HIGH COURTS Bombay HC ITO Acted On Complete Change Of Opinion On Same Material With Intent To Review Assessment Order Passed By Him: Bombay HC Quashes Reopening Case Title: Imperial Consultants and Securities vs. Deputy CIT Case no.: Writ Petition No. 1783 of 2022 While setting aside the reassessment proceedings, the Bombay High Court held that 'change of opinion' or...
HIGH COURTS
Bombay HC
Case Title: Imperial Consultants and Securities vs. Deputy CIT
Case no.: Writ Petition No. 1783 of 2022
While setting aside the reassessment proceedings, the Bombay High Court held that 'change of opinion' or 'review of already completed assessment', is not permitted to AO.
While holding so, the Division Bench of Justice G.S Kulkarni and Justice Advait M Sethna observed that there is no whisper of allegations against the assessee that income that has escaped assessment was attributable to the assessee for not disclosing fully & truly all material facts necessary for assessment.
Calcutta HC
Case Title: Britannia Industries Limited vs. Union of India
Case no.: W.P.A 24534 of 2024
While reiterating that it shall not interfere in matters requiring fact-finding and adjudication, which fall squarely within the statutory domain, the Calcutta High Court advised the manufacturer/ supplier to exhaust the statutory remedies provided under the CGST Act, 2017 including submitting a detailed response to the SCN.
“The statutory framework under the CGST Act provides adequate mechanisms for addressing the petitioner's concerns, including responding to the SCN, participating in adjudication proceedings and availing appellate remedies if dissatisfied with the outcome”, observed a Single Judge Bench of Justice Rajarshi Bharadwaj.
Case Title: Pradeep Kumar Naredi vs. Union of India
Case Number: MAT 375 of 2002
The Calcutta High Court recently reiterated that when the settlement applications were filed before the date on which the Finance Act 2021 did not come into effect, then taxpayers had vested right of preferring the application in absence of any statute prohibiting the said application.
The Division Bench of Justice Harish Tandon and Justice Hiranmay Bhattacharyya reiterated that retrospective legislation cannot affect the vested rights.
Bombay HC
Case Title: Shri Saibaba Sansthan Trust (Shirdi) vs. Union of India
Case no.: Writ Petition No. 4817 of 2022
The Bombay High Court ruled that the materials which were already available before AO and which ultimately were considered in passing assessment order u/s 143(3), cannot form basis of reopening, on ground that such materials were ignored in finalizing assessment. Section 147 does not postulate review jurisdiction, so that assessment can be reviewed by the Assessing Officer intending to form different and/or a new opinion, added the Court.
The Division Bench of Justice G S Kulkarni and Justice Firdosh P Pooniwalla observed that AO cannot assume jurisdiction under garb of re-assessment u/s 147, to reopen assessment merely on basis of change of opinion and/or review assessment order passed against assessee.
Case Title: Nav Chetna Charitable Trust vs, CIT (Exemption)
Case no.: Writ Petition No. 470 of 2024)
The Bombay High Court held that bonafide delay in filing Form 9A on part of trust, has to be construed as procedural lapse and shall be condoned by exercising powers u/s 119(2) of Income tax Act.
The Division Bench of Justice G S Kulkarni and Justice Advait M Sethna observed that that the jurisdictional AO completely lost sight of the fact that at the time when assessee claimed deductions towards depreciation and capital expenditure u/s 11(1) by filing the revised computation, the time limit for submission of Form 9A had lapsed, due to change of procedure.
Delhi HC
Case Title: Pr. CIT vs. International Coal Ventures Pvt Ltd
Case Number: ITA 1174/2018
The Delhi High Court recently accepted that the interest received on borrowed funds, which were temporarily held in interest bearing deposit, is a part of the capital cost and is required to be credited to Capital Work In Progress.
The Division Bench of Acting Chief Justice Vibhu Bakhru and Justice Swarana Kanta Sharma observed that if the interest is earned on the amounts temporarily kept in fixed deposits in course of acquisition of coal mine to set up its business, then interest earned would require to be accounted for as part of capital value of business/ asset.
