Today's Digest Summary
TaxCorp Daily Digest
Your Trusted Source for Tax, Corporate & Regulatory Intelligence
Quick Summary
- 🏛️ Reassessment Jurisprudence Evolves: Multiple ITAT and High Court rulings this week collectively tighten the boundaries of reassessment proceedings — unsigned reasons, abandoned grounds, change-of-opinion, and missing Section 143(2) notices each rendered reassessments void across Delhi, Bombay, Gujarat, and Ahmedabad benches.
- 📋 ICDS Double Disallowance Strikes Down: ITAT Chennai and ITAT Mumbai both invalidated CPC-driven ICDS adjustments where amounts had already been accounted for, reinforcing that Section 143(1) processing powers have clear jurisdictional limits.
- 🏦 GST Compliance Alert: Delhi High Court shields pre-October 2025 SCN recipients from the new 10% pre-deposit requirement on penalty-only appeals, while a new 15-point GST compliance checklist highlights the highest scrutiny-trigger areas for businesses.
- ⚖️ Customs Evidence Standards Raised: Two Supreme Court and CESTAT rulings underscore that electronic records without Section 138C certification and unverified statements cannot sustain customs duty demands or penalties.
Category-wise Updates
🟦 Income Tax
The ITAT Bangalore reaffirmed that credit co-operative societies dealing exclusively with members cannot be classified as co-operative banks under Section 80P(4). Interest earned on surplus funds temporarily parked in banks constitutes business income "attributable to" business operations under Section 80P(2)(a)(i) and is fully deductible.
Key Action: Credit co-operative societies should verify their bylaws to confirm member-only operations and review interest income characterisation in their books to ensure full Section 80P deduction eligibility.
2. ITAT Delhi on Section 263: When Detailed AO Enquiry Blocks Revisional Power of PCIT
In Clix Capital Services Pvt. Ltd. Vs PCIT, the Tribunal drew a sharp distinction between "lack of enquiry" (where Section 263 may apply) and "adequate enquiry without detailed discussion in the order" (where Section 263 cannot be used). Multiple Section 142(1) notices and voluminous details obtained by the AO were held sufficient to block revisional jurisdiction.
Key Action: NBFCs and corporates should document all AO correspondence meticulously — the completeness of enquiry records is a primary shield against Section 263 proceedings.
In Pennar Industries Limited Vs DCIT, the Tribunal reinforced that writing off a debt in books is sufficient for Section 36(1)(vii) deduction without proof of debtor's creditworthiness (TRF Ltd. principle). Accounting adjustments under Ind AS 116 do not attract penalty if underlying claims align with statutory provisions.
Key Action: Companies following Ind AS 116 (lease accounting) should prepare a clear reconciliation between accounting treatment and statutory tax positions to defend against future Section 263 notices.
The CPC's ₹24 crore ICDS adjustment in ACIT Vs Corro Health Infotech was struck down as it required multi-schedule reconciliation beyond the scope of Section 143(1). Additionally, ROU asset amortisation of ₹11.53 crore already disallowed in Schedule BP could not be taxed again as unreported ICDS income.
Key Action: Ensure that Form 3CD, Schedule ICDS, and Schedule BP disclosures are internally reconciled before filing to prevent CPC from making erroneous prima facie adjustments.
5. ITAT Bangalore Sends Back Section 80G Approval Issue Where CIT(E) Ignored Uploaded Evidence
The CIT(E) rejected Section 80G approval on the incorrect premise that no response was filed, despite portal acknowledgements confirming document uploads on 23/07/2025 — six days before the 29/07/2025 rejection order. The ITAT remanded the matter for a fresh decision.
Key Action: Always preserve portal upload acknowledgements with timestamps. Screenshot and archive all e-filing submissions as contemporaneous evidence against adverse orders.
The ITAT Mumbai deleted a ₹12.40 crore ICDS addition on tangible fixed assets that duplicated depreciation adjustments, and a further ₹1.00 lakh MSMED Act disallowance. The case also demonstrates the strategic value of APAs in resolving complex transfer pricing disputes efficiently.
