Sections 80HHC, 115JB, of the Income-tax Act, 1961 - Madras High Court Upholds 80HHC Deduction on Adjusted Book Profits Under MAT Regime for Exporters: Relief to Assessee in Light of Supreme Court Ruling - The Madras High Court’s decision, by affirming the Tribunal’s view and relying on the Supreme Court’s ruling in Bhari Information Technology Systems (P.) Ltd., provides clear and binding authority that when a company is subject to MAT under Section 115JB, the deduction under Section 80HHC is to be calculated based on the adjusted book profits, not the normal income computation. This actionable conclusion means that exporters under MAT should restrict their 80HHC deduction computation to the book profit figures as per Section 115JB.
Section 254 of the Income-tax Act, 1961 / Section 363 of the Income-tax Act, 2025 - Kerala High Court Orders Tribunal to Reconsider Delay Condonation in 80P Deduction Appeal, Affords Assessee Second Opportunity for Proper Affidavit - The Kerala High Court concluded that the procedural lapse in filing an inadequate affidavit should not preclude the assessee from pursuing the statutory appeal. Actionably, the assessee is permitted to submit a properly drafted and comprehensive affidavit to explain the delay of 542 days in filing the appeal before the Tribunal. The Tribunal is mandated to reconsider the application for condonation of delay in light of the additional affidavit, ensuring that the principles of natural justice and substantive law are upheld.
Income Tax - Section 260A - Gujarat High Court Upholds 80G(5) Approval for Trust With Minor Religious Expenditure Below Statutory Limit - Based on the established facts and the statutory framework, the High Court dismissed the Revenue’s appeal, confirming the Tribunal’s order. The actionable point emerging from this decision is that trusts with religious objects can still qualify for approval under section 80G(5) so long as their annual expenditure on religious activities remains within the 5% ceiling specified in Explanation 3. Trusts in similar circumstances should meticulously maintain records to substantiate the quantum of religious expenditure in relation to total income.
Income Tax - Section 148A(b) - Karnataka High Court Sets Aside Assessment Order Due to Inadequate Opportunity When New Allegations Were Introduced at Final Stage - In light of the procedural irregularity stemming from the introduction of new and expanded grounds at a late stage without providing adequate time for response, the Karnataka High Court allowed the writ petition in part. The assessment order and consequential penalty show cause notices were set aside, but the matter was remanded to the Assessing Officer with liberty for the petitioner to file a detailed reply within the time frame specified by the Court. All other issues were left open for fresh determination in accordance with law.
Income Tax - Section 148 - Gujarat High Court Nullifies Reassessment: No Escapement of Income under Section 147 Where Book Profits Unaffected by Depreciation Claim in Infrastructure Business - On the basis of the facts and legal principles discussed, the Gujarat High Court concluded that since the alleged error in the rate of depreciation had no impact on the assessee’s ultimate tax liability under section 115JB, there was no escapement of income chargeable to tax. The attempt to reopen the assessment was found to be without jurisdiction, being based solely on a change of opinion on material already examined during the original assessment. The notice and order for reassessment under section 147 were, therefore, quashed.
Income Tax - Section 153(5) - Calcutta High Court Declares Belated Assessment Order a Nullity; Orders Immediate Refund with Interest for Unlawful Retention of Tax - The Calcutta High Court, by strict application of section 153(5), quashed the belated giving effect order and all consequential actions as time-barred and without jurisdiction. It further directed the department to refund the tax retained, along with statutory interest under section 244A, recognizing the petitioner’s right to timely relief and disallowing administrative convenience as a ground for non-compliance with statutory timelines.
Income-Tax - Section 142(1) - Madras High Court Quashes Reassessment Based on Disclosed Material, Citing Impermissible Change of Opinion - Based on the comprehensive examination of facts and legal principles, the Madras High Court allowed the writ petition and quashed the reassessment proceedings. The Court concluded that the initiation of reassessment proceedings was solely on the basis of material already disclosed and considered during the original assessment, and thus amounted to an impermissible change of opinion. Tax authorities are not permitted to reopen assessments on the same set of facts and issues that have already been examined and concluded.
