Compiled by Vinod Kumar Goel, Advocate
Clarification on Sabka Vishwas Scheme
Circular No. 1074/07/2019-Central Excise Dated, the 12th December, 2019
As the Sabka Vishwas Scheme (Legacy Dispute Resolution) is coming to act on December 31, 2019 the Central Broad of Indirect Taxes and Customs has come out with a circular to bring about more clarity on certain issues by the taxpayers.
Section 122(a) and (b) specifies enactments which are covered under the Scheme. In exercise of powers under Section 122(c), the Central Government has issued Notification No. 06/2019-Central Excise (N.T.) dated 4th December, 2019 specifying seven more enactments under the Scheme. These include Cine-Workers Welfare Cess Act, 1981 (30 of 1981); (ii) Industries (Development and Regulation) Act, 1951 (65 of 1951); (iii) Sugar Export Promotion Act, 1958 (30 of 1958); (iv) Sugar (Regulation of Production) Act, 1961 (55 of 1961); (v) Tea Act, 1953 (29 of 1953); (vi) Finance Act, 2001 (14 of 2001); (vii) Finance Act, 2005 (18 of 2005); (viii) Finance Act, 2010 (14 of 2010).
Section 124(2) provides for adjustment of any amount paid as pre-deposit at any stage of appellate proceedings or as deposit during enquiry, investigation or audit. However, an amount paid after issuance of show cause notice but before adjudication are not mentioned therein. Further, these amounts gets appropriated/adjusted at the time of adjudication. There may be situations where such deposits may have been made but could not be appropriated due to pendency of adjudication proceedings. With a view to facilitate the taxpayer, as well as to recognise and appropriate these deposits as revenue, it is clarified that such deposits can be deducted/adjusted when issuing the statement indicating the amount payable by the declarant.
Many a times, the deposits during enquiry, investigation or audit etc are made `under protest’. Such deposits need to be adjusted by the designated committee in order to determine the final amount payable by the declarant, once a declaration has been filed by the taxpayer. Section 130(2) provides that in case any` ore-deposit or other deposit already exceeds the amount payable under the Scheme, the differential amount will not be refunded. Any person who files a declaration under the Scheme undertakes to comply with all the provisions of the Scheme. Therefore, there is no question of refund of any excess deposit in any case.
Rule 3 of the Sabka Vishwas(Legacy Dispute Resolution) Scheme Rules, 2019 provides that a separate declaration shall be filed for each case. Further, in terms of the Explanation to Rule 3. in case of audit, a ‘case’ means where the amount has been quantified on or before the 30th day of June, 2019. Many a times the audit report contains more than one paras. It is, clarified, that in such cases the option is available with the taxpayer to file separate declarations for each para or file a declaration for two or more paras together.
Form SVLDRS-1 provides for the requirement to indicate PAN (Sr No. 7 of Part A and Part B). In case of taxpayers having PAN based CX/ST registration, the relevant details are auto-populated by the system. It has been brought to the notice of the Board that in case of proprietorship firms in some cases name of proprietor is mentioned as declarant and not the name of the firm (name was automatically filled on entering PAN). It is, clarified, such cases can be processed with the name of the proprietor as declarant. Further, it has also been informed that some units were closed long back before the introduction of PAN based CX registration. Such units want to avail the Scheme but are unable to file the declaration due to mandatory requirement of PAN. Similar problem is also being faced by overseas service providers who’ do not have a PAN but want to avail of the scheme. Keeping in mind the objective of the Scheme to resolve outstanding litigation and to facilitate taxpayers, it is clarified that the requirement of PAN is not mandatory in such cases. The designated committee may waive such requirement in case of any other similar cases, based on facts.
The last minute clarification provided by the CBIC will provide some guidance to the taxpayers wanting to take advantage of dispute resolution-cum-amnesty scheme. Although the government is hard pressed for funds to meet its fiscal deficit target for 2019-20, yet it may be worthwhile to extend the scheme for couple months giving taxpayers more time to take advantage of scheme.
