Appeals

Appeals — the law in short

Every authority in this library on appeals, with what each one decided.

• Jindal Equipment Leasing Consultancy Services Ltd v CIT Supreme CourtCuts both ways
  My client held shares of the amalgamating company as stock-in-trade and received shares of the amalgamated company under the court-sanctioned scheme. Is there business income at that point, or only when those shares are sold?
  It depends. Section 28 does not require a sale, an exchange or a transfer - business profit can be realised in kind - so the substitution of shares on an amalgamation can be charged as business income where shares held as stock-in-trade are replaced by shares that are freely realisable and capable of definite valuation. It is not automatic: the Court laid down a fact-sensitive test of commercial realisability, put the burden of establishing it on the Revenue, and held that the charge is attracted only on allotment of the new shares and not on the appointed date or the date the scheme is sanctioned. The Delhi High Court's judgment was affirmed and the matter remitted to the Tribunal to decide, on the facts, whether the shares were stock-in-trade at all and whether what was received was freely realisable.
• Union of India v Virendra Amrutbhai Patel Supreme CourtHelps taxpayerNo later treatment found
  My benami matter was decided on the strength of Ganpati Dealcom and became final. The Supreme Court has now recalled that judgment. Can the Department reopen my case by review?
  On this order, no. A two-Judge Bench declined to act on the clause in the 18 October 2024 recall order that gave aggrieved parties liberty to seek review of decisions founded on Ganpati Dealcom. It applied the Explanation to Order XLVII Rule 1 CPC — that reversal or modification of a proposition of law by a later decision is not a ground of review — and dismissed the Union's review petition.
• Pathapati Subba Reddy v Special Deputy Collector (LA) — the Supreme Court's current summary on condonation: section 5 is construed liberally, section 3 strictly, and even sufficient cause need not be excused Supreme CourtHelps department
  The other side says every day's delay must be explained; my client says the courts take a liberal view. Which line does the Supreme Court now apply?
  Both, in a stated order. The Court held that s.5 of the Limitation Act is to be construed liberally but s.3, being mandatory and substantive, strictly; that a liberal or justice-oriented approach cannot be used to defeat the law of limitation and revive stale or dead matters; that the existence of sufficient cause is a condition precedent to the discretion; and that even where sufficient cause is established the discretion may still be refused for inordinate delay, negligence or want of due diligence. A delay of 5,659 days was not condoned and the special leave petition was dismissed.
• SAP Labs India P Ltd v ITO Supreme CourtHelps department
  The Tribunal fixed my arm's length price and the department has gone to the High Court — can the High Court reopen the comparables, or is the Tribunal's finding final?
  No, the Tribunal's determination is not final. The Supreme Court held on 19 April 2023 that there is no absolute rule that an arm's length price fixed by the Tribunal cannot be examined under section 260A. Chapter X and Rules 10A to 10E lay down guidelines; a determination made in disregard of them is perverse, and perversity is itself a substantial question of law. The High Court may therefore examine comparability of companies, the selection of filters and whether non-comparable transactions were treated as comparable. The Karnataka High Court's contrary view in Softbrands India was rejected and the whole batch was remitted.
• Godrej Sara Lee Ltd v Excise and Taxation Officer Supreme CourtHelps taxpayer
  The High Court dismissed my writ saying an appeal was available. Was it entitled to do that without looking at the point?
  It depends, and the Supreme Court drew the distinction that matters. Maintainability goes to the root — it decides whether the court can receive the case at all. Entertainability is discretion. The mere availability of an appeal or revision that the petitioner has not pursued does not oust the High Court's jurisdiction or make the writ petition 'not maintainable', and where the challenge is to the very jurisdiction of the authority, or is a pure question of law, the petition deserves consideration on merits.
• Red Chilli International Sales v ITO Supreme CourtCuts both ways
  The High Court threw out my writ petition against a section 148 notice saying I had an alternative remedy. Was it right to refuse to hear me at all?
  Not on that reasoning. The Supreme Court set aside the Punjab and Haryana High Court's observation that a writ petition against a reassessment notice is not maintainable because of the alternative remedy. It said the observation did not take into account several judgments of the Supreme Court on the High Court's jurisdiction, writ petitions having been entertained to examine whether the jurisdictional pre-conditions for a section 148 notice are satisfied, and that the reopening provisions as amended by the Finance Act 2021 need deeper consideration in the light of the earlier case law. The special leave petition was disposed of without any finding on the merits.
• PCIT v ABC Papers Ltd Supreme CourtCuts both ways
  My case was transferred under section 127 to an Assessing Officer in another state — which High Court now hears the appeal against the Tribunal's order?
