India has a detailed taxation law framework that comprises both direct tax in the form of income tax as well as indirect tax in the form of GST, etc.
In this article, Team YLCC brings you the Top 10 landmark Taxation Law cases you must be aware of. Read on!
- KALLURI KRISHAN PUSHKAR V. DY. CIT (2016) 135 DTR 351 (AP&T)(HC)
COURT: AP & T High Court
FACTS: Tax payer submitted an income tax return disclosing a gross income of 2.10 crore, which resulted in a tax and interest bill of 68.28 lakh. However, the assessee was unable to pay a total of 58.15 lakh of the aforementioned tax. The DCIT served him with a notice to submit the records of tax payments in accordance with section 221(1). Assessee submitted a letter indicating his firm had completed State Government contracts for which he was due taxes. However, he did not pay his self-assessment tax since he had not yet received the money owed to him from the State Government. He did, however, indicate his willingness to do so once he had received the money. The assessee is now the subject of an ongoing criminal investigation and trial.
JUDGEMENT: The High Court did not agree with the assessee’s argument that the case should be dropped since he was not given notice under Section 156. In its ruling, the High Court said that issuing such a notice is not necessary for criminal proceedings. The High Court further ruled that the availability of other means of recovery does not preclude the filing of criminal charges.
- SAJID SALIMBHAI SAIYED V. UOI (2019) 265 191 (GUJ.)(HC)
COURT: Gujarat High Court
FACTS: The owner sold the property to the petitioner even though he received a notice of attachment. On March 27, 2019, the Tax Recovery Officer sent a notice on the assessee instructing him to handover unoccupied and undisturbed ownership of the property to the government agency. The assessee appealed the notice from March 27th, 2019, by writ petition. He said he had paid fair market value for the home without being given advance warning. He relied on Section 281 in the absence of any warning from the agency.
JUDGEMENT: The court held that the assessee is required to come before the Tax Recovery Officer as soon as possible to present any supporting documentation and argue his case in order to have the notice dated March 27, 2019 withdrawn. The relevant authority must listen to the assessee’s case and issue a ruling consistent with the law. Authorities are enjoined by the Court to refrain from taking any punitive action against the assessee until this process is finalized.
- ANIL KISANLAL MARDA V. ITO (2019) 177 ITD 749 (PUNE)(TRIB.)
COURT: Income Tax Appellate Tribunal Bench, Pune
FACTS & JUGDEMENT: The Tribunal ruled that “issue” of notice and “service” of notice are two distinct concepts. To have the authority to make the evaluation, the court must first be notified of its intention to do so. In accordance with Rule 127, legal process can be delivered at the PAN address even if the address listed on the return is different. The assessment order must be vacated if a notification is sent but is deemed undelivered by the postal authorities and no further attempt has been made to deliver another notice before the deadline.
- FORTUNE VINCOM PVT. LTD. V. ITO (2019) 69 ITR 48 (SN) (KOL.)(TRIB.) S. 143(3)
COURT: Income Tax Appellate Tribunal Bench, Kolkata
FACTS: The assessee reported a loss of Rs. 283 in their A.Y. 2008-09 return, which was assessed as a loss under Section 143. (1). After that happened, Ld. The Assessing Officer resumed the inspection to verify the share capital and share premium transaction. A total of Rs. 17,720/- was determined as income after a reassessment was conducted under u/s 143 r.w.s. 147 of the Act. The CIT initiated modification proceedings under section 263 of the Act regarding this reassessment on the grounds that the AO had failed to adequately inquire into and verify the authenticity and origin of application money/share capital, as well as the identity and ability to repay of the shareholders who had applied for the company’s shares.
JUDGEMENT: Despite having all the information he needed at his disposal, the Tribunal found that the Ld. AO did not resort to conducting questions in the manner described by the Ld. CIT u/s. 263 of the Act. The Ld. CIT had requested that the AO follow the chain of ownership of the company’s shares all the way to its ultimate beneficial owner, including any changes in shareholding, directorship, etc., so that the truth would be established. The AO had failed to accomplish this, thus the CIT issued a S. 263 order remanding the case to him for a new evaluation and a decision.
- PRADIP BURMAN V. ITO (2016) 382 ITR 418 (DELHI)(HC)
COURT: Central District Tis Hazari Courts, Delhi
FACTS: Assessee has submitted an income tax return revealing an annual income of Rs. 75,31,769. In response to the Income-tax department’s discovery of the assessee’s offshore bank account, the latter offered to settle his tax liability using funds from that account. Assessee afterwards appealed the Assessing Officer’s assessment order and punishment order. In addition, the assessee has requested a stay of prosecution by filing an application with the Additional Chief Metropolitan Magistrate, citing the ongoing appeal before the appellate body.
JUDGEMENT: The assessee’s motion to stop proceedings was denied by the Additional Chief Metropolitan Magistrate. The High Court ruled on the writ that a pending appeal with the authorities does not affect the prosecution. The Court further ruled that the instruction No. 5051 dated 07-02-2011, which states that no prosecution can be filed against a person who is over the age of 70, does not apply because the petitioner was under the age of 70 at the time of the conduct of the accused act.
- V. A. HASEEB AND CO. (FIRM) V. CCIT (2017) 152 DTR 306 (MAD.)(HC)
COURT: Madras High Court
FACTS: In light of the fact that the assessee has already been found guilty by the Criminal Court, the Chief Commissioner of Income tax TDS has decided not to grant the plaintiff’s request to aggravate the crime that was perpetrated by the petitioner in violation of sections 276B and 278B of the Income-tax Act.
