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DATE: January 24, 2020 (Date of pronouncement)
DATE: February 5, 2020 (Date of publication)
AY: 2006-07
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S. 254(2): The limitation of six months for filing a rectification application was substituted by the Finance Act, 2016 w.e.f. 01.06.2016. Therefore, for assessment years prior thereto, the limitation period may be construed to be four years from the date of the order. Even otherwise, if the view is taken that the limitation period is six months, it is sufficient if the application is filed before that date. It is not necessary that the order has to be passed before that date. The assessee or AO can only bring the mistake to the notice of the Tribunal but have no control over the Tribunal. Neither party can be made to suffer for the inability of the Tribunal to pass an order within the limitation period (All judgements referred)

The use of the expression “may” in the aforesaid provision is clearly indicative of the legislative intent that the limitation period of six months from the end of the month in which the order was passed is not to be construed in such a manner that there can not be any extension of time beyond the said period of six months. This is so because the assessee or the Assessing Officer can only bring the mistake to the notice of the Tribunal. The assessee or the Assessing Officer has no control over the Tribunal. For one reason or the other, the Tribunal may not be in a position to pass the order under Section 254(2). For the inability of the Tribunal to pass such an order within the period provided, neither the assessee nor the revenue should suffer. What therefore becomes relevant is that the assessee or the Assessing Officer should bring the mistake to the notice of the Tribunal within the limitation period

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DATE: January 22, 2020 (Date of pronouncement)
DATE: February 5, 2020 (Date of publication)
AY: 2010-11
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S. 68 Cash Credits: The assessee is only required to explain the source of the credit. There is no requirement under the law to explain the source of the source. The fact that the source of the source is suspect and that the creditor had no regular source of income to justify the advancement of the credit to the assessee does not mean that an addition can be made in the hands of the assessee (Veedhata Tower 403 ITR 415 (Bom) followed)

Section 68 of the Act has received considerable attention of the courts. It has been held that it is necessary for an assessee to prove prima facie the transaction which results in a cash credit in his books of account. Such proof would include proof of identity of the creditor, capacity of such creditor to advance the money and lastly, genuineness of the transaction. Thus, in order to establish receipt of credit in cash, as per requirement of section 68, the assessee has to explain or satisfy three conditions, namely : (i) identity of the creditor; (ii) genuineness of the transaction; and (iii) credit-worthiness of the creditor

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DATE: January 17, 2020 (Date of pronouncement)
DATE: January 25, 2020 (Date of publication)
AY: -
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S. 83 CGST Act: Power to provisionally attach bank accounts is a drastic power. Considering the consequences that ensue from provisional attachment of bank accounts, the power is not to be routinely exercised. S. 83 confers power on the authorities to provisionally attach bank accounts to safeguard Govt revenue but the same is within well-defined ambit. Only upon contingencies provided therein that the power u/s 83 can be exercised. This power is to be used in only limited circumstances and it is not an omnibus power. If proceedings are launched against one taxable person, bank account of another taxable person cannot be provisionally attached merely based on the summons issued u/s 70 to him.

Power to provisionally attach bank accounts is a drastic power. Considering the consequences that ensue from provisional attachment of bank accounts, the Courts have repeatedly emphasized that this power is not to be routinely exercised. Under Section 83, the legislature has no doubt conferred power on the authorities to provisionally attach bank accounts to safeguard government revenue, but the same is within well-defined ambit. Only upon contingencies provided therein that the power under section 83 can be exercised. This power is to be used in only limited circumstances and it is not an omnibus power

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DATE: January 8, 2020 (Date of pronouncement)
DATE: January 18, 2020 (Date of publication)
AY: 2009-10
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S. 68/ 69C Bogus purchases: Even if the purchases made by the assessee are to be treated as bogus, it does not mean that entire amount can be disallowed. As the AO did not dispute the consumption of the raw materials and completion of work, only a percentage of net profit on total turnover can be estimated (Mohommad Haji Adam & Paramshakti Distributors followed)

Assuming that the purchasers from whom the purchases were made were bogus, in view of the finding of fact that the material was consumed, the question would be of extending the percentage of net profit on total turnover. This would be a matter of calculations by the concerned authority

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DATE: December 12, 2019 (Date of pronouncement)
DATE: December 21, 2019 (Date of publication)
AY: 2012-13
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S. 147 reopening for bogus purchases & accommodation entries: The omission of the AO to make an assertion in the reasons that there was a failure to disclose fully and truly all material facts necessary for the assessment is sufficient to set aside the reassessment notice. Also, a notice issued on change of opinion is bad

The reasons also refer to a decision of the Supreme Court in the case of M/s.N.K.Proteins Ltd. (2017-TIOL-23-SC-IT v. DCIT ). Even this decision was before the Assessing Officer in the proceeding pursuant to first reopening notice. The Petitioner, along with its objections, placed explanatory note as to how the said decision of the Supreme Court in M/s.N.K.Proteins did not apply to the facts of the case. Therefore, this aspect was also considered when the proceeding under the first reopening notice was conducted

