Direct Tax Weekly Flashback for the period 2 March to 8 March 2025.
Table of Contents
Delhi High Court
Two-Tier Satisfaction Of AO Must For Reassessment: Delhi High Court
Case Title: PCIT Versus M/S Ridgeview Construction Pvt. Ltd.
Case No.: ITA 618/2019
The Delhi High Court has clarified that requirement for Two-Tier Satisfaction of the Assessing officer of both the searched and non-searched entity for initiating reassessment even before 2015 Amendment in Section 153C of the Income Tax Act, 1961.
Delhi High Court Rules On Maintainability Of Cross-Objections In Second Appeal
Case Title: PCIT Versus Nagar Dairy Pvt. Ltd.
Case No.: ITA 320/2023
The Delhi High Court while ruling in respect of maintainability of cross-objections in second appeal under Section 260A of the Income Tax Act held that in case the objection be indelibly coupled to the main question, there would be no legal requirement of preferring cross-objections separately.
Faceless Assessment | Delhi High Court Expresses Concern Over Pending Appeals Before NFAC, Urges Expedited Disposal
Case Title: SUPARSHVA SWABS (I) Versus NFAC
Case No.: W.P.(C) 356/2025 & CM APPL. 1749/2025
The Delhi High Court has expressed the Concern over pending appeals before National Faceless Appeal Centre (NFAC) and urges expedited disposal.
The bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela said, “This court is cognizant of the large number of statutory appeals pending for disposal before the NFAC and express concern over the delay in disposal of such appeals, for which the NFAC was envisaged. We expect that the NFAC would endeavour to implement the said remedial measures in all earnest.”
Income Tax Dept. Can’t Indefinitely Attach Properties Without Steps To Resolve Matter: Delhi High Court
Case Title: Fasttrack Tieup Pvt. Ltd. Versus UOI
Case No.: W.P.(C) 15237/2023 and CM APPLs.60975/2023, 17044/2024
The Delhi High Court while ruling in favour of Fasttrack has held that it is impermissible for the department to keep the properties attached indefinitely without pursuing subsequent steps to resolve the matter.
Gujarat High Court
Interest Payable On Refund Under DTVSV Scheme: Gujarat High Court
Case Title: M/S Sahil Total Infratech Pvt. Ltd. Versus Assistant Commissioner Of Income Tax Circle 2(1)(2), Surat & Ors.
Case No.: R/Special Civil Application No. 20804 Of 2023
The Gujarat High Court has held that the interest is payable on refund under Direct Tax Vivad Se Vishwas Act 2020 (DTVSV Scheme) even in absence of the provision.
The bench of Justice Bhargav D. Karia and Justice D.N.Ray has observed that when the petitioner has opted for direct tax for Vivad se Vishwas Scheme 2020 and led the application which was approved by the designated authority and refund order is also passed as per the said scheme on 12/05/2022 by the Jurisdictional Assessing Officer, the petitioner was entitled to the interest on the amount of refund till the same was paid to the petitioner.
Bombay High Court
S. 9C Bogus Purchase Fully Disallowed: Bombay High Court
Case Title: PCIT Versus Kanak Impex (India) Ltd.
Case No.: Income Tax Appeal No. 791 Of 2021
The Bombay High Court has held that the bogus purchase under Section 9C of the Income Tax is fully disallowed.
The bench of Justice M. S. Sonak and Justice Jitendra Jain has observed that assessee has offered no explanation of the source of the expenditure incurred on account of purchases of Rs.20,06,80,150 and, therefore, the AO was justified in making an addition of the amount and the Appellate Authorities were not justified in estimating the profit rate and thereby impliedly grant deduction of such unexplained expenditure which is contrary to the express provision of Section 69C of the Income Tax Act.
Absence Of Bank Statements To Prove Purchases: Bombay High Court Disallows Bogus Purchases
Case Title: The Principal Commissioner of Income-tax Versus Ganesh Developers
Case No.: Income Tax Appeal No. 719 Of 2018
The Bombay High Court while disallowing the bogus purchases under section 69C of the Income Tax Act, held that in the absence of bank statements, the purchases cannot be said to have been proved.
