The assessee had granted development right to a developer. The assessee had executed a power of attorney authorising the developer to enter upon the property and also received consideration. On the basis of the provisions of section 2(47) of the Act read with section 53A of the Transfer of Property Act, 1882, the assessing officer formed a belief that the capital gains had arisen to the assessee and since the assessee had not declared any capital gains his case for assessment year 2013-14 was reopened u/s. 147 of the Act. The reassessment was challenged by the assessee before the High Court. The High Court noted that development agreement only permitted construction on land by developer as a licensee which did not have effect of transmitting possession in favour of licensee within meaning and spirit of section 53A of 1882 Act and thus there was neither any tangible material nor any reason for Assessing Officer to believe that ‘any income chargeable to tax had escaped assessment’ and thus, impugned reopening notice was not justified – {See Bharat Jayantilal Patel v. Dy. CIT [2023] 149 taxmann.com 290 (Bom.)}

On SLP filed by the revenue, the Supreme Court by a speaking order held that having regard to terms of agreement between parties, this was not a fit case for issuance of notice under section 148. Accordingly the SLP was dismissed.

Dy. CIT v. Bharat Jayantilal Patel [2023] 156 taxmann.com 308(SC)

Assessee-society received registration under section 12AA on 30-9-2016. Subsequently a notice under section 148A(b) was issued upon assessee for assessment year 2015-16 for reason that there was escapement of income on account of bank interest and cash deposits in two of its bank accounts. Assessee responded to the said notice and submitted that as per 3rd proviso to section 12A(2), there was a bar to take any action under section 147 for any preceding year, in which registration was granted. The objection raised by the assessee was dismissed by the Assessing Officer. On a writ petition challenging the said order, the High Court held that since 3rd proviso to section 12A(2) strictly prohibits issuance of notice under section 148 in case of a trust for any year preceding assessment year, in which registration under section 12AA was granted, no proceedings under section 147 could be initiated upon assessee for relevant assessment year 2015-16.

On SLP filed by the revenue against the judgment of the High Court, the Supreme Court, after hearing the plea of revenue, held that they are not inclined to interfere in the matter. Accordingly the SLP was dismissed.

Asst. CIT v. Prem Chand Markanda SD College for Women [2023] 157 taxmann.com 529 (SC)

The assessee filed its statement of specified income disclosing total consideration for specified services and equalisation levy thereon. Since excess equalisation levy was paid by the assessee a refund was claimed from the same. The assessing officer granted the refund. However the assessing officer refused to grant interest on amount refunded holding that interest was not provided for refund of amounts deposited under the equalisation levy and, therefore, the question of payment of any interest did not arise.

On a writ petition filed by the assessee, the High Court noted that section 170 of the Finance Act, 2016 provides that every assessee, who fails to credit the equalisation levy or any part thereof as required under section 166 to the account of the Central Government within the period specified in that section, shall pay simple interest at the rate of one percent of such levy for every month or part of a month by which such crediting of the tax or any part thereof is delayed and, therefore, if the assessee has paid the amount in excess of what was due and liable to be paid should equally be compensated with interest. The High Court held that when the collection of any tax is without the authority of law, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited. Accordingly the assessing officer was directed to allow interest @ 6% p.a. in accordance with the provisions of section 244A of the Act.

Group M Media India Pvt. Ltd. v. Dy. CIT [2023] 157 taxmann.com 487 (Bom.)

A search and seizure action was conducted at the premises of the assessee. Notice was issued u/s. 153A of the Act. The assessee requested to treat the original Return as Return in response to notice u/s. 153A. During the assessment in pursuance to search, the assessing officer disallowed deduction claimed u/s. 80-IAB. The assessee challenged the said disallowance on the ground that there was no incriminating material found during the search and therefore the proceedings u/s. 153A were bad in law. The basis of disallowance by the assessing officer was a statement of valuer which was recorded subsequent to search action. The appeal filed by the assessee was allowed by the CIT (A). The department’s appeal to Tribunal was dismissed.

On further appeal by the revenue to the High Court, the High Court held that in absence of the incriminating material found during the course of search, there cannot be any disallowance of deduction u/s. 80-IAB. The High Court held that the statement of the valuer was recorded subsequent to the search action and the same cannot be said to be incriminating material found during the search action. Accordingly, the High Court confirmed the order of the Tribunal allowing the deduction to the assessee.