Key Action: Multinationals with ongoing TP disputes should actively evaluate APA applications with CBDT as an efficient resolution mechanism, especially where recurring adjustments arise.
In Cyberstar Infocom LLP Vs ITO, an assessment order passed against a Private Limited Company after its conversion to LLP — despite formal intimation to the AO — was held void ab initio. Section 292B cannot cure the substantive jurisdictional defect of assessing a non-existent entity.
Key Action: Entities undergoing conversion (Pvt Ltd to LLP or merger) must formally notify the AO with documentary evidence immediately upon completion of conversion to create a clear procedural record.
The ITAT Chennai confirmed that demonetisation-era SBN deposits cannot automatically become unexplained money under Section 69A if the source is established through identity proofs, PAN, and confirmation letters. Pre-31.12.2016 SBN transactions were not legally prohibited.
Key Action: Assessees with pending demonetisation-related additions should compile all source documentation — PAN, identity proofs, and third-party confirmations — before the next hearing.
9. Delhi ITAT: Sales to Alleged Entry Provider Accepted as Genuine; Section 68 Addition Quashed
In Sanjeev Kumar Vs ACIT, the Tribunal held that genuine sales supported by audited accounts, GST returns, GST invoices, stock registers, and bank receipts cannot be treated as unexplained cash credits under Section 68 merely because the buyer is alleged to be an accommodation entry provider.
Key Action: Businesses should maintain comprehensive transaction-wise documentation (GST invoices + bank statements + stock records) as a standard practice to defeat suspicion-based Section 68 additions.
Where an assessee raises fraud, identity theft, or forgery allegations backed by police complaints and forensic reports, neither the AO nor the CIT(A) can mechanically apply Section 69 on unverified bank records. The ITAT mandated cross-examination of bank officials and forensic verification.
Key Action: In identity theft or fraudulent PAN misuse cases, file an FIR immediately and submit acknowledgement to the AO. Commission a forensic handwriting/document report as contemporaneous evidence.
A Section 271D penalty cannot survive the quashing of the underlying assessment on jurisdictional grounds. The Tribunal also clarified that the six-month limitation under Section 275(1)(c) runs from the end of the month of the AO's satisfaction — not from the date of subsequent approval by the prescribed authority.
Key Action: Assessees facing Section 271D or 271E penalties should immediately verify whether the underlying assessment order has been or can be challenged, as penalty proceedings fall automatically upon jurisdictional quashing of the assessment.
12. MAT Computation: Debenture Redemption Reserve Held Excludable from Book Profits under Section 115JB
In Sun Pharma Laboratories Ltd Vs DCIT, the ITAT Ahmedabad held that a Debenture Redemption Reserve created under Section 71(4) of the Companies Act, 2013 is a provision for an ascertainable liability and must be excluded from book profits under Section 115JB. Section 14A mechanical disallowances were also rejected where own funds were adequate.
Key Action: Companies with DRR in their balance sheets should prepare a detailed MAT computation note excluding DRR with statutory basis, to preempt scrutiny additions under Section 115JB.
In ACIT Vs Kotia Enterprises Limited, the Tribunal held that once the AO abandons the original recorded reason (here, a ₹5.89 crore L&T-related addition), the jurisdiction to make any other addition — including ₹21+ crore under Section 68 — simultaneously lapses. Section 148 is not a blank cheque for roving inquiries.
Key Action: Carefully track the original "reasons to believe" in any Section 148 notice. If the AO drops the specific allegation that triggered reopening, immediately raise a jurisdictional challenge to all new additions in the reassessment order.
In PCIT Vs Maneesh Pharmaceuticals, the Court declined to entertain Revenue's challenge on inventory write-offs (₹94 crore) and bad debt write-offs (₹84 crore) as settled factual matters, but admitted appeals on ₹282 crore investment write-offs in wholly owned subsidiaries — signalling continued judicial scrutiny on capital write-offs.
