The High Court and Supreme Court confirmed that reopening assessments on depreciation and goodwill claims in a Slump Sale transaction was invalid, as material facts were fully disclosed and original assessments completed.
Gujarat High Court held that reopening assessment beyond four years is invalid when all material facts were disclosed. Depreciation claims on Slump Sale assets remain intact.
The Tribunal held that once the assessee’s own ledger reflected a creditor’s write-off, Section 41(1) was automatically triggered. The waiver in books = taxable cessation of liability.
The Court found that the notices sought to reopen issues that legally ceased to exist after approval of the Resolution Plan. It held that proceedings for any pre-plan period cannot continue under the Income Tax Act.
The Court granted bail after finding investigation complete, punishment limited to five years, and no risk of tampering in a case based on documentary evidence.
The Court held that the authority could not reject the ruling request based on earlier proceedings that were closed without deciding tax issues. The matter was remanded for fresh consideration.
Since the assessment order did not refer to initiating penalty under Section 271D, the Court held the penalty void. This reinforces that penalty jurisdiction arises only from recorded satisfaction.
The Tribunal ruled that incidental foreign expenditure does not bar 80G approval, emphasizing that only the main charitable activities’ genuineness matters for registration.
The Court found that the return filed under Section 153A contained full disclosure submitted prior to initiation of penalty proceedings. It held that such disclosure satisfied legal requirements, leaving no basis for penalty.
The Court found that reassessment must proceed through the faceless regime and not through a jurisdictional officer. Since the notice was issued in breach of this mandate, both the notice and assessment order were quashed.
