LiveLawBiz Direct Tax Weekly Round-Up: March 02 - March 08, 2026
Kapil Dhyani
10 March 2026 11:37 AM IST
HIGH COURTS
Allahabad HC
Allahabad High Court Stays Income Tax Revision, Cites No Definite Error In Reassessment Order
Case Title : Nitish Kumar Roy Versus Union Of India And Another
Case Number : WRIT TAX No. - 1036 of 2026
CITATION : 2026 LLBiz HC (ALL) 21
The Allahabad High Court has recently stayed proceedings pursuant to a show cause notice dated January 16, 2026 issued under Section 263 of the Income Tax Act, 1961 against an individual taxpayer, observing that the tax authority had not formed a definite opinion that the reassessment order was erroneous and prejudicial to the interest of the revenue. The order was passed by a bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla.
Bombay HC
Limitation For TDS Default Orders Runs Quarter-Wise, Not Annually: Bombay High Court
Case Title : The Commissioner of Income Tax (TDS), Pune Vs Vodafone Cellular Ltd., Pune
Case Number : INCOME TAX APPEAL NO.2438 OF 2018
CITATION : 2026 LLBiz HC(BOM) 116
The Bombay High Court has recently held that limitation for passing an order treating a person responsible for deducting tax at source as an “assessee in default” under Section 201 of the Income Tax Act must be computed quarter-wise based on the filing of each TDS statement, and not on an annual or cumulative basis. A Division Bench of Justice M.S. Karnik and Justice Gautam A. Ankhad on March 5, 2026 dismissed the Income Tax Department's appeal against Vodafone Cellular Ltd., Pune.
Delhi HC
Case Title : Legal Initiative For Forest And Environment Trust (Life Trust) v. PCIT Central 2 Delhi And Anr
Case Number : W.P.(C) 2342/2026
CITATION : 2026 LLBiz HC (DEL) 218
The Delhi High Court has reprimanded the Income Tax Appellate Tribunal (ITAT) for adjourning an appeal sine die after the matter had already been heard and reserved for judgment. For context, although Petitioner's appeal before the ITAT had been heard at length and reserved for orders on September 3, 2025, the Tribunal subsequently listed the matter again and, on January 19, 2026, adjourned it sine die.
Case Title : Lindstrom Services India Private Limited v. National Faceless Assessment Centre New Delhi & Ors.
Case Number : W.P.(C) 2723/2026
CITATION : 2026 LLBiz HC (DEL) 223
The Delhi High Court has recently quashed a draft assessment order passed by the Faceless Assessing Officer (FAO) against Lindstrom Services India, after noting that it was issued without knowledge of the Court's order quashing transfer pricing, due to delay in uploading the High Court direction on its website. The division bench of Justices Dinesh Mehta and Vinod Kumar clarified that while the FAO could not be faulted personally, an assessment order passed in ignorance of a subsisting High Court order cannot be allowed to stand.
Delhi High Court Directs 2% Withholding Tax Certificate For US Software Firm DocuSign
Case Title : DocuSign Inc v. The Income Tax Officer, Ward Int. Tax 1(2)(2), Civic Centre New Delhi
Case Number : W.P.(C) 1334/2026
CITATION : 2026 LLBiz HC (DEL) 225
The Delhi High Court has directed the Income Tax Department to issue a withholding tax certificate at the rate of 2% in favour of a US-based software company, after finding that the transactions prima-facie look to be not exigible to tax. A division bench of Justices Dinesh Mehta and Vinod Kumar passed the order while hearing DocuSign's writ petition challenging a certificate issued under Section 197 of the Income Tax Act, 1961.
Case Title : Gaurav Dalmia v. Deputy Director Of Income Tax Investigation Unit 2 (3) Delhi & Ors.
