Category: High Court

Archive for the ‘High Court’ Category


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DATE: January 4, 2019 (Date of pronouncement)
DATE: September 21, 2019 (Date of publication)
AY: 2010-11
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CITATION:
S. 41(1) (old & unpaid liability for sundry creditors): It is well settled through series of judgments that merely because a debt has not been repaid for over three years, would not automatically imply cessation of liability. Exhaustion of period of limitation may prevent filing of recovery proceedings in a Court of law, nevertheless it cannot be stated by itself that the liability to repay the amount had ceased. Such liability cannot be termed as bogus

It is well settled through series of judgments that merely because a debt has not been repaid for over three years, would not automatically imply cessation of liability. Exhaustion of period of limitation may prevent filing of recovery proceedings in a Court of law, nevertheless it cannot be stated by itself that the liability to repay the amount had ceased. Going by this logic itself, the Assessing Officer, in our opinion, committed an error invoking Section 41(1) of the Act

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DATE: August 30, 2019 (Date of pronouncement)
DATE: September 14, 2019 (Date of publication)
AY: 1997-98
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CITATION:
S. 147/148: It is mandatory for the AO to follow the procedure laid down in GKN Driveshafts 259 ITR 19 (SC) and to pass a separate order to deal with the objections. The disposal of the objections in the assessment order is not sufficient compliance with the procedure. The failure to follow the procedure renders the assumption of jurisdiction by the Assessing Officer ultra vires (Bayer Material Science 382 ITR 333 (Bom) & KSS Petron (Bom) followed)

The moot question is, therefore, the disposal of the objections by the Assessing Officer in his assessment order dated 26th March, 2004 constitutes sufficient compliance with the procedure prescribed by the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) or, whether it was necessary for the Assessing Officer to have first disposed of the Appellant’s objections by passing a speaking order and only upon communication of the same to the Appellants, proceeded to reopen the assessment

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DATE: February 20, 2019 (Date of pronouncement)
DATE: September 7, 2019 (Date of publication)
AY: -
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CITATION:
Liability of professionals acting as Non-executive directors: Practicing professionals are prohibited from acting as full time directors. They can only act as non-executive directors not performing administrative duties. Such persons cannot be prosecuted for offenses committed by the company. it will be a travesty of justice to prosecute all Directors if the offense is committed without their knowledge. The accounts are signed by such directors in a routine manner and they are not subject to vicarious liability (Homi Phiroz Ranina & Ors. vs. State of Maharashtra 2003 (3) Mh.L.J. 34 followed)

In Homi Phiroz Ranina & Ors. vs. State of Maharashtra & Ors., the complaint was filed for delay in remitting the tax deducted. The applicant has taken stand that he was non- executive Director of the company and they are also practising advocates and, therefore, they are prohibited under the law to act as full time directors. They could only act as non-executive directors not exercising administrative powers or peforming administrative duties. It is held that unless the complaint discloses a prima facie case against the applicant/accused of their liability and obligation as principal officers in the day to day affairs of the company as Directors of the company, the applicants cannot be prosecuted for the offences committed by the company and held that it will be a travesty of justice to prosecute all the Directors if the offence is committed without their knowledge

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DATE: April 9, 2019 (Date of pronouncement)
DATE: September 7, 2019 (Date of publication)
AY: 2011-12
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CITATION:
S. 147/148/292B: The officer recording the reasons u/s 148(2) for reopening the assessment & the officer issuing notice u/s 148(1) has to be the same person. If the reasons are recorded by the DCIT but the notice is issued by the ITO, the reassessment proceedings are invalid. The s. 148 notice is a jurisdictional notice. Any inherent defect therein cannot be cured u/s 292B. The fact that the assessee participated in the proceedings is irrelevant

Since the notice under section 148 of the Act is a jurisdictional notice, any inherent defect therein cannot be cured under section 292B of the Act. A notice under section 148(1) of the Act would be a valid notice if the jurisdictional Assessing Officer records the reasons for reopening the assessment as contemplated under subsection (2) of section 148 and thereafter the same officer namely the jurisdictional Assessing Officer issues the notice under section 148(1) of the Act.

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DATE: August 27, 2019 (Date of pronouncement)
DATE: September 7, 2019 (Date of publication)
AY: 2007-08
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CITATION:
S. 254(1): The Tribunal should not make general observations that there are "contrary decisions". This statement led us to direct counsel to examine the law and bring to our attention any decision contrary to the view taken by the Supreme Court in Mahalaxmi Sugar Mills 123 ITR 429 etc. We are now informed by Counsel that there are no contrary decisions. All this effort and time would have been saved if the Tribunal had made specific reference to contrary decisions or not stated so in the absence of referring to the citations. We request the Tribunal to be specific about the decisions and make a mention of the citation in the order and not make general observations

All this effort and time would have been saved if the Tribunal had made specific reference to contrary decisions or not stated so in the absence of referring to the citations. Therefore, we would request the Tribunal to be specific about the decisions and make a mention of the citation in the order and not make general observations as in this case.