The bench of Justice M.S. Sonak and Justice Jitendra Jain observed that the provision of Section 69C, which is an enabling provision, would become redundant. Section 69C provides that where an assessee has incurred any expenditure and offers no explanation about the source of expenditure or the explanation offered is not in the opinion of the AO satisfactory, then the amount of expenditure may be deemed to be the income of the assessee and such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income.
Bombay High Court Condones Delay In Filing ITR For AYs 2017-18 And 2018-19
Case Title: Skystar Clearing & Forwarding Pvt Ltd Versus Pr. Commissioner of Income Tax
Case No.: Writ Petition No. 485 Of 2025
The Bombay High Court has condoned the delay in filing income tax return (ITR) for Assessment Years (AY) 2017-18 and 2018-19.
The bench of Justice M.S. Sonak and Justice Jitendra Jain observed that the returns were found to be defective, and the Petitioner was informed of the defective return. However, for reasons the Petitioner attributes to the part-time account, such intimation was not addressed, resulting in the delay.
Bombay High Court Imposes Cost Of Rs. 10K For Assessee’s Failure To Inform AO About Pendency Of Objections Before DRP
Case Title: Zarah Rafique Malik Versus ITO
Case No.: Writ Petition No. 5272 Of 2024
The Bombay High Court has imposed the cost of Rs. 10K on Assessee, who failed to inform the Assessing Officer (AO) about pendency of objections before the Dispute Resolution Panel (DRP).
Bombay High Court Quashes Income Tax Reassessment Against Tata Communications
Case Title: Tata Communications Limited Versus DCIT
Case No.: Writ Petition No.2486 Of 2022
The Bombay High Court has quashed the income tax reassessment against Tata Communications in the absence of any fresh tangible material, the proceedings were merely a department’s change of opinion.
Rejection of Application For Compounding Of Offence Under Income Tax Act Solely Based On Limitation Period: Bombay High Court Directs Reconsideration
Case Title: M/s. L. T. Stock Brokers Pvt. Ltd. Versus The Chief Commissioner Of Income Tax – 2, Mumbai
Case No.: Writ Petition (L) No. 21032 Of 2024
The Bombay High Court has directed the Chief Commissioner to reconsider the application for compounding of offence under Income Tax Act as the rejection was solely based on the limitation period.
Income Tax Appeals
INCOME TAX APPEALS | CIT(A) Corrects Action Of CPC By Allowing S. 87A Rebate On Special Rate Incomes
The Commissioner of Income Tax (Appeals) while correcting the action of the Central Processing Unit (CPC) held that Section 87A rebates on special rate incomes allowed in income tax appeals.
ITAT
ITAT Quashes Income Tax Addition Based On ‘Dumb Documents’
Case Title: ACIT Versus New World Buildcon
Case No.: ITA No.5051/Del/2012
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has quashed the income tax addition based on ‘dumb documents’.
The bench of Satbeer Singh Godara (Judicial Member) and S. Rifaur Rahman (Accountant Member) has observed that as per the assessment findings some rough jottings and alleged map was seized from the searched person, which was in the nature of dumb document . The seized dumb document merely indicated some rates rather than pinpointing any specific on-money payment or receipt involving the assessee.
UPS Is Integral Part Of Computer, 60% Depreciation Allowable: ITAT
Case Title: Jubilant Enpro Private Versus Commissioner of Income Tax Circle
Case No.: ITA Nos:- 3197 and 3198/Del/2011
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that UPS is an integral part of the computer and is entitled to 60% depreciation.
The bench of Sudhir Pareek (Judicial Member) and S Rifaur Rahman (Accountant Member) has observed that computer accessories and peripherals such as, printers, scanners and server etc. form an integral part of the computer system. In fact, the computer accessories and peripherals cannot be used without the computer. Consequently, as they are the part of the computer system, they are entitled to depreciation at the higher rate of 60%.