Case Number : W.P.(C) 8352/2025
CITATION : 2026 LLBiz HC (DEL) 226
The Delhi High Court has held that failure of tax authorities to obtain information about an assessee's assets in foreign jurisdictions cannot be used to keep a Look Out Circular (LOC) alive indefinitely, particularly when income tax proceedings have already concluded and no demand is outstanding against the assessee. A Division Bench of Justices Dinesh Mehta and Vinod Kumar thus allowed writ petitions filed by the assessees and observed, “If for one reason or the other, the respondents are not in a position to gather or elicit information from the foreign countries, the petitioners' rights cannot be kept suspended for an indefinite period. We are, therefore, of the view that the respondents' action of continuing with the lookout circular is violative of petitioners' fundamental rights.”
Case Title : Workday Limited v. Deputy Commissioner Of Income Tax Circle Int. Tax 3(1)(1), New Delhi
Case Number : W.P.(C) 731/2026
CITATION : 2026 LLBiz HC (DEL) 231
The Delhi High Court has held that while issuing a certificate for lower deduction of tax at source under Section 197 of the Income Tax Act, 1961, the competent authority is required to record a prima facie view on the taxability of the receipts, and that such certificates cannot be issued mechanically or without reasons. A division bench of Justices Dinesh Mehta and Vinod Kumar made the observation while disposing of a writ petition filed by Ireland-based Workday Limited, which had challenged a withholding certificate directing deduction of tax at the rate of 10% on payments received from India.
Kerala HC
Taxpayer Cannot Escape Prosecution By Filing Revised Returns Post-Search: Kerala High Court
Case Title : Shammem Majeed v. State of Kerala
Case Number : CRL.MC NO. 8014 OF 2019
CITATION : 2026 LLBiz HC (KER) 41
The Kerala High Court on 20 February held that filing revised income tax returns after a search and seizure operation does not absolve a taxpayer from criminal prosecution for wilful tax evasion, and that such revised returns cannot be used as a shield against offences punishable under the Income Tax Act, 1961. Justice G. Girish, dismissed a batch of petitions filed by a medical practitioner challenging prosecutions pending before the Additional Chief Judicial Magistrate (Economic Offences), Ernakulam.
Case Title : Dr. P.H. Abdul Majeed v. State of Kerala
Case Number : CRL.MC NO. 7884 OF 2019
CITATION : 2026 LLBiz HC (KER) 43
The Kerala High Court has reiterated that criminal prosecutions for alleged tax evasion under the Income Tax Act do not automatically fail merely because penalty proceedings were set aside on technical grounds, and that such prosecutions can validly continue where allegations disclose wilful and deliberate concealment of income. The ruling was delivered by Justice G. Girish while dismissing a batch of criminal miscellaneous petitions filed by Dr. P.H. Abdul Majeed, who had sought the quashing of multiple criminal complaints initiated by the Income Tax Department for offences under Sections 276C(1) and 277 of the Income Tax Act.
Madras HC
Case Title : Motilal Jain Mahaveer Jain v. Income Tax Officer
Case Number : W.P.No.23246 of 2023
CITATION : 2026 LLBiz HC (MAD) 61
The Madras High Court has clarified that a non-resident individual falls within the amended definition of an “eligible assessee” under the Income Tax Act, and therefore reassessment proceedings routed through the Dispute Resolution Panel cannot be challenged on that ground. The court dismissed a writ petition filed by individual taxpayers Motilal Jain and Mahaveer Jain and upheld a reassessment order issued under the Income Tax Act following directions of the Dispute Resolution Panel.
Case Title : Verizon Data Services India Private Limited v. Deputy Commissioner of Income Tax
Case Number : W.P.No18377 of 2024
CITATION : 2026 LLBiz HC (MAD) 68
The Madras High Court has recently quashed penalty proceedings against Verizon Data Services India Pvt Ltd, holding that a transfer pricing adjustment based on estimation of arm's length price cannot by itself constitute “misreporting of income” under Section 270A of the Income Tax Act. A single-bench of Justice C. Saravanan, while quashing the penalty order and rejection of its immunity application against Verizon observed, "The entire basis for initiation of penalty proceedings is the transfer pricing adjustment proposed in the draft assessment order. Such adjustment, by its very nature, involves estimation and determination of arm's length price and cannot, in law, be equated with either concealment or misrepresentation so as to attract the Clause (a) to Sub Section (9) to Section 270A."
