Delhi High Court halts processing of ITRs filed by SC and HC judges under new tax regime — here’s why
The Delhi High Court has asked the income tax department not to process income tax returns filed by judges of the Supreme Court and various high courts amid a dispute over whether certain judicial allowances continue to enjoy tax exemption under the new taxation regime.
A bench comprising justices Dinesh Mehta and Rajneesh Kumar Gupta directed the private secretaries of the judges to share their details with the tax authorities, including their PAN numbers. This only applies to those who have filed their ITR under the new income tax regime.
The directions came in two orders, passed on 22 July and 10 August, in response to a petition by the Delhi Tax Bar Association, according to a PTI report.
Why was the petition filed?
Judges receive certain allowances that are excluded from the computation of their income on account of Section 22D of the High Court Judges Act, 1954 and 23D of the Supreme Court Judges Act (Salaries and Conditions of Service) 1958.
The petitioner has contended that the Central Board of Direct Taxes (CBDT), through a communication issued on 12 September 2025, took the view that these allowances available to judges, such as rent-free official residence, conveyance allowance, sumptuary allowances, and leave travel concession, would not be exempt under the new tax regime. This is because the regime does not permit most deductions and exemptions available under the old tax regime, but it offers lower tax slab rates.
In the order passed on 22 July, the court said that, prima facie, sections 22D and 23D override all provisions of the Income-Tax Act, and that the issue raised in the petition required consideration.
The petitioner also argued that the CBDT’s September 2025 memorandum is contrary to law and amounts to interference with the independence of the judiciary. It asserted that the memorandum deprives judges of vested rights and violates Articles 125 and 221 of the Constitution, which guarantee that the allowances and salaries of judges from SC and HC shall not be curtailed or varied to their detriment from the date of their appointment.
HC asks IT dept not to process judges’ ITRs for now
The court clarified that judges can file their income tax returns or submit revised returns by showing the specified judicial allowance amount under the category “receipts not in the nature of income”.
However, it directed that any such ITRs filed by judges of the high courts or the Supreme Court should not be processed by the tax department until further orders are passed in the matter.
Returns are processed without human intervention
During the 10 August hearing, the income tax counsel informed the court that income tax returns are now processed electronically and that the system cannot automatically identify whether an ITR belongs to a sitting judge.
The counsel added that there is every likelihood that by the end of August, about 98% of the returns would be processed without human intervention.
The court consequently asked the private secretaries of the judges to furnish the relevant details to the authorities and further directed that in case any demand is raised after processing of the returns, it would be kept in abeyance during the pendency of the petition.
If any amount is found to be refundable, it shall not be refunded, and any amount already refunded to the judges shall be subject to the outcome of the case, according to the court’s statement.
(with inputs from PTI)
