Legal News & Views

Indu Lata Rangwala vs. DCIT Whereas in a case where the initial assessment order is under Section 143 (3), and it is sought to be reopened within four years from the expiry of the relevant assessment year, the AO has to base his ‘reasons to believe’ that income has escaped assessment on some fresh tangible material that provides the nexus or link to the formation of such belief. In a case where the initial return is processed under Section 143 (1) of the Act and intimation is sent to the Assessee, the reopening of such assessment no doubt requires the AO to form reasons to believe that income has escaped assessment, but such reasons do not require any fresh tangible material

Lahoti Overseas Ltd vs. DCIT In every case of delay, there can be some lapses on the part of the litigant concern. That alone is not enough to turn down the plea and to shut the doors against him, unless and until, it makes a mala-fide or a dilatory statutory, the court must show utmost consideration to such litigant. In matters concerning the filing of appeals, in exercise of the statutory right, a refusal to condone the delay can result in a meritorious matter being thrown out at the threshold, which may lead to miscarriage of justice. Since the employee who was earlier handling the tax matters of the assessee company, while leaving the job of the assessee company, did not handover the relevant papers either to the assessee or to the next person, a fact which caused the delay, the delay was liable to be condoned by taking a lenient view. Article referred: http://itatonline.org/archives/2016/05/page/2/

Arvind Asmal Mehta vs. ITO The purchase of shares in the immediately preceding year was accepted by the Department in an order u/s 147 r.w.s 143(3) of the Act. The shares were evidenced by entries in the demat statement and consideration was received through banking channel. There was no clinching material to say that the impugned transaction was bogus. Also, the statement recorded during the search on M/s Alliance Intermediaries & Network Pvt. Ltd. does not contain any infirmity qua the impugned transaction. Therefore, the addition as income from undisclosed income was liable to be deleted. Article referred: http://itatonline.org/archives/2016/05/page/2/

For allowing / disallowing any expenditure under Section 37 of the Act, the basic thing to be seen as to whether the expenditure was incurred for furtherance of business interest of the Assessee or not. It is a fact that in this case because of the expenditure incurred no new assets came into existence. The expenditure was incurred considering the old relation with the supplier and to avoid future business complications. If an assessee makes payment which is compensatory nature, it has to be allowed. In this case, the payment was made in pursuance of an agreement and that was of compensatory nature i.e.it was not penal, hence it was to be allowed Article referred: http://itatonline.org/archives/2016/05/

Larsen & Toubro Limited vs. UOI No officer is acting independently and following judgments of this Court, but waiting for the superiors to give them a nod. Even the superiors are reluctant given the status of the assessee and the quantum of the demand or the refund claim. We are sure that some day we would be required to step in and order action against such officers who refuse to comply with the Court judgments and which are binding on them as they fear drastic consequences or unless their superiors have given them the green signal. If there is such reluctance, then, we do not find any enthusiasm much less encouragement for business entities to do business in India or with Indian business entitles. Such negative reactions / responses hurt eventually the National pride and image. It is time that the officers inculcate in them a habit of following and implementing judicial orders which bind them and unmindful of the response of their superiors. That would generate the right suppor...

The Gujarat High Court, observing that there is no fundamental right to consume intoxicants, has upheld the Resolution by Home Department of the state by which it had prohibited and discontinued the supply of Poppy Capsules by Government authorities. Justice N.V. Anjaria also observed that the ban amounts to redemption of the Directive Principles of State Policy under Article 47 of the Constitution. Article referred: http://www.livelaw.in/no-fundamental-right-consume-intoxicant-drugs-gujarat-hc/

In Vohra Sadikbhai Rajakbhai & Ors. Vs. State of Gujarat & Ors., the matter came up before the Hon'ble Supreme Court whether gross negligence in not maintaining particular level of water in the dam by the respondents; that has resulted into damage and destruction to the plantation of the appellants, causing loss of livelihood, could be said to be an 'Act of God'?" It so happened that the respondents had constructed and maintained a dam. 60,000 cusecs of water from this dam was released, which flooded the land of the appellants and destroyed the plantation therein. The Hon'ble court while accepting the State's argument that the water was released in public interest to avert a greater disaster as the excessively heavy rain which is an Act of God had increased water level in the dam to a dangerous level, found merit in the Appellant's argument that not keeping the level of the water low in preparation of rainy season was negligence. Article referre...