Advocate Can’t Be Blamed For Delay Of 2655 Days In Filing Appeal, Mere Handing Over Appeal Papers Is Not Enough: ITAT
Case Title: Sumita Roy Chowdhury Versus Income Tax Officer
Case No.: I.T.A. No. 1272/KOL/2024
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has held that the advocates, and Chartered Accountants (CA) cannot be blamed for delay of 2655 days in filing appeal.
The bench of Duvvuru RL Reddy (Vice-President) has observed that merely handing over the appeal papers to the counsel/advocate is not sufficient to say that she has acted with due diligence. There is a huge delay in filing the appeal and delay is due to negligence act of the assessee only.
Income Tax Addition Made On Estimation Against, No Penalty Is Leviable: ITAT
Case Title: Maruti Infrastructure Ltd. Versus DCIT
Case No.: ITA No. 1633/Ahd/2024
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that no penalty is leviable on the assessee, when the addition on account of turnover was estimated merely on the basis of estimation.
The bench of T.R. Senthil Kumar (Judicial Member) and Annapurna Gupta (Accountant Member) has observed that since the AO has not provided any material for estimation of the profit at 40%, penalty under section 271(1)(c) cannot be levied.
Date of Digital Signature on Reassessment Notice Considered as Date of Issuance, Not Printed Date: ITAT
Case Title: DCIT Versus SBC Minerals Pvt. Ltd.
Case No.: ITA No. 3411/Del/2024
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the date of signing of the reassessment notice through digital signature should be considered as the date of issue of the notice and not the date that has been mentioned as the date of issue on the notice.
ITAT Upholds Deletion Of Addition Worth Rs. 34.50 Crores On Account Of Disallowance Of “Provision For Depreciation”
Case Title: ACIT Versus The Karad Urban Co. Op. GBank Ltd.
Case No.: ITA No.1564/PUN/2024
The Pune bench of Income Tax Appellate Tribunal (ITAT) has upheld the deletion of addition worth Rs. 34.50 crores on account of disallowance of “provision for depreciation”.
The bench of R.K. Panda (Vice President) and Astha Chandra (Judicial Member) has observed that the AO for travelled beyond the scope of scrutiny in making an addition of Rs. 34.50 cr as the ground on which the addition was made was not part of the issues notified to the appellant in the initial notice and the AO had not taken appropriate approvals to convert the case of appellant into complete scrutiny from limited scrutiny.
RaOne Tax Case: ITAT Quashes Reassessment Against Shah Rukh Khan
Case Title: Shah Rukh Khan Versus DCIT
Case No.: ITA No.6312/MUM/2024
The Mumbai Bench of Income tax Appellate Tribunal (ITAT) has quashes income tax reassessment against Shah Rukh Khan for not paying tax in India on remuneration for the film ‘Ra.one’
The bench of Sandeep Singh Karhail (Judicial Member) observed that there were neither any fresh facts nor some information with regard to the facts previously disclosed, which came to the possession of the AO after conclusion of the scrutiny assessment proceedings, and the entire re-assessment proceedings were initiated on re-appraisal of facts already available on record.
Circulars & Notices
This CBDT Circular Bars Tax Dept. From Exploiting Ignorance Of Taxpayers
Circular No. 14 (XL-35)
Date: 11/04/1955
The CBDT Circular No. 14 (XL-35) dated 11/04/1955 bars the income tax department from exploiting ignorance of taxpayers.
As the circular the department must not take advantage of ignorance of assessee to collect more tax than what is legitimately due.
TDS Threshold Increased From April 2025: Check New Limits
The Budget 2025 proposed to hike the threshold limit of Tax Deducted at Source (TDS) to Rs 10,000 in a financial year (FY).
In other words, TDS will be deducted only if the interest income crosses the limit of Rs 10,000 in a financial year. The securities include government securities, bonds, and debentures issued by a company.
Income-Tax Dept. Issues Notices Over Mismatch in High-Value Expenses and Bank Withdrawals
The Income-Tax (I-T) department has recently intensified scrutiny on high-income individuals whose bank withdrawals appear disproportionately low compared to their overall spending.
