Delhi HC asks Supreme Court and HC judges to share PAN details amid dispute over tax on allowances

The Delhi High Court has asked Supreme Court and High Court judges to share their Permanent Account Number (PAN) and other details with the Income Tax Department (IT Department) to ensure that their tax returns are not processed pending a dispute over taxation of judicial allowances.

A Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta passed the order on August 10 an application moved by the Income Tax Department seeking modification of an interim order passed on July 22.

The Court directed that if a judge’s tax returns have already been processed and a tax demand has been raised, the demand must be kept in abeyance until the petition is decided.

The earlier order had permitted judges opting for the new income-tax regime to declare specified allowances as “receipts not in the nature of income”. The Court had directed that returns filed in this manner should not be processed until further orders.

The dispute arose from a September 12, 2025 Office Memorandum issued by the Central Board of Direct Taxes (CBDT) concerning allowances paid to judges.

According to the Delhi Tax Bar Association, the memorandum said that judges opting for the new income-tax regime cannot claim the tax benefit relating to rent-free official accommodation, conveyance facilities, sumptuary allowance and leave travel concession. The CBDT’s position was that the new regime provides moderate tax rates without deductions and exemptions.

The Association challenged the memorandum before the Delhi High Court. It argued that these allowances are not deductions or exemptions in the conventional sense.

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 specifically exclude them from the computation of salary income, the Association submitted.

On July 22, the Court prima facie agreed with this contention. It observed that the two provisions override the Income Tax Act, including Section 115BAC governing the new tax regime.

The Court consequently permitted judges to declare the allowances as “receipts not in the nature of income”. It also directed that returns filed in this manner should not be processed until further orders.

Subsequently, when the matter was heard on August 10, the IT department sought modification of this direction. It told the Court that returns are processed electronically at the centralised processing centre and that its software cannot identify whether a return belongs to a sitting judge.

Strict compliance would, therefore, require the Department to stop processing returns filed by all taxpayers.

The Court then directed the private secretaries of judges covered by its earlier order to email the judge’s name, assessment year, PAN, filing date and acknowledgement number to a designated official by August 18.

Returns identified through this process must not be processed. Details of any return or revised return filed subsequently must be sent within 12 hours.

The Court was informed that about 98 percent of returns were likely to be processed automatically by the end of August.

Therefore, it directed that any tax demand already raised against the judges should be kept in abeyance. Refunds should also not be released pending the case. Refunds already issued will remain subject to its outcome.

The matter will be heard next on September 3.

Senior Advocate Sachit Jolly appeared for the Delhi Tax Bar Association along with advocates Mansha Anand, Sohum Dua, Abyudaya Shankar Bajpai, Saloni Ray, Ghunaim Siddiqui, Manvi and Ramanand Roy.

Senior Standing Counsel Shlok Chandra appeared for the Income Tax Department along with Junior Standing Counsel Naincy Jain and Madhavi Shukla and advocate Udit Dad.

[Read Judgment]