SUPREME COURT
Case Title : Deputy Commissioner of Income Tax, Special Range-18, Mumbai v. Reliance Industries Limited
Case Number : Diary No. 67659-2025
The Supreme Court on Tuesday issued notice on an appeal filed by the Revenue challenging a Bombay High Court ruling that had quashed income tax assessments against Reliance Polyethylene Ltd. and Reliance Polypropylene Ltd. following their merger with Reliance Industries Ltd. A Bench of Justice Pamidighantam Sri Narasimha and Justice Vijay Bishnoi called for a response from Reliance Industries Ltd. and directed that the matter be listed for further hearing after completion of pleadings.
Case Title : Woodland (Aero Club) Private Limited Director vs Assistant Commissioner of Income Tax
Case Number : SLP(C) NO. 1532/2026
The Supreme Court has recently said that it will examine a long-standing dispute under the Income Tax Act on whether employees' provident fund and ESI contributions, deposited late under labour welfare laws, can still be allowed as deductions if paid before the income tax return due date. A Bench of Justice J.B. Pardiwala and Justice Sandeep Mehta, while hearing a petition filed by Woodland (Aero Club) Private Limited, noted that High Courts across the country have taken conflicting views on the issue.
Supreme Court Slaps Rs 5 Lakh Costs On Union Govt For Stalling IRS Officer's ITAT Appointment
Case Title : Captain Pramod Kumar Bajaj vs Union of India and Anr.
Case Number : WRIT PETITION(CIVIL) NO(S). 1180 OF 2025
CITATION : 2026 LLBiz SC 31
The Supreme Court on Friday allowed a petition filed by Captain Pramod Kumar Bajaj, a former Indian Revenue Service officer and ex-Army personnel, holding that he was subjected to sustained institutional bias, mala fide conduct and deliberate obstruction by departmental authorities in relation to his appointment as Member (Accountant) of the Income Tax Appellate Tribunal. It also imposed costs of Rs 5 lakh on the Union Government for rank procrastination and deliberate obstruction in his appointment.
HIGH COURTS
Allahabad HC
Allahabad High Court Dismisses PIL Against Retrospective Property Tax By Kanpur Municipal Corp.
Case Title : Indian Industries Association Versus State of Uttar Pradesh and 4 Ors.
Case Number : (PIL) No. - 3560 of 2025
CITATION : 2026 LLBiz HC (ALL) 9
On 12 January, the Allahabad High Court dismissed a public interest litigation (PIL) challenging the retrospective enhancement of property tax by the Kanpur Municipal Corporation, holding that a PIL is not maintainable where the relief sought essentially pertains to the private grievances of an association's members.
A Division Bench comprising Chief Justice Arun Bhansali and Justice Kshitij Shailendra held: “Filing of petitions in the nature of PIL, though essentially projecting the interest of the members of the Association and as a result claiming the general public as affected by the same grievance, cannot be countenanced. Once the petitioner Association has claimed relief qua their own members, the nature of the petition as a public interest petition cannot be maintained.”
Calcutta HC
Case Title : Shri Miraj Digvijay Shah v. The Assistant Commissioner of Income Tax, Central Circle I (1), Kolkata & Ors.
Case Number : WPA 25602 of 2025
CITATION : 2026 LLBiz HC (CAL) 35
The Calcutta High Court on 28 January dismissed a writ petition challenging inspection notices issued by the Income Tax Department for jewellery and bullion seized during a search operation, holding that the revenue authorities are not required to disclose the information or reasons that prompted the inspection, so long as it is undertaken for purposes permitted under the Income Tax Act (IT Act), 1961.
Justice Om Narayan Rai delivered the ruling while examining a challenge to notices issued under Rule 112(13) of the Income Tax Rules, 1962, which prescribes the procedure for opening and inspecting sealed packages seized during search and seizure operations under Section 132 of the IT Act.
Delhi HC
Case Title : Pr. Commissioner Of Income Tax, Central-1, Delhi v. Sanjay Jain
Case Number : ITA 38/2026
The Delhi High Court has ruled that the Income Tax Department cannot extend the time limit for completing search assessments merely by making a reference to a foreign tax authority if the information sought is not permissible under the applicable tax treaty.
Dismissing a batch of appeals filed by the Revenue, a Division Bench of Justices Dinesh Mehta and Vinod Kumar upheld the Income Tax Appellate Tribunal's finding that assessment orders passed for Assessment Years 2011–12 to 2017–18 were barred by limitation, after holding that the reference made to the Foreign Tax and Tax Research Division in this case was legally impermissible.