Case Title: MS Enterprises vs. Sales Tax Officer
Case Number: W.P.(C) No. 10496/2024
The Delhi High Court held that the application for revocation of cancellation of GST registration could not have been dismissed, when apart from using the phrase “any supporting documents” and “others”, no further reason was assigned as to why the said application was dismissed.
The High Court held so, while observing that the solitary reason which has weighed upon the respondent to reject that application was a failure on the part of petitioner to respond to a SCN.
Case Title: Principal CIT vs. M/s Hespera Reality Pvt Ltd
Case Number: ITA 468/2024
The Delhi High Court held that proviso to Sec 10(38) cannot be read in reverse to mean that if gains are not included as book profits u/s 115JB, the same are liable to be included as income for purposes of assessment to tax under the normal provisions. Even though, the gains are required to be excluded from income chargeable to tax u/s 10(38), added the Court.
As per Section 10(38) of Income tax Act, in computing the total income of a previous year of any person, any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity-oriented fund or a unit of a business trust, shall not be included. The Division Bench of Acting Chief Justice Vibhu Bakhru and Justice Swarana Kanta Sharma observed that the income from capital gains on certain assets, which are excluded from income u/s 10(38), would nonetheless, be included in computing book profits for the purposes of Sec 115JB.
Kerala HC
Case Title: CHAVAKKAD SERVICE COOPERATIVE BANK vs. ITO
Case Number: ITA No.9 of 2023
The Kerala High Court held that circumstances under which AO can absolve a taxpayer from payment of penalty u/s 271B are discernible from a reading of Sec 273B, which states that no penalty can be imposed on an assessee u/s 271B for breach of the provisions, if he proves that there was "reasonable cause" for the said failure.
The provision of Section 44AB of Income tax Act prescribes a procedure of audit of accounts by certain categories of assessees and deals inter alia with the manner in which reports of such audit have to be submitted before the AO.
TRIBUNALS
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that discounts/incentives received from manufacturer and passed on to customers during car sales constitute sale of goods, not service, hence not liable to service tax.
The Bench of Binu Tamta (Judicial Member) and Rajeev Tandon (Technical Member) has observed that “sale/target incentive/incentive on sale of vehicles and incentive on sale of spare parts received by assessee, could not be considered as rendering of business auxiliary service.”
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that mark-up earned by purchasing and selling cargo space to importers/exporters on principal-to-principal basis in freight business is not liable to service tax as it amounts to trading activity and not provision of service as intermediary.
The Bench of Binu Tamta (Judicial Member) and Rajeev Tandon (Technical Member) has observed that “when the assessee is acting on a principal to principal basis, as regards purchase and selling of space from shipping line/airline and selling to importers the said act would not amount to an activity liable to Service Tax.”
OTHER DEVELOPMENTS
ICEGATE E-Payment Platform Enables Voluntary Payment Electronically: Finance Ministry
The CBIC on 23.12.2024 has issued a circular informing that the ICEGATE e-payment platform has enabled voluntary payments electronically. As per the circular, the new functionality will replace the existing TR-6 payments which are currently being done manually at various Customs Stations. The functionality will enable the users to generate a self-initiated challan for voluntary payments and then make payments through the ICEGATE e-payment platform without any further approval by officers of Customs.
GST To Remain @5% On Popcorn Sold In Theatres, Clarifies Govt
The Finance Ministry in its 55th Meeting of the GST Council, clarified that ready to eat popcorn which is mixed with salt and spices are classifiable under HS 2106 90 99 and attracts 5% GST if supplied as other than pre-packaged and labelled and 12% GST if supplied as pre-packaged and labelled.
However, when popcorn is mixed with sugar thereby changing its character to sugar confectionary (e.g. caramel popcorn), it would be classifiable under HS 1704 90 90 and attract 18% GST. By this recommendation, the government decided to regularize the issues for the past on “as is where is” basis.