BULLETIN(Issue No.130)DT.09-04-2021
Compiled by Vinod Kumar Goel, Advocate
CASE LAWS
Principal Commissioner of Income Tax 14 Vs. Aditya Birla Telecom Ltd. [2021]125 taxmann.com 85 (SC)
Section 68 of the Income-tax Act, 1961 - Cash credit (Share capital) - Assessment year 2009-10 - In assessee-telecom company investment was made by US based global private investment group through P5AHIML, a specially constituted Mauritius based company - There was no suspicious movement of funds and all necessary permissions and clearances were granted by Government of India and other Government authorities for such investment - High Court by impugned order held that merely because investor was investing a huge amount and multiple corporate bodies were involved in entire process of collecting funds and assessee company invested same immediately in holding and group companies by itself would not be sufficient to brand impugned transaction as sham transaction or colourable device - Whether special leave petition filed against impugned order was to be dismissed - Held, yes [Para 2] [In favour of assessee]
Shiv Bhagwan Gupta Vs. Assistant Commissioner of Income-tax [2021] 125 taxmann.com 306 (Patna-Trib.]
The assessee is an individual and has earned income from partnership firm and interest income. The assessee has neither earned any business income nor earned any income exceeding Rs.50 lakhs so as to require mandatory filing of personal assets and liabilities or to maintain books of account; even the assessee is not required to otherwise disclose any such income to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of search; the alleged income is not any income represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course.
Penalty under section 271AAB can be initiated in respect of undisclosed income as defined in section 271AAB itself found during search action, independent of assessment proceedings. Though, fact in a case that assessee has been able to explain source of alleged 'undisclosed income' may be relevant for final imposition of penalty, however, for initiation of penalty proceedings, provisions of section 271AAB are self-contained and are not dependent upon commencement or finalization of assessment proceedings. It is not mandatory for Assessing Officer to invoke provisions of section 271AAB in each and every case of levy of penalty pursuant to search action. There is no bar to Assessing Officer to initiate penalty proceedings under section 271(1)(c) even in cases involving search actions if in facts and circumstances of case, it is so warranted. Only bar is that no penalty under provisions of section 270A or section 271(1)(c) shall be imposed in respect of undisclosed income, as defined under section 271AAB unearthed during search action carried out under section 132.
Dilipkumar P. Chhada Vs. Income Tax Officer-4(1), Thane [2021] 125 taxmann.com 187 (Bombay]
Section 220, read with section 69A, of the Income-tax Act, 1961 - Collection and recovery of tax - When tax payable and when assessee deemed in default (Stay of demand) - Assessment year 2012-13 - Assessing Officer passed an assessment order in case of assessee making addition of certain amount under section 69A on basis of a statement of one NB and tax demand was raised - Assessee filed an appeal against such addition before Commissioner (Appeals) - During pendency of said appeal, assessee filed an application under section 220(6) for stay of demand before ITO who granted same subject to payment of 20 per cent of outstanding demand - Assessee contended that total demand was to be kept in abeyance till disposal of appeal by Commissioner (Appeals) - It was noted that said addition was made primarily on basis of statement of NB - However, it was found from materials on record that though summons were issued to NB for cross-examination, he did not appear and, therefore, he could not be cross-examined - Further, for previous assessment year he had retracted such statement - Thus, reliance placed on such uncorroborated and untested statement of NB while making additions to income of assessee was highly questionable - That apart, assessee had pleaded financial hardship to meet demand even to extent of 20 per cent - Whether, on facts, entire demand was to be kept in abeyance till disposal of appeal on merits by Commissioner (Appeals) - Held, yes [Paras 15 and 16] [In favour of assessee]
Sanjay Ghodawat University, Kolhapur Vs. Commissioner of Income Tax [Exemptions] [2021] 124 taxmann.com 6 (Bombay]
Where petitioner-university, with a view to avail exemption under section 10(23C)(vi) for assessment year 2019-20 and onwards, filed related application in Form No. 56D before Commissioner (Exemptions), however, same was rejected by him on ground that application was filed beyond prescribed time-limit and that he had no jurisdiction to condone delay in filing of such delayed application, since there is no provision for extension of limitation period or for condonation of delay in filing application for grant of exemption under section 10(23C), Commissioner (Exemptions) was justified in rejecting said application for assessment year 2019-20. However, he certainly fell in error in not considering said application for subsequent assessment years. Because even if said application was filed with delay for assessment year 2019-20, it was before prescribed date for subsequent assessment year.
