Today's Digest Summary
TaxCorp Daily Digest
Professional Tax & Regulatory Intelligence | October 2026
Quick Summary
- 🔴 Income Tax Alert: Multiple ITAT benches quash reassessment orders for jurisdictional defects — invalid Section 143(2) notices, borrowed satisfaction, and time-bar violations are emerging as high-success grounds for assessees
- 🟠 GST Update: High Courts across Telangana, Allahabad, and Madras deliver taxpayer-friendly rulings on registration revocation, e-way bill detention, and Sabka Vishwas scheme eligibility
- 🟡 RBI Regulatory Change: Non-option derivative contract limits scrapped for both Commercial Banks and Small Finance Banks with immediate effect — treasury policy manuals require urgent revision
- 🟢 IBC/Insolvency Clarity: NCLAT and Supreme Court establish consistent doctrine: bank guarantee margin money invoked pre-CIRP is outside the corporate debtor's estate and beyond Resolution Professional's reach
Category-wise Updates
🏛️ Income Tax
1. ITAT Delhi: CSR Contributions Eligible for Section 80G Deduction & CAD Entities Excluded from Software Comparables
In ION Trading India Pvt. Ltd. Vs ACIT, the ITAT Delhi ruled that mandatory CSR donations to eligible trusts qualify for deduction under Section 80G even after disallowance under Section 37(1), harmonising the Companies Act 2013 with the Income Tax Act. On transfer pricing, companies engaged primarily in CAD services cannot be used as comparables for routine software development captives without specific segmental data.
⚡ Action: Review CSR expenditure treatment in current-year returns; audit transfer pricing comparable selection to exclude functionally dissimilar CAD-heavy entities.
2. Agama Patashala Education Qualifies as Charitable Activity Under Section 80G: ITAT Chennai
In Pasikulam Development Trust Vs CIT (Exemptions), the Chennai ITAT held that structured Vedic/Agama Patashala education constitutes "education" and a "charitable purpose" under Section 2(15). The Revenue's reliance on Explanation 3 to Section 80G was rejected for want of evidence that the trust served religious or community-specific purposes exclusively.
⚡ Action: Trusts running Vedic/Agama institutions should file/renew Section 80G(5) applications under clause (iv)(B) post-01.10.2024 and ensure curriculum documentation is in order.
3. ITAT Kolkata Quashes Assessment for Invalid Section 143(2) Notice — Shivam Finance
The Tribunal held that an assessment under Section 143(3) is legally unsustainable where the foundational Section 143(2) notice was issued by an officer lacking pecuniary jurisdiction under CBDT Instruction No. 1/2011. This jurisdictional defect is incurable even if the final order was passed by a competent officer.
⚡ Action: In pending or recently completed assessments, verify whether the Section 143(2) notice was issued by an officer with correct pecuniary jurisdiction as prescribed by CBDT Instruction No. 1/2011.
4. ITAT Kolkata Annuls Assessment for Invalid Section 143(2) Notice and Lack of Territorial Jurisdiction — J R Roadlines
In J R Roadlines Pvt. Ltd. Vs DCIT, the ITAT invalidated an AY 2012-13 assessment on two independent grounds: (i) the Section 143(2) notice was issued by an ITO lacking pecuniary jurisdiction, and (ii) the completing officer had no territorial jurisdiction as the assessee's principal place of business was in Gandhidham, Gujarat.
⚡ Action: Assessees with multi-location operations should immediately verify both territorial and pecuniary jurisdiction of the assessing officer in all open assessments.
5. Delhi HC Sets Aside AY 2014-15 Reassessment Notice as Time-Barred
In Mohd. Athar Anjum Vs ACIT, the Delhi High Court quashed a Section 148 notice dated 31.03.2024 for AY 2014-15, holding it barred by limitation. Following Union of India Vs Rajeev Bansal, the Court held that the six-year limitation under the old regime expired on 31.03.2021, making the 2024 notice jurisdictionally void.
