BULLETIN(Issue No.126)DT.29-10-2020
Compiled by Vinod Kumar Goel, Advocate
CIRCULARS/NOTIFICATIONS
Circular No. 18/2020
F.No. IT(A)/1I2020-TPL
Government of India
Ministry of Finance Department of Revenue
Central Board of Direct Taxes
Dated: 28th October, 2020
Subject: Clarifications in respect of the Direct Tax Vivad se Vishwas Act, 2020 - reg.
With the objective to reduce pending income tax litigation, generate timely revenue for the Government and benefit taxpayers by providing them peace of mind, certainty and savings on account of time and resources that would otherwise be spent on the long-drawn and vexatious litigation process, the Direct Tax Vivad se Vishwas Act, 2020 (hereinafter referred to as 'Vivad se Vishwas') was enacted on 17th March, 2020. The provisions of Vivad se Vishwas had been amended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 to provide certain relaxation in view of the COVID-19 pandemic and also to empower the Central Government to notify certain dates.
2. The Central Government vide the notification S.O. 3847(E), dated 27th October, 2020, has extended the date for payment without additional amount under Vivad se Vishwas from 31 st December, 2020 to 31 st March, 2021. The said notification also noti fied the last date for filing declaration under Vivad se Vishwas as 31 st December, 2020.
3. Under the existing provisions of sub-section (2) of section 5 of the Vivad se Vishwas, the declarant is required to pay the amount within a period of 15 days from the date of receipt of certificate from the designated authority. However, as per the aforesaid notification, a declarant who files declaration on or before 31 st December, 2020 can make payment without additional amount on or before 31 st March, 2021. Hence, requiring payment by the declarant within a period of 15 days from the date of receipt of certificate from the designated authority may result into undue hardship for the declarant in whose case the period of 15 days expires before 31 sl March, 2021.
4. In order to mitigate undue hardship and remove difficulty that may be caused by the aforesaid requirement of payment within 15 days from the date of receipt of certificate from the designated authority, in exercise of powers conferred under section 10 and II of Vivad se Vishwas, it is hereby clarified that where a declarant files a declaration under Vivad se Vishwas on or before 31 st December, 2020, the designated authority, while issuing the certificate under sub-section (I) of section 5 of the Vivad se Vishwas, shall allow e decla nt to make payment without additional amount on or before 31 st March, 2021.
(Ankur Goyal)
Under Secretary to the Govt. of India
CASE LAWS
Honda Motorcycle and Scooters India Pvt. Ltd. Vs. DCIT, Circle-2(1), Gurugram vide ITA No. 6846/Del/2017 [Delhi]
We find that while making the disallowance the TPO has held that assessee failed to demonstrate the benefits derive by it. This proposition of the TPO / DRP also do not hold any water in the light of the principle laid down by the Hon’ble jurisdiction High Court of Delhi in the case of Cushman and Wakefield (367 ITR 730). It would not be out of place to mbention here that in earlier assessment years, this quarrel was restored to the files of the TPO to decide the issue afresh in the light principle laid down by the Hon’ble High Court in the case of Cushman and Wakefield (supra). 7.16. We have been told that in the set aside assessment proceedings the TPO has once again made the addition following the earlier findings that the assessee had failed to provide evidence. 7.17 Considering the facts of the case as mentioned elsewhere we are of the considered view that the assessee has successfully demonstrated not only the benefits but has also shown that the profitability is higher (as per the charts exhibited elsewhere). Considering the totality of the facts we have no hesitation in directing the AO / TPO to delete the impugned addition on account of export commission. 7.18 This ground is accordingly allowed. 9. The other issue relates to the claim of TDS. The AO is directed to allow the credit of the TDS as per the provisions of law. 10. As mentioned at the beginning since facts of A.Y.2013-14 and 2014- 15 are identical, therefore, for the detailed reasoning given here in above the appeal of A.Y.2014-15 is also decided accordingly. 11. In the result, both the appeals filed by the assessee are allowed.
