Case Studies of Landmark Income Tax Judgments | TaxPundit

This appeal by D.Y. Patil Education Society challenges the order of the Principal Commissioner of Income Tax (Central), Pune, rejecting its application for registration under section 12AA of the Income Tax Act, 1961. The Tribunal had earlier set aside the initial rejection and directed the CIT to examine the application strictly within the scope of section 12AA. Despite this, the CIT again rejected the application citing collection of capitation fee, personal use of trust funds, and other allegations without providing concrete evidence. The Tribunal found that the CIT exceeded its jurisdiction by considering issues beyond the scope of section 12AA, as per the Karnataka High Court precedent. The Tribunal emphasized that the source of income is not relevant for registration; only the genuineness of activities and application of funds for charitable purposes matter. Since the CIT failed to provide specific evidence and ignored the Tribunal’s directions, the impugned order is set aside, and the registration is directed to be granted. The appeal is allowed.

The assessee, Colvin Care Pvt. Ltd., appealed against the reassessment order for AY 2016-17, wherein the Assessing Officer had made an addition of Rs. 78,78,470/- under section 68 r.w.s. 115BBE. The primary ground was that the notice under section 148 was invalid due to lack of proper approval. The ITAT Delhi, in ITA No.6867/DEL/2025, held that since more than three years had elapsed since the end of the assessment year, the approval for issuing the notice under section 148 should have been obtained from the Principal Chief Commissioner as per section 151(ii) of the new regime, and not from the Principal Commissioner. Consequently, the notice was void ab initio and the resultant assessment order was quashed. The appeal was allowed.

The ITAT Agra Bench allowed the appeal of Shri Rajvir Singh for AY 2016-17. The assessee raised an additional ground that no notice under section 143(2) was issued after he filed his return in response to notice under section 148. The Tribunal, following its earlier decision in the case of the assessee’s wife Prem Lata Verma and the Supreme Court judgment in ACIT vs. Hotel Blue Moon, held that non-issuance of notice u/s 143(2) is fatal and renders the reassessment proceedings null and void. The assessment order was quashed, and other grounds were left open.

This appeal by the assessee challenged the levy of penalty of Rs.53,97,010 u/s 140A(3) r.w.s 221(1) for delay in payment of self-assessment tax. The ITAT Mumbai held that post the amendment by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01.04.1989, penalty for non-payment of self-assessment tax is no longer contemplated; only mandatory interest is chargeable. The amended section 140A(3) merely treats the assessee as default for recovery purposes, not for penalty. Further, the absence of a corresponding amendment to section 221(1) means the AO cannot invoke it. Following the Coordinate Bench decisions in Heddle Knowledge Pvt. Ltd. and First Global Stockbroking Pvt. Ltd., the penalty was set aside and the appeal allowed.

This case involves a writ petition for refund of seized cash and interest. The petitioner was searched on 30.04.2019/01.05.2019 and Rs. 9,00,000/- seized. No assessment within 120 days. During the writ, cash was refunded on 5.6.2026 but no interest. The Court held that under Section 132B(4), interest at 6% per annum (one-half per cent per month) is payable from the expiry of 120 days from the last search (01.05.2019) until the date of refund (5.6.2026). The Court also noted that compensatory interest can be awarded under Article 226 if no assessment is made. The Revenue’s argument about a vigilance inquiry was rejected. The Court directed payment within six weeks, failing which interest at 12% per annum.

The High Court at Calcutta, in WPO 212 of 2026, allowed the writ petition of Pricewaterhouse Coopers Private Limited challenging the Assessment Order dated March 30, 2026 passed under Section 143(3) of the Income Tax Act, 1961 for AY 2024-25. The court found that the assessee was not given an effective opportunity of hearing, as the show cause notice was issued on March 28, 2026 requiring reply by March 30, 2026, and the order was passed on the same day without proper consideration of the replies. The court rejected the revenue’s argument of alternative remedy, citing established exceptions for violation of natural justice. The assessment order, along with consequential demand and penalty proceedings, was quashed and set aside, and the matter was remanded to the Assessing Officer for fresh assessment after providing a meaningful opportunity of hearing. The court directed completion within eight weeks.

The assessee, Versuni India Home Solutions Ltd., challenged the assessment order for AY 2020-21 as time-barred. The DRP issued directions on 27.06.2024, so the final order had to be completed by 31.07.2024 per section 144C(13). The Assessing Officer signed the order on 31.07.2024 but emailed it to the assessee only on 21.08.2024. The Tribunal, referring to the E-Assessment Scheme, 2019 and judicial precedents, held that ‘completion’ requires the order to be communicated to the assessee. Since it was dispatched beyond the limitation period, the order is invalid. The appeal was allowed.

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, allowed the appeal of M/s. Padmavati Developers, a partnership firm, against the addition of Rs. 11,16,500/- made under section 56(2)(x)(b)(B) of the Income Tax Act, 1961 for Assessment Year 2018-19. The addition arose from the difference between the purchase consideration of Rs. 1,50,00,000/- and the stamp duty valuation of Rs. 1,61,16,500/- (7.44% variation). The Assessing Officer and CIT(A) had held that the enhanced tolerance limit of 10% introduced by Finance Act, 2020 applies prospectively from A.Y. 2021-22. However, the ITAT, following a consistent line of its own decisions (Sunil B. Dalal, Glory Shipmanagement, Balkrishna Venkappa Bhandary, NRB Developers), held that the amendment is curative and retrospective. The Tribunal distinguished the Supreme Court’s decision in Vatika Township, noting that beneficial provisions may be given retrospective effect. Consequently, the addition was deleted. The appeal was allowed.