⚡ Action: Assessees who have received Section 148 notices for AY 2014-15 or earlier should immediately assess the limitation position under the first proviso to Section 149(1)(b).
6. Gujarat HC Strikes Down Reassessment Based on Borrowed Satisfaction and Change of Opinion — Bhavin Jayendrakumar Soni
The Gujarat High Court held that mechanical adoption of Investigation Wing information without independent application of mind constitutes "borrowed satisfaction" and is insufficient to support a valid Section 148 notice. Where original scrutiny assessment covered the same issue without addition, reopening amounts to a mere change of opinion.
⚡ Action: Challenge reassessment notices where the Assessing Officer has relied solely on Investigation Wing inputs without demonstrating independent fresh tangible material.
7. ITAT Delhi Quashes Reassessments for AY 2015-16 to 2017-18 — Notice Dispatch Date & Missing Section 143(2) Notice
In Mukesh Khurana Vs DCIT/ACIT, the ITAT Delhi held that a Section 148 notice dispatched on 01.04.2021 (not merely signed or generated) attracted the amended reassessment framework under Section 148A introduced by Finance Act 2021 — a framework the AO entirely bypassed. For AYs 2016-17 and 2017-18, missing Section 143(2) notices rendered the assessments void ab initio.
⚡ Action: For reassessment notices issued around April 2021, verify the exact dispatch date to determine which statutory regime applies and whether Section 148A pre-conditions were met.
8. Mandatory Nature of Section 143(2) Notice in Reassessment: ITAT Delhi Quashes Additions — Major Suresh Yadav
The ITAT Delhi ruled that failure to issue a Section 143(2) notice during reassessment proceedings is a fatal jurisdictional defect invalidating the entire assessment. Tax additions cannot be sustained on mere estimations or borrowed satisfaction from other government departments without independent verification.
⚡ Action: Maintain a verifiable paper trail of all departmental communications; scrutinise reassessment orders for issuance of all mandatory statutory notices.
9. ITAT Raipur: Minimum 7 Clear Days Under Section 148A(b) is Mandatory
In Kaizen Motoventures Pvt. Ltd. Vs ACIT, the Raipur ITAT held that a Section 148A(b) notice dated 03.03.2023 requiring compliance by 10.03.2023 provided only six clear intervening days, violating the mandatory "not less than seven days" requirement. The reassessment was invalidated as a result.
⚡ Action: Count response timelines on all Section 148A(b) notices carefully, excluding both terminal dates, before deciding compliance strategy or waiving the objection.
10. ITAT Raipur: Reassessment Against Deceased Assessee is a Legal Nullity — Fresh Proceedings Under Section 159 Required
In Jay Patel Vs ITO, the ITAT held that an assessment order under Section 147 read with Section 144B passed in the name of a deceased person — after the Revenue was informed of the demise — is void. Fresh notices must be issued to legal heirs under Section 159(2).
⚡ Action: Upon an assessee's death, immediately notify the jurisdictional AO and faceless assessment unit in writing with the death certificate; legal heirs should register themselves before any pending proceedings are concluded.
11. Jurisprudential Analysis: When Section 143(2) Notice in Reassessment is Not Mandatory — ITAT Jaipur
The ITAT Jaipur clarified a nuanced exception: where an assessee files a return in response to reassessment notices and the AO accepts it without any additions or disallowances, the failure to issue a Section 143(2) notice does not vitiate the assessment, as the notice's fundamental purpose — preventing adverse adjustments without hearing — was not triggered.
⚡ Action: This ruling applies only where no adverse adjustments are made; do not treat it as a blanket waiver of Section 143(2) requirements in cases involving additions.
12. ITAT Hyderabad: No Section 14A Disallowance When No Exempt Income Earned — Pre-Finance Act 2022
In NCC Infrastructure Holdings Ltd. Vs ACIT, the Hyderabad ITAT held that for AY 2017-18, no Section 14A disallowance under Rule 8D can be made where the assessee earned no exempt income, rejecting retrospective application of the Finance Act 2022 amendment. The order is subject to the Supreme Court's final decision in the IL&FS Energy Development SLP.