Shri Sanjeev Garg Vs. Income Tax Officer, Ward-4, Panipat vide ITA No. 5659/Del/2019
We have carefully considered the rival contentions and perused the orders of the lower authorities. In this case at the time of initiation of the Page 4 of 5 penalty proceedings, show cause notice under Section 274 read with Section 271(1)(c) of the Act was issued on 24.07.2017 wherein the ld. Assessing Officer did not strike off any of the twin charges on which penalty is initiated. Hon’ble Delhi High Court in Pr. CIT Vs. Sahara India Life Insurance Co. Ltd. In ITA. No. 475/2019 has categorically held that penalty is not sustainable if none of the twin charges in notice under Section 274 of the Act are cancelled or strike off. Therefore, respectfully following the decision of the Hon’ble Delhi High Court and also of Hon’ble Karnataka High Court in 73 Taxman.com 241 (supra) the penalty levied by the ld. Assessing Officer is not sustainable in law, hence we reverse the orders of the lower authorities and cancel the penalty levied by the ld. Assessing Officer of Rs.7,16,880/- under Section 271(1)(c) of the Act. Accordingly ground No. 5 of the appeal is allowed. 9. In view of the above finding, all other grounds of appeal contested on the merits of the case are merely academic in nature and, therefore, same are not adjudicated.
In the result, the appeal of the assessee is allowed.
Romi Lal Nanda Vs. ITO Ward-20(1), New Delhi vide ITA No. 792/Del/2016
We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only dispute in the impugned appeal is regarding the addition of Rs.50 lakhs made by the AO on account of unaccounted cash receipt for sale of property which has been upheld by the CIT(A). It is the submission of the ld. counsel that during the course of examination by the Investigation Wing, the assessee was confronted with a receipt for Rs.11 lakhs and the assessee was never asked for any further amount received by him. It is only during the assessment proceedings that the AO confronted regarding the receipt of Rs.50 lacs and, therefore, in absence of any material before him, he could not have made the addition since the so-called Rs.50 lacs was a cancelled receipt which the Investigation Wing considered proper not to confront with the assessee.
We find some force in the above argument of the ld. Counsel. A perusal of the receipt of Rs. 50 lacs, copy of which is placed at page 19 of the paper book, shows that it is a cancelled one. The AO has not confronted the contents of the said ITA No.792/Del/2016 11 receipts from Shri Shashi Kant Aggarwal, although his complete address was mentioned in the said sheet of paper. Since the Investigation Wing after considering this cancelled cheque has never confronted the assessee regarding the receipt of Rs.50 lacs, therefore, in absence of any other corroborative material before the AO, he is not justified in making the addition. A perusal of the assessment order shows that the AO has simply made the addition merely on the basis of presumption. Although the assessee has surrendered an amount of Rs.11 lakhs, at no point of time the assessee has agreed for addition of Rs.50 lacs. As mentioned earlier, although complete address of the payer was available in the cancelled money receipt, the AO has never bothered to summon Shri Shashi Kant Aggarwal to find out the authenticity of the said receipt. Under these circumstances, we are of the considered opinion that the CIT(A) is not justified in sustaining the addition of Rs. 50 lacs made by the AO on the basis of a cancelled money receipt found during the course of search conducted in the case of Micromax Group of Companies on 10th February, 2011. Accordingly, the same is directed to be deleted. The grounds raised by the assessee are accordingly allowed.
Sh. Alok Swarup Vs. Income Tax Officer, Ward-1(2), Muzaffarnagar, vide ITA No. 2919/Del/2015
We have heard the rival contention and perused the records. The first issue which is raised in the present appeal is with regard to the computation of income from capital gains in the hands of the assessee for which ground of appeal nos. 3 to 5 have been raised by the assessee. The ground of appeal no.5 raised by the assessee is not pressed and the same is dismissed as not pressed.
