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DATE: November 20, 2017 (Date of pronouncement)
DATE: December 23, 2017 (Date of publication)
AY: 2008-09
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CITATION:
S. 2(47)(v): Immovable property can be regarded to have been transferred on the date of execution of the Development Agreement and irrevocable General Power of Attorney only if the terms indicate that complete control is given to the developer. If the entire consideration is not received by the assessee and physical possession of the property is not parted with, there is no transfer u/s 2(47)(v)

What binds this Court is that the judgment of the Division Bench in the case of Chaturbhuj Dwarkadas Kapadia v/s. Commissioner of Income Tax (2003) 260 ITR 491 (Bom). The Division Bench held that the date of contract is relevant provided the terms of the contract indicate passing off or transferring of complete control over the property in favour of the developer. The Division Bench laid down the test for determining the date which should be taken into account for determining the relevant accounting year in which the liability accrues. Admittedly, on the date of execution of the development agreement, the entire consideration was not received by the respondent assessee. The physical possession of the property subject matter of development agreement was parted with by the respondent assessee on 1st March, 2008. It was held that on that day, complete control over the property was passed on to the developer

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DATE: April 10, 2017 (Date of pronouncement)
DATE: December 16, 2017 (Date of publication)
AY: 2006-07
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CITATION:
Bogus LTCG from Penny stocks: The assessee has not tendered cogent evidence to explain how the shares in an unknown company worth Rs.5 had jumped to Rs.485 in no time. The fantastic sale price was not at all possible as there was no economic or financial basis to justify the price rise. the assessee had indulged in a dubious share transaction meant to account for the undisclosed income in the garb of long term capital gain. The gain has accordingly to be assessed as undisclosed credit u/s 68

The assessee had indulged in a dubious share transaction meant to account for the undisclosed income in the garb of long term capital gain. While so observing, the authorities held that the assessee had not tendered cogent evidence to explain as to how the shares in an unknown company worth Rs.5/had jumped to Rs.485/in no time. The Income Tax Appellate Tribunal held that the fantastic sale price was not at all possible as there was no economic or financial basis as to how a share worth Rs.5/of a little known company would jump from Rs.5/to Rs.485/. The findings recorded by the authorities are pure findings of facts based on a proper appreciation of the material on record. While recording the said findings, the authorities have followed the tests laid down by the Hon’ble Supreme Court and this Court in several decisions

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DATE: August 22, 2017 (Date of pronouncement)
DATE: December 5, 2017 (Date of publication)
AY: 1987-88
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CITATION:
S. 271(1)(c) Penalty: The requirement to obtain previous approval of the IAC is mandatory as it is to safeguard the interests of the assessee against arbitrary exercise of power by the AO. Non-compliance may vitiate the penalty order. However, the requirement in s. 274 that the assessee must be given a reasonable opportunity of being heard cannot be stretched to the extent of framing a specific charge or asking the assessee an explanation in respect of the quantum of penalty proposed to be imposed

The provision of Section 271(1)(c)(iii) of the Income Tax does not attract the rule of presumption of mens rea and it cannot be equated with the provision in the Criminal Statute. The penalty is for default in complying with the provision, i.e. of furnishing true and correct particulars of the income in the return. The penalty is imposable for breach of the civil obligation. It is only the reasonable opportunity of being heard in the matter, which is required to be provided to the assessee. The enquiry seems to be of summary in nature, which does not even call for issuance of show cause notice in respect of the quantum of penalty proposed to be imposed. While exercising the discretion in respect of the quantum of penalty, the explanation furnished by the assessee to mitigate the rigour of penalty has to be considered, having regard to the intention of the assessee, if any, to evade the tax, as one of the factors

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DATE: September 19, 2017 (Date of pronouncement)
DATE: October 6, 2017 (Date of publication)
AY: -
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CITATION:
Strictures by ITAT against ICAI deprecated: It is very unfortunate that the Tribunal, out of sheer desperation and frustration and agitated by the fact that the Revenue is not opposing the request for condonation of delay blamed the assessee's Chartered Accountant and the ICAI on how they should conduct themselves. The Tribunal completely misdirected itself by taking irrelevant factors into account. Delay of 2984 days in filing the appeal caused by wrong advice of a professional is capable of condonation. However, even if the assessee has acted bona fide, he can be held liable for payment of costs to balance rights and equities

