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COURT:
CORAM: ,
SECTION(S): ,
GENRE:
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COUNSEL: ,
DATE: May 13, 2019 (Date of pronouncement)
DATE: August 3, 2019 (Date of publication)
AY: 2010-11
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CITATION:
Suppression of profit/ fictitious loss in stocks/ derivatives by way of Client Code Modification (CCM): CCM within 1% is absolutely normal. By no stretch of imagination can any AO consider a transaction on the Stock Exchange as income of a person other than the one who has either actually received monies in his bank account (in case of profit) and/or paid any monies from his bank account (in case of losses). The AO has to show that the losses were purchased and the party was given cheque or cash payment in view of such favours

The broker, through whom the assessee carried on share transactions, were also not imposed any penalty. No co-relation between the assessee on the one hand and the other parties on the other hand has been brought on record to co-relate that the parties to whom the alleged profits or loss is supposed to have been diverted to reduce the taxable income of the assessee, has been brought on record to show that there was any collusion with each other and were known to each, so that one party diverted its profit or loss to the other parties. Even nothing has been brought on record to suggest that the said losses were purchased and the party were given cheque or cash payment in view of such favour

COURT:
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COUNSEL:
DATE: July 17, 2019 (Date of pronouncement)
DATE: August 3, 2019 (Date of publication)
AY: 2011-12
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CITATION:
S. 56(2)(vii): The stand of the Dept that in the case of an individual, a "HUF" is not a "relative" and that while a gift by the individual to the HUF is exempt, a gift from the HUF to its member is taxable u/s 56(2)(vii) is not correct. S. 56 (2) (vii) provides that the members of the 'HUF' are to be taken as "relatives". The converse is not provided because on first principles, amounts received by a member from the 'HUF' cannot be said to be income of the member exigible to taxation. Terming by the PCIT of decisions of the Tribunal as "incorrect" tantamounts to judicial indiscipline and will lead to chaos

As per the provisions of section 56 (2) (vi i) of the Act , though the members of the ‘HUF’ are to be taken relatives of the ‘HUF’ for the purpose of the said sect ion, however, the converse is not true that is to say that ‘HUF’ is not a relative of the individual member as per meaning of relative given in the case if individual under explanation to sect ion 56(2)(vi i) of the Act

COURT:
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DATE: July 25, 2019 (Date of pronouncement)
DATE: July 27, 2019 (Date of publication)
AY: -
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CITATION:
S. 170/ 292BB: A notice issued in the name of the amalgamating entity after amalgamation is void because the amalgamating entity ceases to exist. Participation in the proceedings by the assessee cannot operate as an estoppel against law. This is a substantive illegality and not a procedural violation of the nature adverted to in s. 292BB. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable.

In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment

COURT:
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DATE: July 25, 2019 (Date of pronouncement)
DATE: July 27, 2019 (Date of publication)
AY: -
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CITATION:
S. 35AC(7) is prospective in nature. A plea of promissory estoppel is not available to an assessee against the exercise of legislative power nor any vested right accrues to an assessee in the matter of grant of any tax concession to him. In a taxing statute, a plea based on equity or/and hardship is not legally sustainable. The constitutional validity of any provision and especially taxing provision cannot be struck down on such reasoning. In tax matters, neither any equity nor hardship has any role to play while deciding the rights of any taxpayer qua the Revenue

As rightly argued by the learned counsel for the respondent (Revenue), a plea of promissory estoppel is not available to an assessee against the exercise of legislative power and nor any vested right accrues to an assessee in the matter of grant of any tax concession to him. In other words, neither the appellant nor the assessee has any right to set up a plea of promissory estoppel against the exercise of legislative power

COURT:
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DATE: July 15, 2019 (Date of pronouncement)
DATE: July 27, 2019 (Date of publication)
AY: 2005-06
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CITATION:
S. 68 Bogus Purchases: Despite admission by the assessee that the purchases were mere accommodation entries, the entire expenditure cannot be disallowed. Only the profit embedded in the purchases covered by the bogus bills can be taxed. The GP rate disclosed by the assessee cannot be disturbed in the absence of incriminating material to discard the book results

The Department had not rejected the instance of the purchases since the sales out of purchase of such raw material was accounted for and accepted. With above position, the Tribunal applied the principle of taxing the profit embedded in such purchases covered by the bogus bills, instead of disallowing the entire expenditure. We do not find any error in the view of the Tribunal.

