Rajeev Sawhney Vs Assessment Unit (Delhi High Court)
The Delhi High Court examined a writ petition filed by a partner of a professional firm challenging the action of the Assessing Officer in adding to his income amounts received as additional remuneration and discretionary performance reward. The petitioner contended that the partnership firm had already paid tax on these amounts, and therefore, taxing them again in the hands of the partner was not justified. It was argued that the Assessing Officer relied on Section 10(2A) Explanation and Section 28(v) of the Income Tax Act, 1961 without considering the proviso and its implications.
The Court noted that similar issues were pending before it in another writ petition and observed that multiple proceedings had been initiated across the country on the same issue, leading to wider implications for partners in professional firms. Considering the broader impact, the Court directed the Central Board of Direct Taxes (CBDT) to examine the issue and issue an appropriate clarification. The petitioner’s firm was directed to submit a representation to the CBDT within two weeks.
Pending further consideration, the Court stayed recovery proceedings arising from the impugned assessment order dated 06.03.2026 and listed the matter for further hearing.
