.2013, the ITAT had re-heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T.

It was argued before the Court that the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order. The Court, however, rejected the said contention and held that,

“Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2) of the Act.”

In exercise of powers under Section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of Section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under Section 254(2) of the Act are akin to Order XLVII Rule 1 CPC. While considering the application under Section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits.

Further, if the Assessee was of the opinion that the order passed by the ITAT was erroneous, either on facts or in law, in that case, the only remedy available to the Assessee was to prefer the appeal before the High Court.

Therefore, it was held that the order passed by the ITAT recalling its earlier order dated 06.09.2013 which has been passed in exercise of powers under Section 254(2) of the Act is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under Section 254 (2) of the Act.

[Commissioner of Income Tax v. Reliance Telecom Ltd., 2021 SCC OnLine SC 1170, decided on 03.12.2021]


Counsels

For Revenue: Additional Solicitor General Balbir Singh

For Respondent: Advocate Anuj Berry


*Judgment by: Justice MR Shah

Know Thy Judge | Justice M. R. Shah

Income Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Income Tax Appellate Tribunal (ITAT), Mumbai: A two-Member Bench of Pramod Kumar (Vice President) and Ravish Sood (Judicial Member) allowed the Board of Control for Cricket in India (“BCCI”) to continue with its registration under Section 12-A of the Income Tax Act, 1961 making it eligible for income tax exemption benefits. The main controversy arose regarding the commercial nature of the Indian Premier League (“IPL”) organised by BCCI, however, there is significant discussion on substantive law in the decision of the Appellate Tribunal.

Factual Matrix

BBCI challenged correctness of the order passed by the Principal Commissioner of Income Tax, Mumbai (“CIT”), rejecting its application for registration under Section 12-A(1)(ab) read with Section 12-AA of the Income Tax Act, 1961.

Notably, BCCI was duly granted registration under Section 12-A in 1996, which is yet to be cancelled or withdrawn. However, BCCI applied for fresh registration in wake of the amendment in its ‘memorandum of association, and rules and regulations’, to implement the recommendations of Justice R.M. Lodha Committee.

While rejecting BCCI’s application, the CIT took note of the amended Memorandum of Association (“MoA”) and inter alia noted that a specific clause was inserted for conducting Indian Premier League (“IPL”) matches, and concluded that “it can be easily concluded that activities of the applicant specially in relation to the IPL are in the nature of trade, commerce or business, and therefore, the applicant is squarely covered by proviso to Section 2(15) and hence applicant’s claim of being covered by the last limb, i.e. advancement of any other object of general public utility cannot be held to be charitable purpose”.

BCCI on the other hand contented that its activities are wholly charitable and genuine, and the element of profit in organising the IPL event does not vitiate its predominant character.  It was submitted that BCCI was in fact under no obligation to approach the CIT for fresh registration as the amendments did not even remotely affect its basic objects for which the registration was earlier granted; nevertheless it approached the CIT in deference  to the observations made by another Bench of the Appellate Tribunal to the effect that “the assessee society should approach the registering authority with the changes and amendments so that the authorities could examine as to whether the amendments in question meet the requirement of law”.

Law, Analysis and Decision

Application of S. 12-A(1)(ab)

Referring first to Section 12-A(1)(ab), the Appellate Tribunal noted that the true trigger for an application under that section has to be the modification of objects “which do not conform to the conditions of the registration”. Therefore, unless such modifications are demonstrated, there is no occasion for CIT to assume jurisdiction. The registration granted to BCCI in 1996 was on the basis of MoA, 1940. Unless, therefore, there were significant amendments in that Memorandum of Association, the provisions of Section 12-A(1)(ab) will not come into play inasmuch these provisions come into play only when the assessee “has adopted or undertaken modifications of the objects which do not conform to the conditions of registration”.

The Appellate Tribunal then compared MoA, 1940 and the amended MoA, 2018, and found that the amended MoA does not show any change which is contrary to the corresponding clause in the earlier MoA. It was noted that there was nothing in the impugned order to even indicate that the modifications in the objects of the amended deed do not conform to the objects in the memorandum of association based on which the registration was granted. The Appellate Tribunal observed:

“It is also important to bear in mind the fact that Section 12-A(1)(ab) specifically refers to ‘objects’ of the assessee trust or institution, and, it cannot, therefore, be open to the Principal Commissioner to go beyond the ‘objects’ so far as jurisdiction under this Section 12-A(1)(ab) is concerned. It is only when there is such a modification in the object clause that it does not conform to the conditions of registration, i.e. objects clause in the documents based on which registration was granted – only the memorandum of association in this case, that Section 12-A(1)(ab) can come into play.”

