Bombay High Court tax relief probe
52 Weeks Entertainment Limited vs. Revenue [W.P. (L) No. 28294 of 2023]
Background of the Case
The appellant, 52 Weeks Entertainment Limited, challenged an order dated 20 September 2023 issued under Section 127(2) of the Income-tax Act, 1961, which proposed to transfer its income tax assessment case from Mumbai to Indore. The appellant challenged this transfer order and, the High Court granted an ad-interim stay on the transfer order after the Revenue (Income Tax Department) sought time to file a reply but failed to do so. Despite multiple hearings, the Revenue repeatedly failed to appear or file a response, leading to extensions of the interim relief.
Shockingly, during the pendency of the petition, the Revenue silently passed a fresh transfer order on 20 February 2025, shifting jurisdiction from one Mumbai circle to another, without informing the court. Additionally, assessment orders were passed in March 2024 and March 2025, seemingly accepting the appellant’s claims without proper scrutiny.
Arguments by the Appellant
The appellant argued that the initial transfer order (Mumbai to Indore) was unjustified and lacked proper reasoning. They highlighted that despite the interim stay, the Revenue continued proceedings in Mumbai, which was a violation of the court’s order. Later, when the Revenue secretly passed a new transfer order (within Mumbai), the appellant claimed they were unaware of it until February 2025. The appellant initially sought to dispose of the petition as infructuous since assessments were now being handled in Mumbai. However, the court observed that if the original transfer order was illegal, any benefits derived from its stay should not stand.
Respondent’s Response
The respondent, Revenue repeatedly failed to appear in court or file replies despite multiple opportunities. When they finally appeared, they opposed the appellant’s request to dismiss the case, insisting that the court should rule on the legality of the original transfer order. Further the Revenue passed a new transfer order (20 February 2025) and completed assessments without court intimation.
Court Findings and Decision
The Bombay High Court, Stated that the interim orders were potentially misused to facilitate a backdoor resolution, undermining judicial oversight and Revenue’s conduct was highly questionable. The assessment orders (March 2024 & 2025) seemed unusually favorable to the appellant, raising suspicions of collusion or undue influence.
The Court, concluded that while the original writ petition had become infructuous due to the new transfer within Mumbai, it could not ignore the broader implications. It therefore directed the CBDT and the Ministry of Finance to initiate a preliminary inquiry into the conduct of officials involved in this case. The Court emphasized the importance of upholding both natural justice and public interest, directing the Chairperson of the CBDT to file a compliance report by 27 June 2025.
Bombay High Court tax relief probe
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