⚡ Action: Assessees with similar pre-amendment fact patterns should monitor the Supreme Court SLP in IL&FS Energy Development Co. Ltd. and preserve all relevant documentation.
13. ITAT Mumbai: WhatsApp Chats from Third-Party Devices Cannot Sustain Section 69A Additions Without Corroboration
In ACIT Vs Dinesh Jaiprakash Baheti, the ITAT Mumbai held that WhatsApp conversations extracted from a third party's device cannot support additions under Section 69A without independent corroborative evidence and Section 65B certification. Reliance on third-party seized documents also requires invocation of Section 153C, not Section 147.
⚡ Action: During search assessments, insist on Section 65B certificates for all digital evidence and challenge additions based solely on third-party electronic records not properly authenticated.
14. ITAT Chandigarh Quashes Valuation-Based Search Additions Without Incriminating Evidence — Khanna Infrabuild
The Tribunal ruled that additions in unabated assessments cannot be sustained merely on a DVO estimation report if no concrete incriminating material was unearthed during search. A company yet to commence commercial operations cannot be saddled with additions for undisclosed income.
⚡ Action: Maintain robust construction and project records; challenge DVO-based additions in search assessments where no direct incriminating material was seized.
15. ITAT Mumbai: Industrial Tariff Accepted as CUP Benchmark for Captive Power Pricing Under Section 80-IA — Aditya Birla Nuvo
The Tribunal held by majority that the industrial tariff of ₹6.62 per unit paid to GUVNL constitutes a valid Comparable Uncontrolled Price for captive power valuation under Section 80-IA, overturning the TPO's lower benchmark of ₹2.52 per unit and restoring a ~₹57.36 crore deduction.
⚡ Action: Captive power plant operators should document external purchase rates paid by related units to independent suppliers as potential CUP benchmarks in Section 80-IA computations.
16. ITAT Surat: Section 80P(2)(d) Deduction Allowed on FD Interest Earned from Co-operative Bank
In Althan Bhatar Co-operative Credit Society Ltd. Vs ACIT, the ITAT Surat reaffirmed that interest income from fixed deposits placed with a co-operative bank qualifies for deduction under Section 80P(2)(d), as a co-operative bank is fundamentally a co-operative society for the purposes of this clause.
⚡ Action: Co-operative societies earning FD interest from co-operative banks should claim Section 80P(2)(d) deduction and support it with Gujarat High Court precedent in Surat Vankar Sahakari Sangh Ltd.
17. Mastering the Dual-Era e-Pay Tax Portal: Act Selection, CRN Generation & Payment Reconciliation
With the transition to a dual-statute environment (Income-tax Act 1961 for up to FY 2025-26; Income-tax Act 2025 from Tax Year 2026-27), assessees must carefully select the correct statute on the e-Pay Tax portal based on the period of liability — not the payment date. Bank debit notifications alone are insufficient confirmation of statutory compliance.
⚡ Action: Implement Maker-Checker controls for all tax payments; always verify the official portal CRN receipt and avoid relying solely on bank transaction confirmations.
18. Polkadot (DOT) in India: VDA Taxation, Staking Mechanics & Compliance Framework
DOT disposals — including token swaps and non-INR exchanges — attract the 30% special rate under VDA transfer provisions with restricted deductions; staking rewards require independent analysis at receipt and disposal. FEMA, GST, and PMLA obligations vary based on specific activity.
⚡ Action: Assessees holding or staking DOT must maintain transaction-level records across all wallets and exchanges and ensure 1% TDS compliance on applicable transactions.
🧾 GST
19. GST Anticipatory Bail Application Dismissed as Premature Without Section 69 Arrest Order — Punjab & Haryana HC
In Avneet Sharma Vs Union of India, the Punjab & Haryana High Court held that anticipatory bail in GST investigations is premature unless a Section 69 arrest order has been passed and communicated. Receipt of summons under Section 70 alone does not constitute a legally cognisable apprehension of arrest.