It was also noted that any changes to bring out reforms in the functioning of BCCI and specifically approved by the Supreme Court to be for that purpose (by its order dated 9-8-2018), cannot be termed to be the changes that dilute the fundamental objective of promoting the game of cricket, or said to be “not in conformity” with the objects of promoting the game of cricket all along espoused by BCCI and as set out in the pre-amendment MoA. In this view of the matter also, the condition precedent for invoking Section 12-A(1)(ab), was not fulfilled.

Referring to the view of another Bench that the assessee society should approach the registering authority with the changes and amendments so that the authorities could examine as to whether the amendments in question meet the requirement of law, the Appellate Tribunal observed:

“[T]his requirement, in our humble understanding, does not necessarily extend to the filing of the fresh application of registration under Section 12-A(1)(ab) unless the amendments are such as not in conformity with the documents based on which registration was originally granted. There is a difference in these two situations, i.e. between keeping the registration authority [informed] about the changes in the memorandum of association etc., and between making an application for fresh registration which comes into play only when the amendments in question do not conform to the objectives in respect of which registration was granted or obtained. Unless that condition is satisfied, Section 12-A(1)(ab) [does not] come into play.”

It was observed that there is a vital distinction between “object” and “power”. It could not even be in dispute that the object of BCCI is the promotion of cricket game, and, at best, it has powers to hold IPL for achieving this object. Whether this power of conducting IPL is exercised with predominantly pecuniary gains in mind or not is a different aspect, but then this is a “power” not an “object”. The Appellate Tribunal was of the opinion that:

“So far as the provisions of Section 12-A(1)(ab) are concerned, the Principal Commissioner was only required to examine the objects of the institution and not to extend her considerations to the powers vested in the institution. Unless the bridge of finding variations in objects of pre-amendment or post-amendment objects is crossed, there is no occasion to examine anything else. “

Application of proviso to S. 2(15)

Next, it was noted that the entire basis of declining registration by CIT was invoking the proviso to Section 2(15) on the ground that IPL activities are in the nature of commercial activities and cross the threshold limit specified in exceptions to the proviso to Section 2(15). On this point, the Appellate Tribunal observed:

“It is, however, well-settled in law that so far as registration under section 12-AA is concerned, Section 2(15) has no application in the matter.”

Relying on its earlier decision in Kapurthala Improvement Trust v. CIT, 2015 SCC OnLine ITAT 8111, the Appellate Tribunal concluded that the remedy to the proviso to Section 2(15) coming into play is not denial of registration under section 12-A or 12-AA but denial of benefits of exemption under Section 11, under Section 13(8). That is the reason that along with the insertion of proviso to Section 2(15), effective from the same date, sub-section 13(8) was also inserted and these two provisions are thus clearly complementary in nature.

Indian Premier League

Interestingly, as to the question whether IPL can indeed be said to be commercial in nature in the sense that the entire orientation of these matches is aimed at making money in the garb of promotion of cricket, the Appellate Tribunal was of the view that it was not necessary to go into that aspect in the instant case. It however added:

“[O]n the face of it merely because a sports tournament is structured in such a manner so as to make it more popular, resulting in more paying sponsorships and greater mobilisation of resources, the basic character of the activity of popularising cricket is not lost. It is indeed possible that the predominant object remains the promotion of cricket but that activity is done in a more effective and financially optimal manner, and that there is no conflict in the cricket becoming more popular and the cricket becoming more entertaining. It results in providing significant economic opportunities to those associated with the holding of the IPL tournament and, in the process, enriching the resources of the assessee trust. As long as the object of promoting cricket remains intact, and that continues to be the predominant object, the assessee cannot be said to be not following the object of promoting cricket, just because the operational model of a cricket tournament, whether IPL or any other tournament, is more entertaining, more economically viable, provides greater economic opportunities to all those associated with that tournament, and mobilises greater financial resources for popularising cricket. The purpose for which all the funds at the disposal of the assessee trust, including the additional funds generated by holding the IPL tournament, are employed is certainly for promoting cricket, and that is what really matters. Improvising the rules of the game, adding entertainment value to it and making it economically attractive, may be a purist’s nightmare but the same factors can also be viewed as radical and innovative ideas to popularise a game –  the very raison d’être of an institution like this assessee, and that is how we view it.”

