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DATE: October 11, 2019 (Date of pronouncement)
DATE: October 26, 2019 (Date of publication)
AY: 2007-08
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CITATION:
S. 147/ 154: The AO cannot, after conclusion of proceedings u/s 147, take aid of Explanation 3 to S. 147 to make any addition u/s 154. If the Dept's argument is accepted that u/s 154 the AO is empowered to deal with escapement of income even after the s. 147 assessment is completed, it would empower the AO to go on making one addition after the other by taking shelter of Explanation 3 to S. 147 endlessly. Such a course is not permissible

If we accept the argument of the learned DR that u/s 154 of the Act, ld. AO is empowered to deal with the escapement of income in respect of which the reasons were not recorded even after the assessment reopened under section 147 of the Act is completed, it would empower the ld. AO to go on making one addition after the other by taking shelter of Explanation 3 to Section 147 endlessly. Such a course is not permissible. Power that is available to the ld.AO under Explanation 3 to Section 147 of the Act, in our considered opinion, is not available to him u/s 154 of the Act, which obviously came to be exercised by the ld. AO after the conclusion of the proceedings u/s 147 of the Act

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DATE: March 12, 2018 (Date of pronouncement)
DATE: March 14, 2018 (Date of publication)
AY: -
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CITATION:
Principles of Mutuality: Receipts by housing co­-operative societies such as non­-occupancy charges, transfer charges, common amenity fund charges and certain other charges from their members are exempt from income-tax based on the doctrine of mutuality. The fact that the receipts are in excess of the limits prescribed by the State Government does not mean that the Societies have rendered services for profit attracting an element of commerciality and thus was taxable

Transfer charges are payable by the outgoing member. If for convenience, part of it is paid by the transferee, it would not partake the nature of profit or commerciality as the amount is appropriated only after the transferee is inducted as a member. In the event of non­ admission, the amount is returned. The moment the transferee is inducted as a member the principles of mutuality apply. Likewise, non­occupancy charges are levied by the society and is payable by a member who does not himself occupy the premises but lets it out to a third person. The charges are again utilised only for the common benefit of facilities and amenities to the members. Contribution to the common amenity fund taken from a member disposing property is similarly utilised for meeting sudden and regular heavy repairs to ensure continuous and proper hazard free maintenance of the properties of the society which ultimately enures to the enjoyment, benefit and safety of the members. These charges are levied on the basis of resolutions passed by the society and in consonance with its bye­laws. The receipts in the present cases have indisputably been used for mutual benefit towards maintenance of the premises, repairs, infrastructure and provision of common amenities

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DATE: August 18, 2017 (Date of pronouncement)
DATE: August 24, 2017 (Date of publication)
AY: 2013-14, 2014-15
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CITATION:
S. 144C DRP: Action of the DRP in granting time to the assessee till 24th July 2017 to submit documents but in still passing the order on the same day itself and that too without taking on record the documents produced by the assessee is clearly unreasonable and in violation of the principles of natural justice

Clearly, the Respondent acted in violation of the principles of natural justice, since despite the time being granted to the Petitioner till 24th July 2017 to submit documents sought by the DRP, the DRP passed the order on 24th July, 2017 itself and that too without taking on record the documents produced by the Petitioner till then. The time given for the Petitioner to do so was just four days. This was clearly unreasonable, particularly, since there was an intervening weekend between 20th and 24th July, 2017

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DATE: April 28, 2017 (Date of pronouncement)
DATE: June 9, 2017 (Date of publication)
AY: 1997-98
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CITATION:
S. 271(1)(c) penalty cannot be levied unless there is "evidence beyond doubt" that there was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee. The fact that the assessee did not voluntarily furnish the return of income, and that the merits were decided against it, does not per se justify levy of penalty. The bonafides of the explanation of the assessee for not complying with the law have to be seen

It is an well established proposition of law that being penal in nature, the provisions of section 271(1)(c) of the Act are invoked only when there is evidence beyond doubt that there was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee towards the tax alleged to be evaded. That is the reason behind that assessment proceedings and penalty proceedings are independent proceedings. In other words, making and sustaining an addition against the assessee will not be always resulted into levy of penalty

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DATE: May 16, 2016 (Date of pronouncement)
DATE: May 28, 2016 (Date of publication)
AY: 2006-07
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CITATION:
S. 147: Non-furnishing by the AO of reasons recorded for reopening the assessment results in violation of the law laid down in GKN Driveshaft 259 ITR 19 (SC) & renders the reopening void

