S.147A: Reassessment – Face less Assessment – Assessing Officer for the purposes of sections 148, 148A – Constitutional validity – Retrospective amendment – Section 147A introduced with retrospective effect from 1-4-2021 to provide that Assessing Officer for purposes of sections 148 and 148A would mean an Assessing Officer other than National Faceless Assessment Centre/assessment unit – Amendment seeking to neutralise judgments of constitutional Courts holding that notices under section 148 were required to be issued by faceless Assessing Officer – Legislature cannot directly overrule or set aside judgments of constitutional Courts without removing the basis of such judgments – Section 147A held unconstitutional and struck down – Notices under section 148 issued by jurisdictional Assessing Officers without random automated allocation and in faceless manner also quashed – Writ petitions allowed. [ Art. 14, 19(1)(g), 265 of the Constitution of India, S. 130, 144B(3 ) 147 , 148, 151A .]

S. 263: Commissioner – Revision of orders prejudicial to revenue – Accommodation entries -Revision under section 263 could not be exercised on the basis of a void reassessment order – Reassessment – Sanction – Jurisdictional condition – Assessment Year 2017-18 – Notice under section 148 issued on 29-07-2022, beyond three years from end of relevant assessment year – Approval obtained from Principal Commissioner under section 151(i), whereas section 151(ii) required approval from Principal Chief Commissioner/Chief Commissioner – Sanction by authority not prescribed under applicable provision was a jurisdictional defect – Reassessment proceedings held void ab initio – Revisionary order quashed. [S. 147, 148, 148A, 151(i), 151(ii), 254 (1) ]

S. 40(a)(i): Amounts not deductible – Deduction at source -Non-resident –Royalty – Fees for technical services – Payments to foreign telecom operators – Voice termination, bandwidth and operation and maintenance services – Services rendered through sophisticated network and technology but assessee neither acquired equipment nor right to use any equipment/process – No technical knowledge or know-how made available – Payments not royalty or fees for technical services under applicable DTAAs – Recipients having no permanent establishment in India – Payments constituted business profits not taxable in India – No obligation to deduct tax under section 195 – Disallowance under section 40(a)(i) deleted – Revenue’s appeal dismissed. [ S.9(1)(vi), 9(1)(vii), 90(2), 195 .]

S. 37(1): Business expenditure – Capitalisation in books – Operational expenditure capitalised under CWIP in books but claimed as revenue expenditure for tax purposes – Assessee’s telecom business already commenced and was operational – Expenditure incurred towards interconnect charges, employee cost, professional fees, call-centre expenses, power and fuel, repairs and maintenance, network costs, selling and distribution expenses, customer service, etc. – No specific capital asset brought into existence – Accounting treatment not conclusive of tax character – Expenditure held allowable as revenue expenditure – Revenue’s appeal dismissed. [ S.32, 145 ]

S.143(1): Assessment – Intimation – Scrutiny assessment – Adjustment made under section 143(1) prior to completion of scrutiny assessment under section 143(3) – Assessee did not file appeal against intimation under section 143(1) but challenged identical addition in appeal against assessment order under section 143(3) – Intimation under section 143(1) merges with subsequent scrutiny assessment order – CIT(A) justified in entertaining assessee’s ground and deleting addition – Revenue’s appeal dismissed. [ S. 143(2), 143(3) , 154, 250 .]

S.54F: Capital gains- Investment in a residential house – Amalgamation of two adjacent flats – Assessee purchased one flat in his own name and another jointly in the names of his wife and son – Subsequently, two flats amalgamated into one composite residential unit under a registered supplementary agreement – Composite flat having a single entry and kitchen – Assessee having made substantial investment in both flats – Entitled to exemption under sections 54 and 54F – Revenue’s appeal dismissed. [ S. 45 , 54 , 250(4) , Rule 46A .]

S. 276C : Offences and prosecutions-Wilful attempt to evade tax-Deletion of penalty by Tribunal-Prosecution under section 276C cannot survive where the Tribunal, on merits, deletes the penalty after finding no concealment. [S. 271AAB, 276C, 278E, Code of Criminal Procedure, 1973, S 482, Art. 226]

S. 276C: Offences and prosecutions-Wilful attempt to evade tax-Sanction-Where tax sought to be evaded exceeds Rs. 25 lakhs, approval of the Principal CIT as sanctioning authority is sufficient for prosecution under section 276C-CBDT Circular No. 24 of 2019, Circular No. 5 of 2020.[S. 119(2)(b), 278E, 279, Art.14, 226]

S. 254(1): Appellate Tribunal-Powers-Stay of proceedings-Tribunal has jurisdiction to stay the operation of an order appealed against even where no tax demand has arisen. [S. 12AB(4)(ii), Art. 226]

S. 254(1) : Appellate Tribunal-Powers-Commissioner-Revision of orders prejudicial to revenue-Tribunal cannot sustain revision on a ground not forming the basis of the Commissioner’s order. [S. 11, 263]