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Posted on by itatbar — No Comments ↓
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DATE: March 18, 2016 (Date of pronouncement)
DATE: April 13, 2016 (Date of publication)
AY: 2012-2013
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CITATION:
S. 14A/ Rule 8D: No disallowance can be made on shares held as stock-in-trade

The Commissioner of Income Tax (Appeals) has erred in not following the order of Tribunal in asessee’s own case. The Co-ordinate Bench of the Tribunal had rejected the appeal of Department for assessment year 2010-11 on identical set of facts. The Commissioner of Income Tax (Appeals) should have maintained ‘Judicial Propriety’ in following the order of Appellate Authority. As of now we restrain ourselves from commenting on the judicial indiscipline committed by the Commissioner of Income Tax (Appeals) and expect that he shall be more careful in future in honouring the orders of the higher Appellate Authorities

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Posted on by bhavikshah — No Comments ↓
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DATE: March 15, 2016 (Date of pronouncement)
DATE: March 31, 2016 (Date of publication)
AY: 2007-08
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CITATION:
AO framed the assessment in a hypothetical way putting the assessee to enormous harassment and inconvenience . Similarly, the CIT(A) confirmed the addition without looking into the merits and facts of the cases which are very clear and apparent from the records produced.

We find that the third party transactions were added in the hands of the assessee without without any basis or material and thus, the AO framed the assessment in a hypothetical way putting the assessee to enormous harassment and inconvenience. Similarly, the ld. CIT(A) confirmed the addition without looking into the merits and facts of the cases which are very clear and apparent from the records produced

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Posted on by editor — 5 Comments ↓
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DATE: March 17, 2016 (Date of pronouncement)
DATE: March 28, 2016 (Date of publication)
AY: 2012-13
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CITATION:
Strictures passed against high-handed and unfair approach of AO (IRS Officer) in refusing to give an acknowledgement of stay application. Chief CIT directed to ensure such behaviour is not repeated. Dept directed to nominate another AO to hear stay application

We find this conduct on the part of the Assessing Officer to accept a stay application and not immediately give acknowledgement of its receipt is unacceptable. The least that is expected of a civil servant is to be fair and civil. In the absence of the above, his conduct is not one becoming of an Officer belonging to the prestigious Indian Revenue Service. The least that is expected of an Officer is that when a person files an application / letter, which is accepted by him, an acknowledgement should be forthwith given to the party filing the application or letter. In case he refuses to accept the letter he should endorse on the letter / application the reason why it is not being accepted with a line or two for the refusal to accept. In case he does accept it and give an acknowledgment he can deal with the applications/ letters as is appropriate in accordance with law. We believe that what has happened in this case is an aberration. However, the Chief Commissioner of Income Tax would ensure that his Officers do not behave in such an high handed and unfair manner, not expected of civil servants

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Posted on by editor — No Comments ↓
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DATE: March 17, 2016 (Date of pronouncement)
DATE: March 28, 2016 (Date of publication)
AY: -
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CITATION:
S. 220(6): Dept directed to redeposit moneys collected illegally by attachment of assessee’s bank account during pendency of stay application. A order passed on a stay application must give reasons for the refusal to stay the demand

Thus, any action to recover taxes adopting coercive means is not permissible till the petitioner’s application for stay under Section 220(6) of the Act is disposed of. Therefore, the action of the Assessing Officer in attaching the petitioners’ bank accounts under Section 226(3) of the Act as well as subsequent withdrawal of the attached amounts from the bank accounts is without jurisdiction and bad in law. The petitioners have a statutory right to its stay application being heard and disposed of before the Revenue can adopt any coercive proceedings on the basis of the Notice of demand under Section 156 of the Act issued to the assessee. This action on the part of the Assessing Officer, if permitted, would lead Section 220(6) of the Act becoming redundant. In the above view, the Notice under Section 226(3) of the Act issued by the Assessing Officer to the petitioners’ bankers are quashed and set aside. Further, the Assessing Officer is directed to deposit the amount of Rs.7,59,185 in HDFC Bank, Fort, Mumbai and Rs.34,265/in State Bank of India, Byculla, Mumbai within a period of one week from today

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Posted on by editor — 3 Comments ↓
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DATE: February 25, 2016 (Date of pronouncement)
DATE: March 3, 2016 (Date of publication)
AY: 2008-09
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CITATION:
S. 14A/ Rule 8D: Severe strictures passed against the ITAT for taking the view that the presumption laid down in HDFC Bank 366 ITR 505 (Bom) and Reliance Utilities 313 ITR 340 (Bom) that investments in tax-free securities must be deemed to have come out of own funds and (ii) Law laid down in India Advantage (Bom) that s. 14A and Rule 8D does not apply to securities held as stock-in-trade cannot be applied as both propositions are contrary to Godrej & Boyce 328 ITR 81 (Bom). ITAT's order reversed on the ground that it is "Judicial Indiscipline" leading to complete chaos and anarchy in the administration of law