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DATE: November 11, 2019 (Date of pronouncement)
DATE: December 7, 2019 (Date of publication)
AY: 2008-09
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S. 147/ 151: As the Act provides for sanction by the JCIT, the sanction by the CIT does not meet the requirement of the Act and the reopening notice is without jurisdiction. The fact that the sanction is granted by a superior officer is not relevant

The reopening proceedings under section 148 are bad as necessary sanction/approval had not been obtained in terms of section 151 of the Act. The impugned order of the Tribunal records that the sanction for issuing the impugned notice had been obtained from the Commissioner of Income Tax when, in terms of section 151, the sanction had to be obtained from the Joint Commissioner of Income Tax. Thus, in the absence of sanction/approval being obtained from the appropriate authority as mandated by the Act, the Tribunal held that the reopening notice itself is without jurisdiction

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DATE: October 3, 2019 (Date of pronouncement)
DATE: October 23, 2019 (Date of publication)
AY: 2005-06
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Writ Petition for non-grant of refund: Though an order refusing to issue refund is not an appeallable order u/s 246A, it is subject to revision u/s 264. As the alternate remedy of revision is available, the Writ is not maintainable (Larsen & Toubro 326 ITR 514 (Bom) referred)

If one contrasts section 264 of the Act with section 246A of the Act which provides for appeal, it would be noticed that unlike section 246A of the Act which specifies sections of the Act from which an appeal would lie, section 264 of the Act provides for revision from `any order’ under the Act. This is another indication that the Commissioner of Income Tax has very wide powers to correct any order passed by an officer subordinate to him

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DATE: September 25, 2019 (Date of pronouncement)
DATE: October 12, 2019 (Date of publication)
AY: 2009-10
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CITATION:
Taxability of loan waivers u/s 28(iv), 41(1): Argument of Revenue that loan taken from agents/ dealers is on revenue account or that on waiver of the loan, its character undergoes a change and it becomes on revenue account is not correct. S. 28(iv) & 41(1) cannot apply if the loan is on capital account and the assessee has never claimed any deduction therefor in the past (Solid Containers 308 ITR 417 (Bom) distinguished, Mahindra and Mahindra Ltd 404 ITR 1 (SC) followed)

Sine-qua-non for application of Section 41(1) of the Act, is that there should have been allowance or deduction claimed by the Assessee in any Assessment Year as a loss, expenditure or trading liability incurred by the Assessee. Subsequently, if any remission or waiver is granted in respect of which such an allowance/deduction has been claimed, then the Assessee is liable to pay t ax on the amount waived/ remitted under Section 41(1) of the Act. This, as the Court held is only to ensure that Assessee does not keep double benefit – one by way of deduction and another by waiver of the amount, which has already been deducted in computing the tax

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DATE: January 15, 2019 (Date of pronouncement)
DATE: October 12, 2019 (Date of publication)
AY: 2006-07
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CITATION:
Bogus loss from Client Code Modification (CCM): Even if the Revenue's theory of the assessee having enabled the clients to claim contrived losses is correct, the Revenue had to bring on record some evidence of the income earned by the assessee in the process, be it in the nature of commission or otherwise. Adding the entire amount of doubtful transactions by way of assessee's additional income is wholly impermissible. The fate of the individual investors in whose cases the Revenue could have questioned the artificial losses is not known

The Tribunal accepted the assessee’s explanation and discarded the Revenue’s theory that profit of the assessee’s company were passed on to the clients. It was also noticed that the Revenue has not contended that the client code modification facility is often misused by the assessee to pass on losses to the investors, who may have sizable profit arising out of commodity trading against which such losses can be set off. The Revenue normally points out number of such instances of client code modifications as well as nature of errors in filling of the client code

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DATE: February 28, 2019 (Date of pronouncement)
DATE: October 9, 2019 (Date of publication)
AY: 2013-14
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CITATION:
Stay of demand u/s 220(6)/254(2A): The Dept is not right in relying upon the decision of the Supreme Court in Asian Resurfing of Road Agency vs. CBI (AIR 2018 SC 2039) to contend that any stay against recovery granted would automatically lapse after six months. This is neither the purport of the judgment of the SC, nor the observations made in the said judgment in the context of civil and criminal litigation can be imported in present set of quasi judicial proceedings. The power of the AO to review the situation every six months, would not authorize him to lift the stay previously granted after full consideration and insist on full payment of tax without the assessee being responsible for delay in disposal of the appeal or any other such similar material change in circumstances

We are prima facie of the view that the Revenue Authorities committed serious error. Against the total demand arising out of the order of assessment of Rs. 205 crore, the Assessing Officer has already recovered a total of Rs. 140 crores by now through different means. There is no allegation that the petitioner is responsible for delay in disposal of the appeal before the Commissioner. Merely relying upon the decision of the Supreme Court in the case of Asian Resurfacing of Road Agency Pvt Ltd (supra), Revenue Authorities now held a belief that any stay against the recovery granted would automatically lapse after six months

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