Depreciation In Sale–Leaseback Cannot Be Denied On Mere Suspicion: Madras High Court

The Madras High Court on 20 April 2026 held that under the Income Tax Act, 1961, a taxpayer is entitled to claim deduction of accrued construction expenses and depreciation arising from sale and leaseback transactions. It ruled that such transactions cannot be treated as colourable devices merely because they result in tax advantages. A Division Bench comprising Justices G. Jayachandran and Shamim Ahmed dismissed the appeals filed by the Income Tax Department under Section 260-A and affirmed...

Bombay High Court Allows Delay Condonation For Charitable Trust IT Filing, Attributes Delay To CA Lapse

The Bombay High Court has set aside an order rejecting a charitable trust's request to excuse a delay in filing Form 10, holding that a lapse on the part of its Chartered Accountant could not be used to deny the trust tax exemption under Section 11 of the Income Tax Act. A Bench of Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla said, “the Petitioner Trust would suffer grave hardship if the delay is not condoned since the Petitioner Firm would be saddled with a huge tax liability for...

Taxpayer Liable Only For Own Investment Share, Not Spouse's Contribution: Delhi High Court

The Delhi High Court on 17 April 2026 held that a taxpayer can only be required to explain his own share of investment and cannot be saddled with tax liability for the contribution of a co-owner, including a spouse, where joint ownership and independent sources of funds are evident. A Division Bench of Justice Dinesh Mehta and Justice Vinod Kumar set aside the assessment order passed under Sections 143(3) read with 144B of the Income Tax Act, 1961, and remanded the matter for reconsideration,...

Madras High Court Holds Post-Search Return Invalid In Block Assessment, Rejects Kerala Roadways' Claim

The Madras High Court on 7 April, held that a return filed after the initiation of search proceedings and beyond the due date cannot qualify as a valid disclosure to exclude such income from undisclosed income in block assessment under the Income Tax Act. A Division Bench of Justices G. Jayachandran and R. Sakthivel rejected the Kerala Roadways appeal. It partly accepted one of the Revenue's appeals and fully accepted another, while deciding issues on block assessment, revisional powers, and...

IT Appellate Authority Must Pass Speaking Order, Hear AO Before Admitting Fresh Evidence: J&K&L High Court

The Jammu and Kashmir and Ladakh High Court has recently held that an appellate authority under the Income Tax law cannot allow a taxpayer to file fresh evidence at the appeal stage without first passing a reasoned order and giving the tax officer a fair chance to respond. A bench of Justice Sanjeev Kumar and Justice Sanjay Parihar said, “We are also of the clear view that the opportunity to lead additional evidence at the appellate stage could not be granted by the First Appellate Authority...

Revised IT Return Permissible Only For Bona Fide Discovery Of Omission Or Mistake: Gujarat High Court

The Gujarat High Court on 9 April, held that a taxpayer can file a revised return under Section 139(5) of the Income Tax Act, 1961 only when it discovers a bona fide omission or wrong statement in the original return filed under Section 139(1). The provision cannot be used to make deliberate or afterthought changes. The Bench of Justices A.S. Supehia and Pranav Trivedi emphasised that a valid revised return replaces the original return for all purposes under the Act, but only when it reflects...

Gujarat High Court Sets Aside Move For Income Tax Reassessment In Land Sale, Bars Differing Stand On Evidence

The Gujarat High Court has set aside a tax reassessment notice issued in a land sale case, holding that the Income Tax Department cannot rely on the same evidence to take opposite positions against the buyer and the seller.The Division Bench comprising Justice A.S. Supehia and Justice Pranav Trivedi was dealing with a writ petition challenging a notice issued under Section 148 of the Income Tax Act for Assessment Year 2020–21.The case arose from a search conducted under Section 132 of the Income...

Gujarat High Court Quashes Move To Reopen Income Tax Assessment Over Vague Third-Party Material

The Gujarat High Court has quashed reassessment notices against a taxpayer, ruling that the Income Tax Department cannot reopen completed assessments based on vague third-party documents that have no clear link to the person concerned.The ruling was delivered by a Division Bench comprising Justice A. S. Supehia and Justice Pranav Trivedi in a batch of petitions led by Bhavnaben Darshanbhai Patel, challenging reassessment proceedings for Assessment Year 2020–21.The case arose after a search under...

Writ Maintainable After Income Tax Assessment If Order Is Ex Facie Without Jurisdiction: Delhi High Court

The Delhi High Court has held that a writ petition under Article 226 is maintainable even after completion of assessment proceedings, where the impugned action is ex facie without jurisdiction.A Division Bench of Justices Dinesh Mehta and Vinod Kumar observed that “simply because the proceedings have culminated into an assessment order, the petitioner cannot be made to suffer the agony of an order which is without jurisdiction on the face of it, until the appellate authority does a formal act of...

No Bad Debt Deduction From Taxable Income Without Actual Write-Off: Madras High Court

The Madras High Court has held that a taxpayer cannot claim a bad debt deduction merely by declaring a debt as irrecoverable and must comply with statutory conditions requiring an actual write-off in its books. A Division Bench of Justice G. Jayachandran and Justice Shamim Ahmed observed, “Merely stating that a bad and doubtful debt is an irrecoverable is not sufficient to claim deduction. Appropriate treatment in the accounts, together with compliance of the conditions in sections 36(1)(vii),...

Summary Processing Cannot Decide Debatable ESI, EPF Claims: Chhattisgarh High Court

The Chhattisgarh High Court on 16 April held that the Income Tax Department cannot invoke summary processing powers under Section 143(1)(a) of the Income Tax Act, 1961 to disallow claims involving debatable legal issues, including employee contributions towards ESI and EPF, as such adjustments fall outside the limited scope of prima facie scrutiny.A Division Bench of Justices Sanjay K. Agrawal and Sachin Singh Rajput allowed the appeal filed by Maa Harsiddhi Infra Developers Pvt Ltd...

No Penalty Where Claim Is Based On Binding High Court Law Later Reversed By Top Court: Bombay High Court

The Bombay High Court on 30 March held that if a taxpayer made a deduction claim based on a binding High Court judgment, penalty under Section 270A of the Income Tax Act cannot be imposed subsequently, merely because the claim was later disallowed following a Supreme Court ruling.A Division Bench of Justices B. P. Colabawalla and Firdosh P. Pooniwalla held that penalty is not automatic and does not arise where a taxpayer makes a bona fide claim based on the prevailing legal position. It noted: ...