Key Action: Companies contemplating write-offs of investments in subsidiaries must build a robust file establishing the investment's business character and commercial rationale, distinct from capital loss treatment.
In Youthreach Vs ITO, the ITAT held that a bona fide error in Form 10B reporting should not deny Section 11 exemption where Form 10 was duly filed and genuine intent to accumulate income under Section 11(2) is evident. The Section 143(1) adjustment without prior opportunity was also held procedurally defective.
Key Action: Charitable trusts should cross-verify Form 10B data against the return before filing. If errors are discovered post-filing, file a revised Form 10B promptly and attach a covering letter explaining the inadvertent nature of the discrepancy.
The Tribunal in Sanchar Nest Sahakari Awas Samiti Limited held that for "other persons" under Section 153C, the legally relevant date of search is when documents are handed over to their specific AO. If this handover occurs on or after 01.04.2021, Section 153C machinery cannot be invoked, making the sunset clause an absolute procedural shield.
Key Action: Non-searched entities receiving Section 153C notices should immediately verify the document handover date. If on or after 01.04.2021, raise a jurisdictional objection at the threshold stage citing this ruling.
In Genesys International Corporation Ltd. Vs ACIT, the Bombay HC reiterated that reassessment cannot withdraw a claim already specifically examined and allowed in original scrutiny without fresh tangible material. A "reason to believe" contrary to binding Supreme Court or jurisdictional High Court precedent is legally untenable.
Key Action: SEZ units and exporters with Section 10AA claims should maintain a detailed record of AO queries and responses from the original scrutiny assessment as the first line of defence against reassessment.
In Bharat Bhushan Vs ITO, the ITAT condoned delay and remanded a ₹27+ crore Section 69A addition where the assessee alleged identity theft via PAN misuse for multiple bank accounts, directing the AO to verify true ownership using statutory powers and allowing the assessee to produce evidence.
Key Action: In cases of suspected PAN misuse, request a credit statement from CDSL/NSDL and approach the jurisdictional AO immediately with an application for verification of bank account linkages to your PAN.
The ITAT Delhi in Square Yards Consulting Pvt. Ltd. held that the Finance Act 2017's omission of Section 92BA(i) without a saving clause retroactively obliterates all pending TP proceedings for Specified Domestic Transactions under Section 40A(2)(b). Any TPO reference for such transactions is void ab initio.
Key Action: Assessees with pending TP proceedings for pre-2017-18 SDTs linked to Section 40A(2)(b) should immediately file a challenge citing the omission of Section 92BA(i) and the Karnataka HC ruling in Texport Overseas.
In Radcliffe Schools Education Ltd. Vs ACIT, the Tribunal confirmed that estimate-based disallowances on audited books without specific adverse findings are unsustainable. Consistent treatment across years cannot be arbitrarily reversed without identifying a change in facts, nature of expenditure, or applicable law.
Key Action: When facing ad hoc disallowances, compile prior year assessment orders showing consistent allowance of the same category of expenditure and cite the consistency principle at the first appellate stage.
21. Delhi ITAT strikes down Section 270A penalty where AO fails to pinpoint misreporting limb
In Shrine Empire Gallery Pvt. Ltd. Vs DCIT, the Tribunal held that failure to explicitly specify which clause of Section 270A(9)(a) to (g) is attracted renders the penalty proceeding a non-curable jurisdictional defect. The ₹2.75 lakh penalty was deleted.
Key Action: On receipt of any Section 270A penalty show-cause notice, immediately verify whether the specific misreporting sub-clause has been cited. Absence of clause-specific invocation is a complete answer to the penalty.
In Kaane Visionary Projects Private Limited Vs ACIT, the Tribunal struck down the CIT(A)'s attempt to levy a presumptive 1% commission on alleged accommodation entries — an income stream never examined by the AO. Enhancement under Section 251(2) cannot introduce entirely new sources; that power belongs exclusively to reassessment or revision channels.
