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DATE: September 4, 2018 (Date of pronouncement)
DATE: September 15, 2018 (Date of publication)
AY: 2014-15
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S. 276(C)(1) Prosecution for bogus transaction: If a stay application is filed before the CIT(A) to seek a stay of the assessment order, during the pendency of such application, the criminal prosecution should not be launched and, if it has been already launched, the same shall not proceed

In the event, the petitioner seeks a stay of the order passed by the Assessment Officer by making a stay application, then, during the pendency of such application, the criminal prosecution should not be launched and, if it has been already launched, the same shall not proceed. Thus, the ad interim stay granted by this Court would continue till the disposal of the application for stay by the First Appellate Authority

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DATE: September 4, 2018 (Date of pronouncement)
DATE: September 7, 2018 (Date of publication)
AY: 2003-04, 2004-05, 2005- 06
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S. 271(1)(c) Penalty: If appeals with reference to the quantum proceedings have been admitted by the Court on substantial questions of law, it means that there were debatable and arguable questions raised and so penalty u/s 271(1)(c) cannot be levied (PCIT v. Shree Gopal Housing 167 DTR 236 distinguished). Penalty also cannot be levied if the claim was as per judicial precedents prevalent at the time of filing the ROI. Also, there must be a finding that the details supplied by the assessee in its return were incorrect or erroneous or false

In all these appeals, we find that the appeals with reference to the quantum proceedings have been admitted by this Honourable Court on a substantial question of law. That has also been recorded by the Tribunal in the impugned order and the same is also not disputed before us. We find that the appeals were admitted as this Court found that there were debatable and arguable questions raised in the quantum proceedings. This being the case, we find that the Tribunal, in the facts and circumstances of the present case, was fully justified in confirming the order of the CIT (A) in all the three assessment years for deleting the penalty

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DATE: August 23, 2018 (Date of pronouncement)
DATE: September 3, 2018 (Date of publication)
AY: 2009-10
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The Revenue has been selective in its approach. It picks either the assessee or the AYs pertaining to that assessee for challenging the orders in relation to them, before the higher forums. This results in revenue leakage or perpetuation of wrongs affecting adversely the collection of revenue. The public at large is at a loss to understand as to why the Department/Revenue consistently loses the battle in the higher Courts. This could be then termed as a deliberate or intentional act. If the Department of Revenue, Ministry of Finance, Government of India is going to conveniently overlook this and not bring the guilty persons to book by initiating disciplinary measures against them, then, no purpose will be served at all. This is not a short term exercise, but a major surgery which will have to be performed. If the Revenue Officials are prepared to take some bold decisions, then, only these state of affairs will improve and not otherwise

On numerous occasions, this Court has brought to the notice of the Department of Revenue, Ministry of Finance, Government of India through the Commissionerates that the Revenue has been selective in its approach.It picks either the assessee or the assessment years pertaining to that assessee for challenging the orders in relation to them, before the higher forums.This results in revenue leakage or perpetuation of wrongs affecting adversely the collection of revenue. The public at large is at a loss to understand as to why the Department/Revenue consistently loses the battle in the higher Courts. This could be then termed as a deliberate or intentional act.6 If the Department of Revenue, Ministry of Finance, Government of India is going to conveniently overlook this and not bring the guilty persons to book by initiating disciplinary measures against them, then, no purpose will be served at all.We know that the Appeal for the prior Assessment Year may not be properly drafted or does not contain the relevant details, much less the precise question of law and if that is dismissed, there will be definitely an impact on the Appeal relating to the Assessment Year under consideration.Hence, this is not a short term exercise, but a major surgery which will have to be performed. If the Revenue Officials are prepared to take some bold decisions, then, only these state of affairs will improve and not otherwise

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DATE: August 21, 2018 (Date of pronouncement)
DATE: August 30, 2018 (Date of publication)
AY: -
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These Petitions have been filed challenging a somewhat curious and unforeseen development. We do not know in what circumstances the Chairman flew down to Mumbai and invited the members for discussion in relation to some cases or related issues. It would be highly risky if such discussions in relation to judicial orders and judicial matters are held in a close-door meeting or in the privacy of the chambers of the members of the Settlement Commission. There is a uncalled for interference in judicial proceedings and none including the Chairman can direct a particular course of action to be taken or a particular order being passed in pending judicial proceedings

The Petitioners are not precluded from challenging the manner in which the Chairman intervened in this matter at a later stage. We would not like to interfere with the pending proceedings for then we would commit the same mistake, if at all, committed by the learned Chairman. It would not be proper to presume at this stage that the Proceedings are necessarily going to an end, with final orders, but adverse to the Petitioners’ interests. For all we know the settlement may go through to the satisfaction of all parties before the Settlement Commission. In the event the apprehension comes true and the Chairman’s meeting and discussion with the members of the Commission results in an adverse order as apprehended, then, while challenging such final orders and if they are found to be influenced by the Chairman’s alleged uncalled for and undue intervention, the Petitioners can raise appropriate pleas and urge before this Court that they have not been dealt with fairly by the Settlement Commission. There is a uncalled for interference in judicial proceedings and none including the Chairman can direct a particular course of action to be taken or a particular order being passed in pending judicial proceedings

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DATE: August 20, 2018 (Date of pronouncement)
DATE: August 29, 2018 (Date of publication)
AY: 2007-08
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Gains from sale of shares whether capital gains or business profits: Short period of holding shows that intention of assessee is to earn profit at earliest possible occasion. Assessee is moving as per stock market trend and selling shares at first available opportunity. This type of activity of sale and purchase is rightly termed, not as investment, but as trading

