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DATE: February 11, 2021 (Date of pronouncement)
DATE: March 20, 2021 (Date of publication)
AY: 2015-16
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S. 271AAB: Penalty u/s 271AAB can only be levied on "undisclosed income". The expression ‘undisclosed income’ is given a definite and specific meaning. It has not been described in an inclusive manner so as to enable the tax authorities to give a wider or elastic meaning. Species of income which is not specifically covered by the definition cannot be brought within its ambit. Such penal provisions are required to be interpreted in a strict, specific and restricted manner. Income declared by the assessee in the return of income or found or assessed by the AO in the assessment proceedings may be relevant for assessment of the income under section 68 /69 and other related provisions of the Act and also for the levy of penalty u/s 271(1)(c) of the Act. However, if it does not fall within the four corners of the definition of “undisclosed income”, penalty u/s 271AAB cannot be levied

The Assessing Officer has levied penalty @ 10% of the alleged undisclosed income, however, it is a matter of record in this case that the assessee has not made any surrender of any undisclosed income during the search action. The assessing officer has not initiated the penalty proceedings u/s 271AAB of the Act on the basis of or in consequence of the said search action, rather the assessing officer, has initiated the penalty proceedings during the assessment proceedings solely on the ground that the assessee has disclosed certain income from undisclosed sources in the return of income and paid due taxes thereupon

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DATE: September 12, 2019 (Date of pronouncement)
DATE: October 21, 2019 (Date of publication)
AY: 2010-11
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S. 2(15)/11: Though the assessee is activity contributing towards the promotion and popularity of cricket, its activities are also concentrated for generation of revenue by exploiting the popularity of the game and towards monopolization and dominant control over cricket to the exclusion of others. The commercial exploitation of the popularity of the game and the property/infrastructure held by the assessee is not incidental to the main object but is one of the primary motives of the assessee (All imp judgements on 'charitable purpose' referred)

The assessee is regularly following commercial activity by commercially exploiting its property and rights to hold matches and thereby earning huge income, hence the said activity can not be said to be incidental activity rather the commercial exploitation of the match is one of the main activity of the assessee, hence, the case of the assessee ,in our view, for the year under consideration will not fall within the definition and scope of section 2(15) of the Act and thus the assessee is not entitled to exemption u/s 11 of the Act. While holding so, we do not mean that the assessee’s activity is not at all for promotion of the game of cricket. No doubt, the assessee is also activity contributing towards the promotion and popularity of the cricket but at the same time its activities are also concentrated for generation and augmentation of the revenue by exploiting the popularity of the game and towards monopolisation and having dominant control over the cricket to the exclusion of others. What we want to convey is that the commercial exploitation of the popularity of the game and the property/infrastructure held by the assessee is not incidental to the main object but is apparently and inter alia one of the primary motives of the assessee

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DATE: September 12, 2019 (Date of pronouncement)
DATE: October 2, 2019 (Date of publication)
AY: 2014-15
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S. 143(3): If the case is selected for limited scrutiny of a specific issue, the AO has no jurisdiction to make additions or disallowances on other issues.

The impugned additions have been made by the Assessing Officer on certain other issues, whereas, the case of the assessee was selected for the purpose of limited scrutiny relating to security transactions. The additions made by the Assessing Officer, thus, being exceeding his jurisdiction are not sustainable in the eyes of law and the same are accordingly ordered to be deleted

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DATE: July 17, 2019 (Date of pronouncement)
DATE: August 3, 2019 (Date of publication)
AY: 2011-12
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S. 56(2)(vii): The stand of the Dept that in the case of an individual, a "HUF" is not a "relative" and that while a gift by the individual to the HUF is exempt, a gift from the HUF to its member is taxable u/s 56(2)(vii) is not correct. S. 56 (2) (vii) provides that the members of the 'HUF' are to be taken as "relatives". The converse is not provided because on first principles, amounts received by a member from the 'HUF' cannot be said to be income of the member exigible to taxation. Terming by the PCIT of decisions of the Tribunal as "incorrect" tantamounts to judicial indiscipline and will lead to chaos

