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DATE: April 21, 2017 (Date of pronouncement)
DATE: May 30, 2017 (Date of publication)
AY: 2007-08
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CITATION:
S. 68 Bogus share capital: Entire law on the onus of the assessee and the department with regard to the genuineness of the share capital explained in the light of several judgements . Law on effect of not giving cross-examination to the assessee also explained

The assessee duly furnished the proof of identity like PAN, bank account details from the bank, other relevant material, genuineness of the transaction, payment through banking channel and even the source of source, therefore, the assessee has proved the conditions laid down u/s 68 of the Act. It is also noted that in spite of repeated request, the Ld. Assessing Officer did not provide opportunity to cross examine the concerned persons and even the relevant information and allegation, if any, made therein, which has been used against the assessee, was not provided to the assessee. At this stage, we add here that mere information is not enough rather it has to be substantiated with facts. The information may and may not be correct. For fastening the liability upon anybody, the Department has to provide the authenticity of the information to the person against whom such information is used. The principle of natural justice, demands that without confronting the assessee of such evidence, if any, or the information, no addition can be made. Even otherwise, as per Article-265 of the Constitution of India, only legitimate taxes has to be levied and collected

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DATE: May 24, 2017 (Date of pronouncement)
DATE: May 30, 2017 (Date of publication)
AY: 2011-12
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CITATION:
Penalty u/s 272A(2)(c) for delay in filing TDS returns cannot be levied if the delay was caused due to requirement to collect PAN of payees. The non-availability of the PAN of the payees is a reasonable cause. The delay is unintentional and it causes no loss to the revenue as the TDS has been deducted and deposited in the treasury. Wrong levy of penalty u/s 272A(2)(k) (failure to deliver TDS certificate) instead of u/s 272A(2)(c) (delay in filing TDS returns) shows that AO is not clear of the charge and vitiates the penalty proceedings

The assessee has submitted that since there were large number of deductees scattered throughout the country, a fact not disputed by the Revenue, it took them some time to collect the PANs of these deductees and thereafter, it was able to upload the e-TDS returns in the IT system maintained by the Revenue. Further, the taxes have deducted and deposited at the prescribed rate with delay of few days. Hence, there is no loss to the Revenue which is caused due to the delay in filing of the e-TDS returns which is totally unintentional. Further, our attention was drawn to the decision of the Coordinate Benches in case Collector Land Acquisition v. ACIT (2012) taxmann.com 22(Chd.), CIT Branch Manager (TDS), UCO Bank vs. ACIT [2013] 35 taxmann.com 45 (Cuttack – Trib) and Branch Manager, State Bank of India v. ACIT [2014] 41 taxmann.com 268 (Cuttack – Trib) wherein non availability of PAN was held to be a reasonable cause for delay in filing of the e-TDS return. Given the peculiarity of the facts in the present case where there was a change effected in the IT system for mandatory requirement of PANs of all deductees before the returns can be validated and uploaded, the fact that there were large number of deductees spread throughout the country and efforts were made by the assessee to obtain their PANs numbers, the fact that taxes have been deducted and deposited, hence no loss to the Revenue, we find that assessee has a reasonable cause for delayed filing of its e-TDS returns in terms of section 273B and the penalty under section 272(A)(K) is hereby deleted

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DATE: May 18, 2017 (Date of pronouncement)
DATE: May 27, 2017 (Date of publication)
AY: 1998-99, 1999-00, 2001-02
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CITATION:
S. 147/148 reassessment has to be based on "fresh material". A reopening based on reappraisal of existing material is invalid. The assessee's duty is only to disclose facts and not to make inferences. Consolidated Photo 281 ITR 394 (Del) is not good law

The reopening was not based on any fresh material. By revisiting the same materials the successor AO now concluded that the payments received by the Assessee pursuant to the O&M Agreements should be treated as FTS. In the circumstances, the view taken by a successor AO on the same material was indeed nothing but a mere change of opinion. It is a well-settled legal proposition, as explained in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191(SC) that once an Assessee has discharged the burden of not only producing the account books and other documents, but also the specific material relevant to the assessment, “it is for the Income-tax Officer to draw the proper inferences of fact and law therefrom and the Assessee cannot further be called upon to do so for him.” In Indian Oil Corporation v. ITO [1986] 159 ITR 956 the Court pertinently observed “it is for the taxing authority to draw inference. It is not necessary for the Assessee to draw inference.” These observations apply on all fours to the case on hand

