Supreme Court Annual Digest 2025: Income Tax Act

Corrupt Practice - Whether election can be declared void due to her non-disclosure of income from her income tax returns and amounts to improper acceptance of nomination rendering election void under section 100(1)(d)(i) and corrupt practise under 100(1)(d)(iv) of RPA – Held, mere failure to disclose assets won't invalidate election unless they're substantial - The non-disclosure was not of a 'substantial nature' and did not materially affect the election result - A Court should not rush to invalidate an election based on a 'highly pedantic and fastidious approach' or on 'minor technicalities' that do not substantially impinge on the law or the integrity of the electoral process - Non-disclosure did not constitute a corrupt practice within the meaning of Section 123(2) of RPA, as it was not of a substantial nature - Appeal dismissed. [Paras 8-11] Ajmera Shyam v. Kova Laxmi, 2025 LiveLaw (SC) 814 : 2025 INSC 992 Debt Recovery Tribunal – Held, the e-auction notice and sale held by the DRT were invalid for non-disclosure of statutory dues of DDA and failure to comply with provisions of the Income Tax Act and Income Tax Certificate Proceedings Rules, 1962 regarding proclamation of sale - Banks failure to disclose encumbrances of property in auction notice invalidates sale - The auction purchaser, though innocent and bona fide, was entitled to restitution as the sale was in violation of lease terms and statutory provisions - The Court quashed and set aside the auction and sale confirmation, directing refund with interest to the auction purchaser while upholding the DDA's rightful claims - The principle of restitution flows from the very heart of justice that no one shall unjustly enrich himself at the instance of another and that those who suffered without fault should, so far as money can achieve, be restored to the position they once occupied - The jurisdiction to make restitution is inherent in every court and will be exercised wherever the justice of the case demands - Appeal allowed. [Para 23-27, 30-32] Delhi Development Authority v. Corporation Bank, 2025 LiveLaw (SC) 953 : 2025 INSC 1161 Departmental Circulars and Guidelines - Binding nature on revenue authorities – Held, Court relied on Circulars issued by Ministry of Finance and Central Board of Direct Taxes (CBDT), including the 2008 Circular and 2009 Prosecution Manual, which state that prosecution under Section 276C(1) should be initiated only after the IT Appellate Tribunal (ITAT) confirms a penalty for concealment of income - These Circulars are binding on the revenue authorities and can 'tone down the rigour of the statutory provision' - The revenue authorities in this case, failed to adhere to these binding instructions by filing the complaint before any such confirmation - The prosecution, lodged in defiance of the department's own binding circulars and continued even after the Settlement Commission's conclusive finding that there was no suppression of facts, amounted to a 'blatant disregard' of their own directives, citing such actions as a 'serious lapse' and are not justified - Set aside order of High Court and imposed costs of Rs. 2 lakhs on the revenue, payable to the appellant - Appeal allowed. [Paras 31-33, 35- 38] Vijay Krishnaswami @ Krishnaswami Vijayakumar v. Deputy Director of Income Tax (Investigation), 2025 LiveLaw (SC) 851 : 2025 INSC 1048 Disproportionate Assets - Income Tax Returns - Quashing of FIR - Economic Inflation - Long-Term Asset Valuation - The Appellant argued that his wife's income and other declared sources of income were not properly considered in the calculation of assets. The Appellant submitted income tax returns and other supporting documents to justify the declared assets. Held, the income of the Appellant's wife and other declared sources were not adequately considered by the Vigilance Department. It was observed that while calculating disproportionate assets over a long period (1996-2020), inflation and economic changes should be considered. Referring to State of Haryana v. Bhajan Lal, 1992 SCC (Cri) 426 the Court noted that powers under Article 226 of the Constitution could be exercised when allegations in the FIR do not constitute any offence. The Court found that the alleged disproportionate assets were not substantiated when the Appellant's and his wife's declared income was properly accounted for. The Supreme Court quashed the FIR registered against the Appellant. Consequently, the appeal was allowed. Nirankar Nath Pandey v. State of U.P., 2025 LiveLaw (SC) 90 Effect of Resolution Plan Approval - Post-Resolution Income Tax Demand - Held, once a Resolution Plan is approved by the Adjudicating Authority, all claims not included therein, including statutory dues owed to the Central Government, stand extinguished. (Para 8) Vaibhav Goel v. Deputy Commissioner of Income Tax, 2025 LiveLaw (SC) 330 : 2025 INSC...

Supreme Court Annual Digest 2025: Income Tax Act

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