Author: inavatiq

Case Details: B. B. Metal Vs. Joint Commissioner of State Tax [2026] 185 taxmann.com 595 (Bombay)

Judiciary and Counsel Details

• G. S. Kulkarni & Aarti Sathe, JJ.
• Sandeep Sachdeva, Devang Bhatia & Swarnima Shinde for the Petitioner.
• Ms Shruti Vyas, Addl. G.P & D. S. Deshmukh for the Respondent.

Facts of the Case

The petitioner challenged the provisional attachment of five bank accounts made by the State tax authorities through Form GST DRC-22 under Section 83 of the CGST Act read with the Maharashtra GST Act. It was contended that identical proceedings for the same subject matter and tax period were already initiated by the Central authorities, who had conducted searches, issued summons, blocked input tax credit (ITC), and issued show cause notices. Despite the ongoing central proceedings and the jurisdictional objections raised by the petitioner, the State authorities conducted a parallel search and attached all bank accounts. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the impugned provisional attachment amounted to an abuse of process of law and resulted in the deprivation of property without lawful authority, contrary to constitutional protections. It was observed that the statutory framework under Section 6 of the CGST Act, which governs cross-empowerment and avoidance of parallel proceedings between Central and State tax authorities, clearly barred overlapping action once one authority had already initiated proceedings for the same subject matter and period. The Court further held that the State authorities could not invoke Section 83 of the CGST Act to justify attachment when the Central authorities were already seized of identical proceedings, making the exercise arbitrary and beyond jurisdiction. Accordingly, the DRC-22 attachment orders were quashed and the petitioner was permitted to operate its bank accounts.

List of Cases Referred to

• Armour Security (India) Ltd. v. Commissioner, CGST [2025] 177 taxmann.com 478/111 GST 400/101 GSTL 289 (SC) (para 2).

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Mukesh Kohli –  [2026] 185 taxmann.com 895 (Article)

1. Introduction

Sometimes we professionals face a situation when the AO makes addition under section 68 or section 69 of Income Tax Act, 1961/ under section 102 or 103 of Income tax Act, 2025 to the Income of a non-resident without Considering the provision of section 5(2) of Income Tax Act, 1961/2025. Can an AO do this? Let us see the various provisions of section 5, 68 and 69 of Income Tax Act, 1961 as well as sections 5, 102, and 103 of Income Tax Act, 2025

2. Section – 68, Income-tax Act, 1961

Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year:

Provided that where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless:

(a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and

(b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:

Provided further that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee company shall be deemed to be not satisfactory, unless:

(a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and

(b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:

Provided also that nothing contained in the first proviso [or second proviso] shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10.

3. Section – 102, Income-tax Act, 2025

1. Where any sum is found credited in the books of an assessee maintained for any tax year, and:

(a) the assessee offers no explanation about the nature and source of such credit; or

(b) the explanation offered about the nature and source of such credit by assessee is not satisfactory in the opinion of the Assessing Officer,

Then, the sum so credited shall be charged to income-tax as income of the assessee of that tax year.

2. For the purposes of sub-section (1), where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, the explanation offered by such assessee shall be deemed to be not satisfactory, unless:

(a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and

(b) Such explanation in the opinion of the Assessing Officer has been found to be satisfactory.

3. For the purposes of sub-section (1), where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount, by whatever name called, the explanation offered by such assessee company shall be deemed to be not satisfactory, unless:

(a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and

(b) Such explanation, in the opinion of the Assessing Officer has been found to be satisfactory.

4. Nothing contained in sub-section (2) or (3) shall apply if the person, in whose name the sum referred to in those sub-sections is recorded, is a venture capital fund or a venture capital company as referred to in Schedule V (Table: Sl. No. 6).