Pr. CIT v. Oxygen Business Park (P) Ltd. [2023] 157 taxmann.com 175 (Delhi)

Assessee was engaged in business of construction and allied services. During the course of the assessment, the case was proposed to be referred to special auditor u/s. 142(2A). On objections raised by the assessee, the assessing officer sought approval of Commissioner for special audit which was granted. Special Auditor was appointed by Commissioner and time frame for completion of audit was fixed as 120 days. At the request of Special Auditor, time frame for completion of audit was extended by another 60 days. Extension of time to the special auditor effectively resulted in extension of time for completion of assessment. The assessee challenged the validity of the extension for special audit and also the completion of assessment. The Tribunal allowed the appeal of the assessee holding that the extension was not permitted and accordingly the order passed was beyond the time limit specified u/s. 153B.

On appeal by the revenue to the High Court, it was held that the legislature vested discretion to extend time frame solely on Assessing Officer and he could not have abdicated that function and confined his role to only making a recommendation to Commissioner. The Commissioner had no role in extending timeframe as Assessing Officer was in seisin of assessment proceedings. The decision taken to get an audit conducted under section 142(2A) Act is a step in process of assessment proceedings and, therefore, is clearly not an administrative power; as appointment of a special auditor entails civil consequences. Since initial exercise of power was not administrative, Commissioner could not have extended time based on recommendation of Assessing Officer. Further the High Court held that the discretionary power to extend time was vested in Assessing Officer was non-delegable and accordingly, it could not have been exercised by Commissioner.

Pr. CIT v. Soul Space Projects Ltd. [2023] 157 taxmann.com 272 (Delhi)

Assessment orders in the case of the assessee for assessment years 2007-08 to 2010-11, 2012-13 and 2013-14 were passed. However while passing the assessment order the computer generated Document Identification Number (DIN) was not mentioned in the body of the assessment order. The assessment orders were accompanied by a covering letter which contained DIN and letter number for said letter but DIN for the assessment order was not mentioned. The assessee challenged the validity of the assessment orders in appeal proceedings to the CIT (A) and further appeal to the Tribunal.

The Tribunal held that in terms of CBDT Circular No. 19/2019, dated 14-8-2019, in order to maintain audit trail of all communication, no communication shall be issued by any income-tax authority to assessee or any other person on or after 1-10-2019 unless a computer generated Document Identification Number (DIN) has been allotted and is duly quoted in body of such communication. The Tribunal also held that the covering letter contained the DIN for the said letter and not for the assessment orders. Further there was no material on record mentioning reason for non-issuance of DIN. As such, there was clear violation of specific requirement under CBDT Circular No. 19/2019 to quote DIN in body of assessment orders and therefore, impugned assessment orders were to be treated as invalid and non-est in eye of law.

Sad Bhawna v. Dy. CIT [2023] 157 taxmann.com 565 (Delhi Trib.)

Assessee sold an immovable property and claimed exemption under section 54. The assessing officer completed assessment under section 143(3) allowing the claim of the assessee. However, the CIT observed that capital gain amount was not deposited in capital gain account scheme during interim period till its utilization in purchase/construction of new property. The CIT was of view that due to non-consideration of these facts, assessment order was erroneous and prejudicial to interest of revenue. He set aside assessment with a direction to disallow deduction claimed under section 54.

On appeal by the assessee before the Tribunal, the Tribunal held that since capital gain was invested in purchase/construction of residential house within time limit prescribed under section 54(1), the assessment order allowing the claim under section 54 could not be treated as erroneous and prejudicial to interest of revenue only because capital gain was not deposited in capital gain account scheme. Accordingly the Tribunal set-a-side the order u/s. 263 passed by the Commissioner.

Sarita Gupta v. Pr. CIT [2023] 157 taxmann.com 208 (Delhi – Trib.)

For the assessment year 2021-22, the assessee claimed the concessional rate of tax as per the provisions of section 115BAA. The claim was denied on the ground that the assessee had not filed the statutory form 10-IC within the time specified for the same. The assessee filed a writ petition before the High Court.

The High Court held that the only reason of not allowing the concessional rate was on account of fact that the assessee failed to file Form 10-IC. Further, the High Court noted that a fresh Form 10-IC was filed by the assessee electronically. Accordingly, the High Court held that in accordance with the paragraph – 3 of the Circular No. 19/2023 dated 23-10-2023 issued by the CBDT, the assesee’s claim for concessional rate of tax u/s. 115BAA was valid. The High Court directed the CBDT to process the request contained in Form 10-IC for the concessional rate.

A.C. Surgipharma (P) Ltd. v. Dy. CIT [2023] 157 taxmann.com 360 (Delhi)