Key Action: If a CIT(A) issues an enhancement notice introducing a new income head not assessed by the AO, file a preliminary legal objection citing the limits of Section 251(2) before responding on merits.
In Unitech Acacia Projects Pvt. Ltd., the Tribunal held that Section 40(a)(ia) only operates on amounts debited to the P&L Account as deductions. Interest capitalised into WIP/inventory never enters the deduction claim space, making Section 40(a)(ia) inapplicable. TDS interest under Section 201(1A) for NOIDA authority payments is capped at the deductee's return filing date.
Key Action: Real estate developers and infrastructure companies capitalising interest into WIP should maintain clear WIP schedules and ensure the capitalisation treatment is supported by accounting policy documentation.
24. Unsecured Loans, Accommodation Entries & Sections 68/69C: ITAT Delhi Clarifies Burden of Proof
In DCIT Vs Mahavir Pulses Pvt. Ltd., the Tribunal held that once identity, creditworthiness, and genuineness are established through bank-based documentation and actual repayment with interest, the primary Section 68 burden is discharged. A consequent Section 69C commission addition automatically fails if the underlying loan is accepted as genuine.
Key Action: Businesses receiving unsecured loans should maintain a complete loan file: identity/PAN of lender, bank statements showing fund movement, board resolutions, promissory notes, and repayment records — all through banking channels.
The Tribunal quashed a post-four-year reassessment where the AO sought to disallow a ₹16.16 lakh shortage rate difference already examined via Section 142(1) notice in original scrutiny. Absence of new tangible material made the action a prohibited "change of opinion."
Key Action: Assessees should request copies of their original assessment records and Section 142(1) responses before responding to any Section 148 notice beyond the four-year window, as full disclosure in original proceedings is the primary defence.
In H.L. Financiers Pvt. Ltd. Vs ITO, the Tribunal held that ITBA system-generated reasons lacking the AO's name, designation, seal, and signature cannot qualify as "reasons recorded by the AO." Login-ID authentication was specifically rejected as insufficient under Section 282A and Rule 127A.
Key Action: On receipt of a Section 148 notice, formally demand a certified copy of the reasons recorded along with the Section 151 approval. Scrutinise authentication details — unsigned or improperly identified reasons are a complete ground for quashing.
In Naresh Kumar Vs ITO, the Tribunal deleted Section 271D and 271E penalties where cash dealings with three farmers for an aborted land purchase were genuine, documented, and disrupted by a family bereavement — constituting "reasonable cause" under Section 273B.
Key Action: In rural land transaction contexts, always obtain and preserve identity documents, written agreements, and narrative explanations for cash usage at the time of the transaction itself, not retrospectively.
The Gujarat HC in Jayatma Technologies Private Limited Vs DCIT quashed a Section 148 notice beyond four years targeting TDS deductions under Section 194C and advance write-offs, finding complete disclosure during original Section 143(3) proceedings and no new tangible material.
Key Action: Preserve a consolidated "scrutiny disclosure file" for each AY containing all queries received and responses submitted, to establish full and true disclosure as a defence against future reassessment attempts.
In Managingbody of Shri Haryana Gaushala Vs ITO, the Tribunal held that Form 10B is directory and procedural — not a mandatory substantive condition for Section 11 exemption. Delayed filing cannot defeat a genuine exemption claim by a registered trust that has applied income for charitable purposes.
Key Action: Charitable trusts that have filed Form 10B late should not abandon their Section 11 claims. File a condonation application and request adjudication on merits, citing this ruling and the well-established judicial consensus on the directory nature of Form 10B.
Section 119(2)(b) read with CBDT Circular No. 9/2015 (amended June 2023) allows recovery of excess TDS/TCS/advance tax refunds for up to six preceding assessment years. The approval hierarchy ranges from CIT/PCIT (up to ₹50 lakh) to CBDT (above ₹3 crore), with no interest payable on condoned refunds.