  The High Court where the Assessing Officer who passed the assessment order sits. The Supreme Court held on 18 August 2022 that an appeal under section 260A lies only to that High Court, and that a transfer of the case under section 127 does not shift appellate jurisdiction — even a transfer for the same assessment year. The Delhi High Court's contrary decisions in CIT v. Sahara India Financial Corporation Ltd. and CIT v. Aar Bee Industries Ltd. were overruled. Nor does the location of the Tribunal decide the forum, since a Bench of the Tribunal often covers several states.
• PCIT v Wipro Ltd Supreme CourtHelps department
  A declaration was required by the due date and you filed it late. Is that fatal?
  Yes. Both limbs — furnishing the declaration, and doing so before the due date for the original return — are mandatory, not directory. A claim made only in a belated revised return does not qualify.
• CIT v Reliance Telecom Ltd Supreme CourtHelps department
  The Tribunal recalled its whole order on my miscellaneous application. Will that recall survive?
  No, where the recall amounts to rehearing the appeal on merits. Section 254(2) is a rectification power limited to a mistake apparent from the record; a Tribunal that reconsiders its own conclusions is sitting in appeal over itself. The remedy against an order said to be wrong on merits is an appeal to the High Court.
• Radha Krishan Industries v State of Himachal Pradesh Supreme CourtHelps taxpayer
  The department has provisionally attached my receivables. Can I go straight to the High Court, or must I appeal first?
  You can go to the High Court where no appeal lies and the statutory conditions have been breached. The Supreme Court held that a provisional attachment ordered by a Joint Commissioner acting as the Commissioner's delegate is not appealable, so the writ petition under Article 226 was maintainable and the High Court was wrong to dismiss it for alternative remedy. On the merits, the power of provisional attachment is draconian, the conditions must be strictly fulfilled, the opinion must rest on tangible material that the assessee is likely to defeat the demand, and the opportunity of being heard on objections is mandatory. The attachments were set aside.
• DCIT v Pepsi Foods Ltd Supreme CourtHelps taxpayer
  Your Tribunal stay lapsed at 365 days through no fault of yours. Is that constitutional?
  No. The third proviso to s.254(2A), which vacated a stay after 365 days even where the delay was not attributable to the assessee, violates Article 14. A stay now vacates only where the delay is attributable to you.
• Shiv Raj Gupta v CIT Supreme CourtHelps taxpayer
  I sold my controlling stake and separately took a large non-compete fee. Can the department call the covenant a sham and tax the fee?
  Not on these facts, and not for the year in question. The Supreme Court allowed the assessee's appeal and set aside the Delhi High Court's judgment. It held the High Court had gone outside the substantial question of law it framed, contrary to section 260A(4), by taxing the Rs 6.6 crore as capital gain when the only question framed was taxability under section 28(ii)(a). On the merits, the revenue has no business to second guess the commercial expediency of what parties at arm's length decide, and following Guffic Chem, a receipt under a negative covenant was a capital receipt not taxable before section 28(va) took effect on 1 April 2003.
• Genpact India Pvt Ltd v DCIT Supreme CourtHelps department
  The Assessing Officer has fastened buy-back tax under s.115QA on my company. Do I have a right of appeal, or must I go to the High Court by writ?
  You have a right of appeal. The Supreme Court held that a determination of liability under s.115QA is covered by the words 'an order against the assessee, where the assessee denies his liability to be assessed under this Act' in s.246(1)(a) and s.246A(1)(a), so an appeal lies; and because that remedy exists, the High Court was right to refuse a writ petition.
• PCIT v I-Ven Interactive Ltd Supreme CourtHelps department
  I moved my registered office and put the new address on my return and in Form 18 with the Registrar of Companies. The scrutiny notice went to the old address. Is the assessment bad?
  No. The Supreme Court held that a notice under section 143(2) sent within the prescribed time to the address in the PAN database is sufficient compliance, and actual service afterwards is immaterial. Filing Form 18 with the Registrar of Companies is not intimation to the assessing officer, and merely showing the new address in the return is not enough. The assessee must apply to have the PAN database changed, because scrutiny notices are generated by an automated system that picks the address from PAN. The appeal was allowed and the matter remanded to the CIT (Appeals) to decide the other grounds on merits.
• PCIT v S.G. Asia Holdings (India) Pvt Ltd Supreme CourtCuts both ways
  The Assessing Officer worked out the arm's length price himself and added to my income without ever sending the transaction to the Transfer Pricing Officer. Is that adjustment good?
  No, but it does not follow that you keep the money. The Supreme Court held that the Assessing Officer breached the Board's mandatory instructions by not making the reference, so the adjustment could not stand as made. It then refused the Tribunal's remedy of simply deleting the adjustment, and restored the matter to the Assessing Officer so that the reference could be made and the Transfer Pricing Officer could do the work. The defect is one of procedure and the Court cured it by sending the file back.
