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Bombay High Court Rules on Compounding Charges: Revenue Directed to Compute 12-Month Period from Actual Service of Complaint to Assessee
Wadhwa Group Holdings Ltd. and Ors Vs The Chief Commissioner of Income Tax
(2026) TaxCorp(LJ) 38764 (HC-BOMBAY)
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Bombay High Court Nullifies CIT(E) Order for Denying Section 11 Exemption Due to Two-Day Delay in Filing Form 10B: Tax Demand of Rs. 14.49 Lakh Set Aside
Shree Hararwala Building Shwetamber Vs The Commissioner of Income-tax
(2026) TaxCorp(LJ) 38745 (HC-BOMBAY) · Section 11
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Bombay High Court: Penalty Under Section 271(1)(c) Invalid as Assessment Abated Due to Delayed Order Giving Effect; Quasi-Judicial Role of AO Recognized
Global Hospitality Licensing SARL Vs The Assistant/Deputy Commissioner of Income-tax
(2026) TaxCorp(LJ) 38613 (HC-BOMBAY) · Section 271(1)(c)
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Bombay High Court Mandates ITAT to Decide Jurisdictional Challenge on Faceless Assessment Procedure Non-Compliance Before Merits of Bogus Purchase Disallowance Highlights Jurisdictional Challenge on Faceless Assessment Procedure: The Bombay High Court emphasized that non-compliance with the mandatory faceless assessment procedure under Section 144B of the Income Tax Act is not a mere procedural lapse but a jurisdictional defect, fundamentally affecting the validity of the assessment order. Assessee’s Specific Plea and Procedural History: The assessee, involved in painting and advertising, had specifically raised the issue of non-adherence to Section 144B both in its rectification application and before the appellate forums. The High Court noted that a previous coordinate bench had already allowed the assessee to raise all grounds, including those pertaining to merits, in the present appeal. Assessment and Disallowance Details: The Assessing Officer (AO) issued statutory notices under Section 142(1), which were duly responded to by the assessee. Subsequently, a show-cause notice under Section 144B(6) was served, proposing a disallowance of Rs. 22.80 lakh. The AO thereafter passed an order making an addition of Rs. 17.31 lakh under Section 69C, treating certain purchases as bogus. CIT(A) and ITAT Proceedings: The Commissioner of Income Tax (Appeals) [CIT(A)] partly favored the assessee, holding that while cash siphoning could not be ruled out, there was a possible inflation of purchases, a view that was subsequently upheld by the Income Tax Appellate Tribunal (ITAT). However, ITAT failed to properly examine the jurisdictional aspect arising from alleged procedural lapses under Section 144B. High Court’s Direction: The High Court held that ITAT was duty-bound to consider both the jurisdictional challenge and the merits of the disallowance. The Court set aside ITAT’s order and remitted the matter back for fresh adjudication on both issues. Detailed Analysis In the matter before the Bombay High Court, the central issue pertained to the alleged non-compliance with the faceless assessment procedures prescribed under Section 144B of the Income Tax Act, 1961. The assessee, engaged in painting and related advertising activities, had declared a total income of Rs. 1.36 crore in its return. During assessment proceedings, the Assessing Officer issued notices under Section 142(1), which were duly replied to by the assessee. Subsequently, a show-cause notice under Section 144B(6) was issued, proposing a disallowance of Rs. 22.80 lakh. The final assessment order confirmed an addition of Rs. 17.31 lakh under Section 69C, attributing it to bogus purchases. Upon appeal, the CIT(A) partly allowed the assessee’s claim, noting that while cash siphoning could not be entirely ruled out, there was a possibility of inflated purchases rather than outright bogus transactions. This order was maintained by the ITAT, which upheld the disallowance. However, the assessee had specifically raised the issue of procedural irregularities under Section 144B at every available forum, including a rectification application before the ITAT. The