Key Action: Identify all unclaimed TDS refunds for the past six assessment years. If filing deadlines were missed for genuine reasons, initiate Section 119(2)(b) applications at the appropriate authority level before the amounts fall outside the six-year window.
31. Delhi ITAT annuls reassessment for not issuing compulsory Section 143(2) notice
In Ashok Kumar Tewari Vs ITO, the Tribunal quashed a reassessment framed under Section 147 read with Section 144 where e-proceedings records showed only Section 142(1) notices and no Section 143(2) notice. Issuance of Section 143(2) notice post-reopening is a non-waivable jurisdictional requirement.
Key Action: In all reassessment proceedings, maintain a chronological record of every notice received from the department. Absence of a Section 143(2) notice is a strong jurisdictional ground for quashing at the ITAT stage.
ESOP taxation operates in two stages: perquisite at exercise (based on SEBI-certified FMV) and capital gains at disposal (with exercise FMV as cost of acquisition). Foreign ESOPs require mandatory Schedule FA disclosure, with severe Black Money Act penalties for non-compliance. Eligible startup employees can defer tax under Section 192(1C).
Key Action: Employees holding foreign company ESOPs must file Schedule FA in their ITR regardless of whether gains are realised. HR and payroll teams should ensure TDS is correctly computed at exercise and cross-verified with Form 12BA.
In DCIT Vs Indian Broadcasting Foundation, the ITAT held that TRAI/Government-mandated equity investment in a not-for-profit subsidiary (BARC) for policy purposes does not violate Section 11(5) investment norms. However, provisions for doubtful debts, gratuity, and leave encashment as application of income were remanded for fresh verification.
Key Action: Charitable organisations making policy-driven equity investments should maintain board resolutions and regulatory correspondence documenting the mandatory nature of the investment to defend against Section 13(1)(d) challenges.
In M P Trading Company Vs PCIT, the Tribunal held that the PCIT cannot invoke Section 263 on issues already pending before the CIT(A) — a statutory bar under Explanation 1(c) to Section 263. A plausible AO view on doubtful purchases (profit percentage estimation) cannot be substituted by the PCIT's preferred approach.
Key Action: When a Section 263 notice arrives on issues already under CIT(A) appeal, file an immediate preliminary objection on jurisdiction, citing Explanation 1(c) to Section 263 along with this ruling.
In Sonam Tshering Bhutia Vs ITO, the ITAT held that a bona fide Sikkim resident is entitled to Section 10(26AAA) exemption on Sikkim-sourced income, and that registered sale deeds are robust public documents sufficient to explain cash receipts — supplementary private confirmations cannot be demanded where statutory documents already validate the transaction.
Key Action: Sikkim residents should proactively attach registered sale deed copies and Section 10(26AAA) domicile proof to their ITR filings to preempt demonetisation-era cash deposit scrutiny.
🟩 GST
The GST Settlement of Fund Rules, 2026 — finalised after extensive debate in the 54th and 55th GST Council meetings — introduce strict SOP for abnormal ITC reversals and consolidate settlement ledgers (merging STL 1.06 with STL 1.10) to eliminate Centre-State revenue mismatches, as confirmed in Parliament on 04.08.2026.
Key Action: All businesses should immediately review internal ITC reversal protocols to ensure alignment with the new SOP, particularly for unusual reversals that may trigger the abnormal reversal flag in the IGST settlement system.
The CESTAT Mumbai held in Asian Paints Limited Vs Commissioner of CGST that operating leases transferring both possession and control constitute deemed sales under Article 366(29A)(d) of the Constitution, entirely outside the service tax net under the Finance Act, 1994. Actual VAT payment on lease rentals was accepted as corroborating the deemed sale character.
Key Action: Businesses with legacy service tax demands on operating lease transactions should review this ruling and examine whether VAT/CST was paid on the same lease rentals — the dual levy prohibition may provide a complete defence.