Thus, we find that the Tribunal, out of sheer desperation and frustration and agitated by the fact that the Revenue is not opposing the request for condonation of delay, turned its attention towards the assessee’s Chartered Accountant. It is unfortunate that thereafter paragraphs after paragraphs are devoted to how a Chartered Accountant ought to conduct himself and while advising litigants in tax matters. How a Chartered Accountant, as a professional, should be aware that legal proceedings should be filed in time and if there are adverse orders, how proper advice should be given. It is very unfortunate that the Tribunal has, apart from seeking to advice professionals, blamed not only individual Chartered Accountants but equally the Institute of Chartered Accountants of India. It is unfortunate that Courts of law or Tribunals, which are the last fact finding authorities in this case, adopted this course

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DATE: September 19, 2017 (Date of pronouncement)
DATE: October 3, 2017 (Date of publication)
AY: 2008-09
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S. 14A/ Rule 8D: The AO is not entitled to make any disallowance under Rule 8D if he does not specifically record that he is not satisfied with the correctness of the assessee's claim. The fact that the CIT(A) and ITAT were not satisfied with the assessee's disallowance and enhanced it does not mean that Rule 8D becomes applicable and the disallowance should be computed as per the prescribed formula

The Assessing Officer did not specifically record that he is not satisfied with the correctness of the claim of the assessee in respect of the expenditure in relation to the income which does not form part of the total income under the Act. However, he felt obliged and going by the presence of Rule 8D that once Section 14A is attracted, the disallowance is to be made as per Rule 8D only which has been prescribed by the Legislature. The Assessing Officer has not adverted to the plain language of subsection (2) of Section 14A

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DATE: September 11, 2017 (Date of pronouncement)
DATE: September 29, 2017 (Date of publication)
AY: -
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High Court states that it is “most unhappy” with the manner in which the Tribunal has decided the appeal. The Tribunal remanded the matter to the AO without any discussion as to why the order of the CIT(A) is perverse or is contrary to law. It also did not pint out infirmities or errors of fact and law in the order of the CIT(A). The Tribunal failed to perform its duty of rendering a complete decision. It is obliged in law to examine the matter and reappraise and reappreciate all the factual materials

There is absolutely no discussion of the law and why the coordinate Bench decision rendered at Delhi is either distinguishable on facts or inapplicable. There is no discussion, much less any finding and conclusion that the order of the First Appellate Authority is perverse or is contrary to law. There are no infirmities, much less serious errors of fact and law noted by the Tribunal in the order of the Commissioner, which the Tribunal is obliged to and which order is therefore interfered by the Tribunal. Why the Tribunal feels it is its duty and obligation to interfere with the order of the First Appellate Authority, therefore, should be indicated with clarity. We have also not seen a reference to any communication or to any document which would indicate that the six queries raised by the Tribunal on the assessee have not been answered, much less satisfactorily. The Tribunal should have, independent of the statements, referred to such of the materials on record which would disclose that the assessee has entered into such arrangements so as to avoid the obligation to deduct the tax at source. If the arrangements are sham, bogus or dubious, then such a finding should have been rendered. Therefore, we are most unhappy with the manner in which the Tribunal has decided these Appeals. We have no alternative but to set aside such order and when the last fact finding authority misdirects itself totally in law. It fails to perform its duty. It has also not rendered a complete decision. Once the Tribunal was obliged in law to examine the matter and reappraise and reappreciate all the factual materials, then it should have performed that duty satisfactorily and in terms of the powers conferred by law

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DATE: August 29, 2017 (Date of pronouncement)
DATE: September 25, 2017 (Date of publication)
AY: -
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CITATION:
S. 69C "On Money": If the unaccounted expenditure incurred is from the 'on money' received by the assessee, then, the question of making any addition u/s 69C does not arise because the source of the expenditure is duly explained. It is only the 'on money' which can be considered for the purpose of taxation. Once the 'on money' is considered as a revenue receipt, then any expenditure out of such money cannot be treated as unexplained expenditure, for that would amount to double addition in respect of the same amount