⚡ Action: Assessees receiving GST summons under Section 70 should co-operate with the investigation process; anticipatory bail applications should be held in reserve until a Section 69 order is actually communicated.
20. GST Registration Cancellation: Telangana HC Allows Manual Revocation Beyond Portal Time Limit
In Tadikamalla Prabhudas Contractor Vs Deputy State Tax Officer, the Telangana High Court directed that a physical revocation application submitted within one week of the order must be accepted and decided on merits, even where the GST portal's electronic filing window had expired, provided no outstanding dues exist.
⚡ Action: Taxpayers locked out of the GST portal's revocation module should immediately approach the High Court or submit a physical application citing this precedent before the window for challenge narrows further.
21. Allahabad HC Sets Aside GST Detention Where E-Way Bill Expiry Was Due to Vehicle Breakdown
In Transporter Vs State of Uttar Pradesh, the Court held that detention under Section 129(3) is not automatically justified by technical e-way bill expiry if the delay resulted from a documented mechanical breakdown. Adjudication must be evidence-based; dismissing credible contemporaneous evidence without reasoned findings is impermissible.
⚡ Action: Transporters should always obtain and preserve contemporaneous breakdown documentation (mechanic receipts, photographs, delay reports) to rebut detention proceedings arising from e-way bill expiry.
22. Madras HC Directs Manual Issuance of SVLDRS-4 Discharge Certificate Under Sabka Vishwas Scheme — Sir Gujan Builder
The Madras High Court held that administrative or system-based limitations do not justify withholding Form SVLDRS-4 where all payment obligations under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 have been fulfilled and liability is recorded as NIL. Manual issuance is within the Designated Committee's authority.
⚡ Action: Assessees who completed SVLDRS payments but have not received Form SVLDRS-4 due to system glitches should file representations with the Designated Committee and, if necessary, approach the High Court citing this ruling.
23. Madras HC: Late SVLDRS Payment During COVID-19 Eligible, Subject to 15% Interest — R.R. Housing
The Court held that SVLDRS payment timelines are directory rather than strictly mandatory, as evidenced by repeated government extensions. Payment of ₹14,98,836 made on 01.03.2021 was treated as valid under SVLDRS subject to 15% per annum interest from 01.07.2020 to the date of payment, with Form SVLDRS-4 to follow.
⚡ Action: Assessees who missed SVLDRS deadlines due to COVID-19 hardship should evaluate this ruling and approach the Designated Committee or Court promptly before further limitation issues arise.
24. West Bengal AAAR Rejects GST Classification Appeal for Introduction of Altered Facts and Fresh Evidence — Swadeshi Soap Industries
The WBAAAR held that introducing a fresh laboratory report, altered packaging, and a physically different product at the appellate stage falls outside the scope of Section 100 and Section 101 of the GST Act. A fresh application before the primary adjudicating authority is the correct recourse.
⚡ Action: Ensure complete consistency in product description, packaging details, and supporting technical evidence between the advance ruling application and any appellate proceedings; do not alter the factual matrix at the appeal stage.
25. Tamil Nadu AAAR Condones 6-Day GST Appeal Delay Caused by Advocate's Demise — TSR & Co (Pooja Samagri)
The AAAR condoned a 6-day delay in appeal filing under the proviso to Section 100(2) of the CGST Act, 2017, where the delay was attributable to the sudden demise of the original advocate necessitating engagement of new counsel. The death of an advocate was held to constitute "sufficient cause."
⚡ Action: In the event of sudden loss of legal counsel, document the circumstances meticulously and file the condonation application with the appellate authority at the earliest with supporting evidence.
🏦 Company Law / Corporate
26. Supreme Court: Binding Guidelines to Curb Delays and Abuse in Civil Decree Execution Proceedings — Rahul S Shah
The Supreme Court in Rahul S Shah Vs Jinendra Kumar Gandhi & Ors. issued enforceable directions requiring early disclosure of third-party interests, appointment of Commissioners and Receivers at the trial stage, and active judicial supervision to prevent execution proceedings from becoming second-round litigation.