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DATE: August 27, 2019 (Date of pronouncement)
DATE: August 31, 2019 (Date of publication)
AY: -
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CITATION:
The work of important Tribunal like Income Tax Appellate Tribunal (ITAT) should not be allowed to suffer on account of shortage of administrative staff. There is no lethargy on the part of the Dept in filing up said posts. The Dept is expected to follow up the proposals to fill up the posts of Assistant Registrars in such quota as well as for issuing promotions for the posts of Deputy Registrars so that all these pots to the extent possible can be filled up at the earliest

The petitioner’s grievance that the work of important Tribunal like Income Tax Appellate Tribunal should not be allowed to suffer on account of shortage of administrative staff is perfectly legitimate, however, we do not find any lethargy on the part of the Department in not filing up said posts. Under these circumstances, we would expect the Department to follow up the proposals to fill up the posts of Assistant Registrars in such quota as well as for issuing promotions for the posts of Deputy Registrars so that all these pots to the extent possible can be filled up at the earliest.

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DATE: July 16, 2019 (Date of pronouncement)
DATE: August 31, 2019 (Date of publication)
AY: -
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CITATION:
S. 148, 282, Rule 127: Mere issue of a s. 148 notice is not sufficient. Service is essential. If the postal authorities return the notice unserved, the Dept has to serve under Rule 127(2) using one of the four sources of address (such as PAN address, Bank address etc). The failure to do so renders the reassessment proceedings invalid (All imp judgements referred)

In terms of Rule 127 and in particular, sub-rule (2) therefore, having regard to the further proviso therein, the Department had to deliver the notice of reassessment at the petitioner’s address given by her to the bank where her account was maitnained. No such steps were taken. Service of notice, therefore, was not complete. In absence of service of notice before the last date envisaged under section 149 of the Act for such purpose, the Assessing Officer could not have proceeded further with the reassessment proceedings

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DATE: July 16, 2019 (Date of pronouncement)
DATE: August 31, 2019 (Date of publication)
AY: -
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CITATION:
Doctrine of promissory estoppel: Once a promise has been solemnly given by the State with an intention that it would be acted upon and which has been indeed acted upon and liabilities suffered by the promisee, the State cannot be permitted to backtrack on the promise and change its position so as to cause loss to the promisee. The eligibility for sales-tax exemption cannot be withdrawn under GST

Two propositions of law emerge from the above observations. Firstly, once the promise is solemnly given by the State with an intention that when acted upon, it would create a legal relation and acting on it the promisee has changed his/her position and incurred liability, the State must be held as bound by the promise, except when owing to change of circumstances or subsequent developments larger public interests demand that the promise be not enforced against the State lest newly established balance of equities would tilt against the Government or larger public interest. Secondly, the doctrine is equitable in nature, and therefore, it must yield when the equity so requires.

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DATE: July 29, 2019 (Date of pronouncement)
DATE: August 3, 2019 (Date of publication)
AY: -
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CITATION:
S. 197/ Rule 28AA TDS: An order u/s 197 is quasi-judicial & must be supported by valid & cogent reasoning. It has to be based on objective criteria and relevant material. On facts, there is arbitrariness and non-application of mind at various levels which vitiates the certificate. The reasons do not conform to the requirement of s. 197 r. w. Rule 28 AA. The settled legal position is that orders passed by a statutory authority under "dictation" of a superior officer or anyone else is bad in law

The Court accordingly finds that in the present case the impugned withholding certificate which directs TDS to be deducted at 5% on the payments made by the Indian entities to the Petitioner is unsustainable in law, inasmuch as it is not based on valid reasons and is contrary to the legal requirement spelt out in Section 197(1) of the Act read with Rule 28AA of the Rules. The impugned certificate is hereby quashed

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DATE: July 12, 2019 (Date of pronouncement)
DATE: August 3, 2019 (Date of publication)
AY: -
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CITATION:
The Benami Amendment Act, 2016, amending the Benami Act, 1988, comes into force on 01.11.2016 and does not have retrospective effect. Unless a contrary intention is reflected, every legislation is presumed and intended to be prospective. In the normal course of human behavior, one is entitled to arrange his affairs keeping in view the laws for the time being in force and such arrangement of affairs should not be dislodged by retrospective application of law. The High Court can strike down wrong exercise of jurisdiction u/A 226, 227 individual to save individuals from lengthy proceedings and unnecessary harassment

For the reason aforesaid and in the backdrop of the settled legal proposition so also in view of singular factual matrix of the matters herein; this Court has no hesitation to hold that the Benami Amendment Act, 2016, amending the Principal Benami Act, 1988, enacted w.e.f. 1st November, 2016, i.e. the date determined by the Central Government in its wisdom for its enforcement; cannot have retrospective effect