While the order passed by the Single Judge is justified and the show-cause notice does not call for interference, in view of the judgement of the Supreme Court in Vodafone International vs. UOI 221 CTR 617, the interest of the assessee is safeguarded by directing that the AO shall record a finding on the preliminary issue relating to jurisdictional fact (as to whether the overseas transaction attracts Indian tax at all). If the assessee is aggrieved by the finding, it is entitled to challenge the same by a Writ Petition

This Court categorically held (in the earlier judgement – attached) that even if there is no period of limitation prescribed u/s153 (3)(ii) to give effect to s. 263 orders, the AO is required to pass the order within a “reasonable period”. Non-specification of period of limitation does not mean that the AO can wait for indefinite period before passing the consequential order. On facts, the period of 3 years & 8 Months that had elapsed since the passing of the s. 263 order was “certainly much beyond the reasonable period that can be allowed to the AO to pass the consequential order“. As the s. 263 order was rightly held to be infructuous, the effect order passed thereafter is not valid

There is a well known difference between a wrong claim made by an assessee after disclosing all the true and material facts and a wrong claim made by the assessee by withholding the material facts. It is only in the latter case that the AO is entitled to proceed u/s 147. The power conferred by s. 147 does not provide a fresh opportunity to the AO to correct an incorrect assessment made earlier unless the mistake in the assessment so made is the result of a failure of the assessee to fully and truly disclose all material facts necessary for assessment. Further, it is necessary for the AO to first state that there is a failure to disclose fully and truly all material facts. If he does not record such a failure he would not be entitled to proceed u/s 147. (Hindustan Lever 268 ITR 332 (Bom) followed)

Reliance and reference to reasons stated in another decision cannot be regarded as a mistake apparent from the record. It is not unusual or abnormal for Judges or adjudicators to refer and rely upon judgments/decisions after making their own research

The “short-cut method” adopted by the Tribunal is totally unsustainable. While the AO is required to record reasons, Law does not mandate the AO to suo moto supply the reasons to the assessee. It is for the assessee to demand the reasons and raise objections to the reopening which the AO is required to dispose of by passing a speaking order. As the assessee did not ask for the reasons and instead participated in the reassessment proceedings, the Tribunal could not have restored the matter back to the file of the AO and give another opportunity to the assessee to raise objections to the “reasons to believe” recorded by the AO. It was the assessee‟s own creation that it did not ask for the reasons or raise objection thereto. Merely because the assessee was oblivious of such a right would not mean that the Tribunal should have granted this right to the assessee, that too, at the stage when the matter was before the Tribunal and travelled much beyond the AO‟s jurisdiction. It is trite that what cannot be done directly, it is not allowed indirectly as well. This novel and ingenuousness method adopted by the Tribunal in setting aside the reassessment orders on merits cannot be accepted

Though Explanation 3 to s. 147 inserted by the FA 2009 w.e.f 1.4.1989 permits the AO to assess or reassess income which has escaped assessment even if the recorded reasons have not been recorded with regard to such items, it is essential that the items in respect of which the reasons had been recorded are assessed. If the AO accepts that the items for which reasons are recorded have not escaped assessment, it means he had no “reasons to believe that income has escaped assessment” and the issue of the notice becomes invalid. If so, he has no jurisdiction to assess any other income. (Jet Airways 331 ITR 236 (Bom) followed)

The claim for deduction u/s 31 is not acceptable because (a) if the heart were to be considered a “plant”, it would necessarily mean that it is an asset which should have found a mention in the assessee’s balance sheet. This was not done and cannot be done as the “cost of acquisition” of such an asset cannot be determined

S. 158BD order void if referring AO’s “satisfaction” not recorded On 30.8.2000, search u/s 132 was carried out on the premises of Manoj Aggarwal pursuant to which a block assessment u/s 158BC was made on 29.8.2002. On 15.7.2003, Manoj Aggarwal’s …

CIT vs. Radhey Shyam Bansal (Delhi High Court) Read More »

Though it is possible that but for detection in the survey, the assessee might not have offered the income, penalty u/s 271(1)(c) can only be levied if “in the course of proceedings” the AO is satisfied that there is “concealment” or “furnishing of inaccurate particulars” in the return of income. The words “in the course of proceedings” mean the assessment proceedings because there is no question of the satisfaction of the AO in survey proceedings. Further, the question whether there is “concealment” or “inaccurate particulars” has to be determined with reference to the return of income. As the assessee had offered the detected income in the return, there was neither concealment nor the furnishing of inaccurate particulars

U/s 2(22)(e), any payment by a closely-held company by way of advance or loan to a concern in which a substantial shareholder is a member holding a substantial interest is deemed to be “dividend” on the presumption that the loans or advances would ultimately be made available to the shareholders of the company giving the loan or advance.
The legal fiction in s. 2(22)(e) enlarges the definition of dividend but does not extend to, or broaden the concept of, a “shareholder”.As the assessee was not a shareholder of the paying company, the “dividend” was not assessable in its hands (Bhaumik 313 ITR 146 (Mum) (SB), approved in Universal Medicare 324 ITR 363 (Bom) & Hotel Hilltop 313 ITR 116 (Raj) followed)