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DATE: July 22, 2019 (Date of pronouncement)
DATE: July 27, 2019 (Date of publication)
AY: 2007-08
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CITATION:
S. 68 Bogus Share Capital: No rational person with sound mind will invest huge amount in the share subscription of a paper/shell company having no worthwhile business/project in hand at such a huge premium. The onus is on the assessee to to prove the genuineness of the transaction as well credit worthiness of the share subscribers. The failure to produce the subscribers and statement of the director that the entire investment is bogus justifies the addition

The Assessing Officer recorded that there was no reason for high premium of Rs.30 per share being paid by the investors. The assessee company had carried out no business during the entire period, except for collection of share application money. The responding investors also could not explain the source of their investments. It was noticed that before issuance of payment by them, deposits were made in their bank accounts and immediately the investments in purchase of the assessee’s shares were made. The investors could not provide photocopies of the share certificate issued by the Company and did not submit the share numbers which were allotted to them.

COURT:
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DATE: July 9, 2019 (Date of pronouncement)
DATE: July 20, 2019 (Date of publication)
AY: -
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CITATION:
S. 4: The primary liability and onus is on the Dept to prove that a certain receipt is liable to be taxed. Deposits collected by a finance company are capital receipts and not revenue receipts. The fact that the deposits are credited to the profit and loss account is irrelevant. The true nature of the receipts have to be seen and not the entry in the books of account (All imp judgements referred).

It is the true nature and quality of the receipt and not the head under which it is entered in the account books that would prove decisive. If a receipt is a trading receipt, the fact that it is not so shown in the account books of the assessee would not prevent the assessing authority from treating it as trading receipt. It has been held by the Supreme court that the primary liability and onus is on the Department to prove that a certain receipt is liable to be taxed

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DATE: July 8, 2019 (Date of pronouncement)
DATE: July 20, 2019 (Date of publication)
AY: -
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CITATION:
S. 80IB(10)(a): There shall be stay of judgement in Global Reality 379 ITR 107 (MP) where it was held that issuance of completion certificate, after the cut off date by the Local Authority but, mentioning the date of completion of project before the cut off date, does not fulfill the condition specified in clause (a) of Section 80IB (10) read with Explanation (ii) thereunder

We accordingly hold that issuance of completion certificate, after the cut off date by the Local Authority but, mentioning the date of completion of project before the cut off date, does not fulfill the condition specified in clause (a) of Section 80IB (10) read with Explanation (ii) thereunder. We reject the argument of the assessee that the effect of amended clause (a) of sub-Section 10 of Section 80IB, which has come into force with effect from 1st April, 2005, has retrospective effect or that it is unjust in any manner or incapable of compliance at all

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DATE: July 15, 2019 (Date of pronouncement)
DATE: July 20, 2019 (Date of publication)
AY: -
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CITATION:
S. 220(6) Stay of demand: The decision of the authorities to demand payment of 20% of the disputed demand is in consonance with the department's circulars. There are no extra ordinary reasons for imposing condition lighter than one imposed by the authorities. The contention that the assessee that he received no consideration and no tax could have been demanded from him is subject matter of the Appeal proceedings and cannot be a ground for lifting the rigor of the requirement of deposit of 20% of the disputed tax pending appeal

The decision of the authorities is in consonance with the department’s circulars. We do not find any extra ordinary reasons for imposing condition lighter than one which has been imposed by the said authorities. The contention of the Petitioner that he had received no consideration at the time of transfer of the tenancy of immovable commercial property of which he is the owner and that therefore no tax could have been demanded from him, would be subject matter of the Appeal proceedings. This is not a ground for lifting the rigor of the requirement of deposit of 20% of the disputed tax pending appeal

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DATE: June 26, 2019 (Date of pronouncement)
DATE: July 13, 2019 (Date of publication)
AY: -
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CITATION:
Prosecution u/s 276C for tax evasion: If the assessee's appeal against levy of s. 271(1)(c) penalty for concealment of income is allowed & has become final, the quashing of prosecution is automatic. The High Court can exercise its inherent jurisdiction to quash the prosecution and not indulge in the empty formality of directing the assessee to approach the trial Magistrate (K. C. Builders 265 ITR 562 (SC) followed)

The subject matter of the complaint being concealment of income arrived at on the basis of the finding of the assessing officer, if the Tribunal has set aside the order of concealment and penalties, there is no concealment in the eye of law and, therefore, the prosecution cannot be proceeded with by the complainant and further proceedings will be illegal and without jurisdiction