LiveLawBiz Direct Tax Weekly Round-Up: July 27 - August 02, 2026
Kapil Dhyani
4 Aug 2026 4:23 PM IST
HIGH COURTS
Bombay HC
Bombay High Court Quashes Criminal Prosecution For Late ITR Filing As Taxpayer Entitled To Refund
Case Title : Rajesh Somandas Sachdev v. Income Tax Officer & Ors.
Case Number : Writ Petition No. 5692 of 2025
CITATION : 2026 LLBiz HC(BOM) 414
The Bombay High Court on 22 July held that criminal prosecution for failure to file an income tax return cannot continue when a subsequent assessment shows that the taxpayer had no tax liability and was instead entitled to a refund, as continuing such proceedings would serve no purpose where the Revenue suffered no loss. Justice Madhav J. Jamdar quashed the criminal complaint that the Income Tax Department filed against Rajesh Somandas Sachdev under Section 276CC of the Income Tax Act (which penalises wilful failure to furnish an income tax return), holding that the Supreme Court's ruling in Guru Nanak Enterprises v. Income Tax Officer squarely covered the case.
Mere Delay In Paying Income Tax Does Not Amount To Wilful Tax Evasion: Bombay High Court
Case Title : Dinar Tarcar Resources (India) Pvt. Ltd. & Ors. v. The Income Tax Department.
Case Number : Criminal Writ Petition No. 202 of 2026
CITATION : 2026 LLBiz HC(BOM) 421
The Goa bench of the Bombay High Court has held that mere delay in paying an admitted tax liability, without a deliberate intention to evade payment, does not amount to a "wilful attempt" to evade tax. Justice Amit S. Jamsandekar observed that criminal prosecution requires proof of mens rea and cannot be invoked merely because there has been a delay or failure in paying tax. "The word 'wilful' introduces a mental element and requires looking into the mind of a person by gauging the person's actions indicative of one's state of mind. Thus, in order to prosecute a person under Section 276-C(2), the conduct of a person acquires importance. A person, in such a case, ought to have deliberately, intentionally and consciously made attempts to evade payment of tax, penalty or interest under the I.T. Act. It does not include an unintentional act, an accidental act or a casual act or genuine inability. The word 'wilful' used in the Section imports the concept of mens rea in the requirement of the Section. Therefore, on mere delay or mere failure without there being mens rea, the provisions of the Section cannot be invoked.", the court held.
Case Title : Principal Commissioner of Income Tax, Central-4 v. Aurum Ventures Private Limited
Case Number : Income Tax Appeal No. 663 of 2024
CITATION : 2026 LLBiz HC(BOM) 422
The Bombay High Court has dismissed two appeals filed by the Income Tax Department, upholding an Income Tax Appellate Tribunal order that deleted additions made to a company's completed income tax assessments after finding they were not based on incriminating material recovered during a search. The court found that no substantial question of law arose for consideration. A division bench of Justice G.S. Kulkarni and Justice Aarti Sathe agreed with the tribunal that the Assessing Officer had based the additions on the company's regular books of account. The bench held that the tribunal's decision was consistent with the settled legal position on completed assessments after a search.
Delhi HC
Case Title : Pr. Commissioner Of Income Tax , Delhi-7 v. Rohde And Schwarz India Pvt. Ltd.
Case Number : ITA 575/2026
CITATION : 2026 LLBiz HC(DEL) 742
The Delhi High Court has admitted the Income Tax Department's appeal to examine whether the statutory deadline for passing income tax assessment orders under Section 153 also governs final assessment orders passed under Section 144C, which lays down a separate assessment procedure for eligible assessees. Section 144C of the Act prescribes a special assessment procedure involving a draft assessment order, review by the Dispute Resolution Panel (DRP), and the passing of a final assessment order for certain eligible assessees.