Now, coming to the adoption of the sale value in the hands of the assessee. In view of the section 50C of the Act, the value adopted by the State Registration Authority are to be taken as sale consideration. In the case of the assessee, the sale value declared in the sale deed was at Rs.38,92,000/-, whereas as per the Registered sale deed, the value was Rs.1.16 Crores. The Assessing Officer made reference to the DVO who in-turn has valued both the pieces of land at Rs.40,86,000/-. The CIT(A) has adopted the said value assessed by the DVO and had directed the AO to re-compute the income in his hands.Where the difference between the value declared by the assessee and value assessed by the DVO is 4.74% i.e. marginal difference which is less than 10% of difference between value declared and value estimated. Since it is case of estimation of value by the DVO, the Courts have held that the marginal difference needs to be ignored. We place reliance on the ratio laid down in Honest Group of Hotels vs ACIT (2000) 177 CTR 232 and Rahul Construction vs DCIT in ITA No.1547/Pune/2007. Accordingly, we direct the Assessing Officer to adopt the sale value declared by the assessee for computing the Income from Long Term Capital Gains in the hands of the assessee.
Now, coming to the aspect of extent of ownership of the assessee. The assessee claimed that it is an ancestral property which was owned by three coowners i.e. Shri Alok Swarup, Shri Anil Swarup, both sons of Late V. K. Singh and M/s V.K. Singh (HUF). The AO on the perusal of the sale deed noted that the same was executed by two co-owners i.e. Shri Alok Swarup and Shri Anil Swarup and consequently was of the view that income to the extent of 50% is to be assessed in the hands of each assessee. In this regard, it may be pointed out that the third co-owner is V.K. Singh(HUF) and the assessment of the V.K. Singh(HUF) has already been completed and 1/3rd Income from Long Term Capital Gain has been assessed in its hands. The same income now cannot be assessed in the hands of balance of two co-owners. Another point also to be noted is that in the succeeding year, similar transaction of sale of similar piece of land jointly owned by three co-owners was declared i.e. 1/3rd share each and same has been accepted in each of the hands. Our attention was drawn to the sale deed for the year under consideration and also for the succeeding year. Both the sale deed have been executed by two co-owners and the sale consideration has been bifurcated amongst three persons. In these facts and circumstances, we find no merit in the orders of the authorities below and direct the Assessing Officer to adopt 1/3rd net capital gains in the hands of the assessee and balance 1/3rd share in the hands of the Shri Anil Swarup.
Now coming to the last linked issue i.e. cost of improvement claimed at Rs.5,69,000/-(100%). The said expenditure was disallowed as no evidence was filed by the assessee. We are of the view that principle of justice would meet in case Rs.1,00,000/- each is allowed as cost of improvement. Accordingly, we hold so. Thus, the ground of appeal nos. 3 and 4 are allowed.
Now coming to the next issue raised with regard to source of cash deposited in the bank accounts. The addition of Rs.25,06,088/- has been made on account of unexplained deposits in HDFC bank and addition of Rs.3,13,097/- has been made on account of unexplained deposits in State Bank of India.
Briefly in the facts relating to the issue, the assessee had not declared the saving accounts with HDFC Bank in which cash was deposited on different dates. The assessee explained that the source of cash was out of sale proceeds of 1/3rd share in the property. However, the assessee’s contention was found to be not acceptable and addition of Rs.25,06,088/- was made in the hands of the assessee. Further, in the State Bank of India, sum of Rs. 3,13,097/- was deposited by cash/cheques during the year. This bank account was also not shown by the assessee in the return of income and the assessee failed to explain the source of deposits. Hence, the same were treated as unexplained in the hands of the assessee. The Ld. CIT(A) upheld the addition against which the assessee is in appeal before us.