Case Title : Sahara India Ltd v. Income Tax Appellate Tribunal Delhi Bench & Ors (and batch)
Case Number : W.P.(C) 6024/2025
CITATION : 2026 LLBiz HC (DEL) 93
The Delhi High Court has set aside a series of orders passed by the Income Tax Appellate Tribunal (ITAT), Delhi Bench, which had dismissed long-pending tax appeals of the Sahara Group on the ground of lack of territorial jurisdiction, despite the matters having been administratively transferred to Delhi nearly two decades ago.
A Division Bench of Justices Dinesh Mehta and Vinod Kumar held that once the President of the ITAT exercises his administrative powers to transfer appeals from one Bench to another, a judicial Bench of the Tribunal cannot sit in appeal over such an administrative order by dismissing the appeals.
Madras HC
Dormant Partner Cannot Face Criminal Liability Without Proof Of Control Over Firm: Madras High Court
Case Title : R. Kalaivani v. Deputy Commissioner of Income Tax
Case Number : Crl.R.C.Nos.872 & 956 of 2023
CITATION : 2026 LLBiz HC (MAD) 26
The Madras High Court has held that a dormant partner cannot be fastened with criminal liability in the absence of specific allegations showing that she was in charge of or responsible for the conduct of the firm's business. A Bench of Justice Sunder Mohan was considering criminal revision petitions filed by a firm, its managing partner, and another partner, challenging the trial court's order that had refused to discharge them from criminal proceedings initiated under the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act).
Tax Recovery Officer Can't Void Third-Party Mortgages: Madras High Court In Sree Gokulam Chit's Case
Case Title : Sree Gokulam Chit and Finance Co. P. Ltd. v. The Tax Recovery Officer
Case Number : W.P.No.16885 of 2022
CITATION : 2026 LLBiz HC (MAD) 32
The Madras High Court has recently set aside an income tax recovery order that had declared a mortgage created in favour of Sree Gokulam Chit and Finance, a chit fund part of the Gokulam Group, as void from the outset. Justice Senthilkumar Ramamoorthy held that the Income Tax Department can recover its dues by selling an attached property, but the Tax Recovery Officer cannot decide the validity of a transfer in favour of a third party. The court said the recovery framework does not permit such an adjudication.
Kerala HC
New Constructions Cannot Be Taxed In Appeals Against Earlier Property Assessments: Kerala High Court
Case Title : M/s Synthite Industries Ltd. v. State of Kerala
Case Number : WA NO. 3092 OF 2025
CITATION : 2026 LLBiz HC (KER) 16
The Kerala High Court on 22 January held that new constructions cannot be brought to tax while deciding statutory appeals filed against earlier property tax assessments. It clarified that the scope of such appeals is confined to examining the validity of the existing demand and cannot be expanded to assess buildings constructed subsequently. A Bench of Justice Harisankar V. Menon observed: “The assessment as regards new constructions, if any, requires to be carried out with reference to the statutory provisions by the original authority and cannot be carried out in an appeal filed against an earlier assessment.”
Punjab & Haryana HC
Case Title : M/s G.S. Builders v. State of Punjab and Ors.
Case Number : CWP-4380-2010 (O&M)
CITATION : 2026 LLBiz HC (PNH) 3
The Punjab and Haryana High Court recently held that Rail Coach Factory (RCF) cannot recover differential tax deducted at source (TDS) from contractors for past periods once the contractors' VAT liability has already been assessed and paid. A Bench of Justice Jagmohan Bansal and Justice Amarinder Singh Grewal was hearing writ petitions filed by G.S. Builders, Inderjit Bajaj and R. Tech Builders. The contractors had challenged recovery notices issued by RCF seeking to deduct additional amounts from their running and final bills.
ITAT
ITAT Delhi Deletes ₹30.7 Lakh Tax, Accepts Marriage 'Sagan' As Source Of Demonetisation-Era Deposits
Case Title : Gaurav Bhatia v. ITO Ward 70(5)
Case Number : ITA No. 5531/Del/2025
CITATION : 2026 LLBiz ITAT(DEL)18
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) on 22 January held that cash deposits during the demonetisation period representing marriage 'sagan' (gifts from friends and relatives) cannot be treated as unexplained income while deleting an addition of Rs. 30.7 lakh made against an individual assessee. The order was passed by Vice President Mahavir Singh, in an appeal against an order of the National Faceless Appeal Centre dated 3 July 3 2025.