Income Tax - Section 148A(3) - Calcutta High Court Quashes Reassessment for AY 2019-20: Failure to Consider Assessee’s Reply Under Section 148A Violates Natural Justice - This decision mandates that before proceeding with reassessment under Section 148, Assessing Officers must rigorously consider the assessee’s explanations and supporting documents. Any failure to do so will vitiate the proceedings and expose such orders to judicial scrutiny and invalidation. Taxpayers facing such proceedings should ensure that all relevant materials and explanations are submitted and insist on their consideration by the AO, thereby safeguarding their rights to due process and fair hearing.
Income-tax - Section 194J - Bombay High Court Reiterates No Disallowance under Section 40(a)(ia) for Short TDS Deduction; Confirms Presumption of Interest-Free Investment under Section 14A Where Own Funds Exceed Exempt Investments - Based on the binding judicial precedents and the undisputed facts of the case, the Bombay High Court has reinforced the following actionable legal positions: (a) disallowance under section 40(a)(ia) is not attracted in cases of short deduction of TDS, (b) a 0.5% commission rate for corporate guarantees to associated enterprises stands as the accepted arm’s length standard, and (c) no interest disallowance under section 14A is warranted where the assessee’s own funds exceed the amount of tax-free investments. Taxpayers and tax authorities should adhere to these principles in similar factual scenarios, unless and until a higher judicial forum decides otherwise or there is a legislative amendment.
Sections 69C, 148 of the Income-tax Act, 1961 / Sections 105, 280 of the Income-tax Act, 2025 - Supreme Court Upholds High Court Bar on Reopening Assessment under Section 69C: No Fresh Jurisdiction Without New Evidence - The Supreme Court’s dismissal of the SLP concretely establishes that the reopening of completed assessments under Section 148 is not permissible when the AO had already examined all relevant facts and documents during the original proceedings, and no new tangible material has surfaced. Assessees who have disclosed all material facts and have undergone scrutiny under Section 143(3) are protected from arbitrary reopening notices based solely on third-party information without further corroboration.
Sections 68, 263 of the Income-tax Act, 1961 / Sections 102, 377 of the Income-tax Act, 2025 - Gujarat High Court Quashes Section 263 Revision: No Material Linking Assessee to Alleged Accommodation Entry via HVPL and SVPL - The Gujarat High Court concluded that the revisionary action under Section 263 was not justified when the Assessing Officer had already conducted requisite inquiries, and there existed no material evidence linking the assessee to the alleged accommodation entry routed through HVPL and SVPL. The order under Section 263 was therefore quashed, favoring the assessee. The actionable takeaway is that revisionary powers under Section 263 should not be exercised merely on the basis of suspicion or information unless supported by tangible material and in the absence of proper inquiry by the AO.
Sections 148A, 148, 147 of the Income-tax Act, 1961 / Sections 281, 280, 279 of the Income-tax Act, 2025 - Gujarat High Court Quashes Income Escaping Assessment Notices as Time-Barred: Section 148A(d) Orders Held Invalid for Issue Beyond Statutory Limitation - Based on the legal principles laid down by the Supreme Court in Ashish Agarwal and Rajeev Bansal, and the facts of the present case, the Gujarat High Court concluded that the impugned order under section 148A(d), the notice under section 148 dated 29.07.2022, and all consequential proceedings under section 147 were invalid. The AO’s failure to issue the order and notice within the prescribed timeline rendered the entire proceedings void ab initio. The writ petition was accordingly allowed in favour of the assessee.
Income Tax - Section 199 - Patna High Court Bars Income Tax Department from Denying TDS Credit Solely Due to Non-Reflection in 26AS; Mandates Verification Based on Form 16A and Deductor Certificates - On the basis of this decision, it is clear that the Income Tax Department cannot deny TDS credit or demand tax directly from an assessee merely because the deducted amount is not reflected in Form 26AS or the Department’s portal. Where the assessee has produced valid Form 16A and certificates from the deductor with all requisite details, the Department must verify these particulars before taking any adverse action. If these certificates are found to be genuine, the assessee is entitled to full TDS credit and refund, along with statutory interest for any delay. Assessees facing similar issues should ensure proper maintenance and submission of original TDS certificates to avail credit and initiate prompt legal remedies if unjustly denied.