The Ld. AR for the assessee pointed out that the cash deposits were out of sale proceeds of the property and rental income and also out of agricultural income shown. This was explanation of source of cash in the bank accounts in HDFC bank. He pointed out that out of the total addition, cash deposit was Rs.19,65,500/-, cheque deposits were Rs.5,40,349/- and interest was Rs.239/- . With regard to the deposits in State Bank of India, the Ld. AR for the assessee pointed that the cash was withdrawn from the account of ASJ Developers, where he was partner and part of it was deposited in the account. From the perusal of the assessment order, we find that the assessee had failed to produce the necessary evidence with regard to the cash deposits and also the source of cash deposits before Assessing Officer. In the interest of justice, we are of the view that the onus is upon the assessee to strictly explain each and every deposits in two bank accounts i.e. HDFC bank and State Bank of India, as both these accounts were not declared in the return of income. Following the principal of natural justice, we are of the view that the matter may be setaside to the file of the Assessing Officer with direction to the assessee to file necessary evidence explaining the source of cash deposits or by cheque in the aforesaid accounts. The Assessing Officer shall allow reasonable opportunity of hearing to the assessee and decide the issue accordingly. The ground nos. 1 and 2 are thus allowed.
In the case of Anil Swarup, the ground of appeal no.1 raised by the assessee is general in nature.
Ground no.2 is against the initiation of proceeding under section 147 of the Act. The ground of appeal no.3, to 5 is against the computation of income from Long Term Capital Gain. We have already adjudicated this issue in the case of Shri Alok Swarup. Following the same parity of reasoning, we allow the claim of the assessee in this regard. Since, we have decided the issue on merits, we find that the issue of reassessment proceedings is academic and dismissed.
Ground of appeal no.6 raised by the assessee is against the levy of interest under section 234A, 234B and 234C of the Act, which is consequential in nature.
Sh. Sanjay Sharma Vs. ACIT, Circle-59(1), New Delhi vide ITA No. 3520/Del/2019
I have carefully considered the orders of the authorities below. The total purchases made from the three parties are as under: i) U.V. International Rs. 4,176/- ii) M/s J.P. Industries Rs. 5,67,713/- iii) M/s B.P. Chemicals Rs. 2,27,484/- During the year under consideration, the assessee has shown sales of Rs.13.41 crores on purchases of Rs.91.37 crores. The three purchases mentioned hereinabove are part of the total purchases.
I find that not only the Assessing Officer has accepted the sales figures but has also accepted that total purchases. The two most relevant decisions of the Tribunal need mention here: “124 TTJ 554 (Del) Elnad International (p) Ltd. v DCIT "5.4 we have considered the facts ofthe case and rival submissions. From the submissions made before us, it is clear that the transactions of purchase and sale were recorded in the books of account and these transactions led to profit to the assessee, which was brought to tax, If sales have been effected out of purchases made from these parties, then, it cannot be said that the purchases were bogus. The finding of bogus sale can only lead to the inference that the corresponding amount should be deleted from the turnover of the assessee. The Assessing Officerhas also not rejected the books of account to estimate profit on these transactions in case it was a firm finding that purchases and sales were bogus. The facts of the case of LA Medica (supra) are different in the sense that detailed enquiries were made into the purchases made by the assessee, which were held to be bogus by the AO. It was found that the purchase consideration got deposited in a bank account of an employee in Calcutta, which was opened with the introduction of the assessee. No such enquiry was made in this case. In the case of La Medica (supra), it was also not the case that sales were effected from the purchases made and, thus, the purchases could not be outrightly termed as bogus.We are of the view that the facts of the two cases are distinguishable. In absence of displacing the finding of the leamed CIT(A) and the fact that the assessee showed profit from these transactions, it is held that there is no such error in the orderof the leamed CIT(A) which requires correction from us. Thus, this ground is dismissed.”