As per the provisions of section 56 (2) (vi i) of the Act , though the members of the ‘HUF’ are to be taken relatives of the ‘HUF’ for the purpose of the said sect ion, however, the converse is not true that is to say that ‘HUF’ is not a relative of the individual member as per meaning of relative given in the case if individual under explanation to sect ion 56(2)(vi i) of the Act

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DATE: October 16, 2018 (Date of pronouncement)
DATE: December 8, 2018 (Date of publication)
AY: 2014-15
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S. 36(1)(iii): Dept's argument that Maxopp Investment/Avon Cycles 402 ITR 640 (SC) overrules the presumption that advances to sister concerns are made from own funds and not borrowed funds is not correct. Law on interpretation of judgements explained

It is evident from the above that the issue before the Hon’ble Apex Court was not whether the presumpt ion theory would apply or not where there are mixed funds and the assessee had demonstrated avai lability of sufficient own funds for making the investments . No discussion on this aspect has also been done by the Hon’ble Apex Court and merely not ing that the assessee had ut i l ized mixed funds, the Hon’ble Apex Court held that the principle of apport ionment would apply. Wi thout any discussion or del iberat ion on the presumpt ion theory, the proposi t ion laid down in the case of Avon Cycles Ltd. (supra) by the Hon’ble Apex Court has to be restricted to the extent of the issue before the Hon’ble Apex Court and facts before i t and not beyond that . And on that basis the decision of the Hon’ble Supreme Court in the case of Avon Cycles Ltd. (supra) can be read only to the extent of upholding the principle of apport ionment of expenses incurred in the context of the l imi ted fact of mixed funds avai lable wi th assessee and no further. The proposi t ion laid down cannot be stretched even logical ly to address the fact si tuat ion where suf f icient own interest free funds are avai lable wi th assessee, which fact was not there before the Hon’ble Apex court in the case of Avon Cycles (supra) , and to negate the presumpt ion that the own funds were used for making the investment , which was nei ther the quest ion raised before the apex court and therefore not addressed by i t also.

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DATE: October 31, 2018 (Date of pronouncement)
DATE: November 3, 2018 (Date of publication)
AY: -
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CITATION:
S. 12A Charity Registration: Exemplary cost of Rs. 1 lakh levied upon trust for fraud in wrongly seeking exemption on basis that it is controlled & managed by the Govt. The ITAT is deemed to be a Civil Court and its proceedings are deemed to be judicial proceedings within the meaning of s. 193 & 228 & of the Indian Penal Code. Any attempt to play fraud on the ITAT by way of conveying wrong and false facts and pleadings is required to be strictly dealt with

We are further pained to note here that identical contentions as were raised by the representatives of the Trust before the lower authorities that the Trust is controlled and managed by the Government or that its funds and properties otherwise belong to the Government, have been raised by the counsel for the assessee Trust before us also and further that even otherwise, dissolution clause has been added vide the amended resolution. This, in our view, is a clear and visible attempt on behalf of the trust to mislead this Bench of the Tribunal by way of concealing the real and true facts that the Members of the Trust have, by not extending the term of Board of Governors, conveniently entrusted unto themselves the control and management of the Trust. Had the case of the Trust been not carefully examined, these important and relevant facts would have remained wrapped under the carpet, and the Trust could have managed to get the relief of exemption from taxation by presenting wrong and false facts

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DATE: October 30, 2018 (Date of pronouncement)
DATE: November 3, 2018 (Date of publication)
AY: 2012-13
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S. 194C TDS: Law on whether the by-product allowed to be retained by the miller can be regarded as consideration 'paid' in kind by the procurement agency so as to create an obligation to deduct TDS thereon explained in the light of Kanchanganga Sea Foods Ltd. vs CIT 325 ITR 549 (SC) & other judgements

Though, before the milling of the paddy, the Government / procurement agencies remain the owner of the paddy, however, the moment the paddy is milled, the Government / procurement agencies lose their ownership and control over the paddy and the by-product but have right only on the ‘milled rice’ for which they pay a stipulated amount of Rs. 15/- as milling charges. The relevant words in the clause (8) of the Agreement that “the Government / Procuring Agency shall have no right or responsibility in this regard” speaks that to retain the by-product cannot always said to be ‘right’ over a thing but sometimes it becomes a ‘responsibility’ also and the Government / Procurement Agencies are not willing to own this responsibility.