Following Earlier Rulings, ITAT Delhi Holds Air France Income Not Taxable Under India–France DTAA
Case Title : AIR France v. DCIT
Case Number : ITA No. 5205/Del/2025 & Connected Matters
CITATION : 2026 LLBiz ITAT(DEL)19
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that Air France's income from technical handling services, interest on operational funds, and commission from domestic airlines was not taxable in India for the assessment years 2017–18 and 2018–19. The tribunal followed its earlier rulings and noted that there was no change in facts. The receipts were held to be covered under Article 8 of the India–France tax treaty.
Tax Additions For Unsecured Loans Unsustainable Where Lender Creditworthiness Is Proven: ITAT Mumbai
Case Title : DCIT v. Supreme Holdings & Hospitality (India)
Case Number : ITA Nos. 3977/Mum/2025 & Connected Matters
CITATION : 2026 LLBiz ITAT(MUM)20
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 23 January held that additions under Section 68 of the Income Tax Act relating to unsecured loans are unsustainable where the lenders had been accepted as genuine in earlier assessment years and the transactions were supported by proper banking records.
A Bench of Saktijit Dey, Vice President, and Jagadish, Accountant Member, hearing appeals arising from a search conducted on the Jatia Group, dismissed the Revenue's challenge to the deletion of additions amounting to Rs. 14.61 crore.
Case Title : Bajaj Auto Ltd. v. The Principal Commissioner of Income-tax–3, Mumbai
Case Number : ITA No. 2666/MUM/2025
CITATION : 2026 LLBiz ITAT(MUM)21
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 23 January dismissed an appeal filed by Bajaj Auto Limited and upheld a revisionary order issued by the Principal Commissioner of Income-tax (PCIT) under Section 263 of the Income Tax Act. A Bench comprising Judicial Member Narender Kumar Choudhry and Accountant Member Om Prakash Kant agreed with the PCTI that the original assessment, completed on 27 May 2022, was erroneous and prejudicial to the interests of the Revenue, as the Assessing Officer (AO) failed to conduct adequate enquiries on key aspects.
Mere Doubts On Cash Utilisation Insufficient For Section 69A Additions: ITAT Mumbai
Case Title : Deputy Commissioner of Income-tax v. F A Construction
Case Number : ITA Nos. 3895 to 3897/MUM/2025
CITATION : 2026 LLBiz ITAT(MUM)22
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 23 January, held that that additions under Section 69A cannot be made merely on doubts about utilisation, if the source of cash withdrawals is from disclosed bank accounts. A Bench of Judicial Member Sandeep Gosain and Accountant Member Om Prakash Kant dismissed three appeals filed by the Revenue against FA Construction (the taxpayer) and upheld the orders of the Commissioner of Income-tax (Appeals) deleting additions for assessment years 2014-15. It also clarified that ad hoc disallowances of expenditure cannot be sustained when the taxpayer furnishes adequate documentary evidence.
OTHER DEVELOPMENTS
Interest On Motor Accident Compensation To Be Tax-Free Under Budget Proposal
Interest received on compensation awarded by Motor Accident Claims Tribunals may soon be taken out of the income-tax net. While presenting the Union Budget 2026–27, Finance Minister Nirmala Sitharaman announced a proposal to exempt such interest from tax and remove the requirement of tax deduction at source.
Budget 2026-27 Proposes Penalty Relief, Decriminalisation And Litigation Reduction In Income Tax Law
The Union Budget 2026–27 on Sunday proposed wide-ranging changes to the income tax penalty and prosecution framework, including immunity schemes, decriminalisation of certain offences and procedural measures to reduce litigation. Presenting her direct tax proposals, Finance Minister Nirmala Sitharaman said, “Multiplicity of proceedings are a hindrance to the ease of doing business.” She proposed to “integrate assessment and penalty proceedings by way of a common order for both.”
Budget 2026–27 Keeps Income Tax Slabs And Standard Deduction Unchanged
Finance Minister Nirmala Sitharaman on Sunday presented her ninth Union Budget since taking charge in 2019, keeping income tax slabs under the new tax regime unchanged from changes made last year
Union Budget 2026–27: Buyback Proceeds To Be Taxed As Capital Gains, Promoters Face Additional Levy
The Union Budget 2026–27 has introduced a significant reform in the taxation of share buybacks by shifting the tax incidence to shareholders and aligning buyback income with the capital gains framework. Under the new proposal, proceeds received by all categories of shareholders, including retail investors, institutional investors, and foreign shareholders from share buybacks will be taxed as capital gains, instead of being subject to a separate buyback distribution tax at the company level. This marks a departure from the earlier regime, where companies had to bear the tax burden and shareholders largely received tax-exempt income.
