Category: High Court

Archive for the ‘High Court’ Category


COURT:
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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

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DATE: July 15, 2019 (Date of pronouncement)
DATE: July 27, 2019 (Date of publication)
AY: 2005-06
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CITATION:
S. 68 Bogus Purchases: Despite admission by the assessee that the purchases were mere accommodation entries, the entire expenditure cannot be disallowed. Only the profit embedded in the purchases covered by the bogus bills can be taxed. The GP rate disclosed by the assessee cannot be disturbed in the absence of incriminating material to discard the book results

The Department had not rejected the instance of the purchases since the sales out of purchase of such raw material was accounted for and accepted. With above position, the Tribunal applied the principle of taxing the profit embedded in such purchases covered by the bogus bills, instead of disallowing the entire expenditure. We do not find any error in the view of the Tribunal.

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DATE: July 22, 2019 (Date of pronouncement)
DATE: July 27, 2019 (Date of publication)
AY: 2007-08
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CITATION:
S. 68 Bogus Share Capital: No rational person with sound mind will invest huge amount in the share subscription of a paper/shell company having no worthwhile business/project in hand at such a huge premium. The onus is on the assessee to to prove the genuineness of the transaction as well credit worthiness of the share subscribers. The failure to produce the subscribers and statement of the director that the entire investment is bogus justifies the addition

The Assessing Officer recorded that there was no reason for high premium of Rs.30 per share being paid by the investors. The assessee company had carried out no business during the entire period, except for collection of share application money. The responding investors also could not explain the source of their investments. It was noticed that before issuance of payment by them, deposits were made in their bank accounts and immediately the investments in purchase of the assessee’s shares were made. The investors could not provide photocopies of the share certificate issued by the Company and did not submit the share numbers which were allotted to them.

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DATE: July 15, 2019 (Date of pronouncement)
DATE: July 20, 2019 (Date of publication)
AY: -
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CITATION:
S. 220(6) Stay of demand: The decision of the authorities to demand payment of 20% of the disputed demand is in consonance with the department's circulars. There are no extra ordinary reasons for imposing condition lighter than one imposed by the authorities. The contention that the assessee that he received no consideration and no tax could have been demanded from him is subject matter of the Appeal proceedings and cannot be a ground for lifting the rigor of the requirement of deposit of 20% of the disputed tax pending appeal

The decision of the authorities is in consonance with the department’s circulars. We do not find any extra ordinary reasons for imposing condition lighter than one which has been imposed by the said authorities. The contention of the Petitioner that he had received no consideration at the time of transfer of the tenancy of immovable commercial property of which he is the owner and that therefore no tax could have been demanded from him, would be subject matter of the Appeal proceedings. This is not a ground for lifting the rigor of the requirement of deposit of 20% of the disputed tax pending appeal

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DATE: June 26, 2019 (Date of pronouncement)
DATE: July 13, 2019 (Date of publication)
AY: -
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CITATION:
Prosecution u/s 276C for tax evasion: If the assessee's appeal against levy of s. 271(1)(c) penalty for concealment of income is allowed & has become final, the quashing of prosecution is automatic. The High Court can exercise its inherent jurisdiction to quash the prosecution and not indulge in the empty formality of directing the assessee to approach the trial Magistrate (K. C. Builders 265 ITR 562 (SC) followed)

The subject matter of the complaint being concealment of income arrived at on the basis of the finding of the assessing officer, if the Tribunal has set aside the order of concealment and penalties, there is no concealment in the eye of law and, therefore, the prosecution cannot be proceeded with by the complainant and further proceedings will be illegal and without jurisdiction

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COUNSEL: ,
DATE: June 25, 2019 (Date of pronouncement)
DATE: July 3, 2019 (Date of publication)
AY: 2011-12
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CITATION:
S. 147/ 148: Even in a case where the return is accepted u/s 143(1) without scrutiny, the fundamental requirement of income chargeable to tax having escaped assessment must be satisfied. Mere non-disclosure of receipt would not automatically imply escapement of income chargeable to tax from assessment. There has to be something beyond an unintentional oversight or error on the part of the assessee in not disclosing such receipt in the return of income. In other words, even after non-disclosure, if the documents on record conclusively establish that the receipt did not give rise to any taxable income, it would not be open for the AO to reopen the assessment referring only to the non disclosure of the receipt in the return of income. The attempt of further verification would amount to rowing inquiry

Despite such difference in the scheme between a return which is accepted under section 143(1) of the Act as compared to a return of which scrutiny assessment under section 143(3) of the Act is framed, the basic requirement of section 147 of the Act that the Assessing Officer has reason to believe that income chargeable to 3 (2013) 356 ITR 481 (Guj) OS WP 1230-19.doc tax has escaped assessment is not done away with. Section 147 of the Act permits the Assessing Officer to assess, reassess the income or recompute the loss or depreciation if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. This power to reopen assessment is available in either case, namely, while a return has been either accepted under section 143(1) of the Act or a scrutiny assessment has been framed under section 143(3) of the Act. A common requirement in both of cases is that the Assessing Officer should have reason to believe that any income chargeable to tax has escaped assessment