Click Here To Read The Full Article

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Case Details: New World Paints (P.) Ltd. vs. Suhas Dattatray Narkar [2026] 185 taxmann.com 342 (Bombay)

Judiciary and Counsel Details

• Amit Borkar, J.
• Dinesh C. Patankar for the Petitioner.
• Avinash D. Kango & Neha T. for the Respondent.

Facts of the Case

In the instant case, the respondent was appointed as Sales Manager in August 2016, and from 1 July 2017 his designation was changed to Senior Sales Manager (Project). He received a relieving letter dated 27 May 2020, issued without prior notice during the pandemic.

After termination, he issued a demand letter seeking reinstatement with full back wages and continuity of service. On non-redressal, he approached the Conciliation Officer; conciliation failed, and the dispute was referred to the Labour Court.

Before the Labour Court, though the petitioner appeared, no written statement was filed. Accordingly, the Labour Court proceeded on the respondent’s unchallenged material and held that the respondent was a workman and that his termination was illegal.

The petitioner-employer filed the instant writ petition contending that the respondent was not a workman, as he was drawing a salary of about Rs. 0.50 lakhs per month and was designated as Senior Sales Manager. However, designation and salary alone are not decisive; what is important is the nature of duties actually performed.

High Court Held

The High Court observed that the respondent had clearly stated on oath that his duties were mainly clerical and that he used to visit societies, meet office bearers, and collect product approvals. These duties did not indicate managerial or supervisory control and, therefore, the conclusion that the respondent was a workman was justified.

Since the petitioner had not shown compliance with statutory provisions such as notice or compensation, the order of reinstatement was a logical consequence.

The High Court further held that, since the findings of the Labour Court were based on evidence and there was no perversity, writ jurisdiction did not permit reappreciation of facts unless there was clear illegality. Therefore, the impugned award passed by the Labour Court was to be upheld.

The post Senior Sales Manager Held Workman – Termination Illegal | HC appeared first on Taxmann Blog.

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Editorial Team – [2026] 185 taxmann.com 897 (Article)

1. Introduction

The Companies (Auditor’s Report) Order, 2020 (CARO 2020) significantly enhances auditors’ reporting responsibilities by requiring detailed, clause-wise disclosures on specific aspects of a company’s operations. While the main audit report expresses an overall opinion on the financial statements, CARO focuses on granular reporting of key matters such as fixed assets, borrowings, statutory dues, and internal controls.

In practice, however, auditors often face challenges in ensuring consistency and completeness between CARO reporting and the main audit report. Instances of incomplete reporting, contradictions, or omission of critical matters in either report are commonly observed, leading to regulatory scrutiny and, in some cases, disciplinary action. This highlights the need to clearly understand the distinction, overlap, and interlinkages between CARO and the main audit report.

2. Relevant Provisions

2.1 Companies Act, 2013

As per Section 143(3), The auditor’s report shall also state—

(a) whether he has sought and obtained all the information and explanations which to the best of his knowledge and belief were necessary for the purpose of his audit;

(b) whether, in his opinion, proper books of account as required by law have been kept by the company so far as appears from his examination of those books and proper returns adequate for the purposes of his audit have been received from branches not visited by him;

(c) whether the report on the accounts of any branch office of the company audited under sub-section (8) by a person other than the company auditor has been sent to him under the proviso to that sub-section and the manner in which he has dealt with it in preparing his report;

(d) whether the company’s balance sheet and profit and loss account dealt with in the report are in agreement with the books of account and returns;

(e) whether, in his opinion, the financial statements comply with the accounting standards;

(f) the observations or comments of the auditors on financial transactions or matters which have any adverse effect on the functioning of the company;

(g) whether any director is disqualified from being appointed as a director under sub-section (2) of section 164;

(h) any qualification, reservation or adverse remark relating to the maintenance of accounts and other matters connected therewith;

(i) whether the company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls;

(j) such other matters as may be prescribed.

As per Section 143(11), The Central Government may, after consultation with the Advisory Committee, by general or special order, direct, in respect of such class or description of companies, as may be specified in the order, that the auditor’s report shall also include a statement on such matters as may be specified therein.

