CAs Pankaj Agrwal and Sandeep Kumar Jain have dealt with the interesting issue whether a professional is entitled to rely on Section 44ADA of the Income-tax Act, 1961 and declare his income as being 50% of the gross receipts even though the actual income is in fact higher. They have also considered whether there is a risk of the Department claiming in later years that the difference between the actual income (reflected by investments) and returned income is “undisclosed income”

In a professional group discussion, a member raised the following query which evoked mixed response: 

(a) Can a professional declare his income equal to 50% of his gross receipts as per provisions of Section 44ADA "EVEN" if his actual income comes to, say 75% of his gross receipts after meeting all his expenses related to profession?

(b) Can the Department in future claim the difference of his investments and returned income as undisclosed income in later years?”

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Advocate V. P. Gupta has explained the scheme of faceless assessments and appeals in a precise manner. He has compared the provisions of the scheme with that prevalent in the USA and pinpointed the advantages and benefits to taxpayers. The ld. author has identified a few issues where clarifications from the Government is desired. He has also offered valuable suggestions on how the scheme can be made better

• The Hon’ble Prime Minister on 13th August, 2020 while inaugurating National E-Assessment Centre announced that henceforth there will be transparency in the department and honest tax payers will be honoured.

• He made following three announcements:-

1. Henceforth assessments will be made without personal interaction between Jurisdictional Assessing Officer and the Assessee. This will avoid pain and harassment to assesses and assessment will be finalised on merits.

2. Taxpayer’s chapter will be issued providing for obligations of the department and also of assesses.

3. With effect from 25th September all appeals before Commissioner (Appeals) shall also be faceless.

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CA Rajat Power has pointed out that section 44AB of the income-tax Act, 1961, which provides for tax audit of certain taxpayers, has been amended in the recent past in order to relax the compliance burden on small taxpayers. However, while these amendments are well-intentioned, they have increased confusion amongst taxpayers. The Ld. author has explained the law in a simple manner and provided clarity on the subject

Introduction

Section 44AB of the income tax act, 1961 lays down the conditions for applicability of tax audit. Tax Audit has been an important tool to increase the efficiency of tax administration and curb the menace of tax evasion. However, recently the government has taken many steps towards relaxing the compliance burden of small taxpayers and has been committed to increase the ‘ease of doing business’ .The provisions of applicability of tax audit have undergone major amendments vide Finance Act 2016 and 2020. Albeit the provisions were made to reduce the compliance burden, they have increased the confusion among the taxpayers regarding applicability of tax audit. The author tries to analyze the various provisions relating to applicability of tax audit so as to provide clarity on the subject.

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CA Rohan Sogani has dealt with the important issue whether electronic data/information found in hard disks, pen drives, etc is admissible as evidence for the Income-tax Department to make additions and disallowances. The ld. author has explained the law in the context of the Income-tax Act, 1961, the Information Technology Act, 2000 and the Evidence Act, 1872. He has referred to all the important judgements and also emphasized the procedures that the Department is duty bound to follow to ensure the admissibility of the evidence. A pdf copy of the article is available for download

1. INTRODUCTION

1.1. Over the past few years, with the advent of technology, there have been great strides in communication systems, leading to increased use of electronic devices in our day to day lives. New communication systems and digital technology have made drastic changes in the way we live and transact business.

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Advocate Arjun Gupta has explained the entire law relating to revision of assessments by the CIT under section 263 of the Income-tax Act, 1961. The ld. author has clearly delineated the extent of the power of the CIT and its limitations. The implications of Explanation 2 to section 263, which was inserted by the Finance Act, 2015, have also been explained in a succinct manner. All the important judgements on the subject have been referred to

The basic features of Section 263 are that the Principal Commissioner or  Commissioner may revise any order of assessment provided it is erroneous and prejudicial to the interests of the revenue,that the revisional order can bepassed  within two years from the end of the financial year in which the order sought to be revised was passed,and that the assessee must be given an opportunity of being heard before any proceedings under the Section are taken. For the purposes of revising the assessment, the Commissioner may make such inquiries as are necessary for the revision of the order of assessment.

