In Brief
Five Sikkim-registered companies claimed income earned as commission on cardamom sales in Sikkim should be taxed under the Sikkim Manual, 1948 (not the Income Tax Act, 1961), and challenged reassessment notices issued from Delhi. The Supreme Court upheld the tax authorities, holding that the companies' control and management were wholly exercised by Rattan Gupta, a Delhi-based chartered accountant, making them Delhi-resident Indian companies subject to the Income Tax Act, 1961. The Court found no credible evidence of genuine commission income earned in Sikkim; summonses to alleged payers went unanswered. Service of notices on Rattan Gupta was valid; reassessment without a prior assessment order was permissible under "escaped assessment" principles; and mandatory interest was properly levied. The appeals were dismissed.
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