• CIT v Spice Enfotainment Ltd Supreme CourtHelps taxpayer
  The company I represent amalgamated years ago, the department knew about it, and the assessment order still came in the old company's name. Is that order void, or can the department call it a curable slip?
  Void. The Delhi High Court held that once a company amalgamates and is dissolved it ceases to exist, and no assessment can be framed against it. Framing an assessment on a non-existent entity goes to the root of the matter: it is a jurisdictional defect, not a procedural irregularity, and section 292B cannot cure it, because that section reaches only technical defects or omissions. Participation by the successor makes no difference. The Supreme Court dismissed the department's appeals on 2 November 2017 without disturbing that reasoning.
• DGIT (Investigation) v Spacewood Furnishers P Ltd Supreme CourtHelps department
  Can I demand the satisfaction note and the reasons recorded before a search warrant was issued against me, and get the search quashed if they look thin?
  No, not at that stage. The Supreme Court held that reasons for the belief under section 132 must be recorded, but need not be communicated to the person searched when the authorisation is issued; the material is disclosed only when assessment proceedings begin after the search. On a writ challenge the reasons may be placed before the court, and the court may examine their relevance to the formation of belief, but not their sufficiency or adequacy. The Delhi High Court had gone into sufficiency, reproduced the satisfaction notes in detail and suspected the file was manipulated; its order was set aside and the search restored.
• CIT v Chhabil Dass Agarwal Supreme CourtHelps department
  Can I go straight to the High Court against an income-tax order instead of filing the statutory appeal?
  Ordinarily no. The Supreme Court held that the Income-tax Act supplies a complete machinery for assessment and reassessment, and an assessee cannot abandon that machinery and invoke Article 226. The exceptions are narrow and have to be pleaded and made out — an order passed otherwise than in accordance with the enactment, in defiance of fundamental principles of judicial procedure, under repealed provisions, or in total violation of natural justice.
• Columbia Sportswear Company v DIT Supreme CourtHelps taxpayer
  The Authority for Advance Rulings has ruled against me and section 245S says the ruling is binding. Is there anything I can do about it?
  Yes. The Supreme Court held that the Authority for Advance Rulings is a tribunal within Articles 136 and 227, exercising judicial power, so its rulings can be challenged in the High Court under Articles 226 and 227 and, in this Court's discretion, under Article 136. Section 245S making a ruling binding on the applicant and the income tax authorities cannot oust a jurisdiction conferred by the Constitution. But the Court will ordinarily send the applicant to the High Court unless a substantial question of general importance arises. Such a writ petition should be heard directly by a Division Bench and decided as expeditiously as possible.
• Office of the Chief Post Master General v Living Media India Ltd — a government department has no separate period of limitation, and red tape is not sufficient cause Supreme CourtHelps taxpayer
  The department has filed its appeal hundreds of days late and its condonation application recites nothing but a list of file movements. Does the usual latitude for government litigants save it?
  Not on an explanation of that kind. The Supreme Court refused to condone a delay of 427 days by the Postal Department, holding that the department could not claim a separate period of limitation when it had competent persons familiar with court proceedings, that the plea of impersonal machinery and note-making cannot be accepted given modern technology, and that the law of limitation binds the Government like everyone else. The appeals were dismissed on the ground of delay alone and the merits were left open.
• Vijay Kumar Talwar v CIT — when a finding of fact does and does not raise a substantial question of law under section 260A Supreme CourtHelps departmentNo later treatment found
  The Tribunal has decided against my client on the evidence. Is there any route into the High Court under section 260A, and what exactly must I show?
  Only by showing that the finding is perverse in a defined sense. The Supreme Court held that an appeal to the High Court lies only where a substantial question of law is involved, and that a finding of fact gives rise to such a question only where it is based on no evidence, or where relevant admissible evidence was not taken into account, or inadmissible evidence was taken into account, or legal principles were not applied in appreciating the evidence, or the evidence was misread. Finding none of that, the Court upheld the Delhi High Court's dismissal and dismissed the assessee's appeals with costs of Rs 20,000.
• CIT v Pawan Kumar Laddha Supreme CourtCuts both ways
  Is payment of admitted tax under s.249(4) a condition that must be satisfied again when the appeal goes on to the Tribunal?
  The Supreme Court treated s.249(4)(a) as a mandatory condition for the admission of a first appeal by the CIT(A), but held that the condition belongs to s.249 alone and cannot be read into s.253(1)(b). Once satisfied at the first-appeal stage, the assessee does not have to pay the admitted tax over again to appeal to the Tribunal.