CIT vs. Indu Surveyors & Loss Assessors Pvt. Ltd If the assessee stands amalgamated with another Co, it ceases to exists and all proceedings of search u/s 132, notice and assessment u/s 153C on the assessee are a nullity and void ab initio

In a recent Case, Gujarat High Court has held that admission and acceptance of bribe is sine qua non for constituting offence under the Prevention of Corruption Act. Article referred: http://www.livelaw.in/prevention-of-corruption-act-gujarat-high-court/

Holding that tax orders are not meant to "add to difficulties" of taxpayers, the Delhi High Court has ruled that the IT department should not "deny" refund to an assessee whose case is being processed under scrutiny and the Assessing Officer will have "discretion" to take a final call on the issue. Article referred: http://timesofindia.indiatimes.com/city/delhi/Do-not-deny-refund-in-scrutiny-cases-let-AO-decide-Delhi-HC/articleshow/52321866.cms

Delhi High Court while reversing the acquittal of an Accused for an Offence U/S 354 of Indian Penal Code has held that there is no legal impediment in convicting a person on the sole testimony of a single witness. Article referred: http://www.livelaw.in/no-legal-impediment-convicting-person-sole-testimony-single-witness-delhi-hc/

The Enforcement Directorate (ED) cannot act as "super investigator" and not share records with the court, Delhi High Court today observed while hearing pleas filed by Himachal Pradesh Chief Minister Virbhadra Singh and others in connection with a money laundering case. Article referred: http://www.newindianexpress.com/nation/Enforcement-Directorate-cant-act-as-super-investigator-Delhi-HC/2016/05/23/article3447420.ece

Supreme Court, in Pawan Kumar Pathak vs. Mohan Prasad has reiterated that an adopted son is no less than a natural son, when it comes to claiming the right to inherit the properties of his father. Article referred: http://www.livelaw.in/adopted-son-no-less-natural-son-inherit-fathers-properties-reiterates-sc/

In a landmark judgment, the Punjab and Haryana High Court has ruled that the family of a terminally-ill person, who decides to stop treatment against medical advice and dies, cannot be denied insurance claim. Article referred: http://www.thehindu.com/news/national/other-states/terminally-ill-cant-be-denied-insurance-punjab-and-haryana-high-court/article8642130.ece

In a blow to the booming software industry, a Chennai court has quashed the dismissal of a software engineer and ordered HCL to reinstate him with full salary, back wages and seniority on the ground that software engineers are workmen enjoying statutory protections. Article referred: http://timesofindia.indiatimes.com/tech/tech-news/Court-orders-HCL-to-reinstate-sacked-employee/articleshow/52204942.cms

Calcutta High Court has recently held that a person is not entitled to back wages for the period during which he was out of service due to dismissal from service by reason of his conviction under Section 498A of the Indian Penal Code and subsequent reinstatement in service upon his acquittal by the Appellate Court. Article referred: http://www.livelaw.in/person-not-entitled-back-wages-period-date-dismissal-account-conviction-criminal-case-till-date-reinstatement-acquittal-calcutta/

Supreme Court in UDDAR GAGAN PROPERIES LTD. VS. SANT SINGH has made some pertinent observations about Land acquisition by the State and private builder benefitting in the process. The Bench comprising of Justices Anil R. Dave and Adarsh Kumar Goel observed that land acquired for housing purpose must revert back to owner, and not to anyone else directly or indirectly. Article referred: http://www.livelaw.in/land-acquired-housing-purpose-must-revert-back-owner-not-anyone-else-directly-indirectly-sc/

It is the public duty of witnesses in a criminal case to give evidence whenever they receive summons from a court of law and therefore they cannot be heard to say that they shall not depose until all the accused in a case are arrested, the Madras High Court Bench here has said. Justice P.N. Prakash made the observation while closing a petition filed by a witness in a case booked by Tirupacheti police in Sivaganga district, challenging an order passed by a Sessions Court on October 4 splitting up the case into two since the police could not arrested the prime accused in the case. Article referred: http://www.thehindu.com/news/cities/Madurai/witnesses-must-depose-when-they-receive-summons-says-hc/article8592817.ece

Justice Manmohan Singh of the Delhi High Court has recently passed a verdict involving Section 12(5) of the amended Arbitration & Conciliation Act of 1996. Hearing a dispute between Assignia-VIL JV and the Rail Vikas Nigam Ltd, the High Court observed that S.12(5) “mandates” that if the arbitrator and the parties involved enjoy any of the relationships mentioned in the Seventh Schedule of the Act, then that arbitrator cannot be appointed. One of these relationships is that of employer-employee, which was the case here. Article referred: http://barandbench.com/delhi-high-courts-judgment-marks-end-house-arbitrators/

