|
Advanced Search Options
Income Tax - Case Laws
Showing 461 to 480 of 8298 Records
-
2023 (12) TMI 269
Unexplained property - Sale proceeds of the land belonging to the assessee’s wife and brother claimed to be credited to the assessee’s bank account - Clubbing of income u/s 64 - HELD THAT:- The land purchased in wife’s name can, in the conspectus of the case, be reasonably regarded as the assessee’s property, in any case, money realized on it’s sale as available to the assessee for his purposes. It is customary in Indian society to acquire property in wife’s name with a view to securing her, both in terms of an asset and a source of income.
Wife has no independent source of income, for her to acquire the said land. Even otherwise, it is apparent that the assessee is managing all the funds belonging to him and his wife, with there being transfers between their bank accounts with MEUCB. The assessee’s explanation, to that extent, must therefore be regarded as acceptable.
Credit in respect of sale of her agricultural land would be available to the assessee even if she is an assessee under the Kerala Agricultural Income Tax Act, 1950, returning/reporting agricultural income thereunder inasmuch as the assessee, having access to those funds, could certainly have used them for his purposes, so that the source can be regarded as satisfactorily explained. As a corollary, all the income arising to the assessee’s wife would stand to be assessed in his hands, statutorily mandated u/s. 64 of the Act. This shall obtain even where Mercy Kurian is an assessee under the 1950 Act.
Agreement with assessee’s brother, there is firstly nothing to show that the same was produced and relied upon before the Revenue authorities, whose orders bear no reference thereto. Why, Sh. Markose could not answer as to why and how this agreement was entered into 10 months before the actual purchase, with there being nothing to show that the purchase agreement had been entered into, or advance therefor made, at the relevant time. In fact, the copy on record not reflecting the back-side of the first page, the same, called for by the Bench to ascertain the said date, was not produced. The agreement states of it being in view of the Kerala Land Ceiling Act. The argument is not supported by any material, even if a sworn affidavit by the assessee’s brother qua his total land holding, for us to take the same with any seriousness. In fact, being against public policy, the same cannot be regarded as a valid agreement in law.
The sale proceeds on land sale have expectedly, and contrary to what stands stated, gone to the respective bank accounts of the sellers, being sba/cs 5308 and 5309 (with MEUCB), i.e., of the assessee’s brother and wife respectively. There is further no transfer of funds between the bank account of the assessee (sb 5026) and his brother, Sunny Kutty, even as the former bears credit for the sale of his 8.74 acres of land. Management of an estate/business, assuming so, would not, by itself amount to ownership of the property/sale proceeds. The assessee’s case qua his brother’s land is without merit and, in any case, unproved. Its rejection by the Revenue is, accordingly, upheld.
The assessee gets part-relief. AO has, in computing the addition, factored the impact of the bank balances (opening and closing) of the assessee’s brother’s and wife’s bank accounts included in the CFS. The addition sustained, accordingly, shall not be for Rs. 26,53,500, but adjusted for the balances in the brother’s bank account/s.
For agricultural income, being on cardamom, the same admittedly including that in respect of 17.68 acres of cardamom plantation held by the assessee’s wife and brother, the AO, having excluded the sale proceeds of their lands in reckoning the source of funds with the assessee, has, per contra, excluded the income qua their lands in the CFS, which sums thus become the assessee’s taxable receipt. We have found the assessee’s claim admissible qua his wife. Agricultural income to that extent would accordingly be accepted, though would stand to be included in the assessee’s income for rate purposes. This sums our decision in principle.
In the absence of any credible material to exhibit and prove the agricultural income, we consider it appropriate that the income, for each year, be adopted on the basis of the estimate of agricultural income on cardamom as provided by the State Agricultural Board or University or that adopted by the bank while processing and advancing agricultural loans for cardamom plantation. That is, and, further, for the category (A, B, or C) of the land/s owned by the assessee at Anaviratty and Chakkupallom villages in Idduki District.
Income shall correspond with the harvest period; the Anaviratty village land having been sold on 02.12.2010. Of course, where the assessee is also an assessee under the State Agricultural Income Tax, the income assessed under the said Act or, in its absence, returned there-under, shall be adopted for the purpose of assessment of agricultural income arising to the assessee and his wife, subject, of course, to the extent reported. The excess, if any, and that ascribed to brother, shall be taxed as unexplained money. We decide accordingly.
Sale of agricultural land, that is, to the extent of 1.74 acres of land (out of 8.74 acres cardamom plantation), sold separately to one, Nikhil John - CIT(A) has, in computing the % age of total consideration ascribed to land, being in fact at 63%, wrongly worked it at 37%, which is in fact for building. The same would not, however, in any manner, impact the final conclusion, which is based on, firstly, the assessee’s case being wholly unproved and, two, of land, forming the major proportion of the total consideration, fetching over twice its regular price. Building, a depreciable asset, its valuation at 37% of the total consideration, as pointed out by the AO, is significant. Adjusting it for the land value, being over twice the normal, i.e., reckoned w.r.t. the normative land rate, the same would be, over 55%, reinforcing the inference drawn of the land sold being, as described in the sale document, appurtenant thereto.
