Income Tax Weekly Flashback for the period 5 to 11 January 2025.
Table of Contents
Supreme Court
Reduction In Share Capital Of Subsidiary Company Is Transfer Of Asset Under Income Tax Act: Supreme Court
Case Title: PCIT Versus M/S. Jupiter Capital Pvt. Ltd.
The Supreme Court has held that reduction in share capital of the subsidiary company and subsequent proportionate reduction in the shareholding of the assessee would be squarely covered within the ambit of the expression “sale, exchange or relinquishment of the asset” used in Section 2(47) the Income Tax Act, 1961.
The Bench of Justice J.B. Pardiwala and Justice R. Mahadevan has observed that the reduction of share capital or redemption of shares is an exception to the rule contained in Section 77(1) of the Companies Act, 1956 that no company limited by shares shall have the power to buy its own shares.
Delhi High Court
No provision Under DTVSV Act Empowering Designated Authority To Reopen Concluded Settlement : Delhi High Court
Case Title: S A N Garments Manufacturing Private Limited Versus PCIT
The Delhi High Court has held that there is no provision under Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act) empowering designated authority to reopen concluded settlement.
Co-Accused May Apply Separately For Compounding Of Offences U/s 276B and 278B Of Income Tax Act, 1961: Delhi High Court
Case Title: Sumit Bharana Versus UOI
The Delhi High Court has held that co-accused may apply separately for compounding of offences under section 276B and 278B Of Income Tax Act, 1961.
The bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela has relied on the guidelines of the Central Board of Direct Taxes (CBDT) which states that where an offence under this Act has been committed by a Company or HUF as defined in section 278B or 278C of the Income Tax Act, an application for compounding may be filed separately or conjointly by the main accused i.e., Company, or HUF and/or any of the person(s) deemed to be guilty of the offence under section 278B or 278C of the Income Tax Act, to be referred as “Co-accused” for the purpose of compounding under these guidelines. The Competent Authority may decide the application accordingly subject to the payment of compounding charges as per these guidelines.
Public Holidays Excluded From Seven Days Time Period To File To Reassessment Notice Reply : Delhi High Court
Case Title: Abhishek Bansal Versus ITO
The Delhi High Court has held that public holidays are excluded from the seven days time period to file a reassessment notice reply.
The bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela has observed that the public holidays are required to be excluded for the purpose of calculation of seven days, the petitioner would be required to file his reply on the next date following the public holiday.
Delhi High Court Quashes Reassessment Notice Issued To Dead Person
Case Title: Late Sh. Lal Chand Verma Through His Legal Heir Versus Union Of India
The Delhi High Court has quashed a reassessment notice issued to dead person.
The bench of Justice Yashwant Varma and Justice Dharmesh Sharma has observed that no notice was issued to the legal heir of the deceased under Section 159(2)(b) of the Income Tax Act, despite the department being informed of the death. Section 159 of the Income Tax Act is applicable when proceedings are initiated and pending against an assessee during their lifetime, and the legal representative assumes responsibility after the assessee’s death.
Time Period For Framing Assessment Expired & No Outstanding Demand, Income Tax Authorities Can’t Retain Seized Cash: Delhi High Court
Case Title: Gautam Thadani Versus Director Income Tax (Investigation) And Anr.
The Delhi High Court has held that if the time period for framing an assessment under Section 153A of the Income Tax Act has expired, and there is no outstanding demand, the Income Tax Authorities would have no justification in retaining the seized cash.
AO Not Certain About Allegation Of Accommodation Entries; Delhi High Court Quashes Income Tax Reassessment
Case Title: Sonansh Creations Pvt Ltd. Versus ACIT
The Delhi High Court has quashed the reassessment proceedings on the ground that the Assessing officer (AO) was not certain about allegations of accommodation entries.