• Mcorp Global (P) Ltd v CIT Supreme CourtCuts both ways
  In my own appeal the Tribunal has taken away a deduction the Assessing Officer had already allowed me — can it do that?
  No. The Supreme Court held that the Tribunal has no power to enhance an assessment or to take back a benefit the Assessing Officer had granted, applying Hukumchand Mills. Depreciation had been allowed on 42,000 bottles; the Tribunal and the High Court, by holding the whole transaction to be a financial arrangement rather than a lease, took that benefit away, and that was not permissible. The disallowance of Rs 18,04,572 was deleted. On the second transaction the Court upheld the concurrent finding that the lease was a sham and confirmed the disallowance of Rs 30,17,122. The appeal was partly allowed.
• ACIT v Saurashtra Kutch Stock Exchange Ltd Supreme CourtHelps taxpayer
  A binding decision that covers my point was never considered when my order was passed. Is that a mistake apparent from the record?
  Yes. The Supreme Court held that non-consideration of a decision of the jurisdictional High Court or of the Supreme Court can be a mistake apparent from the record, and upheld the Tribunal recalling its own order on that ground. The section actually applied was s.254(2); the same test - patent, manifest and self-evident - is the one used under s.154.
• Sree Ayyanar Spinning & Weaving Mills Ltd v Commissioner of Income Tax Supreme CourtHelps taxpayer
  I filed my rectification application to the Tribunal within four years but it took years to decide it. Can the order be set aside because it was passed after the four years were up?
  No. The Supreme Court held that section 254(2) has two parts. The first is the Tribunal's own power to rectify at any time within four years of its order. The second deals with rectification on an application by the assessee or the Assessing Officer pointing out a mistake apparent from the record. Where the application is made within four years, the Tribunal is bound to decide it on the merits, and the fact that it took its own time to dispose of it does not make the order bad. The High Court had erred in holding the application could not be entertained beyond four years. The Court agreed with the Rajasthan High Court in Harshvardhan Chemicals and Minerals Ltd.
• Sudarshan Silks & Sarees v CIT Supreme CourtHelps taxpayer
  The Tribunal cancelled my penalty on the facts. Can the High Court set that aside as perverse when no such question was ever referred to it?
  No. The Supreme Court set aside the Karnataka High Court's order and restored the orders of the Commissioner (Appeals) and the Tribunal cancelling penalty under section 271(1)(c). The Tribunal is the final court of fact. Its finding on facts can be examined by the High Court in reference jurisdiction only if a question is referred saying that the finding is perverse, in the sense that no reasonable person could have reached it. The question actually referred was only whether the Tribunal was right in upholding the cancellation of penalty. Perversity having been neither raised nor referred, the High Court was precluded from discussing it.
• Honda Siel Power Products Ltd v CIT Supreme CourtHelps taxpayer
  The Tribunal decided against me without dealing with a coordinate bench decision I had actually filed in the paper book. Can it recall that order under section 254(2), or is that a review it cannot do?
  It can. The Supreme Court held that where a coordinate bench decision was placed before the Tribunal and the Tribunal overlooked it, the resulting order carries a manifest error and section 254(2) permits the Tribunal to set it right. The purpose of the sub-section is that no party, assessee or Department, should suffer because of a mistake by the Tribunal. That is atonement for the Tribunal's own error, not the exercise of an inherent power of review, and the High Court was wrong to strike the rectification down as a disguised review.
• T. Ashok Pai v CIT Supreme CourtHelps taxpayerPartly overruled — read this first
  My bank's tax department prepared my return and got it wrong. I corrected it by revised returns which were accepted. Can concealment penalty still be levied on me?
  Not on these facts. The Supreme Court set aside the Karnataka High Court's judgment and allowed the assessee's appeal. The Tribunal had found the assessee bona fide, the fault lying with the professional group at his bank that handled his tax affairs, and had held that penalty could not be sustained where the revised return was accepted and no penalty was levied by reference to the original return. The reference to the High Court was general and raised no question of perversity, and the existence of mens rea is essentially a question of fact for the Tribunal. The Court also held that concealment of income and furnishing inaccurate particulars carry different connotations.
• Goetze (India) Ltd v CIT Supreme CourtHelps department
  You want to make a claim you missed, but the time to revise the return has gone. Can you just write to the officer?
  Not to the Assessing Officer — a claim before him needs a revised return. But the Court expressly said this does not touch the Tribunal's power under s.254, so the appellate route stays open.
• M. Janardhana Rao v JCIT Supreme CourtHelps taxpayer
  The High Court admitted my appeal without framing any question of law, heard it, and then formulated questions in the judgment itself. Is that a good disposal under section 260A?