⚡ Action: Decree holders should proactively seek Commissioner/Receiver appointments early in execution proceedings; legal teams should advise clients on the new mandatory disclosure requirements for third-party interests.
27. Executing Court's Limited Powers Under Section 47 CPC — Supreme Court Clarifies in Pradeep Mehra
The Supreme Court reaffirmed that executing courts cannot reopen or sit in appeal over final orders that have attained finality. Section 47 objections are confined to cases of nullity or inexecutable decrees; res judicata applies even across different stages of the same execution proceeding.
⚡ Action: Parties seeking to challenge execution proceedings must identify genuine nullity or inexecutability grounds; tactical Section 47 objections aimed at relitigating settled issues will face summary dismissal.
28. Voluntary Aadhaar Authentication Allowed for BBSSL Farmer Registration — S.O. 5674(E)
Notification S.O. 5674(E) dated 16 October 2026 authorises Bharatiya Beej Sahakari Samiti Limited (BBSSL) to use Aadhaar authentication on a voluntary basis for farmer registration. PAN Card and Voter Identity Card are mandated as alternative identification methods; Aadhaar cannot be made compulsory.
⚡ Action: Agri-sector entities and co-operatives onboarding farmers digitally should review this notification and ensure alternatives to Aadhaar authentication are clearly communicated to farmers.
🏦 FEMA / RBI
29. RBI Scraps Non-Option Derivative Limits for Small Finance Banks — Amendment Directions 2026
Effective 19 October 2026, the RBI has deleted Section C (paragraph 37) of Chapter IV from the Small Finance Banks Miscellaneous Directions, 2025, removing all specific limits for non-option derivative contracts. No transitional arrangements or substitute caps have been prescribed.
⚡ Action: Small Finance Banks must immediately update internal treasury and risk management manuals to remove references to the deleted limits; consult legal counsel before expanding derivative activity as other regulatory frameworks still apply.
30. RBI Removes Non-Option Derivative Contract Limits from Commercial Banks — Second Amendment Directions 2026
Through Circular RBI/2026-27/294 dated 19 October 2026, the RBI deleted paragraph 37 (Section C, Chapter IV) from the Commercial Banks Miscellaneous Directions 2025, removing specific non-option derivative limits with immediate effect. This should not be interpreted as a wholesale relaxation of all derivative-related regulatory requirements.
⚡ Action: Commercial Banks' treasury and compliance teams should audit all derivative policies that reference the now-deleted paragraph 37 and update documentation before next internal audit cycle.
31. RBI Advisory: Updated ISIL & Al-Qaida UN Sanctions List — Section 51A UAPA Compliance
RBI Circular RBI/2026-27/296 dated 19 October 2026 notifies amendments to three sanctions list entries (QDi.082, QDi.427, QDe.132) following UN Security Council press release SC/16480. Regulated entities must ensure no accounts are maintained in the names of listed individuals and must promptly freeze assets and report as required under Section 51A UAPA and Chapter IX of RBI KYC Directions 2025.
⚡ Action: All regulated entities should immediately screen existing customer databases against the updated UN sanctions list and update AML/CFT screening systems to incorporate the three amended entries.
⚖️ Customs
32. Supreme Court Constitution Bench: Judicial Pronouncements Hold Absolute Primacy Over CBEC Circulars
In Commissioner of Central Excise Vs Ratan Melting & Wire Industries, the Constitution Bench definitively ruled that CBEC circulars cannot override Supreme Court or High Court decisions. A beneficial circular does not bar the Revenue from filing an appeal; to hold otherwise would defeat Article 141 of the Constitution.
⚡ Action: Do not structure long-term tax positions or litigation strategies solely on beneficial CBEC circulars without analysing whether the underlying judicial position is consistent with or superior to the circular's interpretation.