Provided that until the National Financial Reporting Authority is constituted under section 132, the Central Government may hold consultation required under this sub-section with the Committee chaired by an officer of the rank of Joint Secretary or equivalent in the Ministry of corporate Affairs and the committee shall have the representatives from the Institute of Chartered Accountants of India and Industry Chambers and also special invitees from the National Advisory Committee on Accounting Standards and the office of the Comptroller and Auditor General. (Effective from 10th April,2015)

2.2 Analysis – Overlap and Practical Challenges

While CARO 2020 and the main audit report serve different purposes, they are interrelated. CARO is not a substitute for audit opinion but a supplementary reporting framework. However, in practice:

• Matters reported under CARO, for example, defaults in loan repayment, fraud, and non-compliance with laws, may have implications on the audit opinion.
• Failure to reflect such matters appropriately in the main audit report can result in inconsistency.
• Conversely, qualifications in the main report may not always be properly mirrored or explained in CARO clauses

This creates overlap risks and reporting gaps, requiring careful evaluation by auditors.

2.3 Illustrative Cases Observed in Practice

The following cases are illustrative of audit deficiencies and reporting inconsistencies observed in orders and inspection findings issued by the National Financial Reporting Authority and disciplinary proceedings of the Institute of Chartered Accountants of India.

Click Here To Read The Full Article

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Press Release: 2026-2027/150, Dated 27.04.2026

The Reserve Bank of India (RBI) has issued final directions on asset classification, provisioning, and income recognition for commercial banks, replacing the draft framework released on October 7, 2025.

1. Objective of the Revised Framework

The directions aim to:

• Consolidate and update prudential norms
• Enhance clarity and consistency in regulatory requirements
• Strengthen risk recognition and provisioning practices

2. Key Features of the Framework

• Comprehensive consolidation of existing instructions into a unified framework
• Updates to norms relating to:

1. 1. Asset classification (standard, sub-standard, doubtful, loss assets)
   2. Provisioning requirements
   3. Income recognition principles

• Issuance of:

1. 1. Multiple amendment directions
   2. Repeal of earlier overlapping instructions

3. Regulatory Impact

The revised framework is expected to:

• Improve accuracy in identification of stressed assets
• Ensure timely recognition of income and losses
• Strengthen prudential risk management in banks

4. Effective Date

• The directions will come into force from April 1, 2027

5. Conclusion

The final directions mark a significant step towards a modernised and harmonised prudential framework, reinforcing RBI’s focus on financial stability, transparency, and sound banking practices.

Click Here To Read The Full Press Release

The post RBI Issues Final Prudential Norms for Banks from April 2027 appeared first on Taxmann Blog.

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Editorial Team – [2026] 185 taxmann.com 849 (Article)

Global IDT Insights provides a weekly snippet of tax news specifically related to Indirect Taxes from around the globe.

1. France Clarified VAT Rules and Procedures for Distance Sales of Imported Goods Where the Trader Does Not Use IOSS

France has issued a clarification regarding the rules and procedures for declaring and paying value-added tax (VAT) on distance sales of imported goods made by a trader who is not registered under the VAT single window ‘Import One Stop Shop’ (IOSS). It also addresses the rules of liability applicable to import VAT on this same type of transaction.

The clarification concerns a merchant who sells goods from its website to individual consumers located in France or another Member State of the European Union (EU), where the goods are shipped directly to the customer from a non-EU country in which the supplier is established. The clarification explains how VAT must be declared and paid in such cases, as well as how liability for import VAT is determined depending on the customs procedures used when the goods enter the EU.

1.1 Place of Taxation of Distance Sales of Imported Goods

The place of taxation of distance sales of imported goods is the EU Member State where the goods are ultimately delivered to the customer. This rule applies uniformly to all such transactions and is not affected by provisions relating to territoriality of deliveries or the person liable for VAT on imports. As a result, when goods are delivered to a customer located in another EU Member State, the trader does not become liable for VAT in France under the distance sales of imported goods scheme (VAD-BI).

