The Delhi High Court has directed Supreme Court and High Court judges to share their Permanent Account Numbers (PANs) and other details with the Income Tax Department to ensure that their tax returns are not processed while a dispute over the taxability of judicial allowances remains pending.
A Division Bench of Justice Dinesh Mehta and Justice Rajneesh Kumar Gupta passed the direction on August 10 while considering an application by the Income Tax Department seeking modification of the Court’s July 22 interim order.
The Court directed that where a judge’s return has already been processed and a tax demand raised, the demand shall remain in abeyance until the case is decided. Refunds will also not be released during the pendency of the proceedings, while refunds already issued will remain subject to the final outcome.
The dispute concerns a September 12, 2025 Office Memorandum issued by the Central Board of Direct Taxes (CBDT) regarding the tax treatment of allowances available to judges.
The Delhi Tax Bar Association has challenged the memorandum, which, according to the Association, states that judges opting for the new tax regime cannot claim tax benefits relating to rent-free official accommodation, conveyance facilities, sumptuary allowance and leave travel concession.
The Association contends that these amounts are not deductions or exemptions but are specifically excluded from salary income under Section 22D of the High Court Judges (Salaries and Conditions of Service) Act, 1954 and Section 23D of the Supreme Court Judges (Salaries and Conditions of Service) Act, 1958.
On July 22, the High Court had prima facie accepted this argument and held that the statutory provisions could override the Income-tax Act, including Section 115BAC governing the new tax regime. It consequently permitted judges to declare the allowances as “receipts not in the nature of income” and directed that such returns not be processed until further orders.
The Income Tax Department later sought modification of the order, stating that returns are electronically processed at a centralised facility and its software cannot identify whether a return belongs to a sitting judge. Strict compliance with the earlier order could therefore require the Department to stop processing returns of all taxpayers.
The High Court has now directed the private secretaries of judges covered by its earlier order to email their name, assessment year, PAN, filing date and acknowledgement number to a designated official by August 18. Details of any subsequently filed or revised returns must be communicated within 12 hours.
The Court noted that around 98% of returns were expected to be processed automatically by the end of August.
The matter will next be heard on September 3.
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