Income Tax - Section 148 - Madras High Court Upholds Timeliness of Reassessment Proceedings under New Regime: Limitation Period Computed with Exclusion under Section 148A - Based on the findings, the Madras High Court held that reassessment proceedings for AY 2015-16 were not barred by limitation, considering both the old and newly amended statutory regimes. The exclusion of the period during Section 148A(b) proceedings was upheld for limitation computation, and the proceedings were allowed to continue on merits. The plea of limitation was conclusively rejected, and all other objections were left open for adjudication in subsequent proceedings.
Income Tax - Section 264 - Gujarat High Court Quashes Non-Speaking Order on Section 264 Revision: Mandates Fresh, Reasoned Adjudication on Assessee’s Application - The High Court has unequivocally held that an order passed under Section 264, without proper consideration of the assessee’s submissions and without recording reasons, cannot be sustained. The impugned order was set aside and the matter remanded for a fresh, reasoned decision after due application of mind to the assessee’s contentions. Authorities are thus reminded of their obligation to pass speaking orders, especially when exercising revisional jurisdiction under Section 264.
Income Tax - Section 263 - Telangana High Court Quashes Section 127 and 263 Orders Passed in Haste During COVID-19 Without Proper Hearing: Emphasizes Adherence to Principles of Natural Justice - In light of the above findings, the Telangana High Court allowed the writ petition and quashed both the transfer and revision orders pertaining to the relevant assessment year. The principal ground for such action was the breach of the principles of natural justice owing to the absence of a fair hearing and the undue haste exhibited by the revenue during the peak COVID-19 period. The authorities have been granted liberty to proceed afresh, strictly in compliance with the requirements of law and due process.
Bombay High Court Permits Amendment of E-Filed Writ Petition Despite Loss of Original, Dispenses with Reverification in Vires Challenge - In view of the unique circumstances—particularly the inability to trace the original e-filed writ petition—the Bombay High Court permitted the amendment of the writ petition to include a challenge to the vires of Section 147A and Section 292BC. The Registry was specifically directed not to insist upon the production of the original writ petition, and reverification was also dispensed with, since the proposed amendment was limited to the vires challenge. Petitioners facing similar factual situations may thus seek relaxation of procedural requirements in exceptional circumstances, provided that the integrity and purpose of the amendment are preserved.
Madras High Court Nullifies Assessment Framed on Incorrect Assumption of Non-Filing of Return; Excludes Writ Pendency from Limitation for Reassessment - In summary, the Madras High Court quashed the assessment proceedings which were erroneously continued on the basis that no return of income had been filed, despite evidence to the contrary. The Department has been granted liberty to recommence assessment proceedings afresh, but must do so after fully considering the already filed return. Additionally, the period during which the writ petition was pending—during which the assessee enjoyed interim relief—will not count towards the time limitation for reassessment, thereby preserving the Department’s right to a fresh assessment within the statutory framework.
Bombay High Court Stays Coercive Action under Black Money Act Amidst Challenge to Constitutional Validity - The Bombay High Court has provided robust interim protection to the Petitioner by staying all coercive actions, including prosecution and penalty, under the Black Money Act until final adjudication of the constitutional challenge. The appellate proceedings before the CIT(A) are permitted to continue unhindered. The decision reflects judicial sensitivity to potential prejudice during the pendency of constitutional litigation and underscores the importance of due process.
Income Tax - Section 148 - Gujarat High Court Quashes Reassessment: No Prima Facie Nexus Between Assessee and On-Money Seizure from Broker - The Gujarat High Court allowed the writ petition and quashed the reassessment notice issued under Section 148. The ruling establishes that for a valid reopening of assessment, the Revenue must have tangible, specific, and relevant material directly connecting the assessee to the alleged escapement of income. Reliance on generic, remote, or indirect evidence from third-party searches, without any prima facie nexus, is insufficient and cannot legally sustain the reopening of an assessment.