Issue No. 236 / June 24^th, 2021

Dear Professionals, 

“Taxsutra Database”, a true Income-tax research tool, is an archive of over 112390+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’. It is a completely integrated service with the following features:  

• Comprehensive coverage of all latest cases powered by an advanced search engine to provide a seamless user experience;  
• Effective search results supported by active filters around Court Level, Location, Case Numbers and Citation;  
• Enhanced search feature, using the Unique Bulls Eye Application, by including "Exact words", "Any of these", "none of these" options.  
• Judicial “forward & backward reference”  

We are glad to present to you the 236^th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena! 

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Key Takeaways from Handpicked Rulings 

1) HC: Dismisses WP filed to institute disciplinary action against Income-tax officials; holds it as abuse of Court process - HC dismisses writ petition, directs petitioners to pay costs; Petitioners filed the writ to initiate action against Income-tax officials, including their prosecution in respect of certain real-estate transactions, also seek monitoring of investigation conducted under Benami Law and the PMLA Act, before filing the writ, petitioners had instituted a civil suit against the respondents on the same issue; Petitioners giving details of certain real estate transactions, allege that such transactions are prohibited benami transactions wherein the consideration as undervalued to avoid stamp duty, registration and transfer fee; HC remarks that “ This Court is not inclined to go into the several contentions advanced in the Writ Petition and conduct a parallel enquiry to that which would happen in the civil suit when it would go to trial”; Further opines that “aspersions cannot be cast on officers of Government Departments solely on the basis of suspicions and assumptions of the petitioners tarnishing their reputation”; states that “We are of the opinion that filing of this Writ Petition is an abuse of process of Court and this Court cannot allow itself to be used as a private investigator by the petitioners to prove their contentions in the civil suit or to coerce the respondents for a possible settlement under threat of a prosecution from respondents 1-5 under the various statutes referred to above.”; accordingly dismisses the writ...............Click here to read and download HC Judgment

2) HC: Dismisses WP, holds no valid ground raised by Assessee to stay demand - HC disposes of the writ petition filed for grant of stay of demand for AY 2014-15;  Assessee- company filed its return of income for AY 14-15 returning income of Rs. 1.76 lakhs which was processed u/s 143(1), Revenue issued notice u/s 148 assessing the income 30409 times higher resulting in an addition of Rs 575 crores making a high pitched assessment on the Assessee;Assessee made a request for staying the collection of tax, which was disposed of in a mechanical mannerby directing payment of 20% of outstanding balance demand in 10 equal instalments ignoring financial difficulty of the Assessee; HC observes that the petitioner’s business was hampered because of COVID-19 and as per CBDT instruction No.1914 which confers power on the authorities to grant stay of demand, requires the authority to consider three parameters namely “(i) existence of prima facie case, (ii) financial stringency, and (iii) balance of convenience” before giving any direction of stay; States that as per this CBDT instruction, authority can grant stay by directing payment of 20% of the demand or even less depending on case to case to protect the interest of Revenue; HC further observes that the Revenue considering Assessee’s hardship extended the time for payment of first instalment, but the Assessee still failed to comply with; HC remarks “…mere failure of the authorities to recover any amount cannot be considered as financial stringency of the petitioner”; Thus, HC having regard to the facts of the case concludes that no valid ground has been raised by the Assessee to interfere with Revenue's order; holds the writ to be devoid merits and dismisses it......................... Click here to read and download HC Judgment

3) HC: Dismisses WP; holds section 154 cannot be converted as an appeal for adjudication of disputable issues - HC dismisses WP filed by Assessee challenging notice u/s 154; Assessee, (Co-operative Bank) filed a writ petition, challenging notice u/s 154; Assessee chose not to appear in person, and file the writ petition, on the ground that his case is not covered within the scope of section 154, and Revenue has no jurisdiction to issue the notice, Assessee, however filed a reply in writing to this notice; Assessee contended that Revenue has considered all the aspects elaborately and passed order on merits, and the very initiation of proceedings for rectification of mistake is beyond scope; Assessee further stated that Revenue was trying to adjudicate a disputable point; The issue in case of Assessee was regards the allowability of deduction u/s 36(1)(vii) & 36(1)(via); Revenue contented that in case Assessee was of the opinion that there was no mistake apparent on record in terms of section 154, then it is a disputable issue which ought to be re-opened; HC remarks that Section 154 cannot be converted as an appeal for entertaining a ground for adjudication of merits or disputable issues; HC holds that “In the present writ petition, the respondent has established that they have not gone beyond the scope of Section 154 and they have taken steps to rectify the mistake apparent from record and the nature of mistake apparent from record is also furnished in the impugned notice issued under Section 154 of the Act. Thus the petitioner is at liberty to participate in the Section 154 proceedings and defend his case by availing opportunities provided by the Authorities”; dismisses the writ petition...................... Click here to read and download HC Judgment

4) HC: Condones delay, allows review petition for appeal, which was earlier not decided on merits - HC allows application seeking condonation of delay in filing the review petition and the review petition, directs Revenue to pay Rs. 5000/- to the Assessee to compensate for the inconvenience caused on account of delay in filing the review petition; Assessee objected to the condonation application on the grounds that the reasons accorded by the Revenue did not constitute ‘sufficient cause’ within the meaning of Sec. 5 of Limitation Act; HC observes that the appeal was withdrawn earlier on Revenue’s prayer that the tax effect might be less than Rs. 1 Cr. as per a policy decision take under Circular No. 17/2019 dated 08.08.2019, while granting liberty to the Revenue to file the application again if in case on scrutiny the tax effect is more than Rs. 1 Cr; HC remarks that although Revenue have been lethargic in filing the review petition along-with the application for condonation of delay, but the said appeal was not decided on merits earlier and was allowed to be withdrawn pursuant to the policy of the aforesaid Circular pursuant to which 100 cases were disposed of in a single day; Thus, HC views that it would be unjustified if the Revenue’s request for revival of the appeal is not allowed totally, directs the Revenue to compensate Assessee for inconvenience caused...................... Click here to read and download HC Judgment

5) HC: Allows Writ for illegal adjustment of refund; directs Revenue to pay interest - HC allows the writ petitions filed by the Assessee against adjustment of refund of AY 2019-20 with outstanding demands of AY 2017-18 and 2008-09, without a prior intimation u/s 245; Assessee had contended that there was illegal recovery of refunds arising for the said AY against the demands for AY 2017-18,since a stay already granted; HC refers to Delhi HC ruling in Maruthi Suzuki India Limited, wherein it was held “…once an absolute stay of recovery of demand of tax was granted to the assessee, it is improper and inappropriate for the Revenue to recover the money through adjustment of refunds.”; HC observes that the Revenue did not provide any explanation as to why the adjustment was made before the expiry of 30 days fixed under the second notice of intimation u/s 245, without averting to the objections filed by the Assessee; Accepts Assessee’s plea that issuance of notice u/s 245 is a necessary pre-requisite so as to enable the petitioner to file objections against orders of adjustment and the adjustment of refunds prior to issuance of such notice is patently illegal; Thus, directs Revenue to refund to the petitioner the amount with interest @ 15% per annum from the date on which it was determined till the date of payment.......................... Click here to read and download HC Judgment

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