Case Title : American Express Banking Corporation (India Branch) v. Deputy Commissioner Of Income Tax
Case Number : ITA 367/2025, CM APPL. 54359/2025, CM APPL. 37792/2026
CITATION : 2026 LLBiz HC(DEL) 750
The Delhi High Court has stayed the operation of a draft assessment order passed against American Express Banking Corporation (India Branch) while admitting the company's income tax appeal raising multiple questions of law relating to transfer pricing adjustments, including the validity of the Bright Line Test (BLT) and the Transfer Pricing Officer's (TPO) methodology. A division bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta noted that by an interim order dated May 29, 2026, it had permitted the Assessing Officer to pass a draft assessment order while directing that it should not be given effect to.
Delhi High Court Admits Appeal On Taxability Of Demonetisation-Era Cash Deposits
Case Title : Principal Commissioner Of Income Tax Delhi-20 v. Satish Kumar
Case Number : ITA 384/2026
CITATION : 2026 LLBiz HC(DEL) 751
The Delhi High Court has admitted the Income Tax Department's appeal against an ITAT order deleting additions to income based on an assessee's cash deposits made during the demonetisation period. A Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta agreed to examine whether the Tribunal rightly deleted the addition under Section 69A of the Income Tax Act, relating to cash deposits made during the demonetisation period, despite the Revenue's contention that the deposits were disproportionate to cash sales in the corresponding period of earlier years.
Case Title : Sahara India Commercial Corporation Ltd. v. Assistant Commissioner of Income Tax
Case Number : ITA 551/2026
CITATION : 2026 LLBiz HC (DEL) 753
The Delhi High Court has held that the Commissioner of Income Tax (Appeals) cannot enhance a tax disallowance without first issuing a statutory notice to the assessee, observing that failure to do so violates both Section 251(2) of the Income Tax Act, 1961 and the principles of natural justice. The division bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta thus set aside the enhancement of a disallowance from ₹11.05 crore to ₹16.74 crore made against Sahara India Commercial Corporation Ltd.
Case Title : The Pr. Commissioner Of Income Tax -Central -1 v. Spicejet Limited
Case Number : ITA 539/2026 + ITA 540/2026
CITATION : 2026 LLBiz HC (DEL) 754
The Delhi High Court has dismissed two appeals filed by the Income Tax Department against SpiceJet Ltd., holding that the tax treatment of premium payable on redemption of Foreign Currency Convertible Bonds (FCCBs) is a settled issue. A division bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta observed that the issue raised by the Revenue—whether the expenditure on FCCB redemption premium ought to be spread over the five-year life of the bonds instead of being claimed in the first year—stands concluded by earlier decisions of the Delhi High Court.
'Something Seriously Amiss': Delhi High Court Flags Delays In Direct Tax Vivad Se Vishwas Refunds
Case Title : Yashita Finance Private Limited v. Principal Commissioner Of Income Tax -7, Delhi & Ors.
Case Number : W.P.(C) 9605/2026
CITATION : 2026 LLBiz HC (DEL) 759
The Delhi High Court on Tuesday (July 28) expressed concern over recurring delays by the Income Tax Department in processing refunds under the Direct Tax Vivad Se Vishwas Scheme, 2024, observing that there was "something seriously amiss" in the system as assessees were routinely approaching the High Court for release of refunds. The Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta directed the Chairman of the Central Board of Direct Taxes (CBDT) to ascertain whether the Department's claim regarding the absence of a functional IT system was correct and, if so, ensure that necessary modules are put in place so that refunds are credited promptly, preferably within 90 days of issuance of Form No. 4.
Case Title : Clix Capital Services Private Limited As A Successor To Clix Finance India Private Limited v. The Dy. Commissioner Of Income Tax, Circle 4 2, New Delhi & Ors.
Case Number : W.P.(C) 10111/2026
CITATION : 2026 LLBiz HC (DEL) 761
The Delhi High Court on Tuesday (July 28) directed an Assessing Officer to personally explain the four-year delay in taking steps to release over ₹15 crore due to Clix Capital Services Pvt. Ltd. A Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta directed the officer involved to personally appear before the Court and show cause why the interest payable for the delay should not be recovered from his salary.
Gauhati HC
Case Title : Biswajit Deb v. Union of India & Ors.
