#Income Tax Act

The Supreme Court ruled that unpaid excise duty on sugar stock lying in a bonded warehouse cannot be added to taxable income under Sections 43B and 145A where the assessee follows the exclusive accounting method, has not claimed any deduction for such duty, and the goods remain unremoved. The decision clarifies that no tax liability crystallises under excise law until goods are actually cleared from the bonded warehouse, protecting manufacturers from phantom income additions on stock they cannot legally sell.

ITAT Kolkata held that reassessment beyond three years under Section 148 mandates PCCIT or CCIT sanction under Section 151; PCIT approval is jurisdictionally invalid. The tribunal quashed a notice where only PCIT approval was obtained, reinforcing the strict hierarchy for time-barred proceedings and protecting taxpayers from procedurally flawed orders.

The Bombay HC quashed reassessment for AY 2020-21, ruling a Section 148A(1) notice invalid where mandatory information was furnished post-limitation. On merits, the Court held Section 56(2)(x) inapplicable to proportionate rights allotments with unchanged shareholding and no disproportionate benefit - a mere issue price vs. FMV differential is not taxable in such cases.

The Calcutta High Court ruled that the first proviso to Section 36(1)(viia)(a) of the Income tax Act 1961 grants banks an option to claim additional provision for doubtful or loss assets, allowing cumulative deduction within statutory limits. This clarifies that the proviso is not an alternative to the main clause, benefitting banking assessees seeking higher tax deductions.

ITAT Pune held PCIT lacked jurisdiction to cancel registration under Sec 12AB(4) for Sec 13(1)(c) violations as the specified violation concept is prospective from 1 Apr 2022, shielding trusts from retrospective cancellation and clarifying limits.

The ITAT Mumbai held that conditioning registration under Sections 12AB/80G on a pending SLP is ultra vires. It directed the Commissioner to issue an unconditional order 1 April 2026 for Trust, stating tax exemptions cannot depend on Supreme Court appeals.

The Chhattisgarh High Court held that reassessment under Section 147 IT Act requires fresh tangible material, not merely a change of opinion, upholding the Tribunal’s quash of the AY 2009-10 order. It guards taxpayers against arbitrary reopenings.

The ITAT Patna held that an assessment against a dissolved entity is a legal nullity and quashed the Section 154 penalty order. It clarifies that tax authorities cannot proceed against non-existent bodies, shielding successors and assessees from void demands.

Under Section 263 ITA, the Supreme Court held that the CIT’s revisional jurisdiction requires an order to be both erroneous and prejudicial to revenue, and that circulars cannot override the statute, thus limiting authority and protecting assessees.

A payer’s residence alone does not trigger tax under Sec 5(2)(b) absent a business connection in India, the Delhi HC ruled, quashing Rs 783 crore of TDS demands on pharma firms. The ruling clarifies source rule, shielding payments from unjust tax claims.

The Gujarat HC ruled that mere shareholding in a public limited company does not attract Section 179 IT Act liability without proof of gross neglect in tax non-recovery. Directors are shielded from vicarious tax liability absent such evidence.

The ITAT Delhi held that reassessment under section 148 is valid only if the escaped income is an asset as per Explanation 2 to section 153A, noting that unsecured loans received by the assessee qualify as such assets and that liability-side entries do not defeat the extended limitation when the escaped amount exceeds ₹50 lakh.

The tribunal ruled that TDS credit under Section 205 is based on actual tax deduction, not merely Form 26AS reflection, and remanded the case for verification of the disputed Rs 43.72 lakh credit. This protects taxpayers from losing legitimate credits due to deductors' filing delays or errors.

The Gujarat High Court quashed a Section 142A valuation reference initiated one day before the limitation period expired, ruling it a colourable exercise of power since the Assessing Officer held all necessary material for six months yet remained inactive. The decision prevents revenue authorities from using valuation references as a tactic to artificially prolong assessment proceedings.

The ITAT Delhi held that satisfaction recorded after 1 April 2021 invalidates a Section 153C search assessment, mandating reassessment under Section 148 instead. The ruling clarifies the procedural switch introduced by the Finance Act 2021 amendment, directly impacting assessees and tax authorities in search-related proceedings.