1.2 Rules Where Goods are Imported into the EU by France and Shipped to Another Member State

(a) Applicability based on intrinsic value of packages – Where goods are first imported into the EU in France and subsequently transported to customers located in another EU Member State, the applicable VAT rules depend on the intrinsic value of the goods determined on the basis of sale from the trader to the final consumer.

(b) Packages with intrinsic value less than €150 – When the intrinsic value of the consignment is less than €150, and the trader has not opted for the IOSS, the importation must take place in the EU Member State where the goods are delivered. In this case, the import is not deemed to occur in France, and no VAT arises in France on the import. If the goods are presented to a customs office in France, the trader must request the external transit customs procedure so that the goods can be released for free circulation in the Member State of destination.

(c) Packages with intrinsic value exceeding €150 – When the intrinsic value of the consignment exceeds €150, and the importation is carried out in France, the trader who makes the sale is liable for the import VAT. In this situation, no other person can be treated as liable for import VAT. The import VAT paid may be deducted under the ordinary conditions, provided that, it is incurred by the trader for purposes of the VAD-BI in another EU Member State.

1.3 Liability for Import VAT Where Goods are Imported into France and Delivered to Customers in France

Where goods are imported into France before being shipped to customers located in France, the transaction involves import VAT liability in France. The person liable for VAT on imports made in France is the end customer or the seller, depending on the case.

(a) When the customer/consignee is liable – Consignee is liable for import VAT when the following conditions are cumulatively met:

• The item is located in France at the time of arrival of the shipment or transport destined for the purchaser
• Sales are not facilitated by an electronic interface
• Seller has not opted for IOSS
• The tax base for the tax due on imports is equal to that which would be determined for distance selling if it were located in France.

In this case, the trader is not liable for import VAT and is not liable for VAT.

(b) When the seller becomes liable – Where the taxable base for imports differs from the taxable base determined for distance selling if it were located in France, the person liable for import VAT is the one making the sale. In this case, the place of sale of imported goods is located in France.

In this situation, the trader becomes liable for import VAT and for the VAT due in France on the distance selling transaction. The trader is required to complete the following formalities:

• Declare and collect the corresponding VAT
• Include VAT registration number in customs declaration requesting the release of the goods for free circulation
• Complete VAT return reporting
• Declaring the amount of VAD-BI on the sales tax return

The VAT collected on imports is deductible under the standard rules.

1.4 Application of Offset Provisions and Requirement to Appoint a Tax Representative

The provisions allowing for the offsetting of VAT amounts already paid to the Treasury against VAT amounts still due are applicable only after an audit initiated by the tax authorities. These provisions cannot be relied upon when completing the sales tax return under standard legal procedures.

Where the trader liable for VAT in France, or required to fulfil reporting obligations, is not established in the EU, the trader must appoint a tax representative. This requirement does not apply where the trader is established in a non-EU Member State with which France has a legal instrument relating to mutual assistance with a scope similar to that provided for by the relevant EU directives and regulations.

Source – Official Clarification

Click Here To Read The Full Article

The post [Global IDT Insights] France VAT Rules for Distance Sales Without IOSS appeared first on Taxmann Blog.

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Press Release: 2026-2027/149, Dated 27.04.2026

The Reserve Bank of India (RBI) has issued final directions on capital charge for credit risk under the Standardised Approach, replacing the draft framework released on October 7, 2025.

