Direct Tax Weekly Flashback for the period 9 to 15 February 2025.
Table of Contents
Supreme Court
Section 271AAA Relief: No 10% Penalty If Undisclosed Income Is Admitted, Substantiated, and Tax Paid Even with Delay: Supreme Court
Case Title: K. Krishnamurthy Versus The Deputy Commissioner Of Income Tax
The Supreme Court has held that the penalty at the rate of 10% under Section 271AAA of the Income Tax Act, 1961 is normally not leviable if the assessee admits and substantiates the manner in which the undisclosed income was derived and also pays the tax along with interest on income even with delay.
Bombay High Court
Bombay High Court Quashes Income Tax Assessments Orders Against Merged Reliance Units
Case Title: Reliance Industries Limited Versus P. L.Roongta
The Bombay High Court has quashed the income tax assessments orders against merged Reliance Units.
The bench of Justice M. S. Sonak and Justice Jitendra Jain has observed that assessment orders have been passed in the name of the amalgamating companies by accepting the submission of the appellant-assessee that the orders could not have been made against the non-existing companies post amalgamation/merger, but result of this submission is that assessment order ought to have been and shall and should be passed in the name of amalgamated company Reliance Industries Limited (RIL).
Section 148 Can’t Be Invoked For Change In Tax Rate For Future AYs: Bombay High Court
Case Title: Oxford University Press Versus DCIT
The Bombay High Court has held that merely because there is some change in the tax rate for the future assessment years, the provisions of Section 148 of the Income Tax cannot be invoked without the jurisdictional parameters of these Sections being fulfilled.
Bombay High Court Quashes Re-Assessment Proceedings Against ICICI Bank
Case Title: ICICI Bank Ltd. Versus Deputy Commissioner of Income Tax
The Bombay High Court has quashed the reassessment proceedings against ICICI Bank.
The bench of Justice M. S. Sonak and Justice Jitendra Jain has observed that there can be no question of any failure to disclose fully and truly all material facts but on the contrary allowing the respondents to pursue the present proceeding would amount to empowering power of review on respondents which the Act does not provide and which is not permissible under the Income Tax Act.
Karnataka High Court
Karnataka High Court Quashes Penalty For Non-Deduction Of TDS On Professional Advice
Case Title: The Commissioner Of Income Tax Versus M/S Jindal Tractebel Power Co. Ltd.
The Karnataka High Court has quashed the penalty for non-deduction of TDS on professional advice.
The bench of Justice Krishna S Dixit and Justice G Basavaraja has observed that the non-deduction of tax was due to the bona fide belief formed on the basis of the legal opinion obtained at the hands of M/s.Singhania & Co., a Law Firm of repute; and the opinion of a Chartered Accountant’s Firm namely Lovelock & Lewis.
Gujarat High Court
Future Amendment Denying Depreciation On Goodwill Can’t Be The Basis For Reopening Assessment: Gujarat High Court
Case Title: GTPL Hathway Limited Versus Deputy Commissioner Of Income Tax Circle 2(1)(1) & Anr.
The Gujarat High Court has held that future amendment denying depreciation on goodwill cannot be the basis for reopening assessment.
The bench of Justice Bhargav D. Karia and Justice D.N.Ray has observed that the provision of section 43(6)(c) of the Income Tax Act was not amended at the relevant point of time for AY 2017-18 and therefore, the amended provision denying the depreciation on goodwill which came into effect from 01.04.2021 could not have formed the basis for re-opening to come to the conclusion that there is escapement of income by claiming of depreciation on goodwill.
Calcutta High Court
AO’s Duty To Dispose Of Written Objection Submitted By Assessee For Re-Assessment: Calcutta High Court
Case Title: PCIT VS Champalal Omprakash
The Calcutta High Court has held that it is the duty of the Assessing Officer (AO) to dispose of written objection submitted by assessee for re-assessment.
ITAT
Evidentiary Value Of Pen Drive In Absence Of Certificate U/s 65B(4) Of Indian Evidence Act: ITAT Upholds Addition
Case Title: Garware Technical Fibres Limited Versus DCIT
The Pune Bench of Income Tax Appellate Tribunal upheld the addition against the assessee while addressing the issue of evidentiary value of pen drive in absence of certificate under section 65B(4) of Indian Evidence Act.
ITAT Quashes Addition On Specified Bank Notes Deposited During Demonetization Citing Nature Of Firework Business
Case Title: M/s.Ayyan Fire Works- Factory Pvt. Ltd. Versus DCIT
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has quashed the addition of specified bank notes (SBN) deposited during demonetization citing the nature of firework business.
The bench of Aby T. Varkey, (Judicial Member) and Amitabh Shukla (Accountant Member) has observed that in this line of business, the majority of the sales is in cash during festivals, marriages, etc., and therefore, from the business model of the assessee and the trade practice, there is no doubt whatsoever with regard to the explanation offered by the assessee that it has collected cash from debtors towards sales made in cash before demonetization period.
Offer To Pay Tax On Additional Amount To Avoid Litigation Not Proof Of Undisclosed Income For Penalty: ITAT
Case Title: M/s. Future Gaming and Hotel Services Private Limited Versus ACIT
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that voluntary tax disclosure to avoid litigation is not proof of undisclosed income for imposing penalty.
The bench of Aby T. Varkey (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member) has observed that a mere offer or disclosure by an assessee to pay tax on some additional amount with a view to avoid litigation cannot amount to discovery of undisclosed income for the purposes of levy of penalty under section 271AAB of the Income Tax Act.