38. Delhi HC shields GST assessees from retrospective 10% pre-deposit on penalty appeals
The Delhi High Court held in Gaurav Jain & Anr. that the Finance Act 2025 amendment introducing a 10% pre-deposit for penalty-only appeals under Sections 107(6) and 112(8) of CGST Act cannot apply to disputes originating from SCNs issued before 01.10.2025, as the right to appeal vests on the SCN date.
⚠️ Key Action: GST taxpayers who received SCNs before 01.10.2025 but face penalty-only orders should challenge any pre-deposit demand at the appellate stage, citing this Delhi HC ruling and the GSTAT Hyderabad decision in Reddy Veeranna Constructions.
39. Avoiding GST Notices: 15 High-Risk Compliance Gaps Every Business Must Fix
Modern GST administration uses data correlation across returns, e-invoices, e-way bills, and financial statements to trigger scrutiny. The 15 key risk areas include: 180-day ITC reversal, Rule 42/43, incidental income, GST on advances, RCM, related-party valuation, GSTR-1 accuracy, blocked ITC, GSTR-1 vs 3B reconciliation, ITC-2B reconciliation, e-invoice/e-way bill matching, credit notes, stock monitoring, place of supply, and annual reconciliation.
Key Action: Conduct a quarterly internal GST compliance audit against these 15 parameters. Embed automated reconciliation checks in your accounting system to convert compliance from reactive to proactive.
🟫 Company Law
Incorporating an LLP under the LLP Act, 2008 involves sequential steps: DSC procurement, name reservation via Form RUN-LLP, incorporation via Form FiLLiP (total government fee: ₹845), and post-incorporation filing of the LLP Agreement via Form 3 within 30 days. Certificate of Incorporation with PAN and TAN is typically issued within 5-7 working days.
⚠️ Key Action: Post-incorporation, the 30-day window for filing the LLP Agreement via Form 3 is critical — failure to comply attracts daily penalties. Simultaneously initiate GST and other regulatory registrations.
The Supreme Court's five-proposition framework in Union Bank of India v. Rajasthan RERA establishes that RERA and SARFAESI coexist as distinct regulatory regimes. RERA's reach over pre-Act mortgages requires proof of fraud or collusion; full RERA jurisdiction applies where post-Act mortgages are involved. Neither statute wholesale displaces the other.
Key Action: Homebuyers and developers facing SARFAESI action on mortgaged properties should first ascertain whether the mortgage predates or postdates the RERA registration, as this determines the applicable legal framework and forum.
⚖️ Corporate Law
In Jamboo Bhandari Vs State Industrial Development Corporation Ltd., the Supreme Court held that the 20% deposit condition under Section 148 of the NI Act is a general rule — not absolute. Appellate courts retain discretion to waive it in genuinely exceptional circumstances with cogent recorded reasons, and the obligation to examine exceptions rests with the court suo motu.
Key Action: Accused persons in Section 138 NI Act appeals facing genuine hardship should specifically bring exceptional circumstances on record before the appellate court, as the court is obligated to independently consider waiver even without a formal application.
43. Bombay HC: Deemed conveyance under MOFA not available once land is vested on society bifurcation
In Happy Homes Plot Owners Co-Op. Housing Ltd., the Bombay HC held that bifurcation under Section 17 of the MCS Act itself constitutes statutory conveyance of assets. A subsequent inter-society agreement concretises the land distribution, and Section 11(3) of MOFA cannot be used to obtain an additional deemed conveyance.
Key Action: Co-operative housing societies that have undergone bifurcation should obtain and review the bifurcation order alongside subsequent inter-society agreements before initiating any deemed conveyance application under MOFA.
🟧 Customs & Excise
In Commissioner of Customs Vs Junaid Kudia, the Supreme Court upheld CESTAT's finding that customs duty demands based on computer printouts of emails and invoices fail where the mandatory Section 138C certificate is not produced and Section 138B cross-examination requirements are not met. Retracted statements without corroboration carry no evidentiary weight.