  No. The Supreme Court held that an appeal lies to the High Court only where a substantial question of law is involved, that it is essential for the High Court to first formulate the question and thereafter proceed, and that without insisting on the statement of the question in the memorandum of appeal and formulating it at the time of admission the High Court is not empowered to decide the appeal generally. Framing the questions after arguments had concluded, for the purpose of writing the judgment, was clearly against the scheme of the section. The judgment was set aside and the appeals remitted.
• Tin Box Company v CIT Supreme CourtHelps taxpayer
  The AO never heard me but the CIT(A) did. Does the appeal cure the defect?
  No. Failure to follow the principles of natural justice at the assessment stage cannot be made good in an appeal. Once it is found that the officer did not give the assessee a proper opportunity of hearing, the assessment order is to be set aside and the matter remanded to the officer for a fresh assessment after a proper opportunity.
• Kunhayammed v State of Kerala Supreme CourtHelps department
  The department's SLP against a High Court judgment in my favour was dismissed. Is that judgment now a Supreme Court decision?
  No. Refusal of special leave, whether by a non-speaking order or a speaking one, is not an exercise of appellate jurisdiction and does not attract the doctrine of merger - the High Court's order remains the operative order. If the refusal gives reasons, those reasons are a declaration of law under Article 141 and bind the courts below, but the High Court judgment does not become a Supreme Court judgment. It is only once leave is granted and the appeal is decided that the order below merges in the Supreme Court's order.
• Whirlpool Corporation v Registrar of Trade Marks Supreme CourtHelps taxpayer
  The authority has issued me a notice I say it had no power to issue. Must I reply to it and go through the whole statutory process before I can go to the High Court?
  No, not where the notice is said to be without jurisdiction. The Supreme Court held that the rule requiring statutory remedies to be exhausted is one of policy, convenience and discretion rather than a rule of law, and that a writ petition under Article 226 may be entertained despite an alternative remedy - in particular where a fundamental right is being enforced, where natural justice has been violated, where the order or proceeding is wholly without jurisdiction, or where the vires of an Act is challenged. The High Court was wrong to dismiss the petition at the threshold without examining the jurisdiction point.
• N. Balakrishnan v M. Krishnamurthy Supreme CourtHelps taxpayer
  My appeal is late by a long stretch because my counsel did nothing and never told me. Will the delay be condoned?
  It can be. The Supreme Court condoned a delay of 883 days caused by an advocate who neither filed nor reported, holding that the length of the delay does not matter and the acceptability of the explanation is the only criterion. Limitation is founded on public policy and exists to stop dilatory tactics, not to destroy rights. Where the first court has accepted the explanation, a superior court in revision should not disturb that exercise of discretion unless it was arbitrary, perverse or on wholly untenable grounds. The appeals were allowed, subject to costs of Rs 10,000 to the other side.
• CIT v Nirbheram Daluram Supreme CourtHelps department
  The first appellate authority has enhanced my assessment using items the Assessing Officer never looked at. Can it do that, or has it gone beyond its jurisdiction?
  It can. The Supreme Court held that the appellate power under section 251 is not confined to matters the Assessing Officer considered. Following the three-judge decision in Kanpur Coal Syndicate and the three-judge decision in Jute Corporation of India, the first appellate authority has plenary powers, coterminous with those of the Assessing Officer: it may confirm, reduce, enhance or annul the assessment, may do what the Assessing Officer could do, and may direct him to do what he failed to do. The Act places no restriction on that power, so ten further hundi credits of Rs 2,30,000 were properly added.
• National Thermal Power Co Ltd v CIT Supreme CourtHelps taxpayer
  You missed a legal point below. Can you raise it for the first time before the Tribunal?
  Yes, where it is a question of law arising from facts already on the record. Section 254 is couched in the widest possible terms and contains nothing confining the Tribunal to grounds urged before the lower authorities.
• Union of India v Kamlakshi Finance Corporation Ltd Supreme CourtHelps taxpayer
  The Assessing Officer says he will not follow the appellate order in my own case because the department has appealed against it. Can he do that?
  No. The Supreme Court held that revenue officers deciding quasi-judicial issues are bound by the decisions of the appellate authorities above them, and that the principles of judicial discipline require those orders to be followed unreservedly. That an appellate order is not acceptable to the department - a phrase the Court called objectionable in itself - and is under appeal is no ground for not following it, unless its operation has been suspended by a competent court. If the officer thinks the appellate order is wrong, his remedy is to have the department take the matter up, not to disregard it.
• Jute Corporation of India Ltd v CIT Supreme CourtCuts both ways
  Can you raise a ground before the CIT(A) that you never raised before the officer?
  Yes, where the ground is raised bona fide and could not reasonably have been raised earlier. The appellate authority's powers are co-terminus with the officer's, and nothing in the Act restricts the right to raise an additional ground.