Justice MS Ramachandra Rao of the Hyderabad High Court has ruled that the officials of survey department are bound to conduct survey of private land if anyone makes such a request after paying the required charges. Authorities cannot deny this facility to people citing provisions of the AP Survey and Boundaries Act, 1923, he said, in his judgement pronounced in a case filed by M Padmavathy of East Godavari district. Article referred:http://timesofindia.indiatimes.com/city/hyderabad/Govt-officials-cannot-refuse-to-conduct-survey-of-pvt-land-HC/articleshow/52180734.cms

Recently Punjab and Haryana High Court has examined the question whether name of a step-father, on the asking of his step-son, can be entered in the Birth Certificate, replacing the name of the biological father, in terms of Section 15 of the Registration of Births and Deaths Act, 1969? Article referred: http://www.livelaw.in/name-biological-father-cannot-replaced-name-step-father-birth-records-punjab-haryana-hc/

The Supreme Court, in State of Rajasthan vs. Firoz Khan @ Arif Khan, has reiterated that a High Court, while passing orders rejecting the application for leave to appeal before it under Section 378 (3) of the Code of Criminal Procedure, should assign reasons for such rejection. Allowing the appeal by State of Rajasthan against an High Court order refusing to grant leave to file appeal before it against an acquittal by Trial Courtin a murder case, the Apex court bench comprising of Justices Abhay Manohar Sapre and Ashok Bhushan observed that the instant case is a clear case of total non-application of mind to the case by High Court. Article referred: http://www.livelaw.in/high-court-assign-reasons-rejecting-applications-leave-appeal-sc/

The Supreme Court in EITZEN BULK A/S VS. ASHAPURA MINECHEM LTD. has reiterated that held that mere choosing of the juridical seat of Arbitration attracts the law applicable to such location and it would not be necessary to specify which law would apply to the Arbitration proceedings, since the law of the particular country would apply ipso jure. Article referred: http://www.livelaw.in/mere-choosing-juridical-seat-arbitration-attracts-law-applicable-location-supreme-court/

Enterprises offering loans against gold jewellery always run the risk of accepting stolen articles and therefore they cannot question the power of police to seize jewels in appropriate cases, the Madras High Court Bench here has said. Justice P.N. Prakash made the observation while disposing of a writ petition filed by the manager of Muthoot Finance, Bazzar Branch, Kovilpatti, Thoothukudi district, to forbear Kovilpatti West police from seizing certain jewels pledged with the company. Article referred: http://www.thehindu.com/news/cities/Madurai/high-court-directive-on-police-seizure-of-jewels/article8577990.ece

The Supreme Court has refused to interfere with a Sessions Court Order which had taken cognizance of new offences and added new Accused under section 193 of Code of Criminal Procedure, though the Magistrate rejected the prayer at Committal Stage. Appellants are parents of a person who was accused of instigating his wife to suicide and was charge sheeted under Section 306 IPC. The complainants had filed an application before the Magistrate Court for taking cognizance against the appellants and their son under Sections 304-B and 498-A IPC. The Magistrate Court rejected their applications and committed the case to Sessions Court, where they again preferred the application. This application was allowed by the Sessions Court, and the High Court upon revision, refused to interfere. The appellants hence approached the Apex Court. Article referred: http://www.livelaw.in/sessions-court-can-take-cognizance-new-offences-add-new-accused-us193-crpc-though-magistrate-rejected-prayer-earlier-sc/

The Delhi High Court has directed the traffic police and transport department not to suspend driving licences without giving alleged violators an opportunity to defend their case. In a significant verdict aimed at preventing harassment of motorist and drivers at the hands of traffic officers, Justice JR Midha directed the traffic police and transport department to “follow due process of law” while prosecuting traffic violators. Article referred: http://www.hindustantimes.com/delhi/can-t-suspend-driving-licence-arbitrarily-says-delhi-high-court/story-gRJ8uVrsCttXzdRwfjXHUL.html

