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The Supreme Court has sustained a Madras High Court judgment invalidating tax reassessments initiated solely due to a shift in opinion. Tax authorities cannot reopen cases where assessees have fully disclosed all pertinent facts.
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The Madras High Court has nullified a Section 148 tax reassessment that relied on a modified viewpoint regarding share issue expenses. Authorities attempted to contest claims originally categorized under Section 37 rather than Section 35D.
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The Bombay High Court has ruled that cash loans omitted from official records remain legally recoverable under Section 138 of the Negotiable Instruments Act. This enforceability holds true despite concurrent violations under Section 269SS.
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The Delhi High Court has invalidated a tax reopening tied to audit objections, ruling that shifting opinions remain impermissible. The court also confirmed that the reassessment action was barred by statutory time limitations.
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The Bombay High Court has refused to invalidate tax reassessment proceedings involving Molbio Diagnostics. The court determined that contested expenditure claims necessitate a thorough factual investigation rather than summary dismissal.
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The Delhi High Court has sustained penalties levied under FEMA for reinvestment infractions involving NRNR accounts. However, the court annulled the accompanying confiscation orders due to an absence of recorded reasons under Section 13(2).
Effective Not specified in the update
For professionals: Compliance officers and FEMA consultants must review client foreign account portfolios to ensure reinvestment rules are strictly followed. · Legal advisors should challenge confiscation notices that lack the requisite statutory reasoning.
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The Jaipur bench of the ITAT has deleted a ₹3.38 crore addition made on account of share premiums. The tribunal ruled that assessing officers cannot replace Discounted Cash Flow valuations without proving material errors.
Effective Not specified in the update
For professionals: Tax practitioners should cite this ITAT Jaipur ruling when defending share premium additions against arbitrary assessing officer adjustments. · Assessing officers cannot substitute a properly prepared DCF valuation with an arbitrary method unless they demonstrate concrete material errors in projections or methodology. · Professionals must ensure that client DCF valuation reports rely on robust financial models and professional certifications.
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The Bombay High Court has set aside a tax reassessment notice because the sanctioning authority granted approval mechanically. The court noted that the approval incorrectly invoked Section 149(1)(b) even though the alleged escaped income was only ₹4 lakh.
Effective Not specified in the update
For professionals: Examine sanction orders and approval memos accompanying reassessment notices for mechanical approach or statutory mismatches. · Verify that prior sanctions under Section 151 reflect independent evaluation by senior officials rather than routine approvals. · Ensure statutory prerequisites like the correct invocation of Section 149(1)(b) are strictly adhered to before tax authorities revisit past assessments.
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The Delhi bench of the ITAT deleted tax additions amounting to ₹27.08 lakh under Section 68. The tribunal accepted that the cash deposits made during demonetisation were adequately explained by earlier bank withdrawals and cash-book records.
Effective Not specified in the update
For professionals: Professionals can cite this ITAT Delhi ruling to delete Section 68 additions when cash deposits are explained by historical bank withdrawals and documented cash books. · Practitioners must meticulously reconcile cash flow statements, bank passbooks, and cash books to establish a direct trail between prior withdrawals and redeposits for clients facing demonetisation litigation. · Section 68 of the Income Tax Act empowers tax authorities to treat unexplained cash credits as income if the source cannot be verified to the assessing officer satisfaction.
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ITAT Mumbai deleted a penny stock addition of ₹55.96 lakh alongside a ₹1.11 lakh commission addition. The tribunal held that relying exclusively on a generalized investigation report without independent corroborating evidence is legally insufficient.
Effective Not specified in the update
For professionals: The ITAT Mumbai deleted a penny stock addition of ₹55.96 lakh and a related commission addition of ₹1.11 lakh while remanding a separate share-profit dispute for fresh review. · Tax professionals representing clients facing penny stock scrutiny must demand cross-examination rights and independent corroboration from the tax department. · Practitioners should compile contract notes, demat statements, bank proofs.
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The Mumbai ITAT upheld the deletion of a ₹1.93 crore penny stock addition. It ruled that tax authorities cannot tax the entire sale proceeds under Section 68 without accounting for the actual purchase costs.
Effective Not specified in the update
For professionals: Tax advisors and chartered accountants must ensure that computation schedules submitted during appellate proceedings clearly reflect net figures rather than gross sale values when challenging share-related additions · Professionals should advise clients to maintain complete contract notes
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ITAT Mumbai upheld the deletion of a ₹4.99 crore addition made under Section 68 for assessment year 2012-13. The tribunal ruled that receiving a high share premium by itself does not justify treating the amount as unexplained income.
Effective Not specified in the update
For professionals: Compile robust valuation reports, bank confirmations, and identity proofs from investors whenever companies issue shares at a premium. · Advise clients that Section 68 additions require verifying identity, creditworthiness, and genuineness of the transaction rather than relying on high share premium alone.
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