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Well the best judgement on the point is Balmukund Acharya vs. DCIT (Bombay High Court)
http://itatonline.org/archives/index.php/balmukund-acharya-vs-dcit-bombay-high-court/

The AO should not take advantage of the assessee's ignorance of the law.



Where the assessee erroneously offered capital gains to tax and the same was accepted by the AO vide Intimation u/s 143 (1)(a) and the assessee thereafter filed an appeal against such assessment of capital gains and the same was held not maintainable by the Tribunal, HELD, reversing the order of the Tribunal that:



(1) In view of the Explanation to s. 143 (prior to its deletion w.e.f. 1.6.1999) an Intimation is deemed to be an appealable order and appeal is maintainable;



(2) The authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If any assessee, under a mistake, misconceptions or on not being properly instructed is over assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. If particular levy is not permitted under the Act, tax cannot be levied applying the doctrine of estoppel.

I found this comic in a tragic way that even a high-profile case involving the Chief Justice of India is pending 37 years later. I think we should all hang our heads in shame for our pathetic justice delivery system.

Even a terrorist who killed hundreds of people in broad daylight is still enjoying his life and getting the best of medical treatment while law-fearing citizens get no medical care. Another convicted terrorist who has been sentenced to death is enjoying life because the President cannot find time to decide his mercy petition.

What is happening to us? Does nobody care at all? Even the SUPREME COURT is only using pathetic words that "it is distressed beyond words". What good is all that talk if there is no action????

"Before parting with the record of the case we are constrained to say
that we are distressed beyond words to find that the case relating to the
attempt on the life of the CJI remains stuck up at the stage of the appeal even
after about 37 years of the occurrence. We are informed that the other case
of the killing of Shri L.N. Mishra is still mired before the trial court. We do
not wish to make any comment on that case as that is the subject matter of
Writ Petition (Criminal) Nos. 200 and 203 of 2011 that remains pending
before this Court. But so far as the present case is concerned, we would
request the Chief Justice of the Delhi High Court with all the strength at our
command to take notice of the inordinately long time for which these
appeals (Criminal Appeal Nos.436 & 443 of 1996) are pending before the
High Court and to put a tab on them so as to ensure that the appeals are
disposed of without any further delay and in any case not later than six
months from the date of the receipt/production of a copy of this order."

I cannot attach the judgement because it is too large. But details are IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 174 OF 2012
[ARISING OUT OF SLP (CRIMINAL) NO.6489 OF 2006]
SUDEVANAND ... APPELLANT
VERSUS
STATE THROUGH CBI ... RESPONDENT

(i) The whole purpose of s. 40(a)(i) is to discourage payers from defaulting on their TDS obligations. But if the tax has been recovered from the payee, then the purpose is fulfilled. Applying the purposive interpretation, the requirement in s. 40(a)(i) will have to be deemed to be fulfilled. But it will require a real strong and clear-headed judge to take this view. If he/she does, then hats' off to him/her!

(ii) Isn't processing charges "expenditure" u/s 37(1)? What is the doubt?

Well Here you are. It is an attachment. You have to log-in to access it.

Many Thanks. I wasn't aware of these. I envy your deep knowledge of the subject! Keep it up.  :)

Sir, there is a judgement in Tamil Nadu Chlorates in 98 ITD 1 (Che) which is against the assessee. Has that been reversed? Somehow I can't find it on my CTR Online. Can you give the citation Sir.

Sir, Can you give the correct citation. The name "Radhe Developers. TA 526/2008. 13/1/12" appears to be wrong.

Excellent answers. I had the same thought in mind but couldn't recollect the law! Anyway thanks for refreshing my memory as well  ;)

I know that there is some judgement in the context of sales-tax that electricity is "goods". Let me try and fish it out for you.

[without consideration]

S. 56(2)(vii) reads as follows:

[(vii)  where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,—

      (a)  any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;

76 [(b)  any immovable property, without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;]

      (c)  any property, other than immovable property,—

       (i)  without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;

      (ii)  for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration :

The key is that the sum of money or property should be received "without consideration". In the present case, the trust property already belongs to the grandson since he is the absolute beneficiary thereof. The trust is merely holding the money/property on behalf of the grandson.

When trust property is handed over to the beneficiaries, there is no "transfer" but it is a mere "giving to the person what he was always entitled to". See Trustees of H.E.H. Nizam's Family Trust [1977] 108 ITR 555 (SC) & related cases. There is also no "gift" and the concept of "consideration" is quite alien to the issue.

S. 271E reads as follows:

Penalty for failure to comply with the provisions of section 269T.

271E. 60[(1)] If a person repays any 61[loan or] deposit referred to in section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the 61[loan or] deposit so repaid.]

62[(2) Any penalty imposable under sub-section (1) shall be imposed by the 63[Joint] Commissioner.]

S. 273B reads as follows:


Penalty not to be imposed in certain cases.

273B. Notwithstanding anything contained in the provisions of 53[clause (b) of sub-section (1) of] 54[section 271, section 271A, 55[section 271AA,] section 271B 56[, section 271BA], 57[section 271BB,] section 271C, 58[section 271CA,] section 271D, section 271E, 59[section 271F, 60[section 271FA,] 61[section 271FB,] 62[section 271G,]] clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA] or 63[section 272B or] 64[sub-section (1) 65[or sub-section (1A)] of section 272BB or] 66[sub-section (1) of section 272BBB or] clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause67 for the said failure.]

So, "reasonable cause" is always an answer. Your facts appear to me to be one of "reasonable cause". Do you have the name and addresses of the payees? What about receipts from them? Are these shown in your accounts and that of the payees. If you build up the facts properly, you can make out a compelling case why penalty should not be levied.

Well, the easiest way is to contact the Asst. Registrar of the Vishakapatnam Bench. His contact details are given here:

Income Tax Appellate Tribunal 
5th Floor, LIC Building
Visakhapatnam-530004
Tel Phone & Fax Nos. 0891-2795058 Fax: 0891-2525961 
E-Mail ID vizag.bench@itat.nic.in

Send him an email or call him up. I am sure you will get an answer. Don't forget to update us also with the info  ;)

Yes, I also (grudgingly) agree with Sai Prasad that he is right. It is a simplicitor sale of water and not a contract for transport of "goods". It didn't occur to me earlier. The Q looks very simple but there is a nice catch to it.

I have quoted s. 6 in the other Q you had asked. Try & work out with the dates in hand. Its quite simple to understand. If you still don't follow, let me know.

S. 6 defines "Residence in India" as follows:

"For the purposes of this Act,—

(1)  An individual is said to be resident in India in any previous year, if he—

(a)  is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or

(b)  [* * *]

(c)  having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

Explanation.—In the case of an individual,—

(a)  being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words "one hundred and eighty-two days" had been substituted ;

(b)  being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words "one hundred and eighty-two days" had been substituted."

So, check whether your client is in India for 182 days or not. If not, check whether he is in India for at least 60 days and in the 4 preceding years been in India for at least 365 days.

If you have the dates, post it here and someone will help you out.