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DATE: February 23, 2018 (Date of pronouncement)
DATE: March 8, 2018 (Date of publication)
AY: 1993-94
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CITATION:
S. 143(1)(a): Submission of Dept that decisions of Courts and Tribunals interpreting a provision is to be ignored by the AO will ring the death knell of Rule of law in the Country. It ignores the hierarchical system of jurisprudence in our country. The AO is bound by the views of the Court. Law on s. 36(1)(viii) (Bad debts) explained

“Litera Leges, certainty concept and on the concept that there is no equity on fiscal law irrespective of any judgment of any Hon’ble Court or Tribunal a go by cannot be given to the aforesaid interpretations given in this written submission”.

The above submission that decision of the Court and / or Tribunal interpreting a provision is to be ignored by the Assessing Officer, if accepted will ring the death knell of Rule of law in the country. The Assessing Officer is bound by the views of the Court. The above submission ignores the hierarchal system of jurisprudence in our country.

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DATE: February 24, 2018 (Date of pronouncement)
DATE: March 8, 2018 (Date of publication)
AY: 2004-05
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CITATION:
Law on reopening u/s 147 pursuant to an audit objection opposed by the AO explained in the context of (i) the notice being silent on whether it was issued pursuant to the audit objection, (ii) there being a gap between the AO's opposition and the issue of notice and (iii) the reasons for reopening being supported by a subsequent Supreme Court judgement

The decision of the Apex Court in Liberty India (Supra) was rendered on 31st August 2009 and the notice seeking to reopen the Assessment year for Assessment Year 2004-05 was issued on 18th March 2009. Therefore, at the time when the reasons for issue of reopening notice was recorded by the Assessing Officer, he could not have had any reasonable belief on the basis of Apex Court decision in Liberty India (Supra) to come to a prima facie view that income chargeable to tax has escaped assessment. In this appeal we are concerned with the issue of jurisdiction of the Assessing Officer to issue the reopening notice and not with the merits of the dispute. Thus when the reopening notice was issued in March 2009, the Apex Court decision was not available and there was a divergence of views. This has to be read in the context of the Assessing Officer’s response to the audit objection on the above issue duly supported by case law

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DATE: February 27, 2018 (Date of pronouncement)
DATE: March 6, 2018 (Date of publication)
AY: -
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CITATION:
No more adjournments. No more ‘tareek pe tareek’. Enough is enough. That a Court will endlessly grant adjournments is not something that parties or advocates can take for granted. Nor should they assume that there will be no consequences to continued defaults and unexplained delay

The time has gone when a Court could, would or should pick up some utterly random figure like Rs.5,000 or Rs.25,000, a number wholly without tether to the actual days of delay. Fixing ad hoc figures like this is counter-productive. Parties believe that even if the delay is inordinate, the costs of that delay will be negligible; and hence they continue to extend the delay. The costs must be real. They must be sufficient to convey the message that non-compliance with our orders brings consequences; that these consequences are inevitable and unavoidable; and the consequences are not some piffling trifle

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DATE: February 23, 2018 (Date of pronouncement)
DATE: March 6, 2018 (Date of publication)
AY: 2010-11
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CITATION:
S. 68 Bogus share capital: If the assessee has discharged the initial onus regarding the identity, creditworthiness and genuineness, the onus shifts to the AO to bring material or evidence to discredit the same. The fact that the shareholders did not respond to s. 133(6) summons is not sufficient to draw an adverse inference. There must be material to implicate the assessee in a collusive arrangement with person who are accommodation entry providers

In view of the above documents and evidences filed by the assessee, we are of the opinion that these are sufficient to discharge its initial onus regarding the identity, creditworthiness and genuineness as required under Section 68 of the Act. The assessee having discharged its onus, it was upon the AO to bring material or evidence to discredit the same. In the present case, from the assessment order, it is evident that no adverse material is available with the AO

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DATE: February 20, 2018 (Date of pronouncement)
DATE: March 3, 2018 (Date of publication)
AY: -
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CITATION:
S. 271(1)(c): Voluntary surrender of income after survey by filing a revised income does not save the assessee from levy of penalty for concealment of income in the original return if there is no explanation as to the nature of income or its source. SAS Pharmaceuticals 335 ITR 259 (Del) is not good law after MAK Data 358 ITR 593 (SC)

The assessee merely made a voluntary surrender; she did not offer any explanation as to the nature of income or its source. The observations in MAK Data (supra) are that the authorities are not really concerned with the statement- whether voluntarily or otherwise and have to see whether there was any non disclosure of material facts, or income. The complete failure to furnish any details with respect to the income, which if given could have been the only reasonable basis for deletion of penalty, in the opinion of the court, reinforced the views of the AO and CIT (A) that the revised return was an afterthought, based on the subsequent event of disclosure of Rs 2,00,00,000/-

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DATE: February 9, 2018 (Date of pronouncement)
DATE: March 3, 2018 (Date of publication)
AY: 2008-09
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CITATION:
S. 68 Bogus Share Capital: Share premium received can be assessed as undisclosed income if (a) directors are allotted shares at par while others are allotted at premium, (b) the high premium is not justified by a valuation report, (c) the high premium is not supported by the financials, (d) based on financials the value of shares is less and no genuine investor would invest at the premium, (e) there are discrepancies & abnormal features which show transaction as "made up" to camouflage real purpose