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DATE: May 16, 2017 (Date of pronouncement)
DATE: May 27, 2017 (Date of publication)
AY: 2006-07 to 2011-12
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CITATION:
S. 132/153A: Important law explained on the preconditions necessary for the department to initiate valid search and seizure action u/s 132 and whether the assessee is entitled to challenge the same. Consequences of the search being declared void on the s. 153A assessment also explained

The law in relation to searches under Section 132 of the Act has been explained in a large number of decisions of the Supreme Court and the High Courts. The jurisdictional facts that have to be established before a search under Section 132 (1) of the Act can be authorised are that (i) the authority issuing the authorisation is in possession of some credible information, other than surmises and conjectures (ii) that the authority has reason to believe that the conditions stipulated in clauses (a), (b) and (c) of Section 132 (1) qua the person searched exist; and (iii) the said information has nexus to such belief. The Courts have laid emphasis on the mandatory nature of the above requirement to be fulfilled under Section 132 (1) of the Act

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DATE: May 25, 2017 (Date of pronouncement)
DATE: May 26, 2017 (Date of publication)
AY: 2000-01 to 2004-05
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CITATION:
S. 153A: Entire law explained on whether concluded assessments can be reopened u/s 153A even in the absence of incriminating material found during the search in the light of the apparently conflicting verdicts in CIT vs. Kabul Chawla 380 ITR 573 (Del) and Dayawanti Gupta v. CIT 390 ITR 496 (Del)

Section 153A of the Act is titled “Assessment in case of search or requisition”. It is connected to Section 132 which deals with ‘search and seizure’. Both these provisions, therefore, have to be read together. Section 153A is indeed an extremely potent power which enables the Revenue to re-open at least six years of assessments earlier to the year of search. It is not to be exercised lightly. It is only if during the course of search under Section 132 incriminating material justifying the re-opening of the assessments for six previous years is found that the invocation of Section 153A qua each of the AYs would be justified. The question whether unearthing of incriminating material relating to any one of the AYs could justify the re-opening of the assessment for all the earlier AYs was considered both in CIT v. Anil Kumar Bhatia and CIT v. Chetan Das Lachman Das. Incidentally, both these decisions were discussed threadbare in the decision of this Court in Kabul Chawla 380 ITR 573 (Del)

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DATE: May 3, 2017 (Date of pronouncement)
DATE: May 26, 2017 (Date of publication)
AY: 2012-13
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CITATION:
S. 54F: U/s 161, a trust which is for the sole benefit of an individual, has to be assessed as an “individual” and not as an “AOP”. Consequently, a trust is eligible for s. 54F deduction

The issue is as to whether the assessee trust, which is for the sole benefit of an individual, will be entitled to deduction u/s. 54F or not, when its status is that of A.O.P. As per Section 54F the benefits of this section is available to individual or Hindu undivided family (HUF). Hon’ble jurisdictional High Court in the case of Mrs. Amy F. Cama vs. CIT 237 ITR 82 has elaborately considered the same issue. The jurisdictional High Court was dealing with assessee trust’s claim for deduction for purchase price of the flat from capital gain as per Section 54 of the Act. The Hon’ble jurisdictional High Court has held that the assessee trust was entitled for the same. The Hon’ble Court had expounded that Section 161 of the I.T Act, 1961, makes a representative assessee subject to the same duties, responsibilities and liabilities as if the income was received by him beneficially. The fiction is created as it was never the object or intention of the Act to charge tax upon persons other than the beneficial owner of the income. Whatever benefits the beneficiary will get in the said assessment must be made available to the trustee while assessing him under section 161

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DATE: May 10, 2017 (Date of pronouncement)
DATE: May 25, 2017 (Date of publication)
AY: -
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CITATION:
Bogus purchases: In view of the Supreme Court’s order in Vijay Proteins Ltd vs. CIT whereby the verdicts of the Gujarat High Court in Sanjay Oilcake Industries vs. CIT 316 ITR 274 (Guj) and N.K. Industries Ltd vs. Dy. CIT were confirmed, the AO has to accept the law and verify whether the transaction is genuine or not on the basis of the aforesaid three judgments

