Tribunals and Commissions judgments

ITAT Delhi rules that reassessment under Section 147 IT Act cannot be initiated based on suspicion or fund rotation alone. The assessing officer must establish tangible material showing a direct nexus between the evidence and the belief of income escapement, setting a higher threshold for reopening assessments.

CESTAT rules that describing 'painted galvanised steel sheets' as 'painted steel sheets' does not amount to mis-declaration under Customs Act 1962, reinforcing that reassessment must comply with principles of natural justice and procedural fairness. The ruling clarifies the threshold for mis-declaration in customs valuation disputes, impacting importers and revenue authorities.

ITAT Delhi rules that startups remain eligible for Section 80IAC tax deductions even if Form 10CCB is filed late, provided the original return is submitted on time and the claim is substantiated. The ruling emphasizes substantive compliance over procedural technicalities, offering relief to startups facing disallowance due to filing delays.

ITAT Delhi ruled that where a High Court has already upheld the assessee’s transfer pricing methodology for royalty and business support service fees in a prior year, the revenue cannot re-agitate the same factual matrix. The Tribunal granted an absolute stay on recovery, reinforcing judicial consistency in transfer pricing disputes and protecting taxpayers from arbitrary reassessments.

ITAT Ahmedabad rules that reopening assessments under Section 147 of the IT Act solely based on investigation wing inputs, without independent application of mind or affording the assessee an opportunity to respond, violates principles of natural justice. The Tribunal quashed the reassessment, emphasizing that procedural fairness mandates reasoned justification beyond mere reliance on third-party information.

ITAT Delhi rules that net profit calculations in search assessments under Section 143(3) must rely on actual figures from seized documents, rejecting uniform gross profit estimates. The decision reinforces that expense deductions require concrete evidence, not presumptive additions, impacting undisclosed income assessments for businesses.

ITAT Delhi rules that assessees can claim the 22% concessional tax rate under Section 115BAA even if Form 10-IC is filed late, provided substantial compliance and intent are proven. The decision underscores a beneficial interpretation, protecting taxpayers from technical disqualifications due to procedural lapses.

ITAT Delhi rules that for non-searched persons, the six-year assessment window under Section 153C commences from the date the Assessing Officer receives seized documents, not the search date. This holding invalidates assessments conducted under Section 143(3) for such cases, setting a critical precedent for jurisdictional compliance in search-related proceedings.

CESTAT Allahabad rules that electricity supplied through diesel generating sets constitutes a sale of goods, not a taxable service under the Finance Act. The tribunal also holds that extended limitation under Section 73 cannot be invoked without proof of wilful suppression, impacting service tax assessments for commercial property lessors.

ITAT Mumbai rules that inadvertent computational errors in depreciation claims can be rectified during assessment proceedings under Section 32 of the Income Tax Act, even if no revised return was filed. The decision underscores the appellate authority's jurisdiction to entertain such corrections, providing relief to taxpayers facing similar procedural hurdles.

CESTAT Chennai rules that reimbursement of shared advertising expenses between group companies does not qualify as 'Business Auxiliary Service' under Section 65(105)(zzb) of the Finance Act, 1994, in the absence of a client-provider relationship. The ruling clarifies that cost-sharing arrangements for business promotion are not taxable unless a distinct service is rendered to a specific client, impacting multinational corporations and group entities engaged in joint marketing.

CAT Ernakulam ruled that transferring a gazetted officer despite acknowledged compassionate grounds-such as long-term family separation and Scheduled Caste status-constitutes arbitrariness violating Article 14. The decision mandates that service exigencies cannot override personal hardship without documented, objective justification, setting a new standard for fairness in public sector transfers.

ITAT Delhi rules that a notice under Section 148 issued to a deceased assessee is void from the outset, and legal heirs bear no duty to inform the tax department of the death. The tribunal quashed the assessment order, reinforcing that jurisdictional defects cannot be cured by subsequent compliance from legal representatives.

ITAT Mumbai rules that selling shareholders can claim proportionate IPO expenses as deductible under Section 48 of the Income Tax Act, provided the expenses are incurred wholly and exclusively for the share transfer. This clarifies the tax treatment of Offer for Sale (OFS) costs, impacting shareholders and tax practitioners dealing with capital gains computations.

ITAT Bangalore rules that a single satisfaction note under Section 153C for multiple assessment years is invalid. Each year requires independent documentation linking seized materials to the assessee, ensuring procedural compliance in search and seizure cases. Tax authorities must now issue distinct satisfaction notes for every assessment year to avoid legal challenges.

ITAT Mumbai rules that redeemable preference shares without dividend payments cannot be reclassified as loans under transfer pricing provisions unless exceptional evidence proves otherwise. The tribunal also upheld the presumption that own funds are used for advances, rejecting disallowance under Section 36(1)(iii) where assessee's funds were already invested in fixed assets.

ITAT Ahmedabad rules that investment in an under-construction residential property within the prescribed time limits under Section 54F qualifies for capital gains exemption, even if the payment was made prior to the sale of the original asset. This holding clarifies that the timing of possession or execution of the sale deed is not the sole determinant, provided the investment meets the statutory timeline.

ITAT Pune holds that deductions under Section 35(1)(iv) of the Income Tax Act for capital expenditure on scientific research are allowable only after the assessee's business has commenced. The ruling clarifies that pre-commencement R&D expenses, even if substantial, do not qualify for tax relief, impacting biotech and pharmaceutical startups.

ITAT Delhi rules that failure to consider assessee's documentary evidence in income tax assessments violates principles of natural justice, setting a critical precedent for Section 68 appeals. The tribunal emphasized that reliance solely on departmental reports without evaluating assessee submissions renders the order unsustainable in law, impacting tax practitioners and appellants facing similar additions.

CAT Cuttack rules that long-term casual workers in government institutions are entitled to regularization even if procedural requirements under the DoPT OM are not met, overriding the strict application of the Uma Devi doctrine. The ruling emphasizes substantive justice over technicalities, impacting thousands of similarly placed workers.

ITAT Ahmedabad rules that cash deposits during demonetisation cannot be automatically treated as unexplained income under Section 69A without evaluating prior sales trends and legitimate income estimates. The ruling mandates a contextual assessment, shifting the burden from presumptive addition to evidence-based scrutiny, impacting tax assessments for businesses and individuals.

CAT Lucknow rules that once promotions under the 1979 Service Rules are settled by judicial order, they acquire finality and cannot be undone-even if the original reasoning contained legal errors. The decision reinforces vested rights in service matters, protecting employees from retrospective administrative revisions post-cadre restructuring.

ITAT Ahmedabad rules that a penalty under Section 271(1)(c) cannot be imposed for 'concealment' if the show-cause notice alleges only 'inaccurate particulars'. The tribunal sets a strict standard for procedural compliance, holding that the default type must be clearly specified in the notice to sustain the penalty.

ITAT Mumbai rules that CSR donations, even if mandated under the Companies Act, qualify for deduction under Section 80G if made to eligible entities. The tribunal rejects the double disallowance argument, clarifying that statutory obligations do not negate tax benefits for compliant contributions. This ruling impacts corporate tax planning and CSR compliance strategies.