Dell India (P.) Ltd. Vs. Joint Commissioner of Income Tax, Bangalore [2021] 123 taxmann.com 468 (Karnataka]
Oversight, inadvertence or mistake of Assessing Officer or error discovered by him on reconsideration of same material is mere change of opinion and does not give him power to reopen a concluded assessment.
Quantum Power Systems Vs. Assistant Commissioner of Income Tax, Circle-4(2)(1), Bengaluru [2021] 125 taxmann.com 102 (Bangalore – Trib.]
Section 80-IC of the Income-tax Act, 1961 - Deductions - Special provisions in respect of certain undertakings or enterprises in certain special category States (Initial assessment year) - Assessment year 2015-16 - Assessee set-up a manufacturing unit in Himachal Pradesh on 1-4-2007 and started claiming 100 per cent deduction under section 80-IC - In assessment year 2012-13, assessee undertook substantial expansion - In relevant assessment year, Assessing Officer disallowed claim of assessee of 100 per cent deduction and allowed deduction to extent of 25 per-cent - Whether an assessee who sets up a new unit as mentioned under section 80-IC(2)(ii) would be eligible for 100 per-cent deduction for 5 years commencing from initial assessment year and for next five years deduction would be 25 per cent - Held, yes - Whether since assessee had carried out substantial expansion as defined under section 80-IC(8)(ix) within aforesaid period of 10 years, said previous year in which substantial expansion was undertaken would become 'initial assessment year' and assessee would be entitled to 100 per cent deduction for a total period of ten years as provided in section 80-IC(6) - Held, yes [Para 10] [In favour of assessee]
Director of Income Tax (Exemption) Vs. Raunaq Education Foundation [2021] 124 taxmann.com 566 (SC]
Section 10(22), read with section 68, of the Income-tax Act, 1961 - Educational institution (Section 68 V. Section 10(22)) - Assessment year 1988-89 - High Court by impugned order held that use of word 'income' in section 10(22) is wide enough to include deemed income under section 68, hence, assessee who was entitled to exemption under section 10(22) could claim benefit thereof for purpose of income deemed to be chargeable to tax under section 68 - Whether appeal against said order was to be dismissed on ground of low tax effect - Held, yes [Para 1] [In favour of assessee]
Deputy Commissioner of Income Tax, Circle 1(1) Vs. Bajaj Allianz Life Insurance Company Ltd. [2021] 125 taxmann.com 71 (SC]
Section 44, read with section 147, of the Income-tax Act, 1961 - Insurance business (Reassessment) - Assessment year 2012-13 - Assessee, engaged in business of life insurance, filed its return of income declaring taxable income in accordance with provisions of section 44 - Assessing Officer passed an assessment order accepting income declared by assessee - After four years, Assessing Officer sought to initiate reassessment proceedings - Assessee's objections to reassessment proceedings were rejected - It was noted that in reasons recorded there was no reference to any new tangible material, but reference was only to financial statement of assessee itself - High Court by impugned order held that since there was no failure on part of assessee to disclose all material facts at time of assessment, initiation of reassessment proceedings on basis of mere change of opinion was not justified - Whether special leave petition filed against impugned order was to be dismissed - Held, yes [Para 8] [In favour of assessee]
Dipak Ratnabhai Patel Vs. Income Tax Officer, [2021] 125 taxmann.com 79 (Gujarat]
Section 5 of the Income-Tax Act, 1961 - Income - Concept of real income (Firm/Partner, in case of) - Assessee was a partner in a partnership firm - He filed his return of income which was accepted and an assessment order was passed - After four years, Assessing Officer issued a reopening notice on ground that firm had paid certain amount as interest on capital and certain amount as remuneration to assessee partner as per a clause in partnership deed and since such amounts were claimed as deduction under section 10AA by firm, same were liable to be taxed in hands of assessee partner - Assessee contended that no interest or remuneration was actually paid by firm to him - It was noted that mere incorporation of clause of payment of interest on partner's capital and remuneration to partners in partnership deed did not necessarily mean or should be construed as mandatory - There was no such material on record to indicate that assessee had actually received any interest on capital or remuneration from partnership firm, thus, question of taxing same did not arise at all - Whether, therefore, impugned reopening notice issue against assessee was unjustified and same was to be set aside - Held, yes [Paras 20 and 21] [In favour of assessee]
Verint Systems (India) Pvt. Ltd., Vs. DCIT, Circle 17(1), New Delhi ITA No. 1398/Del/2018
We have carefully considered the rival contentions and perused the orders of the lower authorities. We have also gone through the paper book filed by the assessee as well as synopsis submitted before us. We first come to the appeal of the assessee. On the basis of the order of the ld. CIT (Appeals) and based on the rectification application moved by the assessee, the ld. Transfer Pricing Officer has passed an order under Section 154 of the Act on 29.08.2019 wherein it is held that now short-fall of adjustment under Section 92CA is only Rs. 38,74,748/-, which is less than 5% of the international transaction i.e. Rs. 88,36,598/- and, therefore, no adjustment Page | 4 is warranted. As the ld. TPO himself based on the order of the ld. CIT (Appeals) has rectified an error and has stated that no adjustment is proposed, appeal of the assessee becomes infructuous and hence dismissed. 12. Now coming to the appeal of the ld. Assessing Officer wherein the only comparable that is challenged is TSR Darashaw Ltd. The difference of adjustment on account of the same results into the total tax effect of Rs. 34,36,924/- which is less than the minimum tax sum for which the Revenue should prefer an appeal before the ITAT, hence the appeal of the Revenue, being low tax appeal, is dismissed.