• Collector, Land Acquisition, Anantnag v Mst. Katiji Supreme CourtCuts both ways
  Your appeal is late. How strictly will 'sufficient cause' be read?
  Liberally. A litigant gains nothing by filing late, refusal can destroy a meritorious cause at the threshold, and where substantial justice and technical considerations clash, substantial justice must win.
• Central Provinces Manganese Ore Co. Ltd. v. CIT — interest under s.215 can be disputed in appeal only on the ground of total non-liability, and waiver must first be asked of the Assessing Officer Supreme CourtHelps department
  The assessment order charges interest under s.215 (or s.217, or s.139(8)). Can I appeal against the interest, and if not, how do I get it reduced?
  The Supreme Court held that because the levy of interest is a part of the process of assessment, an assessee may dispute it in appeal, but only if he limits himself to the ground that he is not liable to the levy at all; a complaint about the quantum, or about the refusal of relief on the merits, is not within the appeal. The route for reduction is the statutory waiver power — s.215(4), and the corresponding provision for s.139(8) interest — and the Court held that where the assessee has made no application to the Income-tax Officer for reduction or waiver, there has been no improper denial of relief, so no revision petition to the Commissioner can be maintained in that regard either.
• CIT v H. Holck Larsen Supreme CourtHelps taxpayer
  I subscribed to rights issues in my own company and sold shares often to fund the calls. Does the frequency make me a dealer in shares rather than an investor?
  Not on these facts. The Supreme Court upheld the High Court's conclusion that the assessee remained an investor. Whether a man is a dealer or an investor is a mixed question of law and fact: the Tribunal's primary findings bind, but its inference can be reviewed if it misdirected itself in law or failed to consider relevant factors in their proper perspective. Here the Tribunal noted, but did not weigh, that rights shares depreciate the original holding, that the assessee was Chairman and his non-subscription would have hurt the market, and that he needed money for an overdraft and a house in Denmark. His conduct was that of a prudent investor, not a plunge into the waters of trade.
• Assistant Collector of Central Excise v Dunlop India Ltd Supreme CourtHelps department
  I have a strong case against the demand. Will the High Court stay recovery if I offer a bank guarantee for the amount?
  Not on that alone. The Supreme Court set aside interim orders that had restrained collection of revenue against a bank guarantee, holding that even an established prima facie case is not sufficient justification for such an order. Where public revenue is concerned more is required: the balance of convenience must be clearly in favour of an interim order and there must not be the slightest indication of likely prejudice to the public interest. Governments are not run on bank guarantees, and liquid cash is necessary to run a government as much as any other enterprise. The appeal was allowed with costs.
• Kapurchand Shrimal v CIT Supreme CourtCuts both ways
  The assessing officer ignored my partition claim and assessed the family anyway. If the Tribunal finds that illegal, can it simply cancel the assessment and stop there?
  No. The Supreme Court held that although an assessment made on a Hindu undivided family without the enquiry the statute requires into a partition claim made in time must be set aside, the Tribunal's duty does not end with declaring the assessment illegal. An appellate authority has the jurisdiction and the duty to correct all errors in the proceedings under appeal and to issue appropriate directions to the authority below to dispose of the matter afresh, unless the statute forbids it. The Tribunal erred in cancelling the assessments without directing fresh ones, and the High Court erred in upholding them.
• Rajinder Nath v CIT Supreme CourtHelps taxpayer
  An appellate order in my firm's case said the officer is free to assess the amount in the partners' hands. Does that lift the limitation bar for assessing me?
  No. The Supreme Court held that the words finding and direction are limited in meaning. A finding must be one necessary for the disposal of the particular case, of the particular assessee and for the particular year, and directly involved in that disposal; an incidental finding will not do. A direction must be express, necessary for the disposal, and within the power of the authority making it. Saying the officer is free to take action leaves the matter to his discretion and is not a direction at all. Section 153(3)(ii) does not enlarge jurisdiction; it only raises the bar of limitation.
• Carborandum Co v CIT Supreme CourtHelps taxpayer
  We are a foreign company paid a technical service fee by an Indian company. Does that fee accrue in India if all our work was done abroad?
  No. The Supreme Court held that the technical service fee neither accrued nor was deemed to accrue in India. Know-how was supplied from outside India, and the foreign personnel were made available outside India, taken on by the Indian company as its employees, paid by it and working under its control, so the services were rendered wholly abroad. Even assuming a business connection existed, no part of the operations was carried out in India, so the deeming provision was not attracted at all. The Court also held that the High Court should not have entertained a business connection point raised for the first time on reference.
• CIT v S. Chenniappa Mudaliar Supreme CourtCuts both ways
  Can an appellate authority under the Income-tax Act throw out an appeal because the appellant did not turn up?