1. Objective of the Revised Framework

The updated directions aim to:

• Enhance robustness and reliability of credit risk assessment
• Introduce greater granularity in risk classification
• Improve risk sensitivity of capital requirements
• Align Indian norms with global Basel III standards

2. Key Features of the Framework

• Incorporates stakeholder feedback received on the draft
• Refines methodologies for:

1. 1. Risk-weight assignment
   2. Exposure categorisation

• Ensures a more accurate reflection of credit risk in capital adequacy

3. Alignment with Global Standards

• The framework is designed in line with Basel III principles
• Promotes:

1. 1. International consistency
   2. Stronger banking system resilience

4. Effective Date

• The directions will come into force from April 1, 2027

5. Regulatory Impact

The revised approach is expected to:

• Strengthen capital adequacy frameworks of banks
• Improve risk management practices
• Enhance financial stability and supervisory effectiveness

6. Conclusion

The final directions represent a significant step towards a more risk-sensitive and globally aligned capital framework, ensuring that banks maintain adequate capital buffers commensurate with their credit risk exposure.

Click Here To Read The Full Press Release

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Case Details: Kailas Kalyan Creators (P.) Ltd. vs. ITO [2026] 185 taxmann.com 518 (Ahmedabad-Trib.)

Judiciary and Counsel Details

• Sanjay Garg, Judicial Member & Annapurna Gupta, Accountant Member
• Chetan Agarwal, A.R. for the Appellant.
• Alpesh Parmar, CIT-DR for the Respondent.

Facts of the Case

The assessee was engaged in the business of land development, as well as the buying and selling of land and buildings. During the year under consideration, the assessee sold land and offered Long-Term Capital Gain (LTCG) on the sale. While computing LTCG, the assessee claimed improvement cost as compensation paid to encroachers to obtain vacant possession. The Assessing Officer (AO) disallowed the entire improvement cost, as the assessee failed to furnish complete details of the persons, including their names, PANs, and the nature of payments (cash or bank), etc. Aggrieved by the order, the assessee preferred an appeal to the CIT(A).

The CIT(A) upheld the additions made by the AO. The matter then reached the Ahmedabad Tribunal.

ITAT Held

The Tribunal held that it was an admitted position that the land in question was encroached upon by various encroachers. Even after protracted litigation and various efforts, the assessee was unable to secure the land’s vacating. The assessee had to pay compensation to the said encroachers. The short issue raised before the Tribunal was only relating to the quantum of the amount of compensation paid and the veracity of evidence, such as bills and vouchers, etc., furnished by the assessee to claim the aforesaid compensation.

The CIT-DR stated at the bar that he had thoroughly examined the evidence furnished by the assessee, including the separate agreements entered into with each of the encroachers and also the details of payments made by the assessee to various encroachers, most of which were through the banking channel. He has pointed out that, though some payments were made in cash, they were preceded by an immediate withdrawal from the assessee’s bank account. The DR also did not dispute the justification for the payments made. There was protracted litigation between the AMC, Ahmedabad, and the encroachers to have the land vacated, along with police complaints. There were also newspaper cuttings, and the encroachers had allegedly threatened and filed complaints with the police against the family members and Directors of the assessee company.

Accordingly, the assessee pursued all available legal remedies, including approaching various authorities, both legal and administrative. Despite the orders of the Hon’ble Gujarat High Court in a petition filed by the encroachers against the Municipal Corporation, Ahmedabad, seeking removal of their encroachments on the land, the assessee was unable to remove the encroachers from the land.

The bills and vouchers, and the entire evidence, having been thoroughly examined by the CIT-DR, and there being no dispute about the factum of compensation paid by the assessee to the encroachers, there was no justification for the lower authorities in not allowing the said claim of improvement on account of the payments of compensation to the encroachers.

Therefore, the claim of improvement on account of payments of compensation to encroachers was to be allowed.

The post Compensation to Encroachers Allowed as LTCG Improvement Cost | ITAT appeared first on Taxmann Blog.

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Press Release: 2026-2027/152, Dated 27.04.2026

The Reserve Bank of India (RBI) has issued final directions on reporting instructions for Authorised Dealer (AD) Category-I banks, after considering stakeholder feedback on the draft dated February 16, 2026.