In fact, trend is that majority transactions have feature in holding of shares from one day to seven days. assessee sold shares within period of one week from date of purchase in more than eighty per cent of cases. It is this trend which resulted in concurrent finding against assessee. Intention of assessee in indulging in these transactions is to earn profit at earliest possible occasion and when there is rise in price. assessee is moving as per stock market trend

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DATE: March 21, 2017 (Date of pronouncement)
DATE: May 12, 2017 (Date of publication)
AY: -
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Valid service of notice: Law explained on whether sending a notice by RPAD and its return by the postal authorities with the remark "addressee refused to accept" amounts to a valid service or not

When it was sent by R.P.A.D. to the address, it was returned by the postal authorities with the remark, that the addressee refused to accept the packet. That is why it is returned. Thus, the presumption that when the addressee whose address is set out on the envelope had an occasion to notice and peruse the packet, meant for him, but he refuses to accept it, then, that is deemed to be served. The addressee in this case is correctly described. There is no dispute about his identity. Even his address is correct. It is at that address the packet is carried and by the concerned postal authority. The duly authorised person carrying the packet reached the address. On noticing the addressee, he serves it, but the addressee after having perused the packet refused to accept it. It is in these circumstances, the postal remark that the concerned person has refused to accept; hence, returned to the sender denotes good and valid service.

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DATE: March 6, 2017 (Date of pronouncement)
DATE: March 10, 2017 (Date of publication)
AY: 2009-10
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S. 145: The average cost method of valuing inventories is an accepted method of valuation approved by the accounting standards issued by the ICAI. The AO is not entitled to disregard the method if the assessee has consistently followed the method

The Assessing Officer sought to question the method of accounting only because the assessee has not been regularly following the same or the income is not computed in accordance with the standards notified under subsection (2). We do not find that there was any material with regard to the standards and notified. It is only whether the assessee was consistent in following the method of accounting provided in subsection (1) of Section 145 of the Income Tax Act, 1961. If that is the other eventuality in which the Assessing Officer derives his power in terms of Section 145, then, in para 12 the Tribunal has found that the assessee has maintained proper books of account. No defect has been pointed out by the Assessing Officer either in the purchases or in the sales

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DATE: February 13, 2017 (Date of pronouncement)
DATE: February 20, 2017 (Date of publication)
AY: -
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The Commissioner and his officials are playing a blame game. To cover up their lapses and deficiencies, they turned around and blamed their Advocates .. We are sorry to say that this is not what was expected from the Commissioner of Service Tax. If the officers are unaware of legal procedures, then, they have to be in touch with their Advocates and periodically. They cannot expect that the Advocate himself comes to their office and apprise them as to what further has to be done after the filing of an Appeal

While filing a cryptic affidavit in support, initially we had observed that the Commissioner and his officials are playing a blame game. To cover up their lapses and deficiencies, they turned around and blamed their Advocates. They are of the opinion that their Advocates ought to inform them and at every stage of the matter, particularly as to which office objections have to be complied with or are to be removed. If no such communication is made by the Advocates, then the Commissioner feels that he and his officers are not at fault. We are sorry to say that this is not what was expected from the Commissioner of Service Tax. If the officers are unaware of legal procedures, then, they have to be in touch with their Advocates and periodically. They cannot expect that the Advocate himself comes to their office and apprise them as to what further has to be done after the filing of an Appeal

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DATE: February 22, 2016 (Date of pronouncement)
DATE: April 20, 2016 (Date of publication)
AY: 2008-09
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Mere non-introduction of interest-bearing funds is not sufficient to conclude that gains from sale of shares are not business income

There are various factors such as frequency, volume, entry in the books of accounts, nature of funds used, holding period etc. which are relevant in deciding the true nature of transactions and no single factor is conclusive. Thus, mere non-introduction of interest bearing funds will not alone determine the nature of the transactions. The impugned order, after analyzing the statement of capital gains which were available before it, came to the conclusion that most of the shares have been sold within 30 days of its purchase and upheld the order of the CIT(A)

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DATE: February 25, 2016 (Date of pronouncement)
DATE: March 3, 2016 (Date of publication)
AY: 2008-09
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S. 14A/ Rule 8D: Severe strictures passed against the ITAT for taking the view that the presumption laid down in HDFC Bank 366 ITR 505 (Bom) and Reliance Utilities 313 ITR 340 (Bom) that investments in tax-free securities must be deemed to have come out of own funds and (ii) Law laid down in India Advantage (Bom) that s. 14A and Rule 8D does not apply to securities held as stock-in-trade cannot be applied as both propositions are contrary to Godrej & Boyce 328 ITR 81 (Bom). ITAT's order reversed on the ground that it is "Judicial Indiscipline" leading to complete chaos and anarchy in the administration of law

The impugned order of the Tribunal seems to question the decision of this Court in HDFC Bank Ltd. (supra) to the extent it relied upon the decision of this Court in Reliance Utilities and Power Ltd. (supra). This is by observing that the decision in Reliance Utilities and Power Ltd.(supra) it must be appreciated was rendered in the context of Section 36(1)(iii) of the Act and its parameters are different from that of Section 14A of the Act. This Court in its order in HDFC Bank Ltd.(supra) consciously applied the principle of presumption as laid down in Reliance Utilities and Power Ltd. (supra) and in fact quoted the relevant paragraph to emphasize that the same principle / test of presumption would apply to decide whether or not interest expenditure could be disallowed under Section 14A of the Act in respect of the income arising out of tax free securities. It is not the office of Tribunal to disregard a binding decision of this court. This is particularly so when the decision in Reliance Utilities and Power Ltd. (supra) has been consciously applied by this Court while rendering a decision in the context of Section 14A of the Act

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