Rajasthan HC
Assessment Order Against Deceased Person Without Hearing Legal Heirs Invalid: Rajasthan High Court
Case Title : Shri Hitesh Patel v. State Of Rajasthan
Case Number : D.B. Civil Writ Petition No. 3194/2026
CITATION : 2026 LLBiz HC (RAJ) 8
The Rajasthan High Court on 26 February, held that assessment proceedings cannot be validly continued or concluded against the legal heirs of a deceased taxpayer under Section 93 of the CGST Act, which limits liability to the estate inherited, unless the authorities comply with mandatory principles of natural justice, including issuance of a proper notice and grant of an opportunity of hearing to the legal representative. A Bench of Acting Chief Justice Sanjeev Prakash Sharma and Justice Baljinder Singh Sandhu found that the assessment order against Late Shri Bhagwan Lal Dangi, in which his son and legal representative Hitesh Patel was affected, failed to adequately set out the factual foundation and reasoning supporting the decision.
ITAT
Case Title : Verizon Communications India P. Ltd. v. Additional CIT, Special Range-9, New Delhi
Case Number : ITA No. 442/DEL/2017
CITATION : 2026 LLBiz ITAT(DEL) 47
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that the Transfer Pricing Officer (TPO) could not reject a taxpayer's limited risk model without citing any comparable uncontrolled transactions and partly set aside a transfer pricing adjustment of Rs. 83.49 crore against Verizon Communications India Pvt. Ltd., restricting the adjustment to Rs. 23.81 crore. A Bench comprising Accountant Member S. Rifaur Rahman and Judicial Member Anubhav Sharma upheld the company's claim for deduction under Section 80-IA and deleted the disallowance under Section 40(a)(i) relating to payments made to foreign telecom operators.
Case Title : KP Diamonds (P) Ltd. v. Income Tax Officer
Case Number : ITA No.6351/Del/2025
CITATION : 2026 LLBiz ITAT(DEL) 48
The New Delhi Income Tax Appellate Tribunal (ITAT) has held that cash sales recorded during the demonetisation period cannot be treated as unexplained income merely on the basis of suspicion or human probabilities, when such sales are duly reflected in audited books of account and supported by stock records, invoices, and VAT returns. The bench consisting of Judicial Member Anubhav Sharma and Accountant Member Manish Agarwal, was dealing with an appeal filed by M/s KP Diamonds (P) Ltd., a trader in diamonds and gold jewellery, for the assessment year 2017–18.
Case Title : Nishant Anand v. The Assessing Officer Delhi
Case Number : ITA No.6622/Del/2025
CITATION : 2026 LLBiz ITAT(DEL) 50
The New Delhi Income Tax Appellate Tribunal (ITAT) has recently held that payments towards credit card dues cannot be added as unexplained expenditure under Section 69C of the Income Tax Act when the assessee is able to satisfactorily explain the source of such payments with supporting evidence. A single bench of Judicial Member CN Prasad, was dealing with the appeal filed by an individual assessee for Assessment Year 2023–24, where the Assessing Officer had treated credit card payments of Rs 11.32 lakh as unexplained expenditure, invoking Sections 69C read with 115BBE of the Income Tax Act.
'No Whisper Of Tangible Material': ITAT Delhi Quashes Reassessment Against Vedanta For AY 2010-11
Case Title : Vedanta Limited v. Assistant Commissioner of Income Tax, Circle 26(1), New Delhi
Case Number : ITA Nos. 2405/Del/2019 & 2250/Del/2019
CITATION : 2026 LLBiz ITAT(DEL) 51
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed reassessment proceedings against Vedanta Limited for Assessment Year 2010-11. It held that the reopening beyond four years was without jurisdiction as it was not based on any fresh tangible material. A coram of Judicial Member Pawan Singh and Accountant Member Brajesh Kumar Singh observed that “there is no whisper of any tangible material which came to the possession of the assessing officer subsequent to the passing of the assessment order u/s 143(3) of the Act on 28.01.2013 or there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment in the return of income for that assessment year in respect of the above two issues on which the assessment was reopened.”