M/s G.D. Educational Society Vs. CIT(A)-1, Noida, ITA No. 1998/Del/2018
Pursuant to the directions of the Tribunal, the Assessing Officer framed assessment u/s 143(3) r.w.s 254 of the Act vide order dated 10.12.2019 and the income was assessed at Rs. NIL. 3 6. Sublato Fundamento Cadit Opus, meaning thereby, that in case the foundation is removed, the super structure falls. Since the foundation [addition] has been removed, the super structure i.e. penalty must fall. We, accordingly, direct the ld. CIT(A) to delete the penalty so levied. 7. In the result, the appeal of the assessee in ITA No. 1998/DEL/2018 is allowed.
The A.C.I.T. Circle-53(1), New Delhi Vs. M/s Jain Jewellery, ITA No. 5289/Del/2017.
We have given thoughtful consideration to the orders of the authorities below. Vide letter dated 31.08.2016, addressed to the ld. CIT(A)-18, New Delhi, the ACIT, Circle 53(1), New Delhi categorically stated that the Assessing Officer had not raised any specific written query regarding proof of physical delivery of goods. This letter is exhibited at pages 159 and 160 of the paper book. We further find that vide letter dated 23.02.2015, Income Tax Officer, Ward 2(3)(8) Surat addressed to the ACIT, Circle 53(1), New Delhi has categorically stated that M/s 7 Parvati Exports might have shifted somewhere else and further that due to centralization of search cases, Parvarti Exports case has been transferred to ACIT, Circle 1(3), Mumbai. This letter is exhibited at page 161 of the paper book. 14. There is no denying that before the first appellate authority on 21.102016, the partner of Parvati Exports appeared and whose statement has been recorded by the first appellate authority. A perusal of the statement clearly shows that the partner has categorically admitted the transaction with M/s Jain Jewellery. When the bills were shown to the partner, the partner admitted that these bills have been signed by himself. Shri Lodha also explained the mode of payment received from the assessee. Since the purchases with M/s Parvati exports have been duly verified, we do not find any reason why addition should have been made in this respect. We, accordingly, direct the Assessing Officer to delete the addition on account of purchases made from M/s Parvati Exports. 8 15. In so far as purchases made from Mukti exports is concerned, we find that the appellant has submitted flight/air tickets copy from Delhi to Surat. We also find that sales made out of purchases have been duly accepted by the Assessing Officer. Notice issued u/s 133(6) of the Act was fully served and replied by M/s Mukti Exports though the Assessing Officer has dismissed the reply stating that the envelopes have same handwriting but we do not find any force in this finding of the Assessing Officer as he is not a Forensic expert. 16. Entire addition has been made solely on the statement of Shri Bhanwar Lal Jain, whose statement was never confronted to the assessee nor any opportunity of cross examination was given. We, therefore, do not find any merit in this addition also. Considering the facts of the case in totality, appeal of the assessee is allowed and the appeal of the Revenue is dismissed. 9 17. In the result the appeal of the assessee in ITA No.7653/DEL/2019 is allowed and that of the Revenue in ITA No. 9451/DEL/2019 is dismissed.
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