The Delhi High Court has mandated judges from the Supreme Court and High Courts to provide their Permanent Account Numbers (PAN) and related details to the Income Tax Department. This measure aims to prevent the processing of their tax returns amidst an ongoing legal debate regarding the taxation of specific judicial allowances.
The directive was issued by a Division Bench comprising Justices Dinesh Mehta and Rajneesh Kumar Gupta on August 10, following a request from the Income Tax Department to amend a previous interim order from July 22. The court instructed that any tax demands raised on processed returns should remain on hold until the resolution of the petition.
Previously, the court had allowed judges who chose the new income-tax regime to categorize certain allowances as “receipts not in the nature of income,” instructing that such returns should not be processed until further notice.
This legal contention arose from an Office Memorandum by the Central Board of Direct Taxes (CBDT), dated September 12, 2025. The memorandum stated that judges opting for the new tax regime are not eligible for tax benefits on rent-free official housing, conveyance facilities, sumptuary allowance, and leave travel concession. The CBDT asserts that the new tax regime offers lower rates without deductions and exemptions.
The Delhi Tax Bar Association has contested this memorandum, arguing that these allowances aren’t typical deductions or exemptions. They cited Sections 22D of the High Court Judges (Salaries and Conditions of Service) Act, 1954, and 23D of the Supreme Court Judges (Salaries and Conditions of Service) Act, 1958, which exclude these allowances from salary income calculations.
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On July 22, the court provisionally supported this viewpoint, noting that these statutory provisions supersede the Income Tax Act, including Section 115BAC, which governs the new tax regime. Consequently, judges were permitted to declare these allowances as non-income receipts, and processing of such returns was halted.
During the August 10 hearing, the Income Tax Department requested a modification, stating that returns are electronically processed at a centralized center, and the system cannot differentiate returns filed by judges from others. Compliance would necessitate halting the processing of all taxpayers’ returns.
To address this, the court instructed the judges’ private secretaries to email specific details, including the judge’s name, assessment year, PAN, filing date, and acknowledgment number, to a designated official by August 18. Returns identified this way should not be processed. Updated information on new or amended returns must be communicated within 12 hours of filing.
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With approximately 98% of returns expected to be processed automatically by the end of August, the court ruled that any tax demands raised against judges should be suspended. Additionally, any pending refunds should not be issued until the case concludes. However, already issued refunds will be contingent upon the case outcome.
The case is scheduled for its next hearing on September 3. Representing the Delhi Tax Bar Association, Senior Advocate Sachit Jolly appeared alongside advocates Mansha Anand, Sohum Dua, Abyudaya Shankar Bajpai, Saloni Ray, Ghunaim Siddiqui, Manvi, and Ramanand Roy. Senior Standing Counsel Shlok Chandra, with Junior Standing Counsel Naincy Jain, Madhavi Shukla, and advocate Udit Dad, represented the Income Tax Department.