Case Title : Varun Beverages Limited v. Assistant Commissioner of Income Tax, Central Circle-7, New Delhi
Case Number : ITA Nos. 3476/Del/2025, 3477/Del/2025 & 3478/Del/2025
CITATION : 2026 LLBiz ITAT(DEL) 49
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that no transfer pricing adjustment is warranted where the interest charged on loans advanced to associated enterprises exceeds the internal Comparable Uncontrolled Price (CUP). The bench comprising Judicial Member Yogesh Kumar U.S. and Accountant Member Manish Agarwal deleted the entire transfer pricing adjustment of Rs 3,42,31,778 for Assessment Year 2017-18 in the case of Varun Beverages Limited, including Rs 2,84,45,221 towards interest on foreign currency loans advanced to overseas associated enterprises and Rs 57,86,557 towards notional interest on outstanding receivables.
No Disallowance Of Interest In Absence of Nexus Between Borrowed Funds And Advances: ITAT New Delhi
Case Title : M/s Shivam Agrioils Pvt. Ltd. v. Deputy Commissioner of Income Tax
Case Number : ITA No. 1030/Del/2025
CITATION : 2026 LLBiz ITAT(DEL) 46
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) on 27 February, held that interest disallowance under Section 36(1)(iii) of the Income-tax Act, 1961 cannot be sustained in the absence of a nexus between borrowed funds and interest-free advances, particularly where such advances were granted in years preceding the borrowings and were supported by commercial expediency. A Bench comprising Judicial Member Satbeer Singh Godara and Accountant Member Amitabh Shukla deleted the addition of Rs. 43,86,674 made towards alleged diversion of interest-bearing funds and allowed the appeal filed by Shivam Agrioils Private Limited (the taxpayer) for Assessment Year 2018-19.
Air India SATS Entitled To Tax Benefits On Ground & Cargo Handling Income: ITAT Delhi
Case Title : ACIT v. M/s Air India Sats Airport Services Pvt. Ltd.
Case Number : ITA No. 5026/Del/2016
CITATION : 2026 LLBiz ITAT(DEL) 52
On 26 February, the New Delhi Income Tax Appellate Tribunal (ITAT) held that Air India SATS Airport Services Pvt. Ltd.'s income from airport ground handling and cargo handling operations qualifies for tax incentives available to eligible infrastructure-related service providers. A Bench of Judicial Member Satbeer Singh Godara and Accountant Member Naveen Chandra heard the Revenue's appeal, which challenged the deduction claimed by Air India SATS under Section 80-IA of the Income Tax Act on income derived from airport ground handling and cargo handling operations.
Notice Issued By Officer Without Jurisdiction Cannot Sustain Assessment: ITAT Quashes Assessment
Case Title : Jagruti Kirti Shah v. Assistant Commissioner of Income Tax, Circle 23(1), Mumbai
Case Number : ITA Nos. 5844/Mum/2025 & 6125/Mum/2025
CITATION : 2026 LLBiz ITAT(MUM) 53
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 26 February quashed an assessment against taxpayer Jagruti Kirti Shah, holding that the notice under Section 143(2) of the Income Tax Act was issued by an officer lacking jurisdiction as per the Central Board of Direct Taxes (CBDT) Instruction No. 1 of 2011. Instruction 1 prescribes the officer-level jurisdiction for issuing scrutiny notices based on the assessee's income and category. The Bench, comprising Judicial Member Rahul Chaudhary and Accountant Member Bijayananda Pruseth, allowed the taxpayer's additional ground and set aside the assessment order dated 24 December 2018 passed under Section 143(3) of the Income Tax Act.