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CA Rohit Kapoor has conducted a detailed study of section 153C and allied provisions of the Income-tax Act, 1961 which deal with search assessments. He has identified all the specific controversies that arise and answered them with clarity with reference to the statutory provisions and judicial precedents. A pdf copy of the article is available for download

Executive Summary

This article covers the trail of changes made in section 153C from time to time and stand taken by the judiciary on the imperative issues. The section 153C was introduced by Finance Act, 2003 with effect from 01/06/2003. It replaced the provisions relating to block assessment   contained in Chapter-XIVB and introduced the new procedure for making assessment u/s 153C which is now a part of Chapter-XIV "Procedure for Assessment". The section 153C provides that where search is conducted on a person and undisclosed assets/documents indicating undisclosed income are found as belonging to or pertains to "other person" other than,"searched person", than in that case, proceedings u/s 153Cwould be undertaken against the "other person". The assessment of income of "such other person"will be made in the manner provided u/s 153A. In this article, all the major issues which are in litigation during operation of section 153C are briefly discussed keeping in view the judgements of various courts and are super-scripted with each and every issue discussed below.

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Lecture on Art of Advocacy by Rajya Sabha MP and Senior Advocate Kapil Sibal (SOL, Manipal University Jaipur and Excellence, April 28, 2020)

Rajya Sabha MP and Senior Advocate Kapil Sibal delivered a lecture, titled the ‘Art of Advocacy’ on April 28th 2020. This was organized by School of Law, Manipal University Jaipur. He started his lecture on the note that there is no perfect formula for becoming a good lawyer and different things work for different people. Having said that, he explained some important practices for success in the court, which are as follows:

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CA Anilkumar Shah has explained the law relating to the taxation of donations to the corpus of a trust which is not registered under sections 12A/AA of the Income-tax Act, 1961. He has analyzed the statutory provisions and the important judgements on the point. He has also offered valuable guidance on what trusts should do in practice to be able to argue that the corpus donations received by them are capital in nature and not taxable as income

1.  Relevant sections in brief

1.1       Voluntary contributions are made taxable vide the definition of income under Section

2(24) (iia) which reads as under-

2(24)(iia) Voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes or by an association or institution referred to in clause (21) or clause (23), or by a fund or trust or institution referred to in sub-clause (iv) or sub-clause (v) or by any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or by any hospital or other institution referred to in sub-clause (iiiae) or sub-clause (via) of clause (23C) of section 10 or by an electoral trust.

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CA Rajendra Agiwal has provided valuable insights on the question whether a notice issued in the name of a deceased assessee is valid or not. He has also analyzed whether the “co-operation” of the legal representatives makes a difference to the legal position in the context of section 292BB of the Income-tax Act, 1961. All the relevant statutory provisions and important judgements of the Courts and Tribunal have been referred to by the ld. author

1. To challenge validity of notice/assessment proceedings is not very uncommon in the proceedings under the Income Tax Act.

2. In multiple cases of an individual and other entities these issues are coming up very frequently.

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Advocate Arjun Gupta has provided much needed clarity on the law relating to the levy of penalty under sections 271(1)(c), 270A and 270AA of the Income-tax Act, 1961. He has put the statutory provisions in their correct perspective and also dealt with all the important judgements of the Supreme Court and High Courts as well as Circulars issued by the CBDT. He has also opined on whether an assessee should be allowed to escape penalty on the ground that the default was by “inadvertence“

Introduction- Penalty under Section 271(1)(c) of the Act

When an assessment order is made under the Income Tax Act, 1961(the “Act”) certain additions and disallowances are made which enhances the total income of the assessee. In addition to the assessment order, the Act has made provision for the imposition of various penalties to be levied by the concerned authority so as to deter the assessee from repetitious blameworthy/contumacious conduct. This Article seeks to analyse the penalty leviable under Section 271(1)(c) of the Act. The basic essentials/requirements of a penalty under Section 271(1)(c) are listed herein below:

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