Principal Commissioner of Income-tax Vs. ishman Pharmaceuticals & Chemicals Ltd.,  112 taxmann.com 91 (Gujarat)
Section 10B of the Income-tax Act, 1961 - Export oriented undertaking (Computation of deduction) - Assessment year 2006-07 - Whether once an income forms part of business of 100 per cent export oriented undertaking (EOU) of assessee, same cannot be excluded from eligible profits for purpose of computing deduction under section 10B - Held, yes - Whether all profits and gains of business of 100 per cent EOU of assessee including dividend income, profit on sale of fixed assets, profit on sale of investments, excess provision return back, duty drawback and interest income would be entitled for claim of exemption under section 10B - Held, yes [Paras 60 and 62] [In favour of assessee]
Section 195, read with section 40(a)(i), of the Income-tax Act, 1961 - Deduction of tax at source - Payment to non-resident (Reimbursement of expenses) - Assessment year 2006-07 - Whether an assessee paying any sum to a non-resident is not liable to deduct tax at source if sum is not chargeable to tax under Income-tax Act, as expression in section 195(1) is 'chargeable under proivisons of Act' and TDS has to be deducted under section 195 only if element of income is involved - Held, yes - Whether where assessee made payment in nature of reimbursement of expenses to a non-resident, there was no element of income involved and, therefore, assessee was not liable to deduct tax at source on such payments, and, thus, no disallowance was to be made under section 40(a)(i) for non-deduction of TDS on same - Held, yes [Paras 26 and 28] [In favour of assessee]
Goodyear India Ltd. Vs. Commissioner of Income Tax, Delhi  112 taxmann.com 136 (SC)
Section 145 of the Income-tax Act, 1961 - Method of accounting (Additions to income) Investigations conducted by Securities and Exchange Commission, i.e., 'SEC', in America in respect of parent company of assessee, that is, 'G' Co., USA revealed that assessee had been provided with amounts in India for unlawful purposes, such as payments to Government officials, etc., which were not shown in assessee's books of account - Pursuant to said investigation, assessee sent two letters to revenue, in which it was stated that it did not desire to carry litigation and some reasonable amount might be added by income-tax authorities - Tribunal, based on certain investigations conducted in India, held that there was no material to show that assessee had kept any amount outside its books of account and accordingly, deleted undisclosed income of assessee as recorded by SEC in USA - High Court reversed finding of fact recorded by Tribunal, essentially placing reliance on two letters written by assessee and assumed that it was in form of admission of non-disclosure and an offer was given by assessee to pay tax and penalty, as the case may be - However, said two letters had been in refutal of allegations contained in news items which were published around that time, when communication was sent by assessee to Department with an explanation and a without-prejudice offer - Such communications could not be treated as admission of non-disclosure nor being a case of unconditional offer to pay tax in that behalf - Whether Tribunal having exhaustively analyzed entire evidence, including two letters and taken a view which was a possible view and that being purely a finding of fact, no interference was warranted - Held,yes - Whether therefore, impugned judgment of High Court was to be set aside and that of Tribunal was to be restored - Held, yes [Paras 6 to 9][In favour of assessee]
Swadesh Trading Co. Vs. Deputy Commissioner of Income-tax, Central Circle-1, Mangalore,  111 taxmann.com 446 (Karnataka)
Section 144A, read with section 148, of the Income-tax Act, 1961 - Deputy Commissioner, power of - To issue directions in certain cases (Reassessment) - Assessment year 2011-12 - On receiving reasons recorded in notice issued under section 148, assessee filed objections - Simultaneously, assessee made application under section 144A seeking directions to ensure that objections raised by assessee were promptly decided - Additional Commissioner directed Assessing Officer to pass appropriate order - However, Assessing Officer proceeded to conclude assessment under section 143(3), read with section 147 and without disposing off objections of assessee, Assessing Officer completed scrutiny assessment - Whether Additional Commissioner could not direct Assessing Officer to complete assessment without deciding objections filed by assessee as he could not have by-passed law and directed Assessing Officer to act contrary to law - Held, yes - Whether, thus, Assessing Officer should have decided objections prior to undertaking assessment under section 143(3) - Held, yes [Para 12] [In favour of assessee]
S. C. Naregal Vs. Commissioner of Income-tax HUBLI,  112 taxmann.com 6 (SC)
Section 268A of the Income-tax Act, 1961 - Filing of appeal or application for reference by Income-tax Authority (Instruction No. 5/2008) - Assessment years 1991-92 to 2001-02 - Whether CBDT's Instruction No, 5/2008, dated 15-5-2008 revising monetary limit to fill appeal would apply even to pending matters when there was no possibility of cascading effect nor issue was involved in group of matters - Held, yes [Paras 4 and 5][In favour of assessee]
Vodafone Idea Ltd. Vs. Deputy Commissioner of Income-tax,  111 taxmann.com 451 (Bombay)
Section 241A of the Income-tax Act, 1961 - Refund - Power to withhold, in certain cases - Assessment year 2017-18 - Assessee filed its return declaring loss and, consequently, claimed refund of entire amount of tax paid at source - Assessing Officer determined amount of refund while completing assessment under section 143(1) - However, he withheld said refund as per provisions of section 241A on grounds that in return for immediately preceding assessment year assessee had declared an income of huge amount, however, in relevant year, assessee had declared huge loss, therefore, return for relevant assessment year needed thorough investigation - Whether merely because in immediately preceding assessment year, assessee had declared a positive income as against substantial loss declared in relevant assessment year, it could not be a ground to doubt contents of return or claim of assessee with respect to loss suffered and withhold refund claimed by assessee - Held, yes - [Paras 16 to 18] [In favour of assessee]
Principal Commissioner of Income Tax, Mumbai Vs. Concentrix Services (I) (P.) Ltd.,  111 taxmann.com 269 (Bombay)
Section 36(1)(iii) of the Income-tax Act, 1961 - Interest on borrowed capital (For purpose of business) - Assessment years 2008-09 and 2009-10 - Whether interest expenditure and finance expenses incurred on loans taken for investment in acquiring controlling interest in a foreign subsidiary which was in same line of business as that of assessee so as to expand business in foreign country, would be allowable expenditure under section 36(1)(iii) - Held, yes [Para 6(f)][In favour of assessee]
Smt. Sarita Tyagi & Sh. Satish Chand Tyagi Vs. Income Tax Officer, Ward-2(4), Ghaziabad, ITA No. 3984 & 3985/Del/2019(Del.)
