India's courts rule on tax notices and rebate relief in two landmark cases

The Gujarat High Court quashed Section 153C notices issued to respondents in the ACIT vs Maulik Jayantilal Patel case, finding that a memorandum of understanding recovered from broker Dhaval Teli had no nexus to the respondents and that the assessing officer had improperly inferred undisclosed investment. The court held that the information gathered after the search did not create the live link required under Section 153C, and the notices were set aside. The revenue challenged the decision before the Supreme Court of India.

Separately, the Rajkot bench of the Income Tax Appellate Tribunal granted rebate relief under Section 87A of the Income Tax Act to individual taxpayer Kavita Paras Shah for short‑term capital gains in Assessment Year 2025‑26. Although the Central Processing Centre had denied the rebate on the basis of a later‑introduced restriction, the Tribunal ruled that the restriction applies only from AY 2026‑27, allowing the rebate on the entire tax liability, including tax on short‑term capital gains.