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DATE: April 16, 2021 (Date of pronouncement)
DATE: April 17, 2021 (Date of publication)
AY: -
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Courts are inundated with complaints filed under Section 138 of the Negotiable Instruments Act, 1881. The cases are not being decided within a reasonable period and remain pending for a number of years. This gargantuan pendency of complaints filed under s. 138 of the Act has had an adverse effect in disposal of other criminal cases. Concerned with the large number of cases pending at various levels, a Larger Bench of the Supreme Court has examined the reasons for the delay in disposal of the cases. The Bench has issued important directions which will expedite the hearing and disposal of the cases

Chapter XVII inserted in the Negotiable Instruments Act, containing Sections 138 to 142, came into force on 01.04.1989. Dishonour of cheques for insufficiency of funds was made punishable with imprisonment for a term of one year or with fine which may extend to twice the amount of the cheque as per Section 138. Section 139 dealt with the presumption in favour of the holder that the cheque received was for the discharge, in whole or in part, of any debt or other liability. The defence which may not be allowed in a prosecution under Section 138 of the Act is governed by Section 140. Section 141 pertains to offences by companies. Section 142 lays down conditions under which cognizance of offences may be taken under Section 138. Over the years, courts were inundated with complaints filed under Section 138 of the Act which could not be decided within a reasonable period and remained pending for a number of years.

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DATE: April 10, 2019 (Date of pronouncement)
DATE: June 28, 2019 (Date of publication)
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S. 254: President/ Sr. VP of the ITAT should take appropriate steps and expedite hearing in old appeals. A tabular statement indicating the age of the old appeals as well as an action plan of the ITAT with respect to the likely time for their disposal, having regard to the priorities that ITAT may set in this regard, shall also be filed in court

The petitioner’s grievance in this case is that the income tax appeals, pertaining to assessment years of about 20 years ago, filed by the petitioner, have been pending for 10 to 16 years (2003-2009). In the light of these averments, this court is of the opinion that the President or the Senior Vice President concerned of the Tribunal should take appropriate steps and expedite the hearing in these appeals

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DATE: April 25, 2019 (Date of pronouncement)
DATE: May 11, 2019 (Date of publication)
AY: 2008-09, 2011-12, 2012-13
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S. 14A/ Rule 8D: Though, after Maxopp Investment 402 ITR 640 (SC), even "strategic investments" have to be considered for disallowance, the assessee is entitled to contend that the investments are "legacy" or "one-time" and that there is in fact no expenditure incurred to earn the tax-free income

It is apparent from a reading of the facts in the appeal that the CIT(A) formed an opinion based upon diverse reasoning, having regard to the facts of each case, regarding the nature of expenditure and especially whether it was a one-time investment opportunity availed of by the assessee. This is relevant in the context of assessee’s assertion that in fact no expenditure was incurred while investing in the mutual funds that yielded substantial income. As to whether in fact no expenditure was incurred or attributable at all, in these circumstances, it becomes a factual controversy requiring further hearing and scrutiny.

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DATE: March 8, 2019 (Date of pronouncement)
DATE: April 3, 2019 (Date of publication)
AY: 2014-15
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CITATION:
S. 10(38) Bogus Capital Gains from Penny Stocks: It is intriguing is that the company had meagre resources and reported consistent losses. The astronomical growth of the value of company’s shares naturally excited the suspicions of the Revenue. The company was even directed to be delisted from the stock exchange. The assessee’s argument that he was denied the right to cross-examine the individuals whose statements led to the inquiry and ultimate disallowance of the long term capital gain claim is not relevant in the wake of findings of fact

There was a specific information that assessee has indulged in non-genuine and bogus capital gain obtained from the transactions of purchase and sale of shares of M/s Kappac Pharma Ltd., a Mumbai based company. It is noticed that the purchase transaction has been done off market in physical form by paying cash. The assessee has purchased the share M/s Kappac Pharma Ltd. in physical form and thereafter, the same have been converted into electronic mode. The purchase payments were made in cash and not through the normal banking channel therefore the same were non verifiable from the authentic supporting details such as bank account/ documents. Assessee is not a regular investor in shares. The assessee has failed to furnish the proof of source for the purchase transactions. Thus, the entire transactions are against human probability

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DATE: February 25, 2019 (Date of pronouncement)
DATE: March 1, 2019 (Date of publication)
AY: -
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CITATION:
S. 254(2): The conduct of the assessee was speculative. It is not an uninformed litigant. it calculatedly chose not to question the rejection of its cross objection. Instead, waiting for the time till the two members who decided the first ITAT orders were not available and choosing to prefer the rectification application at a convenient time, the assessee no doubt technically was compliant, but stood exposed to the odium of forum shopping. ITAT's MA order reversed with costs of Rs. 1.5 Lakh imposed on the assessee

