Issue No. 280 / Dec 27^th, 2023 

Dear Professionals, 

We are glad to present to you the 279^th 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 125660+  Income Tax Rulings reported across ITR, CTR, Taxman, 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

1) HC: PCIT not empowered to adjudicate merits of refund while deciding delay condonation - HC sets aside Single Judge order and PCIT’s order rejecting Assessee’s application under Section 119(2)(b) for condonation of delay by adjudicating the merits of the refund claim; Observes that the issue on merits with regard to determination of the nature of land can only be made by the assessing authority to whom the matter must necessarily be relegated if the PCIT finds that there are justifiable reasons offered by the Assessee for the delay in preferring the claim for refund; Observes that Section 119(2)(b) only empowers the CBDT to admit the application or claim of exemption, deduction or any other relief after the expiry of the period specified under the Act for making such application or claim on merits in accordance with law; Observes that CBDT may authorise PCIT to exercise the discretion but such authorisation cannot confer on the PCIT a greater discretion than what is contemplated under the Act in favour of CBDT; Observes that CBDT Circular no. 9/2015 dt. June 09, 2015; which authorises the PCIT to consider even the merits of the refund claim while exercising the delegated power under Section 119(2)(b) is patently illegal since the mandate of the Act cannot be circumvented through the administrative Circular issued by CBDT; Observes that PCIT findings on merits is flawed since  ………………Click here to read and download HC Judgment copy

2) HC: Sec. 220(2) amendment prescribing 30 days for paying demand, not retrospective; Follows Vikrant Tyres - HC allows Assessee’s writ petition, holds that second proviso to Section 220(2) cannot be invoked to demand any interest from the Assessee for AY 2011-12 in case the payment of entire tax amount is made within 35 days from the date of rectification order under Section 154; Relies on SC ruling in Vikrant Tyres wherein it was held that Section 220(2) would be applicable and the interest will accrue in case where even after the notice of demand under Section 156 and a further period of 30 days as provided under Section 220(1) the Assessee continue as a defaulter in the matter of payment of tax; Observes that second proviso which has been introduced in the Finance Act, 2014 will have prospective operation with effect from Oct 01, 2014, accordingly, by no stretch of imagination its operation cannot be said to be retrospective; Accordingly, relying on SC ruling in Vikrant Tyres, HC observes that Assessee cannot be held to be default in making the payment of tax which was crystallized by the rectification order under Section 154; Thus, holds that Section 220(2) would not empower the Revenue in levying interest……………. Click here to read and download HC Judgment copy

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3) HC: Quashes criminal prosecution over tax-evasion since tax & penalty paid with delay - HC allows Assessee’s criminal petition, quashes criminal prosecution and the consequential proceedings initiated on the allegation of wilful evasion of tax on account of payment of self-assessment tax belatedly along with penalty; Observes that it is apparently clear that there was no attempted evasion on the part of the Assessee on delayed payments which is also evident from the fact that Revenue levied penalty; HC observes that neither the income tax return for AY 2011-12 nor the gross income or levy of penalty on the delayed payment of income tax as well as the payment of interest by the Assessee has been denied by the Revenue; Observes that while maintaining both civil and criminal proceedings simultaneously, there has to be an element of criminal intent in the mind of the Assessee but in the instant case, it is undisputed that income tax was self-assessed and payment of the same was made although belatedly, accordingly, the allegation of deliberate and wilful default of evasion of tax does not hold the field ….………………Click here to read and download HC Judgment copy

4) HC: Directs adjustment of tax in AY corresponding to tax incidence & consequential VsV effect - HC directs Revenue to adjust the credit of tax paid towards the capital gain in AY 2016-17 against the demand determined in Form 3 pursuant to VsV scheme for AY 2014-15 since the actual incidence of capital gain tax arose in AY 2014-15 as against AY 2016-17 in which the said gain was offered to tax; Also directs Revenue to accept Assessee’s Form 4 filed in pursuance to VsV scheme and issue the Form 5 for the clearance as well; Observes that Revenue has to make suitable adjustments either physically or by online to transfer the tax paid in AY 2016-17 to VsV scheme in AY 2014-15 without any further delay; Observes that in case any difficulty arises by the Revenue, it has to be sort out without causing inconvenience to the Assessee with regard to the transfer of challans standing to the credit of AY 2016-17 to AY 2014-15; Also directs the Revenue to accept the challans manually in case e-transfer is not possible; Assessee, an owner of a property entered into a JDA wherein it received Rs.3.2 Cr in AY 2014-15 from developer in lieu of surrender of 29% of the build-up area which was offered to tax as capital gain in AY 2016-17 by filing return of income declaring total income of Rs. 15.55 Cr. and paid tax amounting to Rs. 4.44 Cr.; During assessment proceedings for AY 2016-17, Revenue rejected Assessee’s valuation and assessed capital of Rs. 20.06 Cr which was challenged before CIT(A); Subsequently, Revenue initiated reassessment proceedings under Section 148 for AY 2014-15 on protective basis alleging failure of Assessee to offer the capital gain from the amount received from JDA with the developer to which Assessee responded that the said amount was offered to tax as capital gain in AY 2016-17, accordingly….………………Click here to read and download HC Judgment copy

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5) HC: Quashes reassessment, change of opinion over utilisation of earmarked funds -  HC dismisses Revenue’s appeal, holds that no substantial question of law arises wherein ITAT quashed reassessment initiated on non-inclusion of receipts of earmarked funds reflecting under head 'fund pending utilization' in the total income while claiming exemption under Section 11 since all materials in respect of the said non-inclusion or allegation of deficiency in application of income for charitable purposes were examined by the Revenue in the course of original assessment under Section 143(3) …….. if the assessing officer has reason to believe that any income chargeable to tax had ‘escaped assessment’ for any assessment year, however, such powers cannot be conferred to the assessing officer to initiate such proceedings merely on his change of opinion on the basis of same facts and circumstances which has already been considered by him during original assessment.………………Click here to read and download HC Judgment copy

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About Taxsutra Database!

“Taxsutra Database”, a true Income-tax research tool, is an archive of over 125660+  Income Tax Rulings reported across ITR, CTR, Taxman, 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:  

a) Comprehensive coverage of all latest cases powered by an advanced search engine to provide a seamless user experience;

b) Effective search results supported by active filters around Court Level, Location, Case Numbers and Citation;

c) Enhanced search feature, using the Unique Bulls Eye Application, by including "Exact words", "Any of these", "none of these" options.  

d) Judicial “forward & backward reference”  

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