S.147 – Where AO is not satisfied, based on an audit objection, that there is escapement of any income chargeable to tax but still, resorts to reopening based on such audit objection and not based on his personal satisfaction, reopening is unjustified.

S.11 & 68 – Once assessee-trust discloses donations as income and spends substantial portion out of the same for charitable purpose, S.68 cannot be invoked to tax such donations for want of its details. Approving “DIT(E) vs. Keshav Social & Charitable Foundation - 278 ITR 152 (Del)”, civil appeal filed by revenue was dismissed by Hon’ble the Apex Court.

S.90(2) – When global telecommunication facility provided by the assessee is an integral part of the “shipping business”, it cannot be said that any “technical services” have been rendered by the assessee. Hence, income from use of such facility is to be classified as income from “shipping business” only and not as “Fees for Technical Services”. 

S.4& 90(2) – When assessee maintains “global telecommunication facility” which enables assessee and its agents to carry out the “shipping business” and expenditure for maintaining such facility is shared by all agents on pro-rata basis, payment received from such agents towards their share in such expenditure (without any profit element embedded therein) cannot be treated as “fees for technical services”. It is merely reimbursement of expenses and cannot be charged to tax.
.... [DIT (IT) vs. A.P.Moller Maersk A S – Civil Appeal No. 8040 of 2015 – Date: 17.02.17 – Supreme Court of India]
S.2(22)(e) : In a case where some “payment” is made to an “HUF” by a company, shares in which are held in the name of “Karta” of such HUF but money towards such share-holding is given by the “HUF” and such HUF is shown as shareholder in the annual returns of the company, addition can be made u/s 2(22)(e) in the hands of the “HUF” in respect of such payment. Even if it is presumed that “HUF” is not “registered shareholder”, such addition can be made in light of Explanation 3 to S.2(22)(e). Therefore, it is no gainsaying that since “HUF” itself is not “registered shareholder”, provisions of S.2(22)(e) are not attracted.
S.271D, 271E & 275 - In case of penalties u/s 271D and 271E, period of limitation as prescribed under clause (c) of S.275(1) shall be applicable (i.e. within the same financial year in which assessment order is passed or 6 months from the end of the month in which action imposing penalty is initiated, whichever period expires later) and not that under clause (a) of S.275(1) (i.e. time-limit in case where appeal is preferred in quantum proceedings).
.... [CIT vs. Hissaria Brothers – Civil Appeal No.5254 of 2008 (Supreme Court) – Date: 22.08.16]

