Case Studies of Landmark Income Tax Judgments | TaxPundit

The ITAT Raipur quashed reassessment proceedings where the notice u/s 148A(b) allowed only 6 clear days for response, instead of the mandatory 7 days. The Tribunal emphasized that the period must be computed by excluding both the date of issuance and the date of compliance, as held by the Supreme Court in Pioneer Motors. Since the notice was void ab initio, the assessment order and all subsequent proceedings were held non-est. The appeal of the assessee was allowed.

The Income Tax Appellate Tribunal, Kolkata, quashed the reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961, for Assessment Year 2018-19, because the mandatory approval under Section 151 was obtained from the PCIT instead of the PCCIT, as the notice was issued beyond three years from the end of the assessment year. The Tribunal followed the Telangana High Court’s ruling in Deloitte Consulting India (P) Limited and the Supreme Court’s dismissal of SLPs in similar cases, holding that the proviso to Section 151 inserted by the Finance Act, 2023 is not retrospective. Consequently, the Revenue’s appeal against the CIT(A)’s order deleting additions was dismissed as infructuous.

The ITAT Jaipur Bench quashed reassessment proceedings under sections 148A and 148 of the Income-tax Act, 1961, holding that the monetary threshold of ₹50 lakh under section 149 for issuing notice beyond three years must be determined on the basis of income chargeable to tax alleged to have escaped, not gross sale consideration. The assessee’s one-fourth share in the property sale was ₹42,25,250, below the threshold. The Tribunal followed the Madhya Pradesh High Court’s decision in Nitin Nema v. PCIT and the coordinate Bench’s decision in Vipendra Ravindra Mandal v. ITO, and applied the principle from CIT v. Vegetable Products Ltd. that the view favorable to the assessee should be adopted. The reassessment was held unsustainable, and the appeal was allowed.

The ITAT Ahmedabad quashed the PCIT’s order under section 263 revising the assessment order for AY 2020-21. The Tribunal held that revision proceedings initiated solely on the basis of audit objections are invalid, as audit objection is a mere opinion and cannot substitute the PCIT’s independent satisfaction. The Tribunal further held that the AO had conducted proper enquiries and taken a plausible view, and the PCIT cannot substitute its own view merely because it disagrees. The appeal was allowed.

The Income Tax Appellate Tribunal, Agra Bench, allowed the appeal of State Bank of India, holding that the bank cannot be treated as an assessee in default under sections 201(1) and 201(1A) for non-deduction of TDS on LFC reimbursements for foreign travel during the period when interim directions of the Madras High Court (25.04.2014 and 16.02.2015) were in force. The Tribunal distinguished the Supreme Court’s decision in State Bank of India v. ACIT (2022), which held such reimbursements not exempt under section 10(5), on the ground that the obligation to deduct TDS was separately governed by the binding judicial directions. The Tribunal followed the decisions of the Mumbai and Chennai Benches and the Kerala High Court, which held that a deductor acting in obedience to a judicial order cannot be treated as in default. The demand raised under sections 201(1) and 201(1A) was deleted.

The ITAT Bangalore Bench, in Shore Dwellings Private Limited v. JCIT (TDS Range-2), allowed the assessee’s appeals for Assessment Years 2018-19 and 2019-20, cancelling penalties under section 271C of the Income-tax Act, 1961. The assessee had deducted TDS on interest credited to group concerns but failed to remit it to the Government. The recipients furnished Forms 26A confirming that they had offered the interest to tax and paid the tax. The Tribunal, following the Supreme Court’s decision in US Technologies International (P.) Ltd. v. CIT, held that section 271C(1)(a) is attracted only for failure to deduct tax, not for belated or non-remittance of TDS after deduction. The consequences of non-remittance are covered by section 201(1A) (interest) and section 276B (prosecution). The Tribunal also noted that the assessee had been held not to be an assessee in default in rectification proceedings. The penalties were therefore deleted.

The ITAT Chennai allowed the appeals of three assessees (Centre for Social Development, Resource Centre for Ecology Agriculture and Community Development, and Indian Forum for Sustainable Development) against denial of registration u/s 12AB and approval u/s 80G by CIT(E). The Tribunal held that facilitating loans to self-help groups and receiving bank incentives did not amount to commercial activity where the predominant object was relief to poor. The proviso to Section 2(15) was inapplicable as the activities fell within ‘relief to poor’, not general public utility. The CIT(E) was directed to grant registration and approval.

The Income Tax Appellate Tribunal, Chennai Bench, allowed the appeals of four assessees (Centre for Social Development, Resource Centre for Ecology Agriculture and Community Development, Indian Forum for Sustainable Development, and one other) against the orders of the CIT(E) denying registration under Section 12AB and approval under Section 80G. The CIT(E) had rejected the applications on the ground that the assessees’ activities of maintaining Self Help Groups and receiving bank incentives constituted commercial activity, with receipts exceeding 20% of total receipts, thus attracting the proviso to Section 2(15). The Tribunal, following the Madras High Court’s decision in Kurinji Social Welfare Society and the Coordinate Bench’s decision in Blaze Trust, held that the assessees’ activities were charitable, aimed at relief to the poor, and the incentive income was incidental. The Tribunal directed the CIT(E) to grant registration and approval.