This court is of the opinion that the conduct of the assessee was speculative, to put it mildly. As observed earlier, it is not an uninformed litigant; it calculatedly chose not to question the rejection of its cross objection (on grounds of its having been rendered infructuous). Having waited more than a year after the decision of this court (which was rendered on 21-12-2012), it approached the ITAT in 2014. It offered no explanation why it did not seek the rectification earlier, during the pendency of the revenue’s appeal- in that event, if the ITAT had rejected its application this court would have given suitable directions. Instead, waiting for the time till the two members who decided the first ITAT orders were not available and choosing to prefer the rectification application at a convenient time, the assessee no doubt technically was compliant, but stood exposed to the odium of forum shopping

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DATE: January 22, 2019 (Date of pronouncement)
DATE: February 22, 2019 (Date of publication)
AY: 2011-12
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S. 220(6) Stay of demand: The AO cannot impose the per se condition that pending consideration of the application for stay of demand, certain minimum amount (15%/ 20%) has to be deposited by the assessee as prescribed by the CBDT. He has apply his mind and decide the application for stay of demand

It is evident that the concerned authorities and tax officials have to apply their mind to decide an application for stay of demand. This does not, however, mean that any particular AO in a given case has to impose a per se condition that pending consideration of the application for stay of demand, certain minimum amount has to be deposited

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DATE: December 21, 2018 (Date of pronouncement)
DATE: January 17, 2019 (Date of publication)
AY: -
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CITATION:
Law on what constitutes a "fixed place permanent establishment" under Articles 5(1) to 5(3) of India-USA DTAA explained after referring to all judgements and pronouncements from the OCED Commentary and eminent authors

GE’s overseas enterprises have a place of business in India, per Article 5(1) of the DTAA. The term “place of business” has been understood to mean any premises, facilities or installations used for carrying on the business of the enterprise – does not have to be exclusively used for that purpose [OECD Model Tax Convention on Income and on Capital, Commentary on Article 5 Concerning the Definition of Permanent Establishment, para. 4 (“OECD MTC”)], with even a certain amount of space at its disposal is sufficient to cause fixed place of business.1 Moreover, having space at disposal does not require a legal right to use that place – mere continuous usage is sufficient if it indicates being at disposal. (Ref Para 4.1 of OECD MTC)

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DATE: November 16, 2018 (Date of pronouncement)
DATE: December 7, 2018 (Date of publication)
AY: 2011-12
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S. 147/ 148: A report of the Revenue audit party is merely information and opinion. It is not new or fresh or tangible material. If the reassessment notice is solely based on an audit opinion, it means it is issued on change of opinion which is not permissible

We find that the arguments on behalf of the petitioner are well founded and it must succeed. The audit report merely gives an opinion with regard to the non-availability of the deduction both under section 80-IA was not deducted from the profits of the business while computing deduction under section 80HHC. Clearly, therefore, there was no new or fresh material before the Assessing Officer except the opinion of the Revenue audit party. Since it is settled law that mere change of opinion cannot form the basis for issuing of a notice under section 147/148 of the Act, therefore, we do not propose to burden out judgment with the said judgments

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DATE: October 1, 2018 (Date of pronouncement)
DATE: October 15, 2018 (Date of publication)
AY: -
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CITATION:
Search assessments. The time limit of 2 years u/s 153B for framing search assessment orders applies only to the original order and to orders passed after remand. The time limit for passing remand orders is governed by s. 153(3)/ erstwhile 153( 2A) & not by s. 153B. Limitation begins (for any purpose under the Act) from the point of time when the departmental representative receives the copy of a decision or an order of the ITAT

The next question is whether the non-obstante clause under Section 153 of the Act, which prescribes a specific period of limitation to complete a search assessment for the block period concerned, could override the general period of limitation. In this context, the Court notices that Section 153 of the Act generally talks of various periods of limitation. It prescribes that no order of assessment shall be made either under Section 143 or Section 144 of the Act any time after expiry of twenty one months from the end of the assessment year in which the income was first assessable. The exception carved by way of Section 153(2) – relates to reassessment and states that in cases covered by it, the period is reduced to nine months from any of financial year in which the notice for re-assessment is served

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DATE: September 12, 2018 (Date of pronouncement)
DATE: September 22, 2018 (Date of publication)
AY: -
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CITATION:
S. 68 Cash Credits: In order to avail of the theory of "peak credit", the assessee has to make a clean breast of all facts. He has to explain each of the sources of the deposits and the corresponding destination of the payment without squaring them off. The ITAT cannot proceed merely on the basis of accountancy and overlook the settled legal position

The legal position in respect of an accommodation entry provider seeking the benefit of ‘peak credit’ appears to have been totally overlooked by the ITAT in the present case. Indeed, if the Assessee as a self-confessed accommodation entry provider wanted to avail the benefit of the ‘peak credit’, he had to make a clean breast of all the facts within his knowledge concerning the credit entries in the accounts. He has to explain with sufficient detail the source of all the deposits in his accounts as well as the corresponding destination of all payments from the accounts. The Assessee should be able to show that money has been transferred through banking channels from the bank account of creditors to the bank account of the Assessee, the identity of the creditors and that the money paid from the accounts of the Assessee has returned to the bank accounts of the creditors. The Assessee has to discharge the primary onus of disclosure in this regard

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