JUDGEMENT: The Court agreed with the petition and granted the assessee’s motion to aggravate the charge despite the assessee’s prior conviction. According to the regulations, the responsible authorities must look into the specifics of the situation and determine if compounding is justified. The competent authority’s competence is not limited in any way by the guidelines. Consequently, this Court believes that the defendant can reexamine the facts without being prejudiced by the Criminal Court’s verdict of guilt against the plaintiff.
- ANIDHI IMPEX PVT. LTD. V. ITO (2019) 73 ITR 379 (MUM.)(TRIB.)
COURT: Income Tax Appellate Tribunal Bench, Mumbai
FACTS: On August 27, 2013, the AO gave a former part-time employee of the assessee who had worked for the company up until March 31, 2011, notice under section 143(2). After the directors’ deadline for responding to the AO’s notice under Section 143(2) had passed, the AO issued another notice under that provision.
JUDGEMENT: The Tribunal took note of the assessee’s affidavit from the part-time worker, who stated that he had declined to accept the notice (since he was no longer involved with the assessee) and that he had been unable to transmit the notice to the firm because of its move. The directors have also submitted affidavits corroborating the information. After reviewing S. 282 of the Act and the Civil Procedure Code, 1908, the Tribunal concluded that the notice had not been delivered upon a person eligible to receive it, which resulted in invalid service, and that the evaluation order u/s 143(3) should be invalidated as a result.
- HIMALAYAN COOPERATIVE GROUP HOUSING SOCIETY V. BALWAN SINGH (2015) 7 SCC 373
COURT: Supreme Court of India
FACTS: In front of the Tribunal, the Authorized Representative argued that the notice u/s.143(2) was not properly served on the partners of the assessee firm. He argued that the assessment should be overturned because notice served to Shri Harish C. Pawar, Manager of the assessee, was insufficient to constitute legal service. A copy of the assessment proceedings order sheet was entered into the official record by department personnel. The Tribunal saw that in the assessment procedures entry dated 13-08-2012 and the order sheet entry also indicates that the assessee company’s signed copy of the notice under section 143(2) was presented to and accepted by Shri D. P. Lunawat. The document continues by saying that when questioned if he still objected to the delivery of notice, Shri Harish C. Pawar said, “he has no objection.”
JUDGEMENT: The Tribunal concluded that a challenge to the AO’s competence that is subsequently removed by the assessee’s Authorized Representative constitutes a waiver of the objection. As such, a claim that the AR lacked the jurisdiction to express no-objection and could not obligate the assessee is not admissible. Once an assessee grants authority to an Authorized representative to appear on his behalf before a governing body, the assessee is legally bound by any and all agreements made by the Authorized representative. It is therefore determined that the objection to the evaluation based on legitimate performance is not valid.
- ROOPA ELECTRICALS V. ITO (2019) 76 ITR 39 (SMC) (SN) (BANG.)(TRIB.)
COURT: Income Tax Appellate Tribunal Bench, Bangalore
FACTS: The assessee earned money from Kuvempu University for contract work that was completed. The amount reported by Kuvempu University on its TDS Return is greater than the amount the assessee has on its books. Therefore, the AO has made an adjustment based on a discrepancy between Form 26AS and the assessee’s books of account, and the CIT has approved this adjustment.
JUDGEMENT: On appeal, the Tribunal relied on the judgment of the Hon’ble Mumbai ITAT in the matter of TUV India Pvt. Ltd. (2019) 75 ITR 364 (Mum,)(Trib. ), which included facts similar to those in the assessee’s case, and concluded that-
- There is a disparity in receipts as stated in 26AS;
- There is a divergence in the accounting policy adopted by the assessee and the TDS have been deducted by the clients on basis of service tax,
- Since the assessee is lacking access to the Income Tax Department’s database, as shown on Form 26AS, it can only offer plausible explanations for the discrepancy at best;
- Since the Department already has all the relevant data at its disposal, asking the assessee to conduct additional investigation is unwarranted.
Therefore, the discrepancy between Form 26AS-reported income and book-recorded income is not subject to an adjustment.
- PCIT V. SWANANDA PROPERTIES (P.) LTD. (2019) 267 TAXMAN 429 (BOM.)(HC)
COURT: Bombay High Court
FACTS: The assessee operated as a real estate developer. The assessee got funds from the sale of many apartments that were completed throughout the year. The AO determined that the flat sale revenue was subject to tax in the assessment year 2004-05, rather than the assessment year 2005-06, on the grounds that the project was finished in the prior year applicable to the former. However, during the 2005–06 assessment year, assessee’s proposed income was evaluated with some safeguards in place. He also discovered that the purchase prices of six apartments had been artificially low. For this reason, he put in an extra amount to account for the decreased sales value of six apartments.
JUDGEMENT: When the assessee appealed, the Tribunal reversed the CIT’s decision, finding that neither the AO nor the CIT had evidence to back their contention that the assessee had acquired more money than was indicated in the sale documents. Furthermore, it decided there was no need to use S. 145(3) in order to reject the books because no flaw in the books was discovered. As a result, it nullified the score improvement. The revenue appealed the Tribunal’s decision, and the top court upheld it, while also ruling that a new rule effective as of January 1, 2014 for determining the value of sales proceeds based on stamp duty valuation would apply retroactively.
YLCC would like to thank Dibyangana Nag for her valuable insights in this article.