Supreme Court lays down contempt law in the case of Maninderjit Singh Bitta vs. Union of India & Ors. (WRIT PETITION (CIVIL) NO.510 OF 2005, dated 13/10/2011)
 8. Now, we would examine certain principles of law which would normally guide the exercise of judicial discretion in the realm of contempt jurisdiction. ‘Contempt’ is an extraordinary jurisdiction of the Courts. Normally, the courts are reluctant to initiate contempt proceedings under the provisions of the 1971 Act. This jurisdiction, at least suo moto, is invoked by the courts sparingly and in compelling circumstances, as it is one of the foremost duty of the courts to ensure compliance of its orders. The law relating to contempt is primarily dissected into two main heads of jurisdiction under the Indian Law: (a) Criminal Contempt, and (b) Civil Contempt. It is now well settled and explained principle under the Indian contempt jurisdiction that features, ingredients, procedure, attendant circumstances of the case and the quantum of punishment are the relevant and deciphering factors. Section 12 of the 1971 Act deals with the contempt of court and its punishment while Section 15 deals with cognizance of criminal contempt. Civil contempt would be wilful breach of an undertaking given to the court or wilful disobedience of any judgment or order of the court, while criminal contempt would deal with the cases where by words, spoken or written, signs or any matter or doing of any act which scandalises, prejudices or interferes, obstructs or even tends to obstruct the due course of any judicial proceedings, any court and the administration of justice in any other manner. Under the English Law, the distinction between criminal and civil contempt is stated to be very little and that too of academic significance. However, under both the English and Indian Law these are proceedings sui generis. While referring to Justice J.D. Kapoor’s Law of Contempt of Court, Second Edition, 2010 which mentioned the Phillimore Committee Report – Report of the Committee on Contempt of Court, of which importantly the following passage can be noticed:
“4. In England and Wales most forms of contempt have been regarded as of criminal character, and as such, are called “criminal contempts”. In Scotland contempt of court is not a crime nor is a distinction between “criminal” and “civil” contempts recognised. Scots law regards contempt of court as a chapter of a law sui generis. This difference of approach is of little more than academic significance in modern practice, but the Scottish explain certain peculiar elements in its operation and procedure. What is of particular importance is that it is branch of the law in which breaches are investigated by a special and summary procedure and where, once established, they may be severely punished.”
9. Under the Indian Law the conduct of the parties, the act of disobedience and the attendant circumstances are relevant to consider whether a case would fall under civil contempt or a criminal contempt. For example, disobedience of an order of a court simplicitor would be civil contempt but when it is coupled with conduct of the parties which is contemptuous, prejudicial and is in flagrant violation of the law of the land, it may be treated as a criminal contempt. Even under the English Law, the courts have the power to enforce its judgment and orders against the recalcitrant parties.
10. In exercise of its contempt jurisdiction, the courts are primarily concerned with enquiring whether the contemnor is guilty of intentional and wilful violation of the orders of the court, even to constitute a civil contempt. Every party to lis before the court, and even otherwise, is expected to obey the orders of the court in its true spirit and substance. Every person is required to respect and obey the orders of the court with due dignity for the institution. The Government Departments are no exception to it. The departments or instrumentalities of the State must act expeditiously as per orders of the court and if such orders postulate any schedule, then it must be adhered to. Whenever there are obstructions or difficulties in compliance with the orders of the court, least that is expected of the Government Department or its functionaries
is to approach the court for extension of time or clarifications, if called for. But, where the party neither obeys the orders of the court nor approaches the court making appropriate prayers for extension of time or variation of order, the only possible inference in law is that such party disobeys the orders of the court. In other words, it is intentionally not carrying out the orders of the court. Flagrant violation of the court’s orders would reflect the attitude of the concerned party to undermine the authority of the courts, its dignity and the administration of justice. In the case of Re: Vinay Chandra Mishra [(1995) 2 SCC 584], this Court held that ‘judiciary has a special and additional duty to perform, viz., to oversee that all individuals and institutions including the executive and the legislature act within the framework of not only the law but also the fundamental law of the land. This duty is apart from the function of adjudicating the disputes between the parties which is essential to peaceful and orderly development of the society. Dignity and authority of the Courts have to be respected and protected at all costs’.
11. Another very important aspect even of the Civil Contempt is, ‘what is the attribution of the contemnor?’ There may be cases of disobedience where the respondent commits acts and deeds leading to actual disobedience of the orders of the court. Such contemnor may flout the orders of the court openly, intentionally and with no respect for the rule of law. While in some other cases of civil contempt, disobedience is the consequence or inference of a dormant or passive behaviour on the part of the contemnor. Such would be the cases where the contemnor does not take steps and just remains unmoved by the directions of the court. As such, even in cases where no positive/active role is directly attributable to a person, still, his passive and dormant attitude of inaction may result in violation of the orders of the court and may render him liable for an action of contempt.
12. It is not the offence of contempt which gets altered by a passive/negative or an active/positive behaviour of a contemnor but at best, it can be a relevant consideration for imposition of punishment, wherever the contemnor is found guilty of contempt of court. With reference to Government officers, this Court in the case of E.T. Sunup v. Canss Employees Assoc.. [(2004) 8 SCC 683] took the view that it has become a tendency with the Government officers to somehow or the other circumvent the orders of the Court by taking recourse to one justification or the other even if ex-facie they are unsustainable. The tendency of undermining the court orders cannot be countenanced. Deprecating practice of undue delay in compliance with the orders of the court, this Court again in the case of M.C. Mehta v. Union of India and Ors. [(2001) 5 SCC 309] observed :
“.....clear lapse on the part of NCT and Municipal Corporation. Even if there was not deliberate or wilful disregard for the court orders, there has clearly been a lackadaisical attitude and approach towards them. Though no further action in this matter need be taken for now, but such lethargic attitude if continues may soon become contumacious.”
13. It is also of some relevancy to note that disobedience of court orders by positive or active contribution or non-obedience by a passive and dormant conduct leads to the same result. Disobedience of orders of the court strikes at the very root of rule of law on which the judicial system rests. The rule of law is the foundation of a democratic society. Judiciary is the guardian of the rule of law. If the Judiciary is to perform its duties and functions effectively and remain true to the spirit with which they are sacredly entrusted, the dignity and authority of the courts have to be respected and protected at all costs (refer T.N. Godavarman Thirumulpad’s case [(2006) 5 SCC 1]. The proceedings before the highest court of the land in a public interest litigation, attain even more significance. These are the cases which come up for hearing before the court on a grievance raised by the public at large or public spirited persons. The State itself places matters before the Court for determination which would fall, statutorily or otherwise, in the domain of the executive authority. It is where the State and its instrumentalities have failed to discharge its statutory functions or have acted adversely to the larger public interest that the courts are called upon to interfere in exercise of their extraordinary jurisdiction, to ensure maintenance of the rule of law. These are the cases which have impact in rem or on larger section of the society and not in personam simplicitor. Courts are called upon to exercise jurisdiction with twin objects in mind. Firstly, to punish the persons who have disobeyed or not carried out orders of the court i.e. for their past conduct. Secondly, to pass such orders, including imprisonment and use the contempt jurisdiction as a tool for compliance of its orders in future. This principle has been applied in the United States and Australia as well. For execution of the orders of the court even committal for an indefinite term has been accepted under Australian law [Australasian Meat Industry Employees Union v. Mudginberri Station Pty. Ltd. (1986) 161 CLR 98 (Australian High Court)] and American law, though this is no longer permissible under English Law. While referring to detention of a person for a long period to ensure execution of the orders in Re Nevitt [117 F. 448, 461 (1902)] Judge Sanborn observed that the person subjected to such a term ‘carries the keys of his prison in his own pocket.’ Lethargy, ignorance, official delays and absence of motivation can hardly be offered as any defence in an action for contempt. Inordinate delay in complying with the orders of the courts has also received judicial criticism. It is inappropriate for the parties concerned to keep the execution of the court’s orders in abeyance for an inordinate period. Inaction or even dormant behaviour by the officers in highest echelons in the hierarchy of the Government in complying with the directions/orders of this Court certainly amounts to disobedience. Inordinate delay of years in complying with the orders of the court or in complying with the directed stipulations within the  prescribed time, has been viewed by this Court seriously and held to be the contempt of court, as it undermines the dignity of the court. Reference in this regard can be made to Maniyeri Madhavan v. Inspector of Police, Cannanore [AIR 1993 SC 356] and Anil Ratan Sarkar and Ors. v. Hirak Ghosh and Ors. [(2002) 4 SCC 21]. Even a lackadaisical attitude, which itself may not be deliberate or wilful, have not been held to be a sufficient ground of defence in a contempt proceeding. Obviously, the purpose is to ensure compliance of the orders of the court at the earliest and within stipulated period.