With respect to cash deposit in savings bank accounts, we find that assessee is carrying on his professional practice wherefrom he has shown the net professional income of Rs. 345590/- and remuneration of Rs. 247065/- from Priyadarshi Hospital. The opening balance shown by the assessee is also deposited in the savings bank account. The gross receipt shown in his profit and loss account from professional fees was Rs. 685010/- which was deposited in the bank account in cash. In view of this, we direct the ld AO to delete the addition to that extent. Further opening balance of cash in hand deposited in the bank account can also not be added as income of the assessee. Therefore, ld AO is directed to delete the same. Further, with respect to cash receipt of Rs. 3 lakh from M/s. Priyadarshi Hospital the assessee is directed to show by submitting the authentic account of that firm wherefrom the assessee received Rs. 3 lakhs in cash. Further with respect to the gift from relatives shown by the assessee of Rs. 48000/- no information is available. Hence, with a similar direction, we set aside the issue to the extent of Rs. 348000/- to the file of the LD AO with a direction to the assessee to submit authentic copy from the partnership firm wherefrom he received Rs. 3 lakh in cash, which was deposited in the bank. Further, the assessee is also directed to explain the gift from relative of Rs. 48000/-. The above cash being less than Rs. 50000/- is otherwise, exempt u/s 56. However, the assessee must show the nature and source of such gift. If the assessee satisfies the ld AO about the nature and source of such gift, no addition is required to be made. In view of this, out of Rs. 135870/- cash deposited in bank account , only the addition of Rs. 348000/- is set aside to the file of the ld AO. The LD AO may examine the details and decide the issue accordingly. Thus Ground no 2 is allowed with above directions.
Accordingly, appeal of the assessee is partly allowed with above directions.
In the result, both the appeals are partly allowed.
Sh. Ramesh Kumar Agarwal Vs. I.T.O., Ward-46(3), New Delhi, ITA No. 7751/Del/2018
We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. According to the assessee, main reason for business loss in trading of designed fabric is cancellation of purchase orders by M/s Cotton collection and M/s Sarthak apparels. The assessee produced both these parties before the Ld. CIT(A). Statement of both the parties are available on page K to M of the paper-book. Sh. Sunil Kumar Balooni, proprietor of M/s Cotton Collection stated that he received an order of export from Australia of Scarf and for supply of that order, he placed order for purchase of customized fabrics to the assessee, but the order was cancelled because the assessee 13 ITA No.7751/Del./2018 shown him a small piece of the ordered fabric, which was not as per the design orderand rejected by his buyer. 6.1 Similarly, Sh Ramesh Kumar Garg, Director of M/s Sarthak Apparel Private Limited, submitted that in the business of manufacturing ready-made garments , he received an order of ready-made garments of customised fabrics from Vishal Mega Mart and for supply of that, he placed an order for purchase of customised fabric to the assessee, but later on that order was cancelled by M/s Vishal Mega Mart. 6.2. The assessee has produced above two parties to prove that he has received orders from those parties which were later on cancelled. Both the above parties have confirmed the aforesaid transaction with the assessee in their statement made before the Ld. CIT(A) as well as confirmed in reply to the notice under section 133(6) of the I.T. Act before the A.O. In the business transactions it is not necessary that all the transactions should be proved by documentary evidences. The business orders are placed orally as well and particularly when transactions have been confirmed by the parties, there is no reason to doubt the statements of the above persons as well as their reply under section 133(6) of the I.T. Act. The sale and purchase of the items under reference from independent parties have not been doubted by the authorities below. If as per A.O. the pattern and language of the correspondence assessee and these parties are similar is no ground to reject their explanation. It is also not necessary that for each and every business cancellation orders, the parties shall have to resort to litigation before the Civil Court by filing a Civil Suit. The assessee shall have to maintain business relation with the parties and for business interest some times shall have to 14 ITA No.7751/Del./2018 suffer the losses, therefore, it is always not advisable to resort to civil litigation for a small amount for the betterment of the business activities. PB-15 is P & L A/c of the assessee proprietorship concern which shows assessee has turnover of Rs.8.82 cores which shows the bonafide of the assessee in carrying the business activities. Therefore, for a small amount the authorities below should not have doubted the explanation of the assessee and others. The reasons given by the A.O. are merely a presumption which could not reject the explanation of assessee that he has suffered genuine business loss. The assessee furnished copy of the invoices and ledger account in support of the above explanation. Therefore, the documentary evidences which have not been rebutted by the A.O. could not have been disbelieved by the A.O. on irrelevant reasons. The A.O. did not examine the parties from whom assessee has purchased the items under reference which were later on sold to other parties when the above two parties refused to accept the goods from the assessee. Considering the totality of the facts and circumstances, we are of the view that the A.O. has failed to establish that loss suffered by the assessee is not genuine. Thus, there is no reason to sustain the addition of Rs.56,53,550/-. In view of the above, we set aside the Orders of the authorities below and delete the entire addition. In the result, appeal of the assessee is allowed. 7. In the result, appeal of the assessee is allowed.