Key Action: Importers facing DRI investigations should immediately challenge the admissibility of electronic records where the Section 138C certificate is absent. Request cross-examination rights for all adverse statements at the adjudication stage itself.
45. Managing Partner Personally Liable for Customs Penalty Along with Firm: CESTAT Hyderabad Clarifies
In Khazana Vs Commissioner of Customs, the Tribunal confirmed that deliberate undervaluation established through commercial documents and recorded statements attracts confiscation (Section 111(m)), redemption fine (Section 125), and personal penalty on the Managing Partner under Section 112(a) — independent of and coexisting with firm-level penalties.
Key Action: Managing partners of import-focused firms should conduct periodic internal audits of customs valuations and maintain clean documentation trails, as personal liability under Section 112(a) can coexist with firm-level penalties with no double-jeopardy protection.
The Government's ₹10/litre reduction in Central Excise Duty on petrol and diesel in March 2026 (triggered by Brent crude peaking at USD 138.2/barrel) successfully contained average CPI inflation at 3.9% during April-June 2026, within the RBI's 4% ± 2% band, while managing revenue implications through expenditure reprioritisation.
Key Action: Businesses with fuel-intensive operations should reassess input cost budgets for Q3 2026 onwards in light of this excise reduction, while monitoring the Government's signals on restoring duty rates as crude prices stabilise.
47. Finance Ministry Extends Anti-Dumping Duty on Phthalic Anhydride from China and Korea for 5 Years
Notification No. 20/2026-Customs (ADD) dated 05.08.2026 extends anti-dumping duty on Phthalic Anhydride (HS Code 2917 35 00) for five years: USD 40.08/MT for China and USD 140.17/MT for Korea, including specified third-country routing combinations. This supersedes Notification No. 43/2021-Customs (ADD).
⚠️ Key Action: Importers of Phthalic Anhydride must update Bill of Entry filings immediately to reflect the new ADD notification. Third-country routing through specified jurisdictions attracts the same duty — review supply chain structures accordingly.
In Berger Paints India Limited v. Commissioner of Customs, the Tribunal held that Notification No. 70/2014-Customs (N.T.) prescribing 6% interest under Section 129EE operates prospectively. For investigation-stage deposits made and refund periods prior to 12.08.2014, the judicially established rate of 12% per annum (per Supreme Court in ITC Ltd.) continues to apply.
Key Action: Companies with customs investigation-era deposits (pre-August 2014) that have been refunded at 6% should file a rectification/appeal claiming the higher 12% rate, supported by the applicable Supreme Court and High Court precedents.
📌 Insolvency
The NCLT Mumbai held that for personal guarantors under on-demand guarantees, the default date for Section 95 IBC purposes is when the stipulated payment period under the first invocation notice lapses — not the NPA classification date of the corporate debtor. COVID-19 exclusion periods and acknowledgement under Section 18 of the Limitation Act also factor into limitation computation.
Key Action: Financial creditors pursuing personal guarantors under Section 95 of IBC should carefully compute limitation from the invocation notice payment deadline, incorporating applicable COVID-19 exclusion periods, to ensure petitions are within the limitation window.
📊 SEBI
The Supreme Court in Videocon International Ltd. Vs SEBI held that the 2002 amendment to Section 15Z (substituting the High Court with the Supreme Court as the second appeal forum) does not affect appeals already filed before the High Court against pre-29.10.2002 SAT orders. Vested appellate rights cannot be disturbed by subsequent amendments without express legislative intent.
Key Action: Parties with appeals pending before High Courts against pre-2002 SAT orders should verify their case status and resist any attempt by the Revenue/SEBI to redirect them to the Supreme Court under the amended provision.
