Issue No. 287 / April 04th, 2025 

Dear Professionals, 

We are glad to present to you the 287th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena! 

“Taxsutra Database”, a true Income-tax research tool, is an archive of over 130730+ 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’ 

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Key Takeaways from Handpicked Rulings  

SC: Dismissed assessee SLP, upholds AO’s use of CBDT risk management strategy and validity of section 148A approvals. SC dismissed the assessee's Special Leave Petition (SLP), finding no grounds to interfere with the impugned order passed by the HC. The HC had rejected the assessee’s objections to the application of Sections 148 and 148A of the Income Tax Act, ruling that information received under the CBDT's risk management strategy was valid. The HC also dismissed the claim that approval under Section 148A had not been obtained, confirming that the necessary approval was provided by the Pr. CIT. The argument that two approvals were required was deemed incorrect. 

Click here to read and download SC Judgment copy

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SC: Tax evasion claims found unfounded as court dismisses Revenue's SLP, legal question still open. SC condoned the delay in filing the petition and, after considering the arguments, found no grounds for interference under Article 136 of the Constitution. The question of law was left to be addressed in a future case, if necessary. SC dismissed the Revenue's Special Leave Petition (SLP) challenging the HC ruling regarding the filing of revised returns. The assessees waived their tax claims, and thus, this was not a case where tax evasion could automatically be attributed to the assessees. HC had quashed the prosecution under Section 276C(1) for willful tax evasion against a group of individuals and companies (assessees). HC opined that mens rea is necessary for prosecution, and an incorrect or erroneous claim would not amount to willful evasion, as such errors could stem from a mistaken interpretation of the law. HC relies on co-ordinate bench judgments in Vyalikaval House and Confident Projects wherein SLP was dismissed by the SC and observes, “in order to render the accused guilty of "attempt to evade tax" it must be shown that he has done some positive act with an Intention to evade tax.. The act of filing the returns by itself cannot be construed as an attempt to evade tax, rather the submission of the returns would suggest that petitioner No.1 had voluntarily declared his intention to pay tax. The act of submitting returns is not connected with the evasion of tax”; Remarks that the act of an assessee to evade tax should be palpable and demonstrable; HC notes that the Assessees filed revised returns waiving their claim for short term capital loss and long term capital gains and also paid taxes, the moment the search was conducted and the assessment proceedings commenced; Also, holds that the order of the magistrate of taking cognizance of offence as illegal since it suffered from non-application of mind. 

Click here to read and download SC Judgment copy

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SC: Dismisses Assessee’s SLP; Declines to Interfere with HC order, remitting matter to ITAT for consideration of incriminating materials. SC heard both parties' counsel and noted that the Allahabad HC had remitted the matter to the ITAT to review incriminating materials, previously examined by the AO and CIT (A) u/s 153A. Since the issue remains unresolved, the SC dismissed the SLP and left all rights and contentions open to be argued before the ITAT. HC had earlier ruled in favour of the Revenue, stating that assessments u/s 153A can be made based on both incriminating materials found during a search and materials available at the time of the original assessment. HC  confirmed that the Revenue’s findings were made with due consideration of evidence and in compliance with the principles of natural justice. ITAT had not overturned the Revenue’s findings, but allowed the Assessee’s appeal based on its earlier ruling in Sigma Casting,, assuming no incriminating material was found during the search. 

Click here to read and download SC Judgment copy

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SC: Continuation of criminal proceedings unnecessary after Income tax return revised and penalty dropped. SC quashed the criminal proceedings u/s 276CC under the IT Act, 1961. SC found that continuing the criminal proceedings was unnecessary since the appellant had eventually filed the return, the penalty proceedings were dropped, and a refund was granted. Relied on Guru Nanak Enterprises 

Click here to read and download SC Judgment copy 

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SC: Dismisses Assessee's SLP, amounts credited and returned on last day of AYs count as Income. SC condoned the delay in filing the petition and, after considering the arguments and reviewing the materials, found no reason to interfere with the Punjab & Haryana HC order. SC dismissed the assessee's Special Leave Petition (SLP) against the HC ruling regarding the issue of crediting an amount in the books of accounts and then returning it the next day, realizing this only on 31st March (the last day of the assessment year). HC had held that there is no issue of mens rea in this case. Crediting and subsequently returning an amount in the books of accounts, even on the last day of the assessment year, still qualifies as income for that year. Allowing such entries could lead to fictitious transactions designed to gain tax benefits. Additionally, discrepancies may arise if the entries in the books do not match the bank account, particularly in cases involving cash or unencashed cheque transactions. HC further emphasized that the income to be assessed is based on accrued income, not the actual income received during the financial year. Therefore, if an amount is entered in the books of accounts on 31st March, it will be treated as income, even if the cheque is not encashed on that day. The decision favoured the revenue, and the appeal was dismissed.

Click here to read and download SC Judgment copy

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SC: State's SLP dismissed over 1700-day appeal delay; Court emphasizes judicious use of discretion in condonation. SC agrees with the High Court’s decision to dismiss the appeal, as the delay was not adequately explained or justified by the State. It notes that the delay, lasting 1,788 days, led to significant revenue loss for the Government. SC directed the State to improve its legal processes, hold responsible officers accountable, and impose penalties for delays or lapses, with a warning for all states to follow suit. The Court emphasizes that when seeking condonation of delay, the focus should be on explaining why the party failed to file within the specified limitation period, not on events occurring after the deadline has passed. Even though a party can wait until the last day to file, if the appeal is not filed on time, the explanation must demonstrate that a valid cause prevented filing before the limitation expired. Events after the expiration cannot justify the delay. Any delay after the limitation period should be linked to a cause that arose before the period ended. SC dismissed the SLP and imposed a fine of Rs. 1,00,000 on the State, to be deposited within two weeks. If the State fails to do so, the Registry will take legal action to recover the amount. The Court emphasized the need to discourage frivolous appeals against well-reasoned High Court decisions. 

Click here to read and download SC Judgment copy

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SC: Dismisses Revenue’s review petitions; Sec.153C AYs to be reckoned from forwarding of seized material, not search date. SC dismisses Revenue’s review petitions against Jasjit Singh judgment. SC, in Jasjit Singh judgment, ruled that as per the plain reading of Section 153C, the six year assessment period commences from the date the seized material is forwarded to the AO of the person 'other than the searched person' and not from the date of search; SC rejects Revenue’s contention that proviso to Section 153C(1) is confined in its application to abatement and underscores that “the Parliamentary intent to enact the proviso to Section 153C(1) was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted”; In review petitions, SC observes, "the petitioner filed a review petition with a delay of 433 days, which was not adequately explained. We have carefully gone through the said Order and the record. In our opinion, no case for review is made out. Consequently, the review petition is dismissed on the ground of delay as also on merits” 

Click here to read and download SC Judgment copy

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SC: Citing delay, dismisses revenue's SLP, upholds Apple India's 'provision for warranty' claim. SC dismisses the SLP filed by the Revenue against the HC order due to a 225-day delay, finding the explanation for the delay unsatisfactory. SC also notes that similar cases had already been dismissed and rejects the petition on both procedural and substantive grounds. HC upholds Apple India's 'provision for warranty' claim, observing that the percentage of utilization of the provision depends on the warranty claims made during the year. Based on the factual submission by the Assessee, the HC notes that the warranty claim varied between 2.16% and 9.89%, but the utilization was 95.5%. Thus, the HC holds that the estimate made by the Assessee was robust and dismisses the Revenue's appeal. 

Click here to read and download SC Judgment copy

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