The impugned order of the Tribunal seems to question the decision of this Court in HDFC Bank Ltd. (supra) to the extent it relied upon the decision of this Court in Reliance Utilities and Power Ltd. (supra). This is by observing that the decision in Reliance Utilities and Power Ltd.(supra) it must be appreciated was rendered in the context of Section 36(1)(iii) of the Act and its parameters are different from that of Section 14A of the Act. This Court in its order in HDFC Bank Ltd.(supra) consciously applied the principle of presumption as laid down in Reliance Utilities and Power Ltd. (supra) and in fact quoted the relevant paragraph to emphasize that the same principle / test of presumption would apply to decide whether or not interest expenditure could be disallowed under Section 14A of the Act in respect of the income arising out of tax free securities. It is not the office of Tribunal to disregard a binding decision of this court. This is particularly so when the decision in Reliance Utilities and Power Ltd. (supra) has been consciously applied by this Court while rendering a decision in the context of Section 14A of the Act

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Posted on by editor — No Comments ↓
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DATE: January 27, 2016 (Date of pronouncement)
DATE: March 3, 2016 (Date of publication)
AY: 2007-08
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CITATION:
S. 147/ 148: Providing the assessee with the recorded reasons towards the end of the limitation period and passing a reassessment order without dealing with the objections results in gross harassment to the assessee which the Pr. CIT should note & remedy

The Principal Commissioner of Income Tax would take serious note of the above and after examining the facts, if necessary, take appropriate remedial action to ensure that an assessee is not made to suffer for no fault on its part. This is particularly so as almost the entire period of two years from the end of the financial year in which the notice is issued was consumed by the Assessing Officer in failing to give reasons recorded in support of the impugned notice. Nevertheless, the Assessing Officer proceeds to pass a draft Assessment order without dealing with the objections filed by the Petitioner. We could have on that date or even earlier passed an order setting aside the draft assessment order dated 30th March 2015 as it was passed without disposing of the objections. Thus, clearly without jurisdiction. However, we were of the view that although this appears to be a gross case of harassing an Assessee, the Principal Commissioner would take note and adopt remedial action / proceedings

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Posted on by editor — 1 Comment ↓
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DATE: January 21, 2016 (Date of pronouncement)
DATE: February 23, 2016 (Date of publication)
AY: 2008-09
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CITATION:
S. 154: Pedantic stand of AO in refusing to rectify a mistake on the ground that the assessee is responsible for it is appalling and makes a mockery of the assessment proceedings. A sense of fair play by the field officers towards the taxpayers is not an act of benevolence by the field officers but it is call of duty in a socially accountable governance

A lot of emphasis is placed on the fact that the mistake was committed by the assessee himself which has resulted in the error creeping in the assessment order as well. Instead of being apologetic about the complete non application of mind to the facts and making a mockery of the scrutiny assessment proceeding itself, the Assessing Officer has justified the mistake on record on the ground that it is attributed to the assessee. The income tax proceedings are not adversarial proceedings. As to who is responsible for the mistake is not material for the purpose of proceedings under section 154; what is material is that there is a mistake- a mistake which is clear, glaring and which is incapable of two views being taken. The fact that mistake has occurred is beyond doubt. The fact that it is attributed to the error of the assessee does not obliterate the fact of mistake or legal remedies for a mistake having crept in. It is only elementary that the income liable to be taxed has to be worked out in accordance with the law as in force. In this process, it is not open to the Revenue authorities to take advantage of mistakes committed by the assessee. Tax cannot be levied on an assessee at a higher amount or at a higher rate merely because the assessee, under a mistaken belief or due to an error, offered the income for taxation at that amount or that rate. It can only be levied when it is authorised by the law, as is the mandate of Art. 265 of the Constitution of India. A sense of fairplay by the field officers towards the taxpayers is not an act of benevolence by the field officers but it is call of duty in a socially accountable governance

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Posted on by editor — 10 Comments ↓
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DATE: January 27, 2016 (Date of pronouncement)
DATE: February 5, 2016 (Date of publication)
AY: -
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CITATION:
High Court Shocked At Loot Of Taxpayers Funds By Corrupt Babus. Calls For Non-Cooperation Movement By Taxpayers To Eradicate "Hydra Headed Monster" Of Corruption

Hon’ble Justice A. B. Chaudhari of the Nagpur Bench of the Bombay High Court has passed severe strictures against the Government for turning a blind eye to the rampant corruption in the Country. The learned Judge lamented that “It shocks one and all as to the manner in which the taxpayers’ money is being swindled, misappropriated and robbed by such unscrupulous holders of posts”.

