Indian tax law - The Legal Chamber

Supreme Court: Prosecution Without Confirmed Penalty is Abuse of Process

30Sep

By The Legal ChamberNo Comments

Supreme Court

Supreme Court: Prosecution Without Confirmed Penalty is Abuse of Process

The Supreme Court quashed the prosecution under Section 276C(1) of the Income Tax Act, 1961, holding that its continuation after a conclusive settlement order granting immunity from penalty was an abuse of process. The Revenue's action was in blatant disregard of its own binding circulars which mandated prosecution only after penalty confirmation by the ITAT. Facts Of The Case: A search u/s 132 of the Income Tax Act, 1961, was conducted at the appellant's residence on 24.04.2016, leading to the seizure of unaccounted cash. Based on this, the Revenue initiated prosecution u/s 276C(1) for the Assessment Year 2017-2018, alleging a wilful attempt to evade tax. The appellant's petition before the High Court to quash these proceedings was dismissed. Subsequently, the appellant filed an...

Supreme Court Rules Customs Duty Drawback Circular Has Retrospective Effect

The Supreme Court held that Circular No. 35/2010-Cus. dated 17.09.2010, which clarified the entitlement of merchant exporters to claim 1% All Industry Rate (AIR) customs duty drawback irrespective of availing CENVAT benefits, was clarificatory and declaratory in nature. Consequently, the Court ruled that the Circular must be applied retrospectively, ensuring uniform benefits from 2008 onwards. The judgment emphasized that clarificatory circulars, which resolve ambiguities in existing notifications without creating new rights, operate retrospectively to align with the legislative intent. The High Court's order denying retrospective application was set aside. Facts Of The Case: The appellant, M/s Suraj Impex (India) Pvt. Ltd., a merchant exporter of Soyabean Meal (SBM), claimed All Industr...

No Double Benefits: Supreme Court Clarifies Double Deduction Rules Under Income Tax Act

The Supreme Court ruled that Section 80-IA(9) of the Income Tax Act, 1961, bars double deductions on the same profits under both Sections 80-IA and 80-HHC. It held that while deductions can be computed separately under different provisions, the total deduction cannot exceed the eligible profits of the business. The Court upheld the Bombay High Court’s interpretation, clarifying that Section 80-IA(9) restricts the allowability—not computation—of deductions, ensuring taxpayers do not claim overlapping benefits under Chapter VI-A. Facts Of The Case: The case involved Shital Fibers Limited, which filed its income tax return for the Assessment Year 2002-03, declaring a taxable income of ₹46,99,293 and claiming deductions under Sections 80-HHC (export profits) and 80-IA (industrial undertaking...