Mr. Rajiv Madhok Vs. ACiT, Circle-30(1), New Delhi, ITA No. 2291/Del/2017
We find that similar issue had come up before the Hon'ble Bombay High Court in the case of CIT Vs. Smt. Beena K. Jain (supra). The Hon'ble High Court in the appeal by Department, upholding the order of Tribunal and allowed the benefit of exemption u/s 54F to the assessee. The substantial question for consideration before the Hon'ble High Court was : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in allowing exemption of Rs.11,04,423/- under section 54F of the Income Tax Act, 1961, considering the date of possession of the new residential premises instead of the date of sale agreement and the date of registration ?" The Hon'ble High Court decided the issue in favour of the assessee by answering the question as under : "2. Under section 54F of the Income-tax Act, in the case of an assessee if any capital gain arises from the transfer of any long- term capital asset, not being a residential house, and the assessee has, within a period of one year before or two years after the date on which the transfer took place, purchased a residential house, the capital gain shall be dealt with as provided in that section. As per the section certain exemption has to be allowed in respect of the capital gains to be calculated as set out therein. The Department contends that the assessee did not purchase the residential house either one year prior to or two years after the sale of the capital asset which resulted in the long-term capital gains. According to the Department, the agreement for purchase of the new flat was entered into more 9 ITA No. 2291/Del./2017 than one year prior to the sale. Hence, petitioner is not entitled to the benefit under section 54F. In our view, the Tribunal has rightly negatived this contention and has held that the new residential house had been purchased by the assessee within two years after the sale of the capital asset which resulted in long-term capital gains. The Tribunal has held that the relevant date in this connection is July 29, 1988, when the petitioner paid the full consideration amount on the flat becoming ready for occupation and obtained possession of the flat. This has been taken by the Tribunal as the date of purchase. The Tribunal has looked at the substance of the transaction and come to the conclusion that the purchase was substantially effected when the agreement of purchase was carried out or completed by payment of full consideration on July 29, 1988, and handing over of possession of the flat on the next day." 10. The Mumbai Bench of the Tribunal in the case of Bastimal K. Jain Vs. ITO (supra) under similar set of facts had allowed the benefit of exemption u/s 54 to the assessee by following the ratio laid down in the case of CIT Vs. Smt. Beena K. Jain (supra). 11. Thus, in view of undisputed facts of the case and the decision rendered in the case of CIT Vs. Smt. Beena K. Jain (supra), we hold that the assessee is eligible for claiming exemption u/s 54F on the entire amount of capital gain utilized for purchase of residential property. Consequently, the appeal of the assessee is allowed and the appeal of Revenue is dismissed.” 4.12 In the instant case before us also, the assessee has brought of attention to clause 46.0 of the buyers agreement (which is available on page 41 of the paper book), which is identical to clause 12 in the case of Ayushi Patni (supra) reproduced in para 8 of the decision. The relevant clause 46.0 of the buyer’s agreement is reproduced as under: “46.0 The Allottee understands and confirms that the execution of this Agreement shall not be construed as sale of transfer under any applicable law and the title to the Allottee hereby allotted shall be conveyed and transferred to the Allottee only upon his fully discharging all the obligation undertaken by the Allottee including payment of the entire sale price and other applicable charges/dues, as mentioned herein and only upon the registration of the conveyance/sale deed in his favour. Prior to such conveyance, the allottee shall have no right or title in the apartment.” 10 ITA No. 2291/Del./2017 9. In view of the identical facts and circumstances, the ratio of the above decision in the case of Ayushi Patni (supra) is squarely applicable over the facts of the instant case and thus accordingly, we hold that the new asset i.e. residential house has been purchased within two years from the date of transfer of the original asset i.e shares, and thus, the assessee is entitled for benefit of section 54F of the Act. The finding of the Ld. CIT(A) on the issue in dispute is accordingly set aside and the Assessing Officer is directed to allow the benefit of section 54F of the Act amounting to Rs.2,07,62,580/-. The grounds of the appeal of the assessee are accordingly allowed. 10. In the result, appeal of the assessee is allowed.