1. Objective of the Directions

The framework aims to:

• Enhance transparency in the foreign exchange (forex) derivatives market
• Strengthen regulatory oversight and data visibility
• Enable better risk monitoring across group structures

2. Mandatory Reporting to CCIL

AD Category-I banks are required to report INR foreign exchange derivative transactions to clearing Corporation of India Ltd. trade repository

3. Scope of Reporting

• Covers INR-based FX derivative transactions
• Includes transactions:

1. 1. Undertaken globally
   2. By related parties of the bank

4. Focus on Group-Level Transparency

The inclusion of related party transactions across jurisdictions ensures:

• A holistic view of exposures
• Better identification of systemic and concentration risks

5. Regulatory Impact

The directions are expected to:

• Improve data aggregation and market intelligence
• Strengthen risk management frameworks
• Align with global practices on trade repository reporting

6. Conclusion

The final directions mark a significant step towards centralised reporting and enhanced transparency in the forex derivatives market, ensuring that RBI has comprehensive visibility over INR-linked exposures across global operations.

Click Here To Read The Full Press Release

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Case Details: Atanu Banerjee vs. Deputy Director of Income-tax (Investigation) - [2026] 185 taxmann.com 533 (Delhi-Trib.)

Judiciary and Counsel Details

• Vimal Kumar, Judicial Member & Ramit Kochar, Accountant Member
• Ms Priyanka Garg, CA for the Appellant.
• S.K. Jadhav, CIT

Facts of the Case

Assessee-individual was resident in India for the relevant assessment year. During the assessment proceedings, the Assessing Officer (AO) noticed that the assessee maintained a foreign bank account in the USA. The assessee furnished the details of the said account and the credits therein, including USD 4,05,000 on account of the sale of a house property situated in the USA.

The said property was purchased in 1999 and sold in 2016, and the assessee claimed that it was acquired during his stay in the USA out of foreign earnings and a mortgage loan. The transaction was disclosed to the US tax authorities, and, on computation under the Income-tax Act, 1961, it resulted in a long-term capital loss. However, the AO treated the amount as unexplained and added it as undisclosed foreign income under the Black Money Act.

The matter reached the Delhi Tribunal.

ITAT Held

The Tribunal held that the assessee was required to substantiate that the asset had not been acquired from an amount chargeable or assessable to income-tax in India at the relevant times. The assessee, being a resident during the relevant assessment year, failed to furnish the necessary evidence to support its contention, viz., status as non-resident when the said house was acquired in 1999, evidence related to sources of making investments in the said house acquired in 1999, and evidence related to his employment in the USA during 1993-2004. The assessee has chosen not to file such evidence before the Tribunal.

It is also contended by the assessee before the Tribunal that he is old and, being very old, and that if some more time is granted to the assessee and, accordingly, if one more opportunity is provided to the assessee, then the assessee will get all the relevant documents to support his contentions. However, it is observed that the assessee has stated that he is more than 70 years of age, suffering from a disease, and is old. The statute, being new albeit stringent, the assessee has contended that one more opportunity be provided to produce the relevant evidence/documents.

Thus, keeping in view of the peculiar facts and circumstances of the case, fairness to both the parties and in the interest of justice, the Tribunal was of the considered view that one more opportunity is required to be provided to the assessee to furnish details/conclusive evidence/explanations w.r.t. sources of investing in the said foreign assets, sources of making repayments of mortgage loans and also to prove its residential status during the previous years in which the payment for acquisition of the said property or repayments of mortgage loans were made. Thus, the assessee’s appeal is allowed for statistical purposes.

List of Cases Referred to

• Chitturi Subanna v. Kudapa Subbanna & Ors AIR 1965 SC 1325 (para 2.2)
• National Thermal Power Co. Ltd. v. CIT [1998] 97 Taxman 358/229 ITR 383 (SC) (para 2.2).

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