Karnataka High Court Sets Aside Tax Revision Notice Against Myntra Co-founder Mukesh Bansal

The Karnataka High Court has set aside tax revision proceedings initiated against entrepreneur and Myntra co-founder Mukesh Bansal in connection with a tax refund exceeding ₹27.13 crore for the assessment year 2019-20. Justice S. Sunil Dutt Yadav delivered the ruling, holding that an intimation issued under Section 143(1) of the Income Tax Act without any adjustment cannot be treated as an order for exercising revisionary powers under Section 263.

The judgment provides clarity on the legal boundaries governing the Income Tax Department's revisional authority. Tax practitioners noted that the ruling reinforces statutory distinctions between routine processing of returns and full-scale scrutiny assessments, impacting how administrative rectifications are contested across corporate circles.

The case originated from Bansal's original income tax return for the assessment year 2019-20, where he declared a total income of ₹231.73 crore and an initial tax liability of ₹82.55 crore, claiming a minor refund of ₹6.07 lakh. He subsequently filed a revised return after obtaining condonation of delay, seeking to reclassify the repurchase of employee stock options from capital gains to salary.

This reclassification generated a revised refund claim of ₹27.13 crore. After the tax administration processed the revised return and issued the refund, the Principal Commissioner of Income Tax issued a notice under Section 263 to review the proceeding. Bansal challenged the notice directly before the High Court through legal counsel, arguing that the statutory prerequisites for invoking revisionary jurisdiction were absent.

The court accepted the petitioner's argument that an intimation processed automatically under Section 143(1) without adjustments lacks the character of an assessment order required to attract Section 263 scrutiny. Consequently, the bench quashed the notice issued for the hearing of the revision proceedings.

Legal experts observed that the verdict curtails the authority of tax authorities to unilaterally reopen processed intimations where regular scrutiny was not undertaken. The decision is expected to guide taxpayers dealing with similar reclassifications of employee stock option proceeds and subsequent administrative reviews.