Penalty Invalid Where AO Issues Stereotypical Notice Without Specifying Charge: ITAT Delhi
Case Title : Ms. Deepti Goel v. Income Tax Officer
Case Number : ITA No. 6069/Del/2025
CITATION : 2026 LLBiz ITAT(DEL) 54
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) on 25 February quashed an income tax penalty imposed on a taxpayer, after finding that the Assessing Officer issued a stereotypical penalty notice without specifying the exact charge under the Income Tax Act. A Tribunal Bench comprising Judicial Member Yogesh Kumar U.S. and Accountant Member Renu Jauhri held that a notice issued must clearly state whether the penalty proceedings are initiated for “concealment of income” or “furnishing inaccurate particulars of income.” Failure to specify the charge renders the penalty proceedings invalid.
ITAT Delhi Quashes Reassessment Against Lalit Modi Over Credit Card, Private Jet Expenses
Case Title : Lalit Kumar Modi v. Deputy Commissioner of Income Tax
Case Number : ITA No.1636/DEL/2023
CITATION : 2026 LLBiz ITAT(DEL) 55
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed reassessment proceedings initiated against former IPL commissioner Lalit Kumar Modi over alleged unexplained credit card expenditure and private jet costs. The tribunal held that reassessment cannot be initiated while regular scrutiny assessment proceedings are still pending. A bench of Judicial Member Vikas Awasthy and Accountant Member Brajesh Kumar Singh held that the reassessment was without jurisdiction. It observed that initiating reassessment in such circumstances amounted to impermissible parallel proceedings.
ITAT Delhi Upholds Deletion Of ₹1.34 Crore Tax Addition Against NDTV
Case Title : DCIT v. New Delhi Television Ltd. & New Delhi Television Ltd. v. DCIT
Case Number : ITA No.1564/Del/2016 & ITA No.1623/Del/2016
CITATION : 2026 LLBiz ITAT(DEL) 56
The Income Tax Appellate Tribunal (ITAT) at Delhi on Friday upheld relief granted to New Delhi Television Ltd. (NDTV) in a dispute over a Rs 1.34 crore disallowance under Section 14A of the Income Tax Act for the assessment year 2010–11. The tribunal held that expenditure cannot be disallowed under the provision where the taxpayer has not earned any tax-exempt income during the relevant year. A bench comprising Judicial Member Madhumita Roy and Accountant Member Manish Agarwal dismissed the Income Tax Department's appeal challenging the deletion of the disallowance.
ITAT Delhi Upholds Tax Incentive For Big Babol, Mentos Maker Perfetti's Uttarakhand Unit
Case Title : ACIT v. Perfetti Van Melle India Pvt. Ltd.
Case Number : ITA No. 623/Del/2025
CITATION : 2026 LLBiz ITAT(DEL) 57
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the order allowing confectionery manufacturer Perfetti Van Melle India Pvt. Ltd. to claim tax deduction under Section 80-IC of the Income Tax Act on profits from its Rudrapur manufacturing unit in Uttarakhand. A bench of Judicial Member Anubhav Sharma and Accountant Member Manish Agarwal dismissed the Revenue's appeal and upheld the order of the Commissioner of Income Tax (Appeals) allowing the deduction.
OTHER DEVELOPMENTS
Central Bank Digital Currencies Not 'Relevant Crypto-Assets' For CRS Reporting: CBDT
The Central Board of Direct Taxes (CBDT) has amended the Income Tax Rules, 1962, to clarify that Central Bank Digital Currencies (CBDCs) will not fall within the definition of “relevant crypto-assets” for Common Reporting Standard (CRS) framework. The amendment forms part of the Income-tax (Amendment) Rules, 2026 notified on March 5, 2026 and the changes introduce new definitions and reporting provisions relating to crypto-assets, electronic money products and digital currencies under the Common Reporting Standard (CRS) framework.