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COURT:
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SECTION(S):
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DATE: April 5, 2019 (Date of pronouncement)
DATE: April 10, 2019 (Date of publication)
AY: 2012-13
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CITATION:
S. 68 Bogus Share Capital: The judgement in PCIT vs. NRA Iron & Steel 103 TM.com 48 (SC) is distinguishable on facts & does not apply to a case where the assessee has discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants by producing the PAN details, bank account statements, audited financial statements and Income Tax acknowledgments and the investors have shown the source of source & personally appeared before the AO in response to s. 131 summons

The ld DR placed reliance on the recent decision of the Hon’ble Apex Court in the case of Principal CIT vs. NRA Iron & Steel (P) Ltd reported in 103 taxmann.com 48 (SC) wherein the decision on addition made towards cash credit was rendered in favour of the revenue. We have gone through the said judgement and we find in that case, the ld AO had made extensive enquiries and from that he had found that some of the investor companies were non-existent which is not the case before us. Certain investor companies did not produce their bank statements proving the source for making investments in assessee company, which is not the case before us. Source of funds were never established by the investor companies in the case before the Hon’ble Apex Court, whereas in the instant case, the entire details of source of source were duly furnished by all the respective share subscribing companies before the ld AO in response to summons u/s 131 of the Act by complying with the personal appearance of directors

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DATE: April 5, 2019 (Date of pronouncement)
DATE: April 10, 2019 (Date of publication)
AY: 2008-09, 2009-10, 2010-11
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CITATION:
S. 201(1) TDS: The time limit specified in s. 201(3) & (4) for passing orders does not apply to cases where payments are made to non-residents. In cases of payments made to non-residents, an order passed after one year from the end of the FY in which the proceedings were initiated is void ab initio and liable to be quashed

In our considered opinion, where the payments are made to the entities/persons other than the persons specified in sub-section (3), the limitation period of one year from the end of financial year in which the proceedings u/s. 201 were initiated, as laid down by the Special Bench of Tribunal and affirmed by the Hon’ble Jurisdictional High Court would apply. In the instant case, since, the order u/s. 201 has been passed much after the elapse of one year period from the end of financial year in which proceedings u/s. 201 were initiated, the order u/s. 201 in the impugned assessment years is void-ab-initio and hence, is liable to be quashed

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DATE: March 26, 2019 (Date of pronouncement)
DATE: April 10, 2019 (Date of publication)
AY: -
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CITATION:
Benami Transactions: After amendment, the onus of proving a benami transaction rests entirely on the shoulders of the owner/ benamidar. Before amendment, the burden of proof was on the prosecution to prove the guilt of the Benamidar and beneficial owner. Once both are able to discharge their burden of proof as per amended law, then the burden of proof shifts to the prosecution. Once the burden shits upon the IO, the principles of general law available prior to amendment would apply (Imp judgements referred)

The essence of a benami is the intention of the party or parties concerned; and not unoften such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof

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DATE: April 3, 2019 (Date of pronouncement)
DATE: April 6, 2019 (Date of publication)
AY: 2010-11
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CITATION:
S. 254(2)/ 271(1)(c): Though the High Court faulted the Tribunal's decision of reducing the penalty as a "way to bypass the minimum limit" and the Tribunal was in error in granting the relief, the same does not constitute a "mistake apparent from the record" so as to enable the Tribunal to revisit its decision

The observations of Hon’ble High Court, disapproving the conclusions, are based on the proposition that the conclusion of the Tribunal was a way to bypass the minimum limit. That is, with respect, a wholly a highly subjective observation and all a matter of perception. The other way of looking at the conclusions of the Tribunal could possibly be, and that’s how we looked at it, that the explanation of the assessee was partly accepted and, as regards the element of income on which explanation was not accepted, the penalty was still one hundred percent of tax sought to be evaded. It was stated to be accepted past history of the case, as pleaded before the Tribunal, that all the cash deposits were not of income nature but in the nature of business receipts and that only income embedded therein could be brought to tax. Wrongly though, as we have learnt the hard way, we were in error in following the same path for the purpose of evaluating explanation extended before the Tribunal during the hearing, but then this was not altogether devoid of any basis or rationale. The rationale or basis of our approach has turned out to be incorrect but it clearly did exist. In any event, it was not something which was incapable of two opinions

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DATE: April 3, 2019 (Date of pronouncement)
DATE: April 3, 2019 (Date of publication)
AY: 2006-07, 2007-08
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CITATION:
S. 45(4): The revaluation of asset being land held by the partnership firm which results into enhancement of value of asset and this enhanced amount credited in capital account of partners and when a retiring partner takes amount in his capital account including enhanced value of asset, it does not give rise to Capital Gain under section 45(4) r.w. Section 2(14) of the Income-tax Act

The partnership firm continued to exist even after the retirement of Smt. Hemlata Shetty and Shri Sudhakar Shetty from the partnership. There was only a reconstitution of partnership firm on their retirement without there being any dissolution and the land properly acquired by the partnership firm continued to be owned by the said firm even after reconstitution without any extinguishment of rights in favour of the retiring partners. The retiring partners did not acquire any right in the said property and what they got on retirement was only the money equivalent to their share of revaluation surplus (enhanced portion of the asset revalued) which was credited to their capital accounts. There was thus no transfer of capital asset by way of distribution of capital asset either on dissolution or otherwise within the meaning of section 45(4) read with section 2(14) of the Act.