ii) 310 ITR 99 (AT) (SB) (Del) Manoj Aggarwal vs. DCIT "For example, in the case of credit purchases, the account of the supplier is credited with the amount payable. In such a case, where the purchase is allowed as expenditure, it may not be possible for the Assessing Officer to again call upon the assessee to prove the nature and source amount credited for the reason that the purchase itself was allowed as expenditure only on being satisfied that itwas a genuine purchase on credit. Implicitly, the nature and source of the amount credited has also to be taken as having been explained satisfactorily. Another possible argument can be that in such a case, the amount credited is not a cash credit in the sense that mere monies have been received by the assessee, but the credit represents a liability payable by the assessee in future. Under accounting principles, a liability can only be brought into account by a credit entry in the books of account in favour of the person to whom the money is payable' Thus, there is marked difference between a credit representing a liability payable by the assessee and a credit representing monies received from another person. It is because of this distinction, a liability for purchase which has been credited in the account ofthe supplier cannot be added under section 68 of the Act, more so when the purchase has been accepted as genuine and a deduction therefore has been allowed.”
Further, the decision in the case of Jhabua Power Investments Ltd 938/DEL/2018 dated 21.05.2019, which has been authored by me, needs mention wherein it has been held as under: "8. I have carefully considered the order of the authorities below. It is not in dispute that the A.O made impugned addition of Rs. 4,97,5g9/- treating the purchases as bogus expenses. It is equally true that the purchases were debited in the regular books of account of the assessee. The sales out of the purchases were accepted by the A.O. I further find that the notices issued by the A.O on the address of Ms Kumar Sales were duly served. Nothing prevented the A.O to issue summons to M/s Kumar Sales to force its attendance and examine the transaction. I further find that the CIT(A) realisingthat Section 69C is not applicable on the facts of the case invoked Section 68 of the Act. In find that the assessee has furnished all the details of sales made to M/s Overseas and such details can be seen from the followings chart:- -- 9. The sale invoices are exhibited at pages 5 to 10 of the paper book. In my considered opinion, the power of the CIT(A) are co terminus to that of the A.O and, therefore, he should have examined the transaction if he wanted to invoke the provisions of Section 68 of the Act. Failing which the action of the CIT (A) cannot be upheld. The contention of the DR that fresh opportunity should be given to the CIT (A) to examine the transaction does not have any force. In my considered view, no second innings should be given to examine the same set of facts which were very much before the lower authorities. I do not find any merit in the order of the CIT(A). I have accordingly direct the A.O to delete the addition of Rs. 4,97,589/. The appeal filed by the assessee is accordingly allowed.”
In the light of the afore-mentioned decisions, I do not find any merit in the addition made by the Assessing Officer and sustained by the ld.CIT(A). I, accordingly, direct the Assessing Officer to delete the impugned addition.
Income Tax Officer, Ward-5(2), New Delhi Vs. Buniyad Developer Pvt. Ltd. vide ITA No. 5290/Del/2016
We have gone through the record in the light of the submissions made on either side. As of now, it an admitted fact that the land that was sold was located in village Kishora, which is more that 8 kms away from municipal limits and the profits earned on sale of such land are exempt u/s. 10 of the Act. Further, provisions of section 115JB(2)(k)(ii) provide that the amount of income to which any of the provisions of section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply, shall be reduced from computation of book profit, if any such amount is credited to the statement of profit and loss. In this matter, the assessee computed the book profits while crediting thesale consideration of agricultural land to the profit and loss account and offered thesame to tax. Obviously, it is a mistake.In view of the decision of Hon’ble Supreme Court in the case of Shelly Products (supra), such a mistake has to be rectified by the Revenue Authorities when it is brought to their notice and they are satisfied with the genuineness of the claim. Therefore, when the ld. CIT(A) is satisfied that the income which is exempt u/s. 10 of the Act is included in the book profit u/s. 115JB, which should not be done, the ld. CIT(A) is justified in directing the learned Assessing Officer to follow the law and to compute the tax in accordance with provisions of section 115JB by reducing the amount of income to which section 10 applies, if such amount is credited to the profit and loss account. The action of the ld. CIT(A) is perfectly legal and does not suffer any infirmity. We see no ground to interfere with the same. We, therefore, while declining to interfere with the findings of ld. CIT(A), find the appeal of the Revenue as devoid of merits.
In the result, the appeal of the Revenue is dismissed.
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