Case Number : WP(C) No. 1929 of 2022
CITATION : 2026 LLBiz HC(GAU) 23
The Gauhati High Court has quashed reassessment proceedings initiated under Income Tax Act, holding that the Assessing Officer (AO) reopened the assessment without first verifying the petitioner's transactions. Referring to the AO's own recorded reasons that beneficiary-wise transactions could not be identified "due to paucity of time", Justice N. Unni Krishnan Nair held, "The recording of reason by the Assessing Officer in paragraph 5 of being unable to carry out investigation for identifying the transactions for each of the beneficiaries involved, due to paucity of time, would go to reveal that the notices were being issued only to carry out such verification. This court also holds that such reopening of assessment would not be permitted for a fishing or roving enquiry."
Gujarat HC
Gujarat High Court Quashes Reassessment Notice Issued Beyond COVID-Era TOLA Deadline
Case Title : Wealth First Portfolio Managers Limited v. Assistant Commissioner of Income Tax
Case Number : R/Special Civil Application No. 23218 of 2022
CITATION : 2026 LLBiz HC (GUJ) 101
The Gujarat High Court has quashed a reassessment notice issued under Section 148 of the Income Tax Act, holding that it was issued beyond the "surviving time" available under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), as interpreted by the Supreme Court in Union of India v. Rajeev Bansal. TOLA was enacted to extend statutory timelines for tax and other legal proceedings during the COVID-19 pandemic.
Three Days To Reply To Income Tax SCN Not Reasonable: Gujarat High Court Quashes Assessment
Case Title : SN Advance Ventures Private Limited v. Assistant Commissioner of Income Tax Assessment Unit & Anr.
Case Number : R/Special Civil Application No. 6284 of 2026
CITATION : 2026 LLBiz HC (GUJ) 102
The Gujarat High Court recently held that granting a taxpayer only three days to respond to an income tax show cause notice does not amount to a reasonable opportunity of hearing and violates the principles of natural justice. Setting aside an income tax assessment order passed after scrutiny proceedings, a Division Bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati observed, "Thus, in view of the settled legal position, granting only three days' time to file a reply cannot be said to be a reasonable opportunity. The Assessing Officer ought to have considered and decided the petitioner's grievance dated 16.03.2026, wherein objection was raised regarding the inadequate time granted for filing the reply."
Case Title : Institute of Fire Safety Disaster Management Studies v. Assistant Commissioner of Income Tax, Circle 1(1)(1) & Anr.
Case Number : R/Special Civil Application No. 6872 of 2025
CITATION : 2026 LLBiz HC (GUJ) 103
The Gujarat High Court has recently held that a public trust cannot be treated as a "concern" under the deemed dividend provisions of the Income Tax Act (Section 2(22)(e)) merely because its trustee holds substantial shares in the lending company. Holding that the legal fiction created by the provision cannot be stretched to cover such trusts, the court observed, "The word "concern" used under the Act in such Explanation, which encompasses a Hindu Undivided Family (HUF), or a firm, or an association of persons or a body of individuals or a company cannot be extended to public Trust and they cannot be classified as a "concern" for the purpose of specific tax fiction. Thus, even if a loan is extended to a public Trust by a Private Limited Company, that usually cannot be treated as a deemed dividend under Section 2(22)(e) of the Act."
Case Title : Commissioner of Income Tax (Exemptions), Ahmedabad v. Bhavnagar Mandap Contractors Association
Case Number : R/Tax Appeal No. 467 of 2025
CITATION : 2026 LLBiz HC (GUJ) 104
The Gujarat High court has recently upheld an Income Tax Appellate tribunal order directing the Commissioner of Income Tax (Exemptions) to reconsider a trade association's application for registration as a charitable institution. It held that trade promotion bodies established to advance trade and commerce can qualify as charitable institutions under the "general public utility" category of the Income Tax Act. A division bench of Justice Bhargav D. Karia and Justice Pranav Trivedi said the Bhavnagar Mandap Contractors Association's objects were aimed at advancing trade and business for its members as well as the public at large.