  The Supreme Court struck down the rule that allowed the Appellate Tribunal to dismiss an appeal for default of appearance, holding it ultra vires the statutory obligation to dispose of an appeal on the merits. The reasoning - that the statute commands a decision, not a disposal - is the source of the settled position that the CIT(A) too must decide, not dismiss for non-prosecution.
• ITO v M.K. Mohammed Kunhi Supreme CourtHelps taxpayer
  My appeal is pending before the Tribunal and recovery of the demand is going on. Can the Tribunal stay recovery when no section gives it that power?
  Yes. The Supreme Court held that the Tribunal has the power to stay recovery as incidental or ancillary to its appellate jurisdiction. No provision confers it expressly, and the statutory stay in section 220(6) is available only while an appeal is pending before the first appellate authority, not the Tribunal. But an express grant of statutory power carries by necessary implication the authority to use all reasonable means to make the grant effective, and the wide powers in section 254(1) carry with them everything incidental and necessary to make their exercise fully effective - including, in proper cases, orders preventing a successful appeal from being rendered nugatory.
• CIT v Devi Prasad Vishwanath Prasad Supreme CourtHelps department
  The officer rejected my books, estimated my profits at a flat rate, and then also added an unexplained cash credit. Can he do both, and must he say what source the credit came from?
  Yes to both, subject to the facts. The Supreme Court held there is nothing in law preventing the Income-tax Officer, in an appropriate case, from taxing both a cash credit whose source and nature are not satisfactorily explained and the business income he estimates after rejecting the books, following Kale Khan Mohammad Hanif. Whether he may do so in a given case depends on its own facts. Where a cash credit is unexplained the officer may hold it to be the assessee's income and need not show what source it came from; it is for the assessee to prove that it is income from a source already taxed.
• CIT v Mahalakshmi Textile Mills Supreme CourtHelps taxpayer
  I claimed the expenditure under one head before the Assessing Officer, lost, and now want the Tribunal to allow it under a different head. Can the Tribunal do that, or am I stuck with the plea I chose?
  The Tribunal can do it. The Supreme Court held that the Appellate Tribunal is competent to pass such orders on the appeal as it thinks fit, that nothing in the Act restricts it to the questions raised before the departmental authorities, and that all questions of law or of fact relating to the assessment of the assessee may be raised before it. Where the reasons the authorities gave for rejecting one contention justify relief on another ground, the authorities and the Tribunal are under a duty to grant that relief. The right of the assessee to relief is not restricted to the plea raised by him.
• CIT v Rai Bahadur Hardutroy Motilal Chamaria Supreme CourtCuts both ways
  Can the CIT(A) use the enhancement power to tax a source of income the Assessing Officer never examined?
  The first appellate authority enhanced the assessment by bringing in amounts which the Income-tax Officer had not examined from the point of view of taxability. The Supreme Court held the enhancement power is confined to the subject-matter of the assessment, that is, to sources the officer had considered expressly or by clear implication. Material merely lying in the assessment record is not enough.
• Hukumchand Mills Ltd v CIT Supreme CourtCuts both ways
  The Department raised a completely new ground before the Tribunal to support the assessment, and the Tribunal allowed it and remanded. Was the Tribunal entitled to do that?
  Yes. The Supreme Court held that the Tribunal's power under section 33(4) of the 1922 Act to pass such orders as it thinks fit is expressed in the widest possible terms. The word 'thereon' confines it to the subject matter of the appeal, but within that subject matter the Tribunal may allow a ground to be raised for the first time and may direct a further enquiry. The subject matter here was the written down value of the assessee's buildings and machinery, and it was open to the Department to support the finding on that on any ground decided against it. The Appellate Tribunal Rules are procedural and do not cut down the section.
• Dwarka Nath v Income-Tax Officer Supreme CourtHelps taxpayer
  The Commissioner dismissed my revision and the officer will not issue a demand notice so I cannot appeal. Is the revisional order beyond the reach of a writ because it is administrative?
  No. The Supreme Court held that the revisional jurisdiction is prima facie judicial: the order brought before the Commissioner affects the assessee's rights, it is implicit in a revisional power that the parties be heard, and the nature of the jurisdiction carries with it a duty to act judicially. Certiorari therefore lies. And even if the revisional order were administrative, that would not help the Revenue, because the officer's failure to issue the statutory demand notice would still be a failure of a statutory duty, correctable by mandamus. The Court quashed the revisional order and directed the officer to pass an order and issue notice according to law.
• CIT v Kanpur Coal Syndicate Supreme CourtCuts both ways
  How wide are the first appellate authority's powers when it disposes of an appeal?