The Supreme Court, in CHAMOLI DISTRICT CO-OPERATIVE BANK LTD. VS. RAGHUNATH SINGH RANA has reiterated that the compliance of principles of natural justice by the Employers in Disciplinary proceedings is not a mere formality, especially when the statutory provisions specifically provides that disciplinary proceedings shall be conducted with due observations of the principles of natural justice. Article referred: http://www.livelaw.in/compliance-principles-natural-justice-disciplinary-proceedings-not-mere-formality-sc/

A two Judge Bench of the Supreme Court held that previous proceedings would operate as res judicata only in respect of issues of facts and not on issues of pure questions of law when the subsequent suit or proceeding is based upon a different cause of action and in respect of different property though between the same parties. Article referred: http://www.livelaw.in/an-erroneous-decision-on-a-pure-question-of-law-does-not-operate-as-res-judicata/

The Supreme Court remarked that it was "quite shocking" that a bank auctioned a mortgaged property with a floor price of Rs 42 lakh for Rs 5.5 lakh. Since the sale was full of irregularities, the bank was directed to return the money to the auction purchaser with eight per cent interest from the sale in 1998. In this case, Olinda Femandis versus Goa State Cooperative Bank Ltd, the property belonged to seven members of a family. Three of them signed a mortgage deed for Rs 2 lakh, while others did not consent. The bank, nevertheless, sanctioned the loan. It was not returned, leading to the auction. The court set aside the auction and made arrangement to help one of the owners, who had opposed the mortgage. Article referred: http://www.business-standard.com/article/opinion/return-of-pre-deposit-in-sarfaesi-suits-116050800701_1.html

Supreme Court: Deciding the question as to the fate of the deposit on the disposal of the appeal in case of an appeal under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) before the Debt Recovery Appellate Tribunal(DRAT), the bench of Kurian Joseph and R.F. Nariman, JJ held that the partial deposit before the DRAT as a pre-condition for considering the appeal on merits in terms of Section 18 of the Act, is not a secured asset. Article referred: http://blog.scconline.com/post/2016/04/26/pre-deposit-under-s-18-of-sarfaesi-act-to-file-an-appeal-before-drat-not-a-secured-asset/

A Division Bench of Bombay High Court has held that the expression “suit or other proceedings” in Section 446(1) under chapter II of Part VII of Companies Act, 1956, does not include criminal complaints filed under Section 138 of the Negotiable Instruments Act, 1881 Article referred: http://www.livelaw.in/expression-suit-proceedings-section-4461-companies-act-not-include-case-us-138-ni-act-bombay-hc/

The Madurai Bench of the Madras High Court has refused to entertain a petition seeking a direction to the police to arrest the accused in a criminal case with an observation that court cannot coerce the police to arrest someone since it was the prerogative of the investigating officer concerned. Article referred: http://www.thehindu.com/news/cities/Madurai/court-cannot-coerce-police-to-arrest-someone-says-high-court/article8558970.ece

A Constitution Bench of the Supreme Court of India Today upheld the constitutional Validity of M.P. Niji Vyavasayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007 (M.P. Act No.21 of 2007) and various Rules enacted by the Madhya Pradesh Government primarily to regulate the admission of students, fixation of fee and reservation in Post Graduate Courses in Private Professional Educational Institutions in the State.  The Constitution Bench comprising of Justices AR Dave, AK.Sikri, RK.Agarwal, AK Goel and Banumati has dismissed the Appeals filed against the MP High Court Judgment holding  that the occupation of education cannot be treated at par with other economic activities. In this field, State cannot remain a mute spectator and has to necessarily step in in order to prevent exploitation, privatization and commercialisation by the private sector. It would be pertinent to mention that even in respect of those economic activities which are undertak...

“Reasonable cause” for the purpose of application of Section 271C in the backdrop of Section 273B has been explained by the Hon’ble Delhi High Court in the case of Woodward Governors India (P) Ltd. Vs. CIT (2002) 253 ITR 0745 to mean a probable cause, an honest belief founded on reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinarily prudent and cautious man, placed in the position of the person concerned to come to the conclusion that same was the right thing to do. The cause should not be found to be frivolous, without substance or foundation.

