#tax litigation

CESTAT Chennai held electronic records inadmissible under Section 36B of the Central Excise Act for non-compliance, quashing a ₹4.08 crore duty demand and ₹2 crore penalty, stressing procedural compliance essential for digital evidence in tax disputes.

The ITAT ruled that an assessment order issued under section 143(3) in the name of a deceased taxpayer is merely irregular and can be corrected, not a nullity. Consequently, the tax liability remains enforceable and the legal heir may seek rectification without the order being void.

ITAT Delhi held that the discount on employee stock options is a deductible expense under Section 37(1) of the Income Tax Act, treating it as a composite expense under Section 57. Companies can now claim the ESOP discount against taxable income, reducing tax outgo. This benefits firms that grant ESOPs.

The Gujarat High Court set aside a 2019 Section 148 notice, ruling that without new, concrete material a tax authority cannot reopen an assessment merely on a revised opinion. This reinforces that any reassessment must be backed by fresh evidence, protecting taxpayers from arbitrary reopening.

ITAT’s demand that a taxpayer deposit a ₹1 lakh cost before filing an appeal, with automatic confirmation on default, is struck down. The High Court held that a right to appeal cannot be conditioned on payment of costs, preserving access to justice for all assessee under the Income-Tax Act.

An assessment order issued under Section 148 after the assessee’s death is deemed void from the outset, rendering the notice ineffective. This ruling bars revenue authorities from reopening assessments of deceased taxpayers without proper procedural basis, protecting legal heirs from unwarranted tax demands.

The Bombay High Court ruled that proceeds from selling flats in a completed real-estate project are capital gains, not business income, because the seller’s intent was investment and the holding period was long. Hence, tax authorities must prove a trade-like activity, and developers will be taxed only on capital gains.

The ITAT Kolkata has held that the CIT(A)’s dismissal of an income tax appeal without considering a timely adjournment request constitutes a fatal breach of natural justice, rendering the order void. This reinforces that even in faceless appeal systems, the right to be heard is non-negotiable and cannot be waived by procedural technicalities or non-appearance.

ITAT Surat holds that penalties under Section 271(1)(c) of the Income Tax Act cannot be levied on ad-hoc or estimated additions, even in cases of alleged bogus purchases. The ruling reinforces that penalty provisions require concrete evidence of concealment, not mere presumptive additions, impacting tax assessments involving disputed transactions.

CESTAT Kolkata holds that Education Cess and SHE Cess credits cannot be transferred to the CENVAT credit account for excise duty payment, reinforcing strict segregation under CENVAT Credit Rules 2004. The Tribunal upheld the demand but waived interest and penalty, emphasizing compliance with Delhi HC precedent.

ITAT Pune rules that failure to issue notice u/s 143(2) of the Income Tax Act after assessee files return in response to notice u/s 148 renders re-assessment order invalid, even if return is delayed.

ITAT Delhi set aside a CIT(A) order for violating principles of natural justice by deciding an appeal ex-parte without granting the assessee an effective hearing. The Tribunal ruled that mere non-submission of documents does not justify bypassing quasi-judicial obligations under Section 250(6) of the Income Tax Act, emphasizing procedural fairness in tax adjudication.

ITAT Delhi sets aside a ₹12.91 lakh penalty under Section 271(1)(c) for failing to specify whether the charge was for concealment of income or furnishing inaccurate particulars. The ruling reinforces that tax authorities must clearly articulate the limb of the penalty provision invoked, impacting all penalty proceedings under the Income Tax Act.

ITAT Bangalore rules that assessees filing tax appeals within 90 days from 01.03.2022 are not barred by limitation, citing COVID-19 suo motu directions. The tribunal remands the case for merit-based adjudication, reinforcing the applicability of pandemic-related extensions in tax litigation.

ITAT Pune has ruled that delays in filing tax appeals must be condoned when the core issue involves substantial justice, particularly where reassessment stems from survey-based proceedings and the assessee has offered a plausible explanation. This sets a critical precedent for taxpayers facing technical rejections in complex, non-routine tax investigations, reinforcing that procedural lapses cannot override meritorious claims.