Madras HC
Madras High Court Quashes ₹13.48 Cr Misreporting Penalty On Ennore Tank Terminals For Vague Notice
Case Title : M/s. Ennore Tank Terminals Private Limited v. The Additional /Joint /Deputy / Assistant
Case Number : WP No. 10711 of 2022
CITATION : 2026 LLBiz HC(MAD) 206
The Madras High Court on 20 July set aside a penalty of over Rs. 13.48 crore imposed on Ennore Tank Terminals Private Limited, holding that the Income Tax Department cannot penalise a taxpayer for alleged misreporting of income unless it clearly informs the taxpayer of the basis for such allegation in the show cause notice. Justice Senthilkumar Ramamoorthy held that proceedings for misreporting of income carry serious consequences, including a penalty of 200% of the tax payable on under-reported income and denial of statutory immunity.
ITAT
Charitable Trust Registration Can't Be Denied Over Expenditure Concerns Alone: ITAT Delhi
Case Title : Visan Foundation v. Commissioner of Income Tax (Exemptions), Faridabad
Case Number : ITA No. 3604/Del/2026
CITATION : 2026 LLBiz ITAT(DEL) 250
The Income Tax Appellate Tribunal (ITAT), Delhi, has recently directed the Commissioner of Income Tax (Exemptions) to grant charitable trust registration to Visan Foundation. It held that registration cannot be denied merely over concerns regarding expenditure without first examining whether the trust's objects are charitable and its activities are genuine. A coram of Judicial Member Kavitha Rajagopal and Accountant Member M. Balaganesh observed, "We do not find any discussion as to the objects of the Trust, neither as to the genuineness of its activities. Rather, it was with regard to the expenditure claimed by the assessee towards food, rent, and training expenses, more specifically with regard to the food expenses incurred by the assessee. This, in our view, is not justifiable reasoning for denial of registration."
Case Title : Maersk India Private Limited v. Joint Commissioner of Income Tax, Central Circle-4(3), Mumbai
Case Number : ITA No. 5856/MUM/2025 (Assessment Year: 2022-23)
CITATION : 2026 LLBiz ITAT(MUM) 251
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 1 July held that the nomenclature given to a payment in the books of account cannot determine the true nature of a transaction and that tax deduction at source (TDS) provisions do not apply where a payment is only reimbursement of expenditure without any income element in the hands of the recipient. A Bench comprising Judicial Member Siddhartha Nautiyal and Accountant Member Vikram Singh Yadav allowed an appeal filed by Maersk India Private Limited against the disallowance made under Section 40(a)(ia) of the Income Tax Act (which disallows certain expenses where tax was required to be deducted but was not deducted).
Case Title : Chanel (India) Private Limited v. DCIT
Case Number : ITA No. 2341/Del/2022
CITATION : 2026 LLBiz ITAT(DEL) 252
The Income Tax Appellate Tribunal (ITAT) Delhi has recently granted relief to luxury fashion brand Chanel's Indian arm, quashing reassessment proceedings initiated against Chanel (India) Private Limited beyond four years. It also deleted a ₹3.08 crore transfer pricing adjustment. It also deleted a ₹3.08 crore transfer pricing adjustment. The tribunal held that the subsidy received from its associated enterprise formed part of the company's operating income because it directly compensated its unabsorbed distribution costs.
Case Title : Ram Dattatray Kaldate v. Income Tax Officer, Ward-1(1), Aurangabad
Case Number : ITA No. 2177/PUN/2025
CITATION : 2026 LLBiz ITAT(PUN) 253
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has held that the ex gratia amount received by an employee under Pfizer Healthcare India Pvt. Ltd.'s voluntary retirement scheme is a capital receipt and cannot be taxed as income from other sources. Observing that it had consistently taken the same view in identical cases involving other employees of the company, the bench ruled, "We find that the identical issue had come up before the tribunal in the case of other employees of M/s. Pfizer Healthcare India Pvt. Ltd. and the tribunal has consistently decided the impugned issue in favour of the assessee holding that the impugned amount received by the assessee under the Scheme is a capital receipt not chargeable to tax in the hands of the assessee."