🏗️ Insolvency (IBC)
33. Bank Guarantee Margin FDRs Under IBC: NCLAT Delhi Refuses Release Without Guarantee Discharge
The NCLAT held that FDRs maintained as 100% margin for bank guarantees do not automatically revert to the corporate debtor on approval of a resolution plan. These amounts are impressed with a trust character and are not part of the free asset pool, regardless of whether the beneficiary filed claims in the CIRP.
⚡ Action: Resolution Applicants and Resolution Professionals must carefully distinguish between the corporate debtor's free assets and margin money FDRs linked to active bank guarantees when computing resolution plan consideration.
34. Refund of Performance Bank Guarantee Does Not Constitute Corporate Debtor's Asset — NCLAT Delhi in UCO Bank Vs Sudip Bhattacharya
The NCLAT ruled that a refunded guarantee amount funded entirely by the bank (without margin from the corporate debtor) does not constitute an asset of the corporate debtor and is not subject to the CIRP moratorium under Section 14, as such funds legally and equitably belong to the bank.
⚡ Action: Financial institutions issuing performance bank guarantees without margin money from corporate debtors should document funding sources clearly to support asset-ownership arguments in any subsequent CIRP.
35. Supreme Court Upholds NCLAT Ruling on Pre-CIRP Bank Guarantee Invocation and Margin Money — GSEC Consortium
The Supreme Court confirmed that bank guarantees invoked before CIRP commencement (April–May 2018, pre-dating CIRP start of 24 August 2018) convert margin money into trust property at invocation, placing it outside the corporate debtor's estate. A subsequent accounting entry post-CIRP does not constitute a moratorium violation.
⚡ Action: When advising on CIRP-related disputes involving bank guarantees, document invocation dates precisely; pre-CIRP invocations provide strong protection against moratorium challenges.
36. NCLAT Clarifies Treatment of Margin Money for Bank Guarantees Invoked Before CIRP but Adjusted Later
NCLAT reaffirmed that where bank guarantees are invoked before CIRP commencement, the related margin money ceases to be part of the corporate debtor's estate even if the bank's internal accounting adjustment occurs after the CIRP start date. Post-approval, resolution plan claims attain finality per Ghanashyam Mishra Vs Edelweiss ARC.
⚡ Action: Banks should ensure all BG invocations and margin money utilisation records are contemporaneously documented with clear timestamps to withstand scrutiny during CIRP proceedings.
37. NCLAT Upholds Rejection of Liquidator's Application for Fresh FDR Against Customs Bank Guarantee — Naresh Kumar Goel
Relying on Bharat Aluminium Co. Ltd. Vs J.P. Engineers Pvt. Ltd., the NCLAT confirmed that insolvency or liquidation proceedings against a corporate debtor do not empower the Liquidator to alter a surety's independent contractual arrangements or compel the bank to create a fresh FDR for a Customs/EPCG guarantee obligation.
⚡ Action: Liquidators must clearly map which financial instruments belong to the corporate debtor versus third-party sureties before making applications to the Adjudicating Authority for release or creation of security instruments.
38. NCLT Mumbai Sanctions ₹21.726 Crore Resolution Plan for Karthik Alloys Limited
The NCLT Mumbai sanctioned QVC Exports Pvt. Ltd.'s resolution plan for Karthik Alloys Limited, offering ₹21.726 crore against admitted debt of ₹114.739 crore — clearing the liquidation value threshold of ₹14.78 crore — with 100% CoC approval. COVID-19 related procedural complexities were duly addressed in the NCLT's directions.
⚡ Action: Resolution Applicants should ensure plan consideration exceeds liquidation value and addresses post-approval obligations (corporate filings, monitoring, fraudulent transaction proceedings) comprehensively to avoid plan rejection.