  An association of persons was assessed as a single unit; it argued the members should have been assessed individually. The Supreme Court held that the first appellate authority has plenary powers in disposing of an appeal, coterminous with those of the Assessing Officer, and can direct the officer to do what he has failed to do. This is the foundation of every later statement about the CIT(A)'s powers under s.251.
• ITO, Kolar v Seghu Buchiah Setty Supreme CourtHelps taxpayerSuperseded by amendment
  My assessment was reduced in appeal after the officer had already sent a recovery certificate to the Collector and my property was attached. Can he carry on with the old certificate?
  No, on the law as it then stood. By a majority the Supreme Court held that once the assessment order is revised in appeal, the notice of demand founded on it, the default and the recovery proceedings that followed are superseded. There cannot be two defaults in respect of one liability, so the officer must serve a fresh notice of demand for the amount now due, give the assessee an opportunity to pay, and only then treat him as in default. The Mysore High Court had rightly quashed the certificates and the attachment. Shah J dissented, holding that a modification which does not vacate the assessment leaves the earlier default intact.
• Sir Chunilal V. Mehta and Sons Ltd v Century Spinning and Manufacturing Co Ltd Supreme CourtCuts both ways
  The High Court says my appeal raises no substantial question of law because the principles are settled and only their application is in dispute. What actually makes a question of law substantial?
  The test the Supreme Court laid down is whether the question is of general public importance, or directly and substantially affects the rights of the parties, and if so whether it is an open question in the sense that it has not been finally settled by the Supreme Court, the Privy Council or the Federal Court, or is not free from difficulty, or calls for discussion of alternative views. A question settled by the highest court, or one where settled general principles have merely to be applied, or a plea that is palpably absurd, is not substantial. This is a contract case, not a tax case.
• CIT v Shapoorji Pallonji Mistry Supreme CourtHelps taxpayer
  Can the first appellate authority tax a source of income the officer never looked at?
  No. In an appeal filed by the assessee, the first appellate authority has no power to enhance by discovering new sources of income not mentioned in the return or considered by the officer.
• CIT v Scindia Steam Navigation Co Ltd Supreme CourtHelps taxpayer
  Can I argue a point in the High Court that was never taken before the Tribunal, if it arises on the facts the Tribunal found?
  Not as a new question, but you may take a new contention within the question referred. The Supreme Court held that only a question raised before or decided by the Tribunal arises out of its order. A question neither raised before nor considered by the Tribunal is not one arising out of its order, even though it arises on the findings. But where the question referred is itself wide enough, a fresh contention within its framework may be advanced. Here the referred question - whether Rs 9,26,532 was properly included in the 1946-47 assessment - covered the argument that the charging proviso was not yet in force.
• Omar Salay Mohamed Sait v CIT Supreme CourtCuts both ways
  The order against me reads like a hunch dressed up as a finding. Is there an old authority that says the appellate authority has to decide on the evidence?
  Yes. This 1959 Supreme Court decision is the authority for the proposition that conclusions reached by the revenue authorities must be based on evidence, and that no addition can be made on the basis of suspicion, conjecture or surmise. It is cited to this day by the Tribunal for exactly that, and it is the counterweight to the line of cases that lets the authorities act on the probabilities of a case.
• CIT v McMillan & Co Supreme CourtHelps department
  The assessing officer accepted my method of accounting. Can the first appellate authority reject it for the first time in my own appeal and enhance the assessment?
  Yes. By a majority the Supreme Court held that nothing in section 31 read with the proviso to section 13 of the 1922 Act stops the Appellate Assistant Commissioner, in an appeal by the assessee, from exercising the power the Income-tax Officer has to reject a method of accounting from which true profits cannot be deduced, and from computing income under Rule 33. The Income-tax Officer decides first, but he must act reasonably and judicially, and his decision is not final. Once the appellate authority is properly seised of the assessment, section 31(3) imposes no such limitation. Bhagwati J dissented.
• Manik Seth v Initiating Officer, BPU, Ludhiana High CourtHelps departmentNo later treatment found
  The Appellate Tribunal allowed my benami appeal years ago. After the Ganpati Dealcom recall it has reopened the matter on the Department's review. Can it do that?
  On this judgment, yes, where the Tribunal's own earlier order reserved that liberty. The Punjab and Haryana High Court dismissed writ petitions against the Appellate Tribunal's order granting review and restoring the appeals. It held that s.40 of the Prohibition of Benami Property Transactions Act leaves the Tribunal free to regulate its own procedure and expressly includes the power of review, and that the petitioners had acquiesced in an earlier order which itself gave the Department liberty to apply for review if the Supreme Court reviewed Ganpati Dealcom.

The 60 strongest entries are summarised here. The other 246 entries are listed in full below, and each has its own page.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.