#Tax Compliance

The ITAT Delhi has ruled that employers cannot claim deduction for delayed contributions to PF/ESI merely because the tax department processed the return under Section 143(1) without prior notice. This clarifies that compliance deadlines under labor laws are non-negotiable for tax deductions, impacting all employers relying on automatic processing for compliance. The ruling reinforces strict adherence to payment timelines, regardless of procedural automation.

CESTAT Hyderabad has ruled that CENVAT credit can be availed on duty-paid capital goods used in manufacturing, even when those goods are owned by a third party under lease and permanently installed in the factory. This clarifies that ownership, not usage or immovability, is not a barrier to credit - a critical win for manufacturers relying on leased infrastructure.

The ITAT Bangalore has ruled that an Assessing Officer is legally bound to implement Dispute Resolution Panel directions under Section 144C(13) regardless of whether the Transfer Pricing Officer has finalized their order. This clarifies that statutory compliance with DRP mandates cannot be delayed or negated due to procedural lags in transfer pricing assessments, reinforcing taxpayer rights and administrative accountability in complex tax disputes.

ITAT Lucknow sets a precedent by recognizing acute depression and dehydration from Ramadan fasting as valid 'reasonable cause' under Section 273B of the Income Tax Act, deleting a ₹20,000 penalty. This ruling expands the scope of medical exemptions for tax compliance, offering relief to assessees facing health-related non-compliance.

ITAT Kolkata reinforces that assessees must deposit at least 20% of the disputed tax demand to secure a stay under Section 254(2A) of the Income Tax Act, unless they can prove undue financial hardship. The ruling clarifies procedural compliance requirements for taxpayers seeking interim relief during appeals, impacting all direct tax litigation involving stay applications.

ITAT Bangalore nullified a reassessment order for failure to obtain mandatory approval from the Principal Chief Commissioner under Section 151(2) for notices issued beyond three years. The ruling reinforces strict procedural compliance in income tax reassessment proceedings, impacting taxpayers and revenue authorities alike.

The ITAT Mumbai has ruled that interest under Section 234C cannot be imposed on advance tax payments made before a business begins operations, since no income could reasonably be estimated during that period. This clarifies a critical exemption for startups and new enterprises, ensuring they are not penalized for tax obligations tied to non-existent income.

ITAT Bangalore ruled that a penalty under Section 270A cannot stand unless the assessment order explicitly specifies which limb of misreporting under subsection (9) applies. The tribunal set aside a Rs. 1.23 crore penalty, reinforcing that procedural fairness mandates clear identification of the legal basis for tax penalties, directly impacting tax assessment practices for trusts and entities.

ITAT Delhi ruled that a limited risk service provider is entitled to cost-plus remuneration, rejecting transfer pricing adjustments where benchmarking was inconsistent and DRP directions were ignored. The decision reinforces the consistency principle in transfer pricing, impacting multinational enterprises and tax compliance strategies.

ITAT Delhi holds that failure to pay tax under the Income Declaration Scheme 2016 within the stipulated time renders the declaration invalid, making the disclosed income taxable in the year of declaration rather than the original assessment year. This ruling underscores the strict compliance requirement for availing amnesty benefits under the scheme.

The ITAT Nagpur has ruled that a penalty imposed under Section 271AAC(1) cannot stand if the quantum assessment order on which it is based has been set aside by the High Court. This clarifies that penalty proceedings are ancillary to the validity of the assessment itself, protecting taxpayers from punitive action rooted in legally untenable additions. The ruling impacts all assessees facing similar penalty triggers post-reassessment cancellation.

The Bombay High Court has ruled that payment of the principal IGST refund amount does not discharge the statutory obligation to pay interest under Section 54 of the IGST Act. This clarifies that non-payment of interest constitutes contempt of court where previously ordered, reinforcing strict compliance with statutory refund timelines for exporters and zero-rated suppliers.

CESTAT Hyderabad rules that minor invoice irregularities - including incorrect billing address and failure to register as an Input Service Distributor - do not invalidate Cenvat credit if the services were actually received and service tax duly paid. This reinforces the principle that substantive compliance trumps technical non-compliance in tax credit claims, benefiting multi-unit businesses relying on centralized invoicing.

Uttarakhand High Court holds that taxpayers availing the special rectification scheme under Section 148 of the CGST Act are not bound by the 'error apparent on record' standard of Section 161. The ruling provides relief to assessees who missed appeal deadlines, mandating authorities to adjudicate rectification applications under the scheme's terms alone.

ITAT Nagpur rules that a reassessment notice under Section 148 of the Income Tax Act must bear a manual or digital signature to be valid. The absence of such signature renders the notice void ab initio, stripping the Assessing Officer of jurisdiction to proceed, and this defect cannot be cured under Sections 292B or 292BB. The ruling reinforces strict compliance with statutory mandates under Section 282A, impacting all pending and future reassessment proceedings.