Uttarakhand Uthan Samiti Vs. ITO Ward-45(5), New Delhi, ITA No. 48 to 52 and 130/DDN/2019
We find, the Jodhpur Bench of the Tribunal in the case of Indra Bansal & Ors (supra) has observed as under:-
Coming to the facts of the case, it is apparent from the documents on record that the approval was given by the Joint Commissioner in hasty manner without even going through the records as the records were in Jodhpur while the Joint Commissioner was camping at Udaipur. The entire exercise of seeking and granting of approval in all the 22 cases was completed in one single day itself i.e., 31-3-2013. Thus, it is apparent that the Joint Commissioner did not have adequate time to apply his mind to the material on the basis of which the assessing officer had made the draft assessment orders. Tribunal, Mumbai Bench and Tribunal, Allahabad Bench in their orders, as discussed in the preceding paragraphs, have laid down that the power to grant approval is not to be exercised casually and in routine manner and further the concerned authority, while granting approval, isexpected to examine the entire material before approving the assessment order. It has also been laid down that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. In all the cases before us, the Department could not demonstrate, by cogent evidence, that the Joint Commissioner had adequate time with him so as to grant approval after duly examining the material prior to approving the assessment order. The circumstances indicate that this exercise was carried out by the Joint Commissioner in a mechanical manner without proper application of mind. Accordingly, respectfully following the ratio of the Co-ordinate Benches of Mumbai and Allahabad as afore-mentioned and also applying the ratio of the judgement of the Hon'ble Apex Court in the case of Sahara India (Firm) v. CIT (supra), we hold that the Joint Commissioner has failed to grant approval in terms of section 153D of the Act i.e., after application of mind but has rather carried out exercise in utmost haste and in a mechanical manner and, therefore, the approval so granted by him is not an approval which can be sustained.
Accordingly, assessments in three COs and nineteen appeals of the assessee(s), on identical facts, are liable to be annulled as suffering from the incurable defect of the approval not being proper. Accordingly, we annul the assessment orders in CO Nos, 8 to 10/Jodh/2016 and ITA Nos.325 to 331/Jodh/2016. Thus, all the three Cos and the nineteen appeals of the assessee, as aforesaid are allowed.” (emphasis supplied by us)
Since the facts of the instant case are identical to the facts of the case cited (supra), therefore, respectfully following the decisions cited above, we hold that there is no proper approval given u/s 153D in the instant case for which the assessment orders passed by the AO are not in accordance with law. We, therefore, have no hesitation in holding that the assessments completed by the DCIT do not stand in the eyes of law and, therefore, these orders are treated as null and void. Accordingly, the orders passed by the AO are annulled and the ground raised by the assessee on this preliminary issue as per grounds of appeal No.4 and 5 are allowed. Since the assessee succeeds on this preliminary ground of validity of assessment order in absence of proper approval u/s 153D, the other grounds raised by the assessee do not require any adjudication being academic in nature.
The appeal filed by the assessee is accordingly allowed.
Since facts of the other appeals are identical to the facts of the appeal for A.Y. 2008-09, therefore, following similar reasonings the assessment orders for other years are also held to be null and void being not in accordance with law.
Accordingly, these appeals filed by the assessee are also allowed.
In the result, all the six appeals filed by the assessees are allowed.