Key Deadlines & Action Items
| # | Deadline / Action | Applicable To |
|---|---|---|
| 1 | LLP Agreement Filing — Form 3 within 30 days of Certificate of Incorporation | Newly incorporated LLPs |
| 2 | Anti-Dumping Duty Update — Notify No. 20/2026-Customs (ADD) effective 05.08.2026 — Update BOE filings immediately | Importers of Phthalic Anhydride (HS 2917 35 00) from China / Korea |
| 3 | GST Pre-Deposit Shield — Pre-deposit for penalty appeals inapplicable if SCN issued before 01.10.2025 | GST taxpayers with pre-October 2025 SCNs facing penalty-only orders |
| 4 | Section 119(2)(b) Condonation Window — Refund claims available for up to 6 preceding assessment years | Taxpayers with missed TDS/TCS/advance tax refund claims |
| 5 | IGST Settlement Rules 2026 SOP Compliance — Review ITC reversal protocols for abnormal reversals immediately | All GST registered entities |
| 6 | Section 153C Sunset Clause — Document handover on/after 01.04.2021 blocks Section 153C proceedings entirely | Non-searched entities receiving Section 153C notices |
| 7 | Form 10B for Charitable Trusts — File before due date; where delayed, file condonation application proactively | Charitable trusts claiming Section 11 exemption |
| 8 | Schedule FA Disclosure — Mandatory for all employees holding foreign company ESOPs, regardless of realisation | Employees with cross-border ESOP holdings |
| 9 | Section 148 Notice Response — Demand certified copy of reasons + Section 151 approval with authentication details within response window | All assessees receiving Section 148 notices |
| 10 | Section 143(2) Notice Verification — Confirm issuance after any Section 148 reopening before engaging on merits | Assessees in reassessment proceedings |
Professional Takeaways
💡 Insight 1: Reassessment Jurisprudence Has Reached a Tipping Point
This edition carries an extraordinary concentration of rulings invalidating reassessment proceedings — on grounds ranging from unsigned reasons, abandoned primary allegation, missing Section 143(2) notice, change of opinion, and post-four-year limitations. Tax professionals must build a standardised "reassessment challenge checklist" covering all these grounds to be deployed immediately upon receipt of any Section 148 notice. The judicial trend is unambiguous: procedural and jurisdictional safeguards are being strictly enforced, and the Revenue's latitude to reopen settled assessments is narrowing consistently across forums and jurisdictions.
💡 Insight 2: ICDS Compliance Requires Integrated, Cross-Schedule Reconciliation — Not Just Disclosure
Two separate ITAT rulings this week — Chennai (Corro Health Infotech) and Mumbai (Schindler India) — deleted large ICDS-related CPC adjustments on the ground of double disallowance. The common thread is that CPC's processing algorithms identify apparent discrepancies between Schedule ICDS and Schedule BP without contextual reconciliation, resulting in erroneous adjustments. Tax professionals preparing corporate tax returns must build an explicit "ICDS-to-P&L-to-Schedule BP" reconciliation worksheet as part of the tax audit process itself, ensuring that amounts already adjusted in one schedule are not vulnerable to algorithmic double-counting.
💡 Insight 3: Electronic Evidence Standards in Indirect Tax Proceedings Are Now Non-Negotiable
The twin Customs rulings from the Supreme Court (Junaid Kudia) and CESTAT Hyderabad (Khazana) collectively redefine the evidentiary standards in customs investigations. Section 138C certification for electronic records is not a procedural technicality — its absence is fatal to the Revenue's case. Simultaneously, Khazana confirms that personal liability of managing partners for deliberate customs violations is an independent exposure that cannot be mitigated by firm-level penalty proceedings. Compliance professionals advising import-intensive businesses should immediately audit the quality of documentation and evidence management processes used during DRI or customs investigations, including ensuring proper certification protocols for all digital communications and records.
This digest is prepared by TaxCorp India for professional subscribers. All article links direct to TaxCorp's original published content at thetaxcorp.in. This communication is for informational purposes and does not constitute legal or tax advice.
© TaxCorp India | www.thetaxcorp.in