In such view of the matter, the Appellate Tribunal held that BCCI was entitled to continuance of its registration under Section 12-A dated 12-2-1996. Accordingly, the impugned order passed by the CIT was quashed. [BCCI v. CIT, ITA No. 3301/Mum/2019, dated 2-11-2021]

Income Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Income Tax Appellate Tribunal (ITAT): The Bench of Inturi Rama Rao (Accountant Member) and Partha Sarathi Chaudhary (Judicial Member), decided whether registration under Section 12 AA can be denied for non-payment of taxes on donations received.

Instant appeal emanated from the Order of the CIT (Exemption), Pune passed under Section 12AA (1)(b)(ii) of the Income Tax Act, 1961 on the following grounds:

  • CIT (E) erred in rejecting the registration under Section 12 AA of the Income Tax Act.
  • Further, CIT (E) erred in law and on facts that voluntary contributions received by the charitable trust are not income as defined vide Section 2(24) (iia) of the Act.
  • CIT (E) erred in not giving a reasonable opportunity of being heard while rejecting the application made under Section 12AA (1)(b)(ii) of the Act.
  • Assessee craves right to add, alter or modify any grounds of appeal before or at the time of hearing of the appeal.

Factual Matrix

Assessee made online application form for approval of the Trust/Institution under Section 12 AA of the Act under the category of Religious cum Charitable trust/Institution. The said application was rejected by CIT (E).

CIT (E) opined that the voluntary contributions collected by the assessee trust formed a part of the corpus funds of the trust and hence, it is an income of the assessee. Thus, on the said income, the assessee trust was liable to pay tax as per law. Since the requisite taxes were not paid by the assessee, the CIT (E) opined that the requirement of Section 12 AA of the Act i.e. satisfaction of the Commissioner about objects of the Trust and the genuineness of the activities of the trust could not be determined and hence, the said application for registration under Section 12 AA of the Act of the assessee was rejected.

Analysis, Law and Decision

In Tribunal’s opinion, the provisions of Section 12AA of the Act provides that CIT(E) at the time of granting registration to assessee trust or society shall look into the objects of the trust/society and be satisfied with the genuineness of the activities carried out by such applicant trust/society at the time of granting registration under Section 12AA of the Act.

 Whether any tax had accrued to be paid or whether such taxes have been paid or not are to be looked into at the stage of assessment proceedings.

Allahabad High Court in Fifth Generation Education Society v. CIT, (1990) 185 ITR 634 (All) held that,

“the Commissioner is not to examine the application of income at the stage of application made by assessee for granting registration u/s.12AA of the Act. The Commissioner may examine whether the application was made in accordance with the requirements of Section 12AA r.w.r 17A and whether Form 10A has been properly filled up. He may also see whether the objects of the trust are charitable or not. At that stage, it is not proper to examine the application of income.”

In the case of Kai Shri Mahadebrao Naykude Dnyanvikas Prabhodhini Trust v. Commissioner of Income Tax (Exemption) (2020) 208 TTJ (Pune) 296, it was observed that,

when the objects of the trust were not disputed by the Department, nor they have disputed genuineness of activities of the assessee trust, then non filing of return u/s. 139(4A) of the Act cannot be the ground to deny registration u/s.12AA of the Act to the assessee. It is only at the assessment proceedings, the Assessing Officer can take appropriate steps as per law regarding the non-filing of return. However, at the time of granting registration, the object of the assessee trust has to be looked into and genuineness of the activities of the assessee trust should be considered.

In the present matter, registration was not granted under Section 12AA of the Act since taxes were not paid on the donations received by the assessee trust. It is always left to the Assessing Officer to take appropriate steps at the time of assessment proceedings with regard to payment of taxes and application of income of the trust/society.

Bombay High Court in the case of CIT v. Manekji Mota Charitable Trust (2019) 267 TAXMAN 0016 (Bombay) has held “at the time of the registration of the trust u/s.12A, the question of application of income of the trust is premature.” Thus, whether taxes are due to be paid on any income received that issue has to be looked into only at the time of assessment proceeding. 

In the instant case, the objects of the trust were not doubted by the Department, and they have also not disputed the charitable nature of the activities conducted by the assessee trust.

Therefore, Tribunal held that the present matter was not a fit case for rejection of application for registration under Section 12 AA of the Act and no findings were laid down stating the activities carried out by the assessee were not genuine.

“…just because, the taxes were not paid on the donations/voluntary contributions received cannot be the ground for rejection of application u/s.12AA of the Act. These things can be examined by the Department and scrutinized at the assessment stage. When all the requirements of registration u/s.12AA of the Act have been satisfied by the assessee trust, registration therein should be granted.”