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DATE: August 24, 2018 (Date of pronouncement)
DATE: August 29, 2018 (Date of publication)
AY: 2007-08, 2008-09
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Arrest for recovery of arrears: It is a question of confinement of a person in jail due to non-payment of tax dues. Since the recovery of outstanding dues has been stayed except deposit of specified amount, the TRO is ordered to arrange for release of the assessee immediately on deposit of said amount. Income Tax Authorities are directed to promptly do the necessary formalities including issue of release warrant to the Jail officials on compliance of the directions of the Tribunal

The sole motive of the Department for aforesaid action of putting the assessee in jail is to recover outstanding tax dues which are otherwise impugned before us, however, the Department has failed to recover any amount from the assessee despite putting the assessee behind the bars for 12 days as on today. Whereas by our above directions not only the Department will get recovery of Rs. 20 lacs out of the outstanding dues against the assessee but also the interest of justice will be served so far as the grievance of the assessee is concerned

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DATE: July 26, 2018 (Date of pronouncement)
DATE: July 31, 2018 (Date of publication)
AY: 2013-14
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CITATION:
S. 11: Entire law on what constitutes "advancement of objects of general public utility" so as to qualify as "charitable purpose" u/s 2(15) explained. Law also explained on the impact of carrying out incidental activity in the nature of trade, commerce or business in the course of actual carrying out of advancement of object of general public utility explained (All imp judgements referred)

To remove this anomaly, proper construction will be that the institution carrying out the object of advancement of general public utility which involve the incidental or ancillary activity in the nature of trade, commerce or business and generating income therefrom, the income to such an extent as is limited by the second proviso to section 2(15) of the Income Tax Act should be taken as exempt being treated as income from charitable purposes as per the relevant provisions of sections 2(15), section 10, section 11, section 12 or section 13, as the case may be and wherever applied. The other income which is not from the commercial activity, such as, by way of voluntary donations, contributions, grants or nominal registration fee etc. or otherwise will remain to be from charitable ITA No. 1382/Chd/2016- Chandigarh Lawn Tennis Association, Chandigarh 94 purposes and eligible for exemption under the relevant provisions. However, the income from activity in the nature of trade, commerce or business over the above limit prescribed from time to time as per the second proviso to section 2(15) of the Income Tax Act, should be treated as income from the business activity and liable to be included in the total income. In this way, the receipts of incidental business income while carrying out the objects of advancement of general public utility, when these cross the limit prescribed u/s 2(15) of the Act, will not render such institute as non-charitable bringing into taxation its entire income including non-business income or even income from charitable activity itself including voluntary contributions and donations. Only the business income which will be over and above the prescribed limit will be subjected to taxation.

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DATE: May 9, 2018 (Date of pronouncement)
DATE: June 6, 2018 (Date of publication)
AY: 2009-10
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It is painful to note that the Dept officials in order to achieve targets at the close of the FY not only are tempted to ignore the principles of law and natural justice but cross their limits, in complete violation of the orders issued by judicial authorities. They are pressurised by higher officials to do so and they have to choose the lesser risky option of the two i.e. either to face the departmental action for not achieving targets or to face contempt proceedings. They choose the later option because perhaps they think that courts will not opt for strict view in case the amount coercively recovered is refunded after passing of the cut off date i.e. 31st March, and an apology tendered to the Court

Despite severe structures and directions of the Tribunal against the departmental officials passed vide order dated 20.12.2017, which was not only very much in the knowledge of not only of the concerned officials who had done the coercive act of recovery from the assessee but also to the senior officials of the Department. The concerned Principal Commissioner of Income Tax herself had come present to argue the matter in the Stay Application on 29.11.2017 along with departmental representatives and the concerned Assessing officer leading to order dated 20.12.2107. Under the circumstances, it cannot be said that the illegal recovery, even despite strict directions of the Tribunal, has been made by the Assessing officer without the knowledge of the higher officials

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