Despite repeated letters requesting to provide copy of the reasons recorded or the grounds on which the assessment was reopened, no such reasons were provided to the assessee. We find that the DR could not substantiate whether any reasons were provided by the Assessing Officer to the assessee and merely relying on the fact that general practice was followed in Department of supplying reasons, it cannot be presumed that reasons were supplied in the case of the assessee. The Assessing Officer has not complied with the direction of the Hon’ble Supreme Court in the case of GKN Driveshaft (India) limited Vs. CIT (2003) 259 ITR 19 (SC) providing reasons for reassessment within a reasonable time, and therefore respectfully following the decisions cited above, the reassessment completed by the Assessing Officer under section 147 of the Act cannot be sustained in the case of the assessee and quashed

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Posted on by ananyakapoor
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DATE: March 30, 2016 (Date of pronouncement)
DATE: April 10, 2016 (Date of publication)
AY: -
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CITATION:
S. 147: Reopening in the absence of fresh material and merely on change of opinion is nor permissible

Assessee had made full and true disclosure during the original assessment proceedings. We are also of the view that reopening had been done merely on change of opinion in as much as that in the original assessment made u/s. 143(3) of the I.T. Act. We also find that AO has no fresh material to form his opinion regarding escapement of assessment and he has also not found any tangible material to record the reasons for reopening of the assessment of the assessee. It is a settled law that merely change of opinion is not permissible under the law

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Posted on by ananyakapoor
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DATE: March 3, 2016 (Date of pronouncement)
DATE: March 28, 2016 (Date of publication)
AY: -
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CITATION:
Section 147, reopening, reopening on factually erroneous premise, not permissible, change of opinion

Since the action of the Revenue was based on a factually erroneous premise, the Court is of the view that the reopening of the assessments for the said AYs is not sustainable in law. The Court is also satisfied that the requirement of the law, as explained by the Court in Commissioner of Income Tax. v. Kelvinator of India Limited (2010) 320 ITR 561 (SC), and reiterated in the later decisions, has not been fulfilled in the present case

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DATE: February 18, 2016 (Date of pronouncement)
DATE: February 22, 2016 (Date of publication)
AY: 2007-08 to 2012-13
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CITATION:
S. 147: The reopening of the assessment is not valid if the reasons recorded are incoherent and do not indicate what the basis for reopening is

A plain reading of the reasons recorded for reopening reveals that the reasons are totally incoherent. In fact, a plain reading of it gives rise to doubts whether some lines have gone missing or some punctuation marks have been left out. Grammatically also the reasons recorded make little sense. However, this is the least of the problems. Essentially, the reasons recorded do not indicate what the basis for the reopening of the assessments is

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DATE: August 19, 2015 (Date of pronouncement)
DATE: August 27, 2015 (Date of publication)
AY: 2008-09
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CITATION:
Transfer Pricing: Circumstances in which the Profit Split Method (PSM) has to be preferred over the TNMM for determining the ALP and method of allocation of profits between the assessee and the AE under the PSM explained

The Profit Split Method (PSM) first identifies the profit to be split for the associated enterprise from the controlled transactions in which the AEs are engaged. It then splits these profits between the AEs on an economically valid basis that approximates the division of the profit that would have been anticipated and reflected in an agreement, transaction or a residual profit intended to represent the profit that cannot readily be assigned to one of the parties. The contribution of each enterprise is based upon a functional analysis and valued to the extent possible by any available reliable standard market data. The functional analysis is an analysis of the functions performed (taking into account assets used and risk assumed) by each enterprise

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DATE: June 10, 2015 (Date of pronouncement)
DATE: June 30, 2015 (Date of publication)
AY: 2001-02
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CITATION:
S. 275(1)(a): Law on time limit for passing penalty order u/s 271(1)(c) explained. Challenge by assessee to validity of penalty order entertained in Dept's appeal despite lack of C. O. /cross-appeal by assessee

On a combined reading of Section 275(1)(a) along with its proviso it becomes clear that main section 275(1)(a) talks of a period of six months from the date on which the order is received by commissioner and main section also talks of orders passed by commissioner appeals as well as by tribunal talk whereas the proviso which is applicable from 01.06.2003 talks about orders passed by Commissioner Appeals only and here, the period of limitation for passing penalty order is one year from the date Commissioner receives Tribunal order

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