Devendra-Jain-Radha-HalbeAdvocates Devendra Jain and Radha Halbe have pointed out that the disruption caused by the Covid-19 pandemic is likely to lead to defaults in payment of salaries, rent, business transactions, execution of contracts etc. The ld. authors have systematically analyzed the tax implications of these defaults and explained whether the income will still be assessable in the hands of the assessee. A plethora of important judgements have been referred to by the ld. authors in support of their analysis

1. Introduction

In the wake of the ongoing Covid-19 crises, the country has seen unprecedented times and the downfall in terms of the socio-economic environment has directly affected people at large. Temporary disruptions of trade and commerce might stress many organisations, particularly those with inadequate liquidity. In our fight against the Covid-19 Pandemic,Prime Minister Narendra Modi unveiled a comprehensive package of Rs 20 lakh crore under the ‘Atmanirbhar Bharat Abhiyan’ campaign to build a resilient India. Various measures have need taken by all at their individual levels to restore normalcy, medical and economic, at the earliest.

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GargieyaAdvocates Mahendra Gargieya and Hemang Gargieya have explained the law relating to “full and true disclosure of material facts” in the context of reopening under sections 147 and 148 of the Income-tax Act, 1961. The ld. authors have explained the fine distinction between the obligation of the assessee to disclose the “material facts” and the requirement to disclose the “inferences” to be drawn from those facts. They have opined, by relying on judgements of the Apex Court, that while the assessee is required to disclose the former, he is not obliged to disclose the latter

1. The provisions related to reassessment u/s 147 to 151 of the Income Tax Act, 1961 (hereinafter referred as “the Act”) has been the most litigated piece of legislation and this saga continues so. The powers conferred upon the Assessing Office, under section 147 of the Act, to reopen a concluded assessment is certainly wide in scope and the said provision has been interpreted by the courts to be meant solely for the benefit of the Revenue. However, howsoever vast such powers are, they are not unbridled and the legislature, being fully aware of the possibility of its abuse, have also suitably provided built-in checks and safety measures.

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CA Tilak Chandna has analyzed in a meticulous manner the definition of the term “benami transaction” in section 2(9) of the Prohibition of Benami Transactions Act, 1988. He has explained precisely which transactions are, and which are not, covered by the definition of the term. All the important legal precedents on the issue, of the Indian Courts as well as that of the foreign courts, have been referred to

A journey into the evolution of the definition

It is natural that the comprehensive analysis of the definition of benami transaction in the >benami act has to start with reproducing the definition itself. Section 2(9) of Prohibition of Benami Transactions Act, 1988 defines Benami Transaction. As per this, Benami Transaction means:

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Sameer-BhatiaAdvocate Sameer Bhatia has dealt with the interplay between sections 2(47) and 45 of the Income-tax Act, 1961 and the provisions of the Transfer of Property Act, 1882 and the Registration Act, 1908. He has also dealt with the controversial question whether a “transfer” is complete on the date of the agreement to sell or on the date of physical possession/registration of documents. All the relevant judgements as well as Circulars of the CBDT have been referred to by the Ld. Author

Introduction

Income Tax Act, 1961 provides a comprehensive machinery to deal with the computation of incomewhich in turn has principally been divided into five main heads. The expression `Transfer’ by itself is used at varied places in law amongst the computational heads and specifically been dealt with by the provisions of section 2(47). The expression `Transfer’ as is so defined by provisions of section 2(47) and as it stands today is the outcome of its substitution by the Taxation Laws (Amendment) Act, 1984 with effect from 01st April, 1985. Part E of Chapter IV of the Income Tax Act deals with the computational head `Capital Gains’ which by itself contains exhaustive propositions dealing with the expression denoted as `Transfer’ which is at various times the area of conflict between the department and the assessee. Section 45(1) inserted by the Finance Act, 1964 with effect from 01st April, 1964 provides the methodology of working out the capital gains arising from transfer of capital assets. Any profit or gain arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B, 54D,54E, 54EA, 54EB, 54F, 54G and 54H be chargeable to income tax under the head `Capital Gain’ and shall be deemed to be the income of the previous year in which the transfer took place.

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Advocate Divesh Chawla has conducted a comprehensive analysis of the Benami Law. He has explained the impact of the statutory provisions, the process involved, and the consequences in civil and criminal law. He has also explained the conflict between the Benami Law, the Income-tax Act and the Money Laundering Act. He has also provided valuable advice on the precautions to be taken by the concerned persons and third parties to avoid falling foul of the law

The Government commitment to eradicate the black economy is evident with demonetization of high-value currency notes and numerous statutes (1) . To future its purpose, they carried out significant amendments in the Benami Transactions (Prohibition) Act, 1988 (‘BTPA’). Leading up to the BTPA, there was no embargo on Benami Transaction and was recognized as legally valid by Indian Courts (2) . The deceitful use of Benami Transaction to defeat the provisions of law, sow the seeds for BPTA, that prohibits Benami Transaction, while compelling the actual owner to keep the property in his name.