The argument of the assessee that the provisions of Sec.56(1)(viib) of the Act does not apply to the case on hand for the year under consideration as it has been introduced by Finance Act, 2012 w.e.f. 1.4.2013 is a misplaced one. From a reading of the order of assessment, it is clear that the Assessing Officer has invoked the provisions of Sec. 68 of the Act. This leads us to the question of whether the provisions of Sec. 68 of the Act can be invoked for the nature of transactions involved in the case, where sums of money are credited in the name of share premium. This question has been addressed by the Hon’ble Calcutta High Court in the case of Pragati Financial Management Pvt. Ltd. Vs. CIT in C.A. 887 & 998 of 2016 and others dt.7.3.2017. In its order (supra) on the issue of whether enquiry under Section 68 of the Act can be carried out for examining the genuineness of the share premium transaction, the Hon’ble High Court held that Sec. 68 of the Act can be invoked to conduct enquiry on the genuineness of share premium transactions

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DATE: February 19, 2018 (Date of pronouncement)
DATE: February 27, 2018 (Date of publication)
AY: 2005-06
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CITATION:
S. 143(2) service of notice: If the assessee is not available to take service of the s. 143(2) notice, service on the authorized representative is sufficient to draw inference of deemed service of notice on the assessee. The fact that the authorized representative is disowned by the assessee is irrelevant

The non-availability of the respondent – Assessee to receive the notice sent by registered post as many as on two occasions and service of notice on 19th October, 2006 on the authorized representative of the respondent Assessee whom the respondent Assessee now disowns, in our considered view, is sufficient to draw an inference of deemed service of notice on the respondent – Assessee and sufficient compliance of the requirement of Section 143(2) of the Income Tax Act, 1961

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DATE: February 5, 2018 (Date of pronouncement)
DATE: February 20, 2018 (Date of publication)
AY: -
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CITATION:
S. 206AA TDS: The requirement (pre amendment) that TDS should be deducted at 20% on payments to non-residents even though the income is chargeable to tax at a lower rate under the DTAA is not acceptable because the DTAA has primacy over the Act. S. 206AA (as it existed) has to be read down to mean that where the non-resident payee is resident in a territory with which India has a Double Taxation Avoidance Agreement, the rate of taxation would be as dictated by the provisions of the treaty

Having regard to the position of law explained in Azadi Bachao Andolan Vs. Union of India, (2003) 263 ITR 706 (SC) and later followed in numerous decisions that a Double Taxation Avoidance Agreement acquires primacy in such cases, where reciprocating states mutually agree upon acceptable principles for tax treatment, the provision in Section 206AA (as it existed) has to be read down to mean that where the deductee i.e the overseas resident business concern conducts its operation from a territory, whose Government has entered into a Double Taxation Avoidance Agreement with India, the rate of taxation would be as dictated by the provisions of the treaty

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DATE: February 16, 2018 (Date of pronouncement)
DATE: February 17, 2018 (Date of publication)
AY: -
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CITATION:
S. 12A: The CIT has no power to cancel/withdraw/recall the registration certificate granted u/s 12A until express power to do so was granted by s. 12AA(3). Though the grant of certificate is a quasi judicial function, s. 21 of the General Clauses Act cannot be applied to support the order of cancellation of the registration certificate

The CIT had no express power of cancellation of the registration certificate once granted by him to the assessee under Section 12A till 01.10.2004. It is for the reasons that, first, there was no express provision in the Act vesting the CIT with the power to cancel the registration certificate granted under Section 12A of the Act. Second, the order passed under Section 12A by the CIT is a quasi judicial order and being quasi judicial in nature, it could be withdrawn/recalled by the CIT only when there was express power vested in him under the Act to do so. In this case there was no such express power

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DATE: January 25, 2018 (Date of pronouncement)
DATE: February 17, 2018 (Date of publication)
AY: -
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CITATION:
Service-tax on maintenance of property: Under the MOFA, the builder/ developer is under a statutory obligation to look after the day-to-day upkeep, maintenance and repair of the property till conveyance to the co-op society. Such maintenance of the structure is not rendering a taxable service as per s. 65 (64) of the Finance Act, 1994

The promoter has to maintain, safeguard and protect the property and look after the day-to-day wear and tear. Therefore, when he maintains the structure or repairs it, he is not rendering a taxable service in the sense envisaged by the Financial Act, 1994. If one loses complete focus or sight of the backdrop in which the so called service is rendered, then, the conclusion as erroneous and suggested by the Revenue will be reached. The deposit or the monies themselves are held and appropriated towards payment of taxes, etc., popularly known as outgoings. The building and the Flats therein has to stand intact till all the Flats or units are sold and the statutory obligations are fully discharged. This is not a service of the nature understood by Section 65 (64) of the Finance Act, 1994. It is not a contractor simplicitor of maintenance of immovable property. It is not as if there is a existing building comprising of Flats, fully occupied, the maintenance and upkeep of which is handed over under a contract. It is a statutory obligation superimposed on a contract to sell a Flat/unit in a building to be constructed on a piece or parcel of land. That cannot be confused with a taxable service as defined under the Finance Act, 1994. The day-to=day upkeep, maintenance and repair is till the statutory duty is fully performed as noted above.

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