Case Title : Sudhir Agrawal v. Deputy Commissioner of Income Tax
Case Number : ITA Nos. 3823 to 3830/Del/2026
CITATION : 2026 LLBiz ITAT(DEL) 254
The New Delhi Income Tax Appellate Tribunal (ITAT) on 29 July held that where the Assessing Officer of the searched person and the “other person” under Section 153C of the Income Tax Act is the same, the limitation period for completing assessment begins from the date of transfer of jurisdiction under Section 127 and not from the date of recording satisfaction. A Bench of Judicial Member Vimal Kumar and Accountant Member Manish Agarwal quashed the assessment orders passed against Sudhir Agrawal for Assessment Years 2013-14 to 2020-21, holding that the orders passed on 30 March 2023 were barred by limitation as the transfer order under Section 127 was passed on 20 October 2020.
Disseminating Bhagavad Gita Teachings Can't Be Treated As Religious Propagation: ITAT Chandigarh
Case Title : World Sankirtan Tour Trust v. CIT (Exemptions), Chandigarh
Case Number : ITA Nos. 1462 & 1463/CHD/2025
CITATION : 2026 LLBiz ITAT(CHA) 255
The Income Tax Appellate Tribunal (ITAT), Chandigarh has recently held that dissemination of the philosophical teachings of the Bhagavad Gita cannot, by itself, be equated with the propagation of religion or the advancement of a particular religious denomination. Therefore, the tribunal held that World Sankirtan Tour Trust was a charitable institution, not a religious entity, and was entitled to tax benefits because its dominant objects and actual activities were charitable in nature.
Case Title : Unicharm India Private Limited v. Deputy Commissioner of Income Tax
Case Number : ITA Nos. 5938/Del/2018, 6088/Del/2018, 6104/Del/2018, 6203/Del/2018 & 7414/Del/2019
CITATION : 2026 LLBiz ITAT(DEL) 256
On 30 July, the New Delhi Income Tax Appellate Tribunal (ITAT) held that AMP expenditure incurred by an Indian entity cannot be treated as an international transaction for transfer pricing purposes without any agreement, arrangement or understanding with its associated enterprise (AE), following the Delhi High Court's ruling in Sony India Pvt. Ltd. v. ACIT. A Bench comprising Judicial Member Satbeer Singh Godara and Accountant Member Manish Agarwal held that the issue of whether AMP expenditure constitutes an international transaction has been settled against the Revenue by decision in Sony India Pvt. Ltd. and deleted the transfer pricing adjustment made against Unicharm India Private Limited.
HCL's Corporate Guarantees For Overseas Subsidiaries Attract Transfer Pricing Provisions: Delhi ITAT
Case Title : HCL Technologies Ltd. v. Deputy Commissioner of Income Tax
Case Number : ITA Nos. 1842/Del/2014, 2327/Del/2015 & 1645/Del/2016
CITATION : 2026 LLBiz ITAT(DEL) 257
The Delhi Bench of the Income Tax Appellate Tribunal has held that corporate guarantees issued by HCL Technologies Ltd. to its step-down overseas subsidiaries amount to indirect financing and therefore qualify as international transactions requiring transfer pricing benchmarking. Rejecting the Transfer Pricing Officer's reliance on commercial bank guarantee rates with an additional 200-basis-point mark-up, the tribunal held that an arm's length guarantee commission of 0.50% was appropriate.
Case Title : Addl. CIT, Special Range-6 v. MakeMyTrip India Pvt. Ltd.
Case Number : ITA No. 6397/Del/2017
CITATION : 2026 LLBiz ITAT(DEL) 258
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the Revenue's appeal against MakeMyTrip India Pvt. Ltd., holding that payment gateway charges paid to banks are fees for banking services and not commission or brokerage. Upholding the Commissioner (Appeals)' order deleting the disallowance, the tribunal followed the Delhi High Court's ruling in MakeMyTrip's own case and observed, "Respectfully following the decision of the Hon'ble Jurisdictional High Court, we hold that no TDS was required to be made u/s 194H in respect of payment of gateway charges made to the Banks and, therefore, revenue's appeal on this issue is dismissed."