The bench of Acting Chief Justice Vibhu Bakhru and Justice Swarana Kanta Sharma has observed that the AO is not required to conclusively decide whether the entries are accommodation entries. But the AO has to be reasonably certain that the alleged entries exist that could possibly be accommodation entries.
Bombay High Court
Not Accepting Revised Computation Of Income Citing Delay In Filing Form 9A Leads To Undue Financial Burden To Taxpayer: Bombay High Court
Case Title: Nav Chetna Charitable Trust versus Commissioner of Income Tax (Exemption)
The Bombay High Court has held that non-acceptance of revised computation of income by the department in light of delayed filing of Form 9A by the petitioner/assessee, would lead to undue financial burden, hardship foisted upon the assessee/petitioner-trust.
The bench of Justice G. S. Kulkarni and Justice Advait M. Sethna has observed that the powers and statutory discretion conferred on the commissioners to condone delay under Section 119(2)(b) of the Income Tax Act ought to be judiciously exercised so that undue hardship to the assessee is avoided.
Bank Of India Entitled To Income Tax Deduction to BPI On Purchase Of HTM Securities: Bombay High Court Disapproves AO’s Non-Compliance To High Court’s Decisions
Case Title: Bank of India Versus ACIT
The Bombay High Court has disapproved the AO’s non-compliance to high court’s decisions and held that assessee are entitled for deduction to the broken period interest (BPI) on purchase of hold to maturity (HTM) securities.
The bench of Justice G. S. Kulkarni and Justice Advait M. Sethna has relied on the decision in Hexaware Technologies Ltd. is binding on the Revenue and accordingly, there cannot be any actions which could be taken by the Assessing Officers contrary to the law as laid down in the decision of this Court.
Bombay High Court Directs Income Tax Dept. Compute Tax At The Rate Of 100% And Not 125% In ‘Non-Search’ Case
Case Title: Umesh Navnitlal Shah HUF Versus ITO
The Bombay High Court has directed the income tax department to compute the tax at the rate of 100% and not 125% in ‘non-search’ cases.
Bombay High Court To Finally Dispose Of PIL Challenging Denial Of S. 87A Rebate For A.Y. 2024-25 Tomorrow
Case Title: The Chamber of Tax Consultants vs. DGIT (Systems) & Ors
The Bombay High Court has adjourned the final disposal of PIL challenging denial of Rebate under Section 87A of the Income Tax Act For A.Y. 2024-25 till 10th January 2025 (tomorrow).
A Public Interest Litigation (PIL) filed by The Chamber of Tax Consultants, challenged disabling of Section 87A rebate claims through the filing utility.
Madras High Court
Faceless Assessment Officer And Jurisdictional Assessment Officer Have Concurrent Jurisdiction In Issuance Of Reassessment Notice: Madras High Court
Case Title: Mark Studio India Private Limited Versus ITO
The Madras High Court has held that the faceless assessment officer and jurisdictional assessment officer have concurrent jurisdiction for issuance of reassessment notice.
Mandatory Twin Conditions To Be Fulfilled For Transferring Cases From One AO To Another: Himachal Pradesh High Court
Case Title: M/s Deluxe Enterprises Versus ITO
The Himachal Pradesh High Court has held that twin conditions to be complied with by the income tax department for transferring the case of the assessee from one Assessing Officer (AO) to another. The twin conditions include the assessee should have been given a reasonable opportunity of being heard and the reasons for transfer should have been recorded.
ITAT
AO’s Order Can’t Be Treated As Prejudicial To Interest Of Revenue When Permissible In Law: ITAT
Case Title: Sagar Jewellers Versus DCIT
The Rajkot Bench of Income Tax Appellate Tribunal (ITAT) has held that the order passed by the Assessing Officer (AO) cannot be treated as prejudicial to interest of revenue when permissible in law.
The bench of Dinesh Mohan Sinha (Judicial Member) and Dr. Arjun Lal Saini (Accountant Member) has observed that when the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue “unless the view taken by the Assessing Officer is unsustainable in law”.