📊 SEBI / Financial Markets
39. Zerodha NSE Currency Derivatives: Entity Details, Activation, Charges, RBI Exposure Rules & Tax
Zerodha's currency derivative offering covers NSE-only INR-pair futures and options on USDINR, EURINR, GBPINR and JPYINR via Kite. RBI's underlying contracted-exposure requirement is central: clients must maintain bona fide FEMA-compliant foreign currency exposures. Brokerage is 0.03% or ₹20 per order (whichever is lower) for futures; ₹20 per order for options.
⚡ Action: Assessees trading currency derivatives must maintain documentation of underlying foreign currency exposures as required by RBI; gains are taxable as business income or speculative income depending on the nature of activity.
Key Deadlines & Action Items
| Deadline / Timeline | Action Required | Relevant Article |
|---|---|---|
| Within 1 week of Telangana HC order | Physical GST revocation application must be submitted to competent authority | GST Registration Revocation |
| Within 4 weeks of Madras HC order | SVLDRS late payment interest (15% p.a. from 01.07.2020) must be paid for SVLDRS-4 issuance | Madras HC SVLDRS Late Payment |
| Immediate | Small Finance Banks & Commercial Banks to update treasury/risk manuals for deleted non-option derivative limits | SFB Amendment / Commercial Banks Amendment |
| Immediate | Screen all customer databases against updated ISIL/Al-Qaida UN sanctions list entries (QDi.082, QDi.427, QDe.132) | RBI UAPA Sanctions Advisory |
| Tax Year 2026-27 onwards | Use Income-tax Act, 2025 provisions and updated forms on e-Pay Tax portal | e-Pay Tax Portal Guide |
| Post 01.10.2024 | Section 80G(5) renewal/fresh applications for Vedic/charitable trusts must comply with clause (iv)(B) | Agama Patashala Ruling |
| Open assessments | Verify pecuniary and territorial jurisdiction of AO for all pending scrutiny and reassessment matters | Shivam Finance / J R Roadlines |
Professional Takeaways
📌 1. Jurisdictional Defects Are the Most Powerful Weapon in Reassessment Litigation Right Now
This edition's Income Tax jurisprudence sends an unambiguous signal: procedural and jurisdictional compliance is not a technicality — it is the foundation of a valid assessment. From invalid Section 143(2) notices (pecuniary and territorial), to wrong-regime reassessments, to sub-standard Section 148A(b) timelines, to proceedings against deceased assessees, courts and tribunals are consistently ruling in favour of assessees where the Revenue has cut procedural corners. Tax professionals should conduct an urgent audit of all pending assessments and reassessments for clients and identify jurisdictional vulnerabilities before the department does.
📌 2. The IBC Bank Guarantee Doctrine is Now Settled — Practical Structuring Implications are Significant
Four decisions in this edition — from NCLAT and the Supreme Court — converge on a coherent and final doctrine: margin money FDRs and bank guarantee proceeds that either pre-date CIRP invocation or are funded entirely by the bank (not the corporate debtor) are outside the corporate debtor's estate and beyond the Resolution Professional's and Liquidator's reach. For insolvency professionals structuring resolution plans, this means guarantee-linked assets must be surgically excluded from available asset calculations. For lenders, it confirms that pre-CIRP invocations provide robust protection and should be executed without delay upon default.
📌 3. Digital Evidence Standards in Tax Assessments Are Rising — Prepare Accordingly
The ITAT Mumbai's ruling on WhatsApp chat evidence, combined with the ITAT Chandigarh's ruling on DVO-based additions, signals that tribunals are raising the evidentiary bar for additions based on indirect or third-party digital data. Section 65B certification for electronic records is non-negotiable; additions without corroboration directly linking the assessee to the alleged transactions will face increasing scrutiny. Tax professionals advising clients in search and seizure matters should build evidentiary challenge strategies around authentication failures and jurisdictional mis-invocation (Section 153C vs. Section 147) as primary grounds.
© 2026 TaxCorp India | thetaxcorp.in | This digest is prepared for informational purposes for professional subscribers. It does not constitute legal advice. Always verify current law and consult qualified professionals before taking action.