Budget 2026-27: Centre Proposes MCA–CBDT Panel To Integrate ICDS Into IndAS
The Union Budget of 2026 has proposed the constitution of a Joint Committee of the Ministry of Corporate Affairs and the Central Board of Direct Taxes (CBDT) to incorporate the requirements of the Income Computation and Disclosure Standards (ICDS) into the Indian Accounting Standards (IndAS).
Budget Proposes 14% Minimum Alternate Tax Final Levy For Companies Opting New Regime From April 2026
The Union Budget 2026–27 on Sunday proposed changes to the Minimum Alternate Tax (MAT) regime applicable to companies, to take effect from April 1, 2026, alongside the implementation of the Income Tax Act, 2025. Presenting the budget, Finance Minister Nirmala Sitharaman said, “I propose to make Minimum Alternate Tax a final tax for companies opting for the new tax regime.”
Union Budget 2026: FM Proposes Major Income Tax Changes
Presenting the Union Budget 2026, the Finance Minister Nirmala Sitharaman proposed the replacement of the Income Tax Act, 1961 with a new Income Tax Act, 2025, to come into force from April 1, 2026, alongside a series of reforms to the direct-tax regime. The Finance Minister said a comprehensive review of the six-decade-old law, announced in July 2024, had been completed in record time. Simplified Income Tax Rules and new return forms will be notified shortly, with the stated objective that “ordinary citizens can comply without difficulty”.
Any Delay In Income Tax Audit Report May Attract ₹75,000 Late Fee, Proposes Finance Bill 2026
A single day's delay in furnishing a tax audit report may attract a fee of ₹75,000 under the proposed Income-tax Act, 2025, as per the scheme set out in the Finance Bill, 2026. Under the existing law, failure to comply with tax audit requirements attracted a penalty linked to turnover, capped at ₹1.5 lakh, and the penalty could be waived if the taxpayer showed a reasonable explanation for the delay.
Budget 2026-27: No TAN Needed For Resident Buyers To Deduct TDS On Property Purchases From NRIs
As per a proposal in the Union Budget 2026 tabled by Finance Minister Nirmala Sitharaman today, resident individuals and Hindu Undivided Families (HUFs) purchasing immovable property from a non-resident (NRI) will no longer be required to obtain a Tax Deduction and Collection Account Number (TAN) for the purpose of deducting tax at source. Instead, the tax deducted can be deposited using the Permanent Account Number (PAN) of the buyer.
Budget 2026-27 Proposes Tax Relief On Compensation Received For Compulsory Land Acquisition
In the Union Budget 2026, the Finance Minister has proposed to exempt income in respect of any award or agreement arising from the compulsory acquisition of land under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act) from income tax, with effect from Assessment Year 2026–27. Under the existing framework, Schedule III of the Income-tax Act provides certain exemptions in respect of capital gains, but does not expressly cover all forms of compensation received on the compulsory acquisition of land.
Budget 2026-27 Introduces One-Time Disclosure Scheme For Small Taxpayers' Undisclosed Foreign Assets
The Union Budget 2026 has introduced the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 through the Finance Bill, 2026. The scheme proposes to offer a one-time opportunity for eligible taxpayers to come forward and declare undisclosed foreign assets or foreign income. On making a valid declaration and payment, taxpayers can obtain immunity from penalty and prosecution under the Black Money law.
The Union Budget 2026 has proposed an income-tax exemption for foreign companies supplying capital goods, equipment, or tooling to Indian electronic goods manufacturers operating in customs bonded warehouses under Section 65 of the Customs Act, 1962. At present, Section 11 read with Schedule IV of the Income-tax Act specifies categories of income that are excluded from the total income of eligible non-residents, foreign companies, and specified persons.
Budget 2026-27 Proposes 12-Month Window From Assessment Year End To File Revised Income Tax Returns
As per the proposals in the Union Budget 2026–27, the government has proposed extending the time limit for filing a revised income tax return from the existing nine months to twelve months from the end of the relevant assessment year. At present, the deadlines for filing a belated return under Section 139(4) and a revised return under Section 139(5) coincide, both expiring nine months from the end of the relevant assessment year. As a result, taxpayers who file a belated return towards the end of the permitted period do not get an opportunity to revise their return.