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DATE: March 29, 2019 (Date of pronouncement)
DATE: April 3, 2019 (Date of publication)
AY: 2012-13
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CITATION:
S. 249(4): The power conferred upon the CIT(A) to condone the delay in filing of appeal is to alleviate genuine suffering of taxpayers. He has the power and corresponding duty to exercise the power when circumstances so warrant. U/s 14 of the Limitation Act, delay caused due to proceeding in a wrong forum has to be condoned. Article 2(1) of the India-UAE DTAA provides that the taxes covered shall include tax and surcharge thereon. Education cess is nothing but an additional surcharge & is also covered by the definition of taxes

The powers conferred upon the CIT(A) under section 249(3), for condoning the delay in filing of appeal if he is satisfied that the appellant had sufficient cause for not presenting it within that period, are statutory power to alleviate genuine suffering of taxpayers, so far as their grievance redressal by way of appeals are concerned, within framework of law. When a public authority has the powers to do something, he has a corresponding duty to exercise these powers when circumstances so warrant or justify–a legal position which has the approval of Hon’ble Supreme Court

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DATE: February 8, 2019 (Date of pronouncement)
DATE: March 23, 2019 (Date of publication)
AY: 2013-14
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CITATION:
Non-taxable capital receipt vs. Business Profits: Test of human probabilities has to be applied to decide whether what is apparent is real. Tax authorities are not required to put on blinkers while looking at documents. They are entitled to look into the surrounding circumstances to find out the reality. The agreement has to make commercial sense. The plea that "coining of concept" is a valuable right worth Rs. 10 cr is too naive & beyond human probabilities to merit judicial acceptance

“Coining of” the concept was in the course of the employment of the assessee, and, therefore, the plea that it belonged to the assessee, in his individual capacity, is too naïve to meet any judicial approval. In any case, there is no material on record to demonstrate that this coining of concept is such a valuable asset that it could fetch Rs 10 crores of consideration on a standalone basis, and, if that was so, it is simply beyond the human probabilities that such a valuable right could be given to someone for 7 years for commercial exploitation and development, with no strings attached, and without even finalizing as to how the fruits of such commercial exploitation will be shared by that person with the owner of this concept.

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DATE: March 8, 2019 (Date of pronouncement)
DATE: March 16, 2019 (Date of publication)
AY: 2011-12
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CITATION:
S. 50C Capital Gains: The adoption of stamp valuation as the sale consideration is not justified in absence of any evidence that the sale consideration was more than the value shown in the agreement. The AO has not brought on record that the property under sale was not was under various encumbrances and the assessee was having the absolute marketable title of the said property (All judgements considered)

The value adopted for the purpose of payment of stamp duty is not disputed by the assessee. The assessing officer has not brought on record that the property under sale was not was under various encumbrances and the assessee was having the absolute marketable title of the said property. No material is brought on record by assessing officer that the assessee has received much more consideration than shown in the MOI. The assessing officer treated the stamp valuation rate as the value of consideration, despite the facts that the assessee throughout the proceedings contended that the assessee was neither having possessing of the impugned piece of land nor having marketable title. The assessee offered the said piece of land on the basis ‘as is where is’. These vital facts were ignored by the lower authorities

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COURT:
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DATE: March 8, 2019 (Date of pronouncement)
DATE: March 15, 2019 (Date of publication)
AY: 2006-07
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CITATION:
S. 68 Bogus Share Capital: Merely presenting of documents & making payment through bank or appearance by director before the AO & admitting fact of share application made is in itself not sufficient to justify the genuineness of the transaction. It is against human probability that anyone will invest and pay share premium in a company without net worth or future prospectus. All applicants with common address are being controlled remotely by one person. These applicants are all paper companies not having sufficient worth and created for providing entries of share application money or share capital or loans by way of accommodation entries (NDR Promoter 410 ITR 379 (Del) & NRA Iron & Steel 103 TM.com 48 (SC) followed)

It is against the human probability that anyone will invest and pay share premium of Rs. 50/- per share without having any net worth of the company or any future prospectus of earning by the company. The current directors have not been able to justify, why the shares were purchased at high premium, without corresponding valuation of the company, which was having meagre income. It is impossible that directors of these nine companies are having either of the two addresses of the Paharganj area of New Delhi. In normal circumstances it is not possible until unless all these companies are being controlled remotely by one person. All the circumstances manifests that these are all paper companies not having sufficient worth and created for providing entries of share application money or share capital or loans by way of accommodation entries

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COURT:
CORAM:
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DATE: February 22, 2019 (Date of pronouncement)
DATE: March 15, 2019 (Date of publication)
AY: 2003-04, 2004-05
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CITATION:
Strictures: The insinuation of the Dept that ITAT passes order in a state of oblivion displays a totally irresponsible and cavalier approach on the cusp of contempt and deserving exemplary cost to purge the same. Referring in a deriding manner that the ITAT started with the grounds of appeal, displays the naivette of revenue authority purporting to be critical examiner of ITAT verdict, which is uncalled for. I express deep anguish at this approach of the department and hope that revenue will disband this cavalier and naïve approach while insinuating about the functioning of the ITAT without verifying their record

The insinuation that ITAT passes order in a state of oblivion to the facts and antecedents to the appeal, displays a totally irresponsible and cavalier approach on the part of Revenue on the cusp of contempt and deserving exemplary cost to purge the same. Furthermore, it is elementary knowledge that an appellate order has to be prefaced with the grounds or questions raised. Referring in a deriding manner that the ITAT started with the grounds of appeal, displays the naivette of revenue authority purporting to be critical examiner of ITAT verdict, which is uncalled for. Be as it may, I express deep anguish at this approach of the department and hope that revenue will disband this cavalier and naïve approach while insinuating about the functioning of the ITAT, without verifying their record.

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