Considering the law declared by the Supreme Court in the case of Vijay Proteins Ltd. Vs. Commissioner of Income Tax, Special Leave to Appeal decided on 06.04.2015 whereby the Supreme Court has dismissed the SLP and confirmed the order dated 09.12.2014 passed by the Gujarat High Court and other decisions of the High Court of Gujarat in the case of Sanjay Oilcake Industries Vs. Commissioner of Income Tax (2009) 316 ITR 274 (Guj) and N.K. Industries Ltd. Vs. Dy. C.I.T., Tax Appeal No.240/2003 decided on 20.06.2016, the parties are bound by the principle of law pronounced in the aforesaid three judgments

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DATE: May 17, 2017 (Date of pronouncement)
DATE: May 25, 2017 (Date of publication)
AY: 2006-07
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CITATION:
S. 271(1)(c): 'Furnishing of inaccurate particulars of income' and 'concealment of particulars of income' have different connotations. The failure by the AO to specify in the s. 274 notice which of the two charges is applicable reflects non-application of mind and is in breach of natural justice as it deprives the assessee of an opportunity to contest. The penalty proceedings have to be quashed

A perusal of the quantum assessment order reveals that the penalty has been initiated for furnishing of inaccurate particulars of income and concealment of particulars of income which, as per settled legal propositions, are different connotations and carry different meaning and two separate limbs. The same also becomes clear from the language of show-cause notice which states that the assessee have concealed the particulars of income or furnished inaccurate particulars of income. Finally, the penalty has been levied for filing of inaccurate particulars of income and hence concealed particulars of income which shows inconsistent thinking on the part of AO. Undisputedly, the AO was required to specify the exact charge for which the assessee was being penalized which he has failed to do so and the same has resulted into taking away assessee’s valuable right of contesting the same and thereby violates the principles of natural justice

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DATE: April 17, 2017 (Date of pronouncement)
DATE: May 23, 2017 (Date of publication)
AY: 2011-12
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CITATION:
S. 68 Bogus share capital: (i) The AO cannot ignore the documentation produced by the assessee to show that the investors are genuine, (ii) A s. 132(4) statement cannot be relied upon if the assessee is not give right of cross-examination, (iii) Fact that the shareholders did not respond to s. 133(6) notices does not warrant an adverse inference, (iv) Fact that the shareholders have low income does not warrant adverse inference, (v) Assessee is not required to prove source of source

The AO doubted the genuineness of the transaction because notice u/s 133(6) could not be served upon the investors and that the assessee was directed to produce both the parties by 19.03.2014. The Ld. Counsel for the assessee however, referred to Paper Book page 157 which is the reply before the AO dated 24.03.2014 in which the assessee has provided correct and updated address of the entity as per MCA website. The AO instead of issuing fresh notice u/s 133(6) at the correct address of the investor companies merely relied upon the fact that the earlier letter under the above provision has returned unserved. Since the AO did not issue fresh notice at the correct address provided by the assessee and no coercive action has been taken for the production of investors, therefore, no adverse inference could be drawn against the assessee

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DATE: May 5, 2017 (Date of pronouncement)
DATE: May 23, 2017 (Date of publication)
AY: 2009-10
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CITATION:
S. 69C Bogus purchases: (i) The AO is not entitled to treat the purchases as bogus merely on the basis of information from the sales-tax dept. He has to make independent inquiry, (ii) Fact that the vendors did not respond to s. 133(6) notices & the assessee did not produce them is not sufficient if the documentation is in order and payments are through banking channels

It is evident from the assessment order that on the basis of information obtained from the Sales Tax Department, Assessing Officer issued notices under section 133(6). As the assessee failed to produce the concerned parties, the Assessing Officer, primarily relying upon the information obtained from the Sales Tax Department held the purchases to be bogus and added 12.5% profit in addition to the normal profit declared by the assessee. Though, it may be a fact that assessee was not able to produce the concerned parties before the Assessing Officer, for whatever may be the reason, fact remains that during assessment proceedings itself the assessee had produced confirmed ledger copies of concerned parties, bank account statement, purchase bills, delivery challans, etc., to prove the genuineness of the purchases. It is also a fact on record that the Assessing Officer has not doubted the sales effected by the assessee. Thus, it is logical to conclude that without corresponding purchases being effected the assessee could not have made the sales. Moreover, the Assessing Officer has not brought any material on record to conclusively establish the fact that purchases are bogus

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