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Rules of Valuation – Rules 5 to 8 of Customs Valuation (Determination of Price of Imported Goods) Rules,1988 - If data of contemporaneous exports of identical goods was not available only then the Authorities can resort to the procedure laid down in the said Rules and market enquiry could be conducted only as a last resort.
“In the present case, as stated above, neither the adjudicating authority i.e., the Commissioner of Central Excise nor the CESTAT has dealt with the matter as per the procedure prescribed under the Act. At the threshold, instead of first determining the value of the goods on the basis of contemporaneous exports of identical goods, the Revenue erroneously resorted to a market enquiry. If for any reason, data of contemporaneous exports of identical goods was not available, the procedure laid down in Rules 5 to 8 of the 1988 Rules was required to be followed and market enquiry could be conducted only as a last resort. It is evident that no such exercise was undertaken by the Commissioner and interestingly he, acting as an appellate authority, proceeded to test the evidentiary value of the report submitted by M/s Skipper International and rejected it on the ground that it does not depict if the identical garments had ever been purchased by the said concern. Observing that in the absence of any other independent evidence relating to market enquiry, there was no other corroborating evidence to support the allegation of inflation in FOB value, he dropped the proceedings initiated vide show cause notice dated 11th September 2003. Similarly, it is manifest from the CESTAT’s order that revenue’s appeal has been accepted mainly on the ground that report of M/s Skipper International was worthy of credence and the exporter had failed to produce any evidence to establish that export value stated in the shipping bills was the true export value. In our opinion, both the said authorities have failed to apply the correct principles of law and therefore, their orders cannot be sustained.”..... Read More
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