If the unaccounted expenditure is determined, then, necessarily the question which would arise for consideration before the Tribunal is whether the Assessing Officer was justified in making addition under Section 69C for the years under consideration. The Tribunal, in para 39 of the order under challenge, found that the explanation as derived from the records and placed by both can be traced to the ‘on money’ received at the time of booking/sale of shops. The statement of the senior partner is referred. The senior partner admitted that the sums have been received as ‘on money’ and at the stage aforesaid. Therefore, both the amounts, namely the ‘on money’ as well as the unexplained expenditure cannot be brought to tax, according to the Tribunal. If the unaccounted expenditure so incurred was from the ‘on money’ received by the assessee, then, the question of making any addition under Section 69C does not arise because the source of the expenditure is duly explained. It is only the ‘on money’ which can be considered for the purpose of taxation. That is what the Tribunal therefore concluded and once the ‘on money’ is considered as revenue receipt, then any expenditure out of such money cannot be treated as unexplained expenditure, for that would amount to double addition in respect of the same amount

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DATE: September 4, 2017 (Date of pronouncement)
DATE: September 22, 2017 (Date of publication)
AY: 2008-09
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CITATION:
40(a)(ia)/40(ba) Disallowance of reimbursement of salary for non-deduction of TDS: Displeasure and unhappiness expressed at the manner in which the Tribunal approached the matter insofar as the applicability of s. 40(ba) is concerned. Tribunal cautioned that it should not use abbreviations in the order without indicating what the terms stand for as it causes confusion

Apart from that, the Tribunal’s order is confusing. In the impugned order, the Tribunal does not indicate what it means by AOP. It does not indicate as to what it means by TAS for both sides tell us that it is identical to TDS, namely, Tax Deducted at Source. We are unhappy with the abbreviations and short forms in the Tribunal’s order. We do not see who is reluctant, either one who dictates or one who takes down the same, but such abbreviations and shortcuts increase burden on the higher Courts. We would caution the Tribunal that hereafter it should indicate somewhere in the order as to what the abbreviations used by it stand for

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DATE: September 11, 2017 (Date of pronouncement)
DATE: September 15, 2017 (Date of publication)
AY: 2002-03
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CITATION:
S. 153A: Argument of the Dept that the law laid down in Continental
Warehousing/ All Cargo Global Logistics 374 ITR 645 (Bom) that assessment u/s 153A can be made only on the basis of incriminating material found in the search and no other issue can be taken is per incuriam in view of Rajesh Jhaveri Stock Brokers 291 ITR 500 (SC) is not correct. Bhola Shankar Cold Storage 270 ITR 487 (Cal) distinguished

The argument of Mr. Ahuja is that the view taken by the Tribunal based on its Special Bench decision in the case of All Cargo Global Logistics Ltd. v. Deputy Commissioner of Incometax, Central Circle44, [2012] 23 Taxman.Com 103 (Mum.) (SB) cannot be said to be correct. Mr. Ahuja’s argument is that though the assessee is heavily relying upon a Division Bench judgment of this Court in the case of Commissioner of IncomeTax v. (1) Continental Warehousing Corporation (Nhava Sheva) Ltd. and (2) All Cargo Global Logistics Ltd. Reported in [2015] 374 ITR 645 (Bom), still, the questions proposed by the Revenue in these Appeals ought to be entertained. These are substantial questions of law and the Division Bench judgment in Continental Warehousing Corporation and All Cargo Global Logistics (supra) is rendered in ignorance of a judgment of the Hon’ble Supreme Court reported in [2007] 291 ITR 500 (SC) (Assistant Commissioner of IncomeTax vs. Rajesh Jhaveri Stock Brokers Private Limited).

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DATE: August 28, 2017 (Date of pronouncement)
DATE: September 12, 2017 (Date of publication)
AY: -
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CITATION:
Severe strictures passed against the department for filing a 'patently false' affidavit with regard to the failure to remove office objections. The cause shown is not sufficient and lacks in bona fides. It is a case of gross negligence and utter callousness on the part of the Revenue/Department. Tendency of the Revenue to either blame its' Advocate or the procedural rules for the dismissal of their Appeals deprecated

We find that the explanation or reason given in paragraph 3 of this affidavit to be patently false. If paragraph 3 and paragraph 4 of this affidavit-in-support cannot be reconciled, then, it is obvious that though aware of the conditional orders after lodging of the subject Appeal, the Revenue’s Advocate and the Revenue officials did not take the requisite steps. They cannot now come out with such a version for seeking restoration of a dismissed Appeal. The cause shown is, therefore, not sufficient and lacks in bona fides. It is a case of gross negligence and utter callousness on the part of the Revenue/Department. In two similar Motions, we had deprecated the tendency of the Revenue to either blame it’s Advocate or the procedural rules for the dismissal of their Appeals

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