Hence, the order of CIT (E) was set aside, and the Department was directed to grant registration under Section 12 AA of the Act to asseessee trust. [Shree Lakadipool Vitthal Mandir v. CIT (E), ITA No. 568/PUN/2020, decided on 25-5-2021]


Assessee by: Shri Abhay Shastri

Revenue by: Shri Deepak Garg

Income Tax Appellate Tribunal
Appointments & TransfersNews

Appointments Committee of the Cabinet has approved the proposal for appointment of the following persons as Judicial Member and Accountant Member in the Income Tax Appellate Tribunal (ITAT) for a period of 4 years with effect from the date of assumption of the charge of the post, or until attaining the age of 67 years, or until further order, whichever is the earliest:

Judicial Member


Un-Reserved Category


  • Shri Sonjoy Sarma, Advocate
  • Ms S. Seethalakshmi, Advocate
  • Shri Shatin Goyal, Additional District & Sessions Judge
  • Shri Anubhav Sharma, Additional District & Sessions Judge

OBC Category


Shri T.R. Senthil Kumar, Advocate


SC Category


Shri Manmohan Das, Law Officer in SBI


Accountant Member


Un-Reserved Category


  • Bhagirath Mal Biyani, Chartered Accountant
  • Balakrishnan S. Chartered Accountant
  • Jamiappa Dattatraya Battull, Chartered Accountant
  • Padmavathy S, Chartered Accountant
  • Arun Khodpia, Chartered Accountant

OBC Category


Rathod Kamlesh Jayantbhai, Chartered Accountant


SC Category


Ripote Dipak Pandurang, Commissioner of Income Tax

Income Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Income Tax Appellate Tribunal, Delhi: Dealing with the validity of the order passed under section 143(3), which was passed by an officer who did not have the Jurisdiction on the case of the Assessee and whether, the second Statutory notice issued under section 143(2) by the jurisdiction Assessing Officer, is also barred by limitation. The tribunal has reiterated that the notice under section 143(2) can be issued within a period of six months from the end of the financial year in which the return was filed. Further, on the point of jurisdiction relating to the issuance of notice also makes the notice under Section 143(2) void-ab-initio

The return of income for Assessment Year 2015-16 was e-filed by the Assessee on 2/9/2015 declaring a total income of Rs. 8,76,900/-. The case was selected for complete scrutiny under CASS. The Assessing Officer after considering the submissions and the relevant documents passed the final assessment order u/s 143 (3) of the Income Tax Act on 1st May, 2017, and accepted the declared income by the Assessee.

The Principal Commissioner of Income Tax (CIT) issued a notice under Section 263(1) on 16/08/2017. The Principal CIT vide order dated 7/11/2017 set aside the original assessment order and directed the Assessing Officer to pass the assessment order afresh.

Being aggrieved by the order u/s 263 of the Income Tax Act, 1961 passed by the Principal CIT, the Assessee preferred an Appeal before the Income Tax Appellate Tribunal (hereinafter referred as to “Tribunal”).

Whereby, the tribunal was pleased to held that the notice under section 143(2) can be issued within a period of six months from the end of the financial year in which the return was filed. Further, on the point of jurisdiction relating to the issuance of notice also makes the notice under Section 143(2) void-ab-initio.

“The tribunal was pleased to held that the notice under Section 143(2) can be issued after an income tax return has been filed but within a period of six months from the end of the financial year in which the return was filed. Thus, the first notice under Section 143(2) was issued on 01.08.2016 which by the non-jurisdictional Assessing Officer and jurisdictional Assessing Officer issued the notice on 10.03.2017 which is beyond the limitation period as per the statutory provisions of the Act. Thus, the notice is time-barred and hence, the assessment itself becomes void-ab-initio.

the proper jurisdiction of the Assessing Officer in the present case is that of DCIT, Circle 25(2) as the assessment for A.Y. 2014-15 has proceeded before the said Assessing Officer in Assessee’s case. There was no change of jurisdiction sought by the Revenue as per Section 124 read with Section 120 of the Income Tax Act, 1961. Thus, on the point of jurisdiction relating to the issuance of notice also makes the notice under Section 143(2) void-ab-initio.”

[Nirmal Gupta v. Pr. CIT-9,  2021 SCC OnLine ITAT 345, decided on 22.06.2021]


† Advocate, Supreme Court of India and Delhi High Court