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DATE: September 2, 2015 (Date of pronouncement)
DATE: October 12, 2015 (Date of publication)
AY: 2007-08, 2008-09
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CITATION:
S. 271(1)(c): If the notice does not clearly specify whether the penalty is initiated for "concealment" or for "filing inaccurate particulars", it is invalid. Mere fact that assessee has surrendered income does not justify penalty if his explanation is not found to be false/ not bona fide

The notice issued by the AO u/s 274 read with section 271 of the Act at the time of initiation of penalty proceedings states that it is issued for “concealment of particulars of income or furnishing of inaccurate particulars of income”. The assessing officer has not specified that as to which limb the notice was issued, i.e., whether it is issued for concealment of particulars of income or furnishing of inaccurate particulars of income. The assessing officer should be clear about the charge at the time of issuing the notice and the assessee should be made aware of the charge. The penalty order is liable to be quashed as the AO has not correctly specified the charge

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DATE: August 19, 2015 (Date of pronouncement)
DATE: August 22, 2015 (Date of publication)
AY: 2009-10
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S. 115JB: (i) Even if an amount is credited to the P&L A/c, the assessee can seek exclusion of that amount for purposes of “book profits” if a note to that effect is inserted in the A/cs (ii) The exemption conferred by S. 115JB to sums exempt u/s 10 should be extended to all sums which are not chargeable to tax

The profit arising on transfer of capital asset to its wholly owned Indian subsidiary company is liable to be excluded from the Net profit., i.e., the Net profit disclosed in the Profit and Loss account should be reduced by the amount of profit arising on transfer of capital asset and the amount so arrived at shall be taken as “Net profit as shown in the profit and loss account” for the purpose of computation of book profit under Explanation 1 to sec. 115JB of the Act. Alternatively, since the said profit does not fall under the definition of “income” at all and since it does not enter into the computation provisions at all, there is no question of including the same in the Book Profit as per the scheme of the provisions of sec. 115JB of the Act

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DATE: March 27, 2015 (Date of pronouncement)
DATE: April 15, 2015 (Date of publication)
AY: 2006-07
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CITATION:
S. 68: Despite documentary evidence and broker’s confirmation, genuineness of penny stock transactions has to be determined on the basis of ‘preponderance of human probabilities’. If assessee is unable to explain ‘intriguing’ facts and circumstances, genuineness of transaction cannot be accepted

Firstly, documentary evidences, in the face of unusual events, as prevailing in the instant case, and without any corroborative or circumstantial evidence/s, cannot be regarded as conclusive. Two, the preponderance of probabilities only denotes the simultaneous existence of several ‘facts’, each probable in itself, albeit low, so as to cast a serious doubt on the truth of the reported ‘facts’, which together make up for a bizarre statement, leading to the inference of collusiveness or a device set up to conceal the truth, i.e., in the absence of credible and independent evidences

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DATE: March 25, 2015 (Date of pronouncement)
DATE: April 13, 2015 (Date of publication)
AY: 2003-04
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CITATION:
S. 271(1)(c): Mistake in claiming deduction of interest expenditure despite s. 43B attracts penalty

The assessee is a regular assessee, well serviced by tax and audit professionals. The latter issuing a disclaimer for being unable to state the amount disallowable u/s.43B in the absence of the relevant information, defeats its case of it being an inadvertent mistake. On what basis, then, one may ask, was the deduction claimed?

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DATE: February 4, 2015 (Date of pronouncement)
DATE: February 9, 2015 (Date of publication)
AY: 2009-10
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CITATION:
Expenditure towards repair and renovation of leased premises is capital in nature. Method for allocation of common expenses to different WIP projects of a builder explained

The assessee being a builder and developer, Accounting Standard 7 (AS-7), issued by the ICAI, titled, ‘Construction Contracts’, would not apply, so that the prescription of AS-9 and AS-2, based on general principles that govern any business, would apply for the revenue recognition and inventory valuation respectively. Only costs incurred toward a particular project, or otherwise related to construction activity, would stand to be allocated and, thus, capitalized as a part of the project cost

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DATE: January 1, 2015 (Date of pronouncement)
DATE: February 2, 2015 (Date of publication)
AY: 2009-10
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CITATION:
Disallowance u/s 14A r.w. Rule 8D cannot exceed the exempt income

The assessee only received Rs.1,82,362 as dividend income, therefore, there is no question of disallowance of Rs.14,58.412 by invoking section 14A r.w. Rule 8D. Disallowance u/s 14A r.w. Rule 8D cannot exceed the exempt income.

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DATE: December 17, 2014 (Date of pronouncement)
DATE: January 9, 2015 (Date of publication)
AY: 2008-09
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CITATION:
S. 56(2)(vi): Amounts received under a Power of Attorney for making investments cannot be treated as income in the hands of the recipient

Section 56 of the Act deals with income from other sources. Sub-clause (vi) to section 56 (2) was inserted by taxation laws (amendment) Act, 2006, with effect from 01/04/2007. The plain reading of the aforementioned statutory provisions reveals that it is intended to tax a receipt of money without consideration. The impugned amount was received by the assessee for making the investment on behalf of Ustad Zakir Hussain, on the basis of Power of Attorney. If the provisions of the Act and the content of the Power of Attorney are kept in juxtaposition and analyzed then it can be concluded that the mutual funds, purchase and sold by the assessee were made on behalf of Shri Zakir Hussain

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DATE: January 1, 2015 (Date of pronouncement)
DATE: January 7, 2015 (Date of publication)
AY: 2004-05
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S. 271(1)(c): If the High Court admits the appeal u/s 260A, it means that the issue is debatable and penalty cannot survive

When the Hon’ble jurisdictional High Court has admitted substantial question of law on the addition, it becomes apparent that the addition so made has become debatable. The penalty was imposed on the basis of addition so made, therefore, when the addition on the basis of which the penalty was imposed has become doubtful/debatable, therefore, penalty imposed u/s 271(1)(c) of the Act cannot survive

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DATE: November 21, 2014 (Date of pronouncement)
DATE: December 2, 2014 (Date of publication)
AY: 2009-10
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CITATION:
Impact of Explanation 2 to s. 195(1) inserted by Finance Act, 2012 w.r.e.f. 01.04.1962 on law laid down in GE India Technology Centre 327 ITR 456 (SC) explained

The law laid down in GE India Technology Centre (P.) Ltd. vs. CIT [2010] 327 ITR 456 (SC) that there is no obligation to deduct TDS u/s 195 if the sum is not chargeable to tax in India is not …

ACIT vs. Vilas N. Tamhankar (ITAT Mumbai) Read More »

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DATE: December 25, 2014 (Date of pronouncement)
DATE: December 1, 2014 (Date of publication)
AY: 2006-07
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CITATION:
S. 133A: A statement given u/s 133A(iii) is not on oath and can be retracted. Even a statement on oath does not create any estoppel and can be retracted

On the issue whether the statement on oath u/s 133A is binding and cannot be retracted, we have to make a categorical observation, here that statement given u/s 133A is not on oath. Section 133A(iii) observes, “record a statement of …

ITO vs. Vandana Properties (ITAT Mumbai) Read More »