High Court made reference to the statutory mandate under Section 144B, which requires all assessments to be conducted in a faceless manner, following due process as prescribed in the section. The Court relied on the principle that any non-compliance with such mandatory procedures constitutes a jurisdictional error, thereby striking at the root of the assessment proceedings (ref. Section 144B, Income Tax Act, 1961; various case laws on jurisdictional errors, e.g., Pr. CIT v. Shree Gopal Housing & Plantation Corporation, 2022 SCC OnLine SC 1233). The Revenue had contended that the assessee’s challenge was only procedural and did not warrant setting aside the assessment on jurisdictional grounds. However, the High Court disagreed, noting that the coordinate bench of the ITAT had already permitted the assessee to raise all grounds, including those relating to merits, in the present proceedings. Importantly, the High Court observed that ITAT was duty-bound to adjudicate the jurisdictional challenge regarding non-compliance with Section 144B, along with the merits of the disallowance under Section 69C. The failure to do so constituted a serious flaw in the appellate process, necessitating a remand for fresh consideration. Accordingly, the High Court set aside the ITAT’s order and remitted the matter back to ITAT with clear instructions to decide both the jurisdictional issue and the merits afresh, after properly appreciating all documentary evidence regarding the genuineness and creditworthiness of the transactions. Conclusion The Bombay High Court’s decision unequivocally establishes that compliance with the procedure prescribed under Section 144B is jurisdictional in nature. Any assessment order passed in breach of these requirements is vulnerable to being set aside. The ITAT must consider such jurisdictional challenges at the threshold before proceeding to decide the merits of the case, including issues related to bogus purchases and disallowances. This actionable takeaway mandates that taxpayers and their representatives must diligently raise and pursue procedural lapses under Section 144B at every appellate stage. Implications for Other Assessees Arising Out of the Decision This decision specifically highlights the strategic importance for assessees to meticulously document and raise objections regarding procedural lapses under Section 144B during assessment proceedings and before appellate authorities. For taxpayers facing similar circumstances—where a faceless assessment has been conducted without strict adherence to the prescribed procedures—this judgment provides a clear precedent to contest the validity of such assessment orders on jurisdictional grounds. Assessees should ensure that all such grounds are not only raised at the earliest but are also substantiated through contemporaneous documentation and are pursued consistently through rectification applications and appeals. This approach can potentially result in the setting aside of adverse assessment orders and remand of the matter, thereby providing additional opportunities to present evidence on the merits and rectify any procedural injustices suffered during the assessment process.
Accost Media LLP Vs Deputy Commissioner of Income Tax
(2026) TaxCorp(LJ) 38611 (HC-BOMBAY) · Section 144B
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Bombay High Court Upholds Revenue's Appeal Condoning 156-Day Delay Owing to Bona Fide Administrative Lapses, Emphasizes Liberal Approach to Limitation under Section 260A
JS Capital LLC Vs The Principal Commissioner of Income Tax
(2026) TaxCorp(LJ) 38575 (HC-BOMBAY)
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Bombay High Court Affirms ITAT Ruling: Allowability of Provision for Future Road Repairs Under Section 37(1) Upheld Based on Contractual Obligation and Scientific Estimation
ECA Infrastructure India Vs Pr. Commissioner of Income Tax
(2026) TaxCorp(LJ) 38577 (HC-BOMBAY)
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Bombay High Court Invalidates Reassessment Proceedings for Unsigned Sanction under Section 151, Holds Signature Mandate under Section 282A(1) Crucial
Nikhil Nagindas Modi Vs Deputy Commissioner of Income Tax
