Direct Tax Knowledge Hub

This ruling directly impacts the conduct of authorities in benami matters, emphasizing the need for consistency and adherence to procedural safeguards at every stage..

This actionable guidance ensures neither party is prejudiced by procedural oversight..

However, the AO was directed to examine the alternate claim under Section 54F on merits, as such a claim cannot be dismissed on mere technicalities if it is otherwise legally available to the assessee..

The Tribunal is required to adjudicate the merits and legality of the penalty afresh as per the directions received under Section 263, irrespective of any procedural lapses in the initial order..

The authorities’ rejection of the AO’s additions was justified and stands endorsed by the High Court..

However, the substantive inference on the nature of the entity must be based on more robust and specific evidence..

Assessees can take actionable comfort that, where proper documentation and third-party evidence are furnished and considered by the AO, the assessment order is less likely to be disturbed merely for want of more detailed investigation..

Taxpayers should thoroughly examine the relevant DTAA provisions before making payments to non-residents and maintain adequate documentation of the absence of a PE to defend against disallowance under section 40(a)(i)..

The Revenue’s attempt to challenge the exemption was dismissed in the absence of fresh facts or legal grounds..

The decision also reiterates that the existence of an appellate remedy does not preclude the High Court’s intervention under Article 226 in cases of jurisdictional transgression..