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CA Shivangi Samdhani has argued that the extension of the due date of the Vivad se Vishwas Act, 2020, brought by the Finance Minister through Press Conference held on 13th May 2020, does not serve the purpose in true spirit and is also unfair to those who have already filed the declaration forms. She has suggested that, in order to make parity, assessees should be allowed to pay tax arrears till December, 2020 irrespective of the date of filing of Declaration. This, she says, will result in a win-win situation for all

In the series of relaxations brought under various statues because of COVID19, the date of making payment without any additional charge under “Vivad se Vishwas Act” has been further extended to 31st December, 2020 from 30th June, 2020 which was originally set out at 31st March, 2020.

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CA-Khushboo-AroraCA Khushboo Arora has methodically analyzed all the provisions in the Income-tax Act, 1961 applicable to cash transactions such as Sections 269SS, 269T, 269ST, 271D, 271E, 271DA, 44AD, 44AB, 269SU, 194N, etc. She has explained the ambit of these provisions with the aid of practical examples. She has also drawn attention to all the important judgements and CBDT Circulars on the point. A pdf copy of the article is available for download

Cash has always been an inevitable element of our economy or any economy for that matter. With the involvement of cash, it is comparatively much easier to maintain anonymity and carry out the transactions without leaving any traces. Ministry of Finance with Income Tax Department has, from time to time,taken various measures to control the involvement of cash in activities, whether or not related to the business. Various amendments have also been made to the Income Tax Act, 1961 in the past few years which have intended to only target cash transactions and limit their involvement. It is without any doubt that the Revenue has fairly been able to do so, either by imposing restrictions on cash transactions or by providing incentives for not dealing in cash.

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Nidhi-SuranaCA Nidhi Surana has explained the subtle differences between an assessment made under section 153C of the Act and that made under section 147/148 of the Act. She has pointed out that the different jurisdictional conditions that have to be satisfied before the AO invokes either of the two provisions. She has also highlighted the different consequences that befall the assessee under the two assessments. All the relevant judgements and Circulars of the CBDT have been referred to

Foreword: Many of us in the fraternity has faced these perplexing cases where though Search has been carried out the order is finalized under the reopening section 148 in place of section 153C. Section 153C is a Bullet missile which gives power to the department to bring with in their ambit even those individuals on whom search has not been conducted, but evidence(document/assets) have been found belonging to or relating to them. Whereas, Reassessment is another distinguished weapons in the armoury of the Department, which empowers the Assessing Officer to assess, reassess or recompute income, turnover etc, which has escaped assessment. The Article is aimed at removing the said ambiguity. In this Article not only a complete comparative analysis of both the sections are done but even various conditions for invoking section 153C are discussed.

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Advocate Sarthak P. Shetty has argued that section 278E of the Income-tax Act, which shifts the burden of proof upon the assessee and provides that an accused is presumed to have a culpabe mental state, is contrary to the basic principles of criminal law and makes serious inroads on the fundamental rights of citizens. He has pointed out that even in the other statutes such as The Prevention of Corruption Act and the NDPS Act, where the burden is shifted to the accused, the accused has to satisfy the Court only on the touchstone of preponderance of probabilities and not “beyond reasonable doubt”. He has also referred to all the leading cases on the subject to support his argument

The section 278E of the Income-tax Act, 1961 (the IT Act) has been re­produced below:

A. Presumption as to culpable mental state.

278E. (1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.

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Anuj-KisnadwalaAdvocate Anuj Kisnadwala has raised the interesting and relevant question as to whether, if the landlord gives the tenant a concession in the rent owing to the Covid-19 hardship, he is entitled to claim that he should be taxed only the rent actually received and not on the contracted rent. He has referred to the relevant judgements and also offered valuable guidance on the documentation that the landlord should maintain to be able to argue his case successfully before the authorities

Taxability of rental income

1)    Rental income is taxed u/s 22 and 23 of the Income-tax Act, 1961(the Act). Section 22 of the Act is a charging provision according to which ‘annual value’ of the property shall be chargeable to tax in the hands of the owner. The computation of the annual value has been prescribed u/s. 23 of the Act, the relevant part of it reads as under:

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