Case Studies of Landmark Income Tax Judgments | TaxPundit

This appeal by the assessee challenges the order of the Commissioner (Appeals) arising from revision proceedings under section 263. The key issue is the validity of the reassessment order passed without issuing notice under section 143(2). The Tribunal admitted the additional ground and, after hearing, quashed the reassessment as null and void. The Tribunal relied on the Supreme Court’s decision in Hotel Blue Moon and the Calcutta High Court’s decision in PCIT v. Oberoi Hotels, which held that notice under section 143(2) is mandatory and non-issuance renders the assessment invalid. Since the reassessment was invalid, the revision under section 263 also fails. The appeal is allowed.

The appeal by Kulbhushan Mittal against the PCIT’s order under section 263 was allowed. The PCIT had set aside the reassessment order for lack of enquiry on section 50C and cash deposits, but these issues were not part of the reassessment which concerned accommodation entries. The Tribunal held that the PCIT’s order was barred by limitation as the limitation period under section 263(2) runs from the original assessment order when the revision issues are distinct. Consequently, the order under section 263 was quashed. The decision reaffirms the principle that the limitation for revision of a reassessment order depends on whether the revision issues are linked to the reassessment or the original assessment.

The Income Tax Appellate Tribunal, Pune Bench, in a consolidated order, allowed the appeals of numerous BSNL employees regarding the taxability of compensation received under the BSNL Voluntary Retirement Scheme, 2019. The Tribunal held that the compensation is in the nature of retrenchment compensation and is exempt under section 10(10B) of the Income Tax Act, 1961, as a capital receipt, not under section 10(10C). It condoned the delay in filing appeals, relying on the principle of substantial justice and following the Bombay High Court’s decision in Vijay Vishin Meghani. The employees were directed to file revised computations with the Assessing Officer for grant of refunds. The decision followed earlier ITAT rulings in Harish Kumar and other cases.

The ITAT Bangalore, in ITA Nos.2536 & 2537/Bang/2025, allowed the appeals of Trimbak Konher Patil for AYs 2019-20 and 2020-21. The issue was the disallowance of employee contributions to PF/ESI paid beyond the due dates under respective Acts but before the due date of filing return. The CPC had made adjustments under section 143(1), which were upheld by CIT(A) citing the Supreme Court’s Checkmate Services decision. The Tribunal held that the adjustment was not valid as the Supreme Court decision was rendered after the intimation, the issue was debatable, and the Finance Act 2021 amendment is prospective. Following the coordinate bench, the Tribunal directed deletion of the additions. Both appeals allowed.

The Madurai Bench of Madras High Court allowed W.P.(MD)Nos.9187 and 9188 of 2026, quashing the reassessment notice dated 18.04.2022 under Section 148, the consequent assessment order dated 18.03.2024 under Section 147 r/w 144 and 144B, and the penalty order dated 20.09.2024 under Section 271(1)(c) for AY 2015-16. The court held that the reassessment proceedings were barred by limitation under Section 149(1) as the notice under Section 148 was issued beyond the prescribed period, even after considering extensions under the provisos. The court found the petitioner’s argument on limitation convincing and did not need to address the concession in Union of India v. Rajeev Bansal. The orders were set aside with no costs.

The ITAT Bangalore, in the case of Pavan Kumar Agarwal, addressed the issue of whether section 54 exemption is limited to one residential house when multiple residential houses are sold. The assessee sold 17 flats and invested the gains in five properties. The AO allowed exemption only for the earliest purchased property (Rs. 5.91 crores) and disallowed Rs. 5.88 crores. The Tribunal, per Judicial Member Keshav Dubey, held that section 54 does not restrict the number of houses that can be purchased or constructed for claiming exemption; it applies to each capital gain arising from each residential house transferred. The Tribunal found that the legislative intent, as per the plain reading of section 54 and judicial precedents, supports allowing exemption for multiple residential houses. Therefore, the disallowance was not justified. (Note: The excerpt ends before the final operative order, so the conclusion is not stated explicitly.)

The Income Tax Appellate Tribunal, Raipur, allowed the appeals of Chhattisgarh Housing Board for AYs 2011-12 to 2017-18, setting aside the orders of the CIT(A) and remanding the cases for fresh adjudication. The core issue was whether the Board, a statutory housing authority, was eligible for exemption under section 11 of the Income Tax Act despite having receipts from commercial activities. The Tribunal, applying the Supreme Court’s decision in Ahmedabad Urban Development Authority, held that providing housing on a cost-to-cost basis to lower-income groups does not constitute trade, commerce, or business. The Assessing Officer was directed to re-examine the matter without invoking the proviso to section 2(15) mechanically.

The Karnataka High Court dismissed the Revenue’s appeal, upholding the Tribunal’s order that deleted the addition under section 56(2)(ix). The court held that advances received for procuring lands were stock-in-trade, not capital asset, and there was no forfeiture. The conditions for invoking section 56(2)(ix) were not satisfied.