Delhi HC pauses judges’ ITRs amid tax exemption row

The Delhi High Court has temporarily halted the processing of income tax returns for judges of the High Court and the Supreme Court amid a dispute over exemptions for certain allowances under a new taxation system. The division bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta directed the private secretaries of judges who filed their income tax returns under the new system to submit their details and PAN numbers to authorities.

This order was issued following a petition filed by the Delhi Tax Bar Association on July 22 and subsequently on August 10.

The petition argues that certain allowances granted to judges are fully exempted from income calculations under Sections 22D of the High Court Judges Act, 1954, and 23D of the Supreme Court Judges Act, 1958. The Central Board of Direct Taxes (CBDT) announced on September 12 that allowances such as rent-free official residence, conveyance allowance, sumptuary allowances, and leave travel concession would no longer be exempted under the new regime.

The court, in its July 22 order, stated that sections 22D and 23D of the Acts override all provisions of the Income-Tax Act, and the matter deserves consideration.

The court clarified that judges can file their returns or revised returns, detailing the allowance amount under 'receipts not in the nature of income.' However, any pending demand arising from the processed returns will be held in abeyance until further notice. The income tax counsel explained that electronic processing of returns makes it difficult to identify returns belonging to specific judges, with an estimated 98 percent of returns likely to be processed without human intervention by the end of August.

The court emphasized that if any refund is due, it will not be released until the outcome of the case. The petitioner has challenged the Central Board of Direct Taxes' memorandum of September 2025, arguing it violates judges' independence and infringes upon Articles 125 and 221 of the Constitution, which safeguard the salaries and allowances of Supreme Court and high court judges from being reduced or altered in their detriment post-appointment.