Approval From Higher Authority Mandatory For Issuing Notice U/S 148 Income Tax Act After Expiry Of 3-Year Limitation: Madras High Court

The Madras High Court has held that under the new regime, approval from a higher authority, such as the Principal Chief Commissioner of Income Tax or the Principal Director General, is mandatory to issue a notice under Section 148 of the Income Tax Act after the expiry of a three-year limitation period. Justice C. Saravanan stated that …….three years from the end of the Assessment Year 2016-2017, 2017-2018 and 2018-2019, to issue Section 148 Notice under the new regime had already...

Income Tax | Assessee Should Not Be Penalised For Delay In Filing Return Caused By CA's Belated Advice: Bombay High Court

The Bombay High Court has held that the assessee should not be penalised for the delay in filing the return caused by the chartered accountant's belated advice. The bench noted that the delay is not due to any negligence on the part of the assessee, but to inadequate advice by the Chartered Accountant, a fact admitted by him in his affidavit. Justices B.P. Colabawalla and Amit S. Jamsandekar opined that the Petitioner ought not to be put to a considerable disadvantage as a result...

AO Cannot Rely Solely On Sales Tax Dept Data To Add Bogus Purchases Without Granting Cross-Examination: Bombay High Court

The Bombay High Court has held that the Assessing Officer (AO) cannot rely solely on Sales Tax Department Data for an income tax addition without granting cross-examination.Justices G.S. Kulkarni and Aarti Sathe stated that, "when the VAT assessment was pending adjudication, merely relying on the information of the Sales Tax Department without granting an opportunity to the Assessee to even cross-examine the hawala purchasers to confirm the purchases from them violated the basic facts of...

S.263 Income Tax Act Can Be Invoked When AO Fails To Address Core Issue In Assessment Order: Kerala High Court

The Kerala High Court held that Section 263 of the Income Tax Act, 1961, can be invoked where the Assessing Officer (AO) fails to address a core issue in the assessment order. The bench opined that the main issue does not appear to have been addressed by the assessing authority while issuing an order under Section 143(3) of the Act. Since the assessment order does not appear to have addressed the issue with reference to the competing provisions, exercise of the power under Section 263...

Income Tax Commissioner's Order For Reopening Assessment U/S 151 Income Tax Act Can Be In Words "Yes, I Am Convinced": Delhi High Court

The Delhi High Court has held that the Income Tax Commissioner's order granting sanction under Section 151 of the Income Tax Act 1961 for reopening assessment after four years of the relevant Assessment Year (AY) can be in the words— “Yes, I am convinced”.Section 151(1) of the Act categorically provides that no notice for reassessment shall be issued under Section 148 by the Assessing Officer (AO), after expiry of four years from the end of the relevant AY, unless the Commissioner is satisfied...

S.36(1)(vii) Income Tax Act | Closing Individual Debtor Accounts Not Mandatory For Bad Debt Deduction: Kerala High Court

The Kerala High Court stated that closing individual debtor accounts is not mandatory for bad debt deduction under Section 36(1)(vii) of the Income Tax Act, 1961. Section 36(1)(vii) of the Income Tax Act, 1961, deals with the deduction of bad debts. It allows the taxpayer to claim a deduction for bad debts that have been written off in the books of accounts during the previous financial year. Justices A. Muhamed Mustaque and Harisankar V. Menon, after referring to the case of...

'Don't Blindly Trust AI'; Bombay High Court Quashes Income Tax Assessment Passed On Unverified AI-Generated Case Laws

The Bombay High Court has quashed an income tax assessment after noting that the Assessing Officer had relied upon non-existent, AI-generated case laws while passing the assessment order. The Court stated that in the era of Artificial Intelligence, the tax authorities cannot blindly rely on such AI-generated results. AI-generated case laws must be cross-verified before using them in quasi-judicial functions. Justices B.P. Colabawalla and Amit S. Jamsandekar stated that in this era...

Delhi High Court Dismisses Income Tax Dept's Appeals Against Remfry & Sagar Law Firm Over Goodwill License Fees

The Delhi High Court has upheld an order of the ITAT allowing IPR law firm Remfry & Sagar to treat the license fees paid by it to acquire its founder's goodwill, as a business expense deductible under Section 37 of the Income Tax Act.A division bench of Justices V. Kameswar Rao and Vinod Kumar thus dismissed the appeals preferred by the Income Tax Department against the firm.The Court heavily relied on Pr. Commissioner Of Income Tax -21 v. M/S.Remfry & Sagar (2025) where a coordinate...

Income Tax Act | Failure To Raise Timely Objection To Jurisdiction U/S 143(2) Bars Assessee From Challenging Assessment: Chhattisgarh HC

The Chhattisgarh High Court held that failure to raise a timely objection to jurisdiction under Section 143(2) of the Income Tax Act bars the assessee from challenging the assessment. Justices Sanjay K. Agrawal and Radhakishan Agrawal stated that the assessee also did not raise any objection regarding jurisdiction upon completion of his assessment. As such, the plea with regard to the territorial jurisdiction of the ITO was barred by virtue of Section 124(3)(a) of the Income Tax Act....

Limitation Under Rule 68B Of Income Tax Act Does Not Apply To RDDB Act Proceedings: Kerala High Court

The Kerala High Court held that the limitation under Rule 68B of the second schedule to the Income Tax Act does not apply to RDDB Act (Recovery of Debts Due to Banks and Financial Institutions Act, 1993) proceedings. Justice Mohammed Nias C.P. stated that Rule 68B of the Second Schedule to the Income Tax Act, 1961, has no mandatory application to recovery proceedings under the RDDB Act. It is also relevant that under Sections 19(22) and 25 of the RDDB Act, the Recovery Officer derives...

Income Tax Act | Non-Production Of Form 3CL Isn't Material Suppression; Not Grounds To Reopen Assessment U/S 147: Kerala High Court

The Kerala High Court held that the non-production of Form 3CL is not material suppression and is not a valid ground to reopen the assessment under Section 147 of the Income Tax Act. Under Section 35(2AB) of the Income Tax Act, 1961, any expenditure on scientific research is allowable as a deduction. A sum equal to one and one-half times the expenditure is allowed as such a deduction. Section 147 of the Income Tax Act, 1961, empowers the Assessing Officer (AO) to reassess or...

Income Tax Act | Deputy Commissioner Cannot Act Beyond DRP Directions; Assessment After S.144C(13) Time Limit Invalid: Bombay High Court

The Bombay High Court stated that the Deputy Commissioner cannot act beyond the dispute resolution panel (DRP) directions; assessment completed beyond Section 144C(13) of the Income Tax Act, 1961, the time limit is invalid. Section 144C(13) of the Income Tax Act, 1961 mandates the completion of the assessment within one month from the end of the month in which DRP directions are received. Justices B.P. Colabawalla and Amit S. Jamsandekar stated that the Deputy Commissioner cannot...