Supreme Court in VLS Finance Ltd. & Anr. vs. Commissioner of Income Tax, has held that an operative period of interim stay order by the High Court which affects passing of Assessment Order by the Assessment Officer is also to be excluded for purpose of computing Limitation Period under Section 158BE(2) of Income Tax Act. Article referred: http://www.livelaw.in/operative-period-interim-stay-order-affects-passing-assessment-order-also-excluded-purpose-computing-limitation-period/

The Supreme Court M.K. Indrajeet Sinhji Cotton Pvt Ltd. Vs. Narmada Cotto Coop. Spg. Mills Ld. & Ors has held that Registrar of Cooperative Societies has no jurisdiction to decide whether the suit is tenable for want of notice or not. Apex Court Bench comprising of Justices S.A. Bobde and Amitava Roy observed that that a question whether a suit is tenable under Section 167 of the Co-operative Societies Act for want of notice under the said provision is a question within the exclusive competence of a Civil Court. Article referred: http://www.livelaw.in/registrar-cooperative-societies-no-jurisdiction-decide-tenability-suit-societies-sc/

Invoking Article 142 of the Constitution of India to do ‘complete justice’ to a couple who had decided to part with each other after living separately for last five years, the Supreme Court has waived statutory cool-off period of six months and granted them divorce. Article referred: http://www.livelaw.in/supreme-court-invokes-article-142-waive-cooling-period-mutual-consent-divorce-plea/

The Supreme Court in RISHABH CHAND JAIN & ANOTHER VS. GINESH CHANDRA JAINhas held that an order dismissing the suit on the ground of Res Judicata does not cease to be a decree on account of a procedural irregularity of non-framing an issue. Apex Court bench comprising of Justices Kurian Joseph and R.F. Nariman held that, such orders cannot be assailed in Revision, but only by preferring Appeal under section 96 of the Code of Civil Procedure. Article referred: http://www.livelaw.in/order-dismissing-suit-ground-res-judicata-not-cease-decree-account-procedural-irregularity-non-framing-issue-sc/

The Supreme Court in ITC LIMITED GURGAON vs. COMMISSIONER OF I.T. (TDS) DELHI, has categorically held that ‘tips’ received by Hotel employees does not amount to ‘salary’ from their employer and hence the employer need not deduct the tax at source under Section 192 of the Income Tax Act, though the same would be chargeable in the hands of the employees as“income from other sources”. Article referred: http://www.livelaw.in/no-tds-deductible-tips-received-hotel-employees-says-supreme-court/

In a significant judgment, the Supreme Court in Devinder Singh & Ors vs. State of Punjab through CBI, has summarized the principles governing requirement of sanction to prosecute Government servants and held that the offence committed by the Government servants must be directly and reasonably connected with official duty to require sanction. The Court also observed that Protection of sanction, which is an assurance to an honest and sincere officer to perform his duty honestly and to the best of his ability to further public duty, cannot be camouflaged by them to commit crime. Article referred: http://www.livelaw.in/protection-sanction-govt-servants-cannot-camouflaged-commit-crime-sc/

A Suit or a proceeding for a declaration as to the validity of both marriage and matrimonial status of a person is within the exclusive jurisdiction of the Family Court, the Supreme Court has held in BALRAM YADAV VS. FULMANIYA YADAV. Article referred: http://www.livelaw.in/declaration-validity-marriage-matrimonial-status-person-within-exclusive-jurisdiction-family-court-sc/

When a high court is asked to appoint an arbitrator, it is not supposed to discuss, much less elaborate, on the factual issues arising in the dispute between the parties. The court's role under the Arbitration and Conciliation Act is only to examine whether there is an arbitration agreement between the parties and any dispute has arisen warranting appointment of an arbitrator, the Supreme Court stated last week in its judgment, Rajesh Verma vs Aswani Kumar. The Supreme Court remarked that the Delhi High Court in this case went into the merits of the case, which was "wholly uncalled for and should not have been made." The high court had appointed an advocate as arbitrator according to the terms of arbitration in the agreement between the land owner and tenant, but in view of the opposition of the land owner, the Supreme Court appointed a retired high court judge as sole arbitrator.

Fixation of a reserved price for auction by a public authority based on the circle rate of a property does not imply that it must sell it at that price. Circle rates are not a true measure to determine the actual market value of a property, the Supreme Court stated while dismissing the appeal case, E-City Entertainment vs State of Uttar Pradesh. The court explained that the authority must be satisfied that the price offered truly represented the market value. Otherwise, it can cancel the auction. In this case, the Kanpur Corporation offered for sale a prime plot with a reserve price of Rs 15.47 crore. The firm offered Rs 21.51 crore, which was the highest of the three bids. However, after some time, the corporation cancelled the entire tender process because even the highest bid was far below the market value, which was assessed at Rs 100 crore. While ordering the return of the earnest money to the firm, the judgment said: "The property offered by the corporation is admittedly...