(2026) TaxCorp(LJ) 38554 (HC-BOMBAY) · Section 282A(2)
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Bombay High Court Rules Revenue Cannot Deny TDS Credit to Assessee Due to Deductor’s Default in Depositing Tax
Manohar Ramabtar Jhunjhunwala Vs Principal Commissioner of Income Tax
(2026) TaxCorp(LJ) 38540 (HC-BOMBAY)
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Bombay High Court Refers Architect’s Completion Certificate Issue Under Section 80-IB(10) to Larger Bench—Strict Compliance with Local Authority Certificate Mandated
Atul Properties Vs Pr. Commissioner of Income Tax
(2026) TaxCorp(LJ) 38539 (HC-BOMBAY)
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Bombay High Court Clarifies TDS Exemption on Interest Paid by Co-operative Societies to Non-Member Depositors under Section 194A(3)(v)
Citizen Credit Co-operative Bank Ltd. (Borivali) Vs The Income Tax Officer
(2026) TaxCorp(LJ) 38466 (HC-BOMBAY) · Section 194A(3)
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Bombay High Court Upholds ITAT: Sale of Flats to be Taxed as Capital Gains, Not Business Income, Based on Intention and Consistency in Assessment
Aurum Ventures Private Limited Vs Pr. Commissioner of Income Tax
(2026) TaxCorp(LJ) 38455 (HC-BOMBAY)
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Bombay High Court: Revenue’s Complaint Fails as “Wilful Attempt to Evade Tax” Not Established under Section 276-C(2); Mens Rea Essential for Prosecution
Dinar Tarcar Resources (India) Pvt. Ltd Vs Deputy Commissioner of Income Tax
(2026) TaxCorp(LJ) 38450 (HC-BOMBAY) · Section 276C(2)
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Bombay High Court Mandates Adherence to ITAT Rule 34 Timelines After Multiple Delays in Pronouncement of Judgment
Rajesh R. Hemrajani Vs Income Tax Appellate Tribunal & Anr
(2026) TaxCorp(LJ) 38448 (HC-BOMBAY)
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Bombay High Court Invalidates Reassessment Against Non-Resident for Failure to Issue Draft Assessment Order Under Section 144C
Sanket Vinayak Nagvekar Vs Income Tax Officer
(2026) TaxCorp(LJ) 38437 (HC-BOMBAY) · Section 144C
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Bombay High Court Reaffirms: Mere Higher Profit Margin Insufficient to Invoke Section 80-IA(10); Revenue’s Appeal Dismissed on Absence of Evidence for Arranged Profits
Persistent Systems Pvt Ltd Vs The Pr.Commissioner of Income-Tax
(2026) TaxCorp(LJ) 38438 (HC-BOMBAY) · Section 10A
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Bombay High Court Bars Reassessment Beyond Four Years on Section 80-IA Claim After S.143(3) Scrutiny, Citing Full Disclosure and No New Material
Chennai Container Terminal Pvt.Ltd Vs Assistant Commissioner of Income-tax
(2026) TaxCorp(LJ) 38244 (HC-BOMBAY) · Section 80-IA
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Bombay High Court Rules Revenue Liable for Interest on Income Tax Refunds Delayed by Administrative Failures, Not Assessee’s Fault
Bedmutha Industries Limited Vs Assistant Commissioner of Income Tax
(2026) TaxCorp(LJ) 38254 (HC-BOMBAY)
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Bombay High Court Allows Deduction for Bad Debts Written Off Despite Pending Litigation, Clarifies ‘Actual Write-Off’ Requirement under Section 36(1)(vii)
Madhusudan Babubhai Kocha Vs The Asstt. Commissioner of Income-Tax
(2026) TaxCorp(LJ) 38223 (HC-BOMBAY)
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Bombay High Court Clarifies Limits of CIT(E)'s Revisional Authority Under Section 263: No De Novo Inquiry Permissible Without Legal Unsustainability in AO’s Order
Impact Foundation (India) Vs Commissioner of Income Tax
(2026) TaxCorp(LJ) 38117 (HC-BOMBAY) · Section 263
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Bombay High Court Rules Arbitrary Cap on Section 10B Deduction Unjustified Without Concrete Proof of Profit Inflating Arrangement Between EOUs and Sister Concerns
Pragati Aroma Oil Distillers Private Ltd. (formerly known as M/s. Hindustan Essential Oil Company) Vs The Deputy Commissioner of Income Tax
(2026) TaxCorp(LJ) 38099 (HC-BOMBAY) · Section 10B
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