He also pointed that corruption has become the order of the day over the past few decades and that taxpayers are helpless victims of the sordid state of affairs.

“Does the taxpayers pay the money to the Government for such kind of acrobatics being played” Justice Chaudhari asked in a rhetorical manner.

He also lamented that ethics and morals have taken a back seat in modern India’s scheme of things. He opined that to eradicate the “hydra headed monster” of corruption, citizens have to come together to tell their Governments that they have had enough. He also recommended that taxpayers’ may have to resort to refuse to pay taxes by a “non-cooperation movement“.

The learned Judge also found fault with the attitude of the employees’ unions who are otherwise very vigilant about their rights. He expressed surprise that the Unions do not “condemn, outcast or demonstrate against their counterpart bureaucracy indulging in corruption” and on the contrary support their misdeeds.

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Posted on by editor — 7 Comments ↓
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DATE: November 30, 2015 (Date of pronouncement)
DATE: January 13, 2016 (Date of publication)
AY: -
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CITATION:
Entire law on accountability of public officials for acts of omission and commission explained. Customs officials directed to pay costs of Rs. 14 lakh + interest @ 9% p.a. from personal account & to face disciplinary action for “high-handedness”, arbitrariness” and seeking to “hoodwink” Court

Today the issue thus is not only of award of compensation but who should bear the brunt. The concept of authority and power exercised by public functionaries has many dimensions. It has undergone tremendous change with passage of time and change in socioeconomic outlook. The authority empowered to function under a statute while exercising power discharges public duty. It has to act to subserve general welfare and common good. In discharging this duty honestly and bona fide, loss may accrue to any person. And he may claim compensation which may in circumstances be payable. But where the duty is performed capriciously or the exercise of power results in harassment and agony then the responsibility to pay the loss determined should be whose? In a modem society no authority can arrogate to itself the power to act in a manner which is arbitrary. It is unfortunate that matters which require immediate attention linger on and the man in the street is made to run from one end to other with no result. The culture of window clearance appears to be totally dead. Even in ordinary matters a common man who has neither the political backing nor the financial strength to match the inaction in public oriented departments gets frustrated and it erodes the credibility in the system. Public administration, no doubt involves a vast amount of administrative discretion which shields the action of administrative authority. But where it is found that exercise of discretion was mala fide and the complainant is entitled to compensation for mental and physical harassment then the officer can no more claim to be under protective cover. When a citizen seeks to recover compensation from a public authority in respect of injuries suffered by him for capricious exercise of power and the National Commission finds it duly proved then it has a statutory obligation to award the same. It was never more necessary than today when even social obligations are regulated by grant of statutory powers. The test of permissive form of grant is over. It is now imperative and implicit in the exercise of power that it should be for the sake of society. When the court directs payment of damages or compensation against the State the ultimate sufferer is the common man. It is the tax payers’ money which is paid for inaction of those who are entrusted under the Act to discharge their duties in accordance with law. It is, therefore, necessary that the Commission when it is satisfied that a complainant is entitled to compensation for harassment or mental agony or oppression, which finding of course should be recorded carefully on material and convincing circumstances and not lightly, then it should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible for such unpardonable behaviour by dividing it proportionately where there are more than one functionaries

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Posted on by editor — 8 Comments ↓
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DATE: October 12, 2015 (Date of pronouncement)
DATE: November 5, 2015 (Date of publication)
AY: 2002-03
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CITATION:
S. 147/ 148: Dept warned not to harass taxpayers by reopening assessments in a mechanical and casual manner. Pr CIT directed to issue instructions to AOs to strictly adhere to the law explained in various decisions and make it mandatory for them to ensure that an order for reopening of an assessment clearly records compliance with each of the legal requirements. AOs also directed to strictly comply with the law laid down in GKN Driveshafts 259 ITR 19 (SC) as regards disposal of objections to reopening assessment

The Court is of the view that notwithstanding several decisions of the Supreme Court as well as this Court clearly enunciating the legal position under Section 147/148 of the Act, the reopening of assessment in cases like the one on hand give the impression that reopening of assessment is being done mechanically and casually resulting in unnecessary harassment of the Assessee

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