Investment in land at Meenachil Village, Pala - HELD THAT:- The basis of the addition is the Agreement dated 14.6.2011, found and seized during the search on 25.9.2014. Besides attracting the statutory presumption as to the truthfulness of its contents u/s. 292C of the Act, the same is admitted as true by Shri Devasia vide his deposition u/s.132(4) dated 25.9.2014. The same, an unregistered document, executed on stamp papers of Rs. 100, has in fact been acted upon; being also attended by advance payment of Rs. 50 lakhs, mentioned therein, followed by registered sale deeds in favour of the three buyers between December, 2011 and February, 2012, for an aggregate of Rs. 93.25 lakhs.
The investment is in fact admitted, and the issue before us is the valuation of assessee’s share, claimed, without any material, even if indirect or corroborative, of the assessee’s share being, in value, lower than per the average rate. The agreement, reproduced in the assessment order, speaks of a gross consideration for the entire 177.44 cents of land sold by 20 persons. That apart, the other two buyers have also claimed their investment as per the average rate. Under the circumstances, we find no infirmity in bringing the shortfall in investment to tax.
Income @ 35% stated to arise on sale of latex, arises on application of r. 7A of the Income Tax Rules, 1962 - The said rule is applicable only for manufacture of rubber, and not for sale of latex, the whole of which is to be regarded as agricultural income. The assessee, relying for the purpose on sale bills, has, however, not produced the same at any stage; rather, taking a different stand before the ld. CIT(A). The assessee’s claim is allowed subject to production of the sale bills for the relevant year. The assessee is also at liberty to exhibit before the AO, i.e., while giving appeal-effect to this order, that agricultural income of Rs. 10.19 lacs includes the impugned income of Rs. 2.91 lacs, i.e., as stated before the ld. CIT(A), inasmuch as he has not adjudicated thereon. The onus though would be on the assessee. On the flip side, that would though mean that the assessee has no explanation for the source of Rs. 2.91 lacs found credited separately in his bank account. Also, we observe, non-deduction of the corresponding expenditure, which would need to be explained or, as the case may be, estimated.
Income from other sources - received by way of sale of scrap of fixed assets, viz., furniture, machinery, etc. belonging to a firm, Greenland Rubbers, brought to tax u/s 56(1) - CIT(A), in appeal, directed the reduction of the said amount from the relevant block/s of assets where depreciation has been claimed thereon. It is this condition that is the cause of the assessee’s grievance. The ld. CIT(A) has, as apparent, agreed with the assessee in principle, i.e., of it being a capital receipt. The rider that the depreciation should have been claimed and allowed is not necessary. This is as the reduction is to be only from the written down value (WDV) of the relevant block/s of assets, which would, in case of claim of depreciation, have the effect of reducing its WDV. Only the excess realised over the WDV is assessable as a short-term capital gain u/s. 50 of the Act. The assessee has nowhere stated the WDV of the relevant block/s of assets. The impugned receipt is thus taxable where and to the extent it exceeds the same. The onus to exhibit the WDV of the relevant block/s of assets is on the assessee. We decide accordingly.
Assessment u/s 153A - addition having its basis in the incriminating material found and seized in search as being maintainable section 153A proceedings - the appellants are maintaining several bank accounts and, at the same time, not maintaining any accounts for any of their incomes/receipts. On investment in immovable property/s being found in search, corroborated by statements on oath u/s. 132(4) of the Act, CFS for different years were submitted in explanation. All the additions arise on account thereof. The investment in Pala property is during fy 2011- 12, relevant to AY 2012-13. The same, therefore, where not satisfactorily explained, is to be assessed only for that year. The assessee/s, however, in a bid to explain the same, has built-up cash from an earlier period. Where and to that extent, therefore, the receipts are shown to arise during the earlier period, their taxability under the Act has to be with reference to the provisions applicable for that year, i.e., to the extent found taxable, and taxed for that year. The incriminating material found for a period could result in assessment of income for more than one year. However, where and to the extent the Revenue does not admit a receipt, the same has to be excluded from the cash flow for that year, and only the closing balance so arrived at carried forward to the following year, determining the short-fall, if any, for the year for which the investment/s has been found to be made. Where the closing, or for that matter, cash balance during the year, is negative, no addition shall arise for that year in the absence of any incriminating material for that year, and the cash balance carried forward to the following year would be nil. This negative balance can be taxed only in regular assessments or s. 147 assessment for that year. The AO shall, nevertheless, verify and determine the CFS, prepared date-wise, considering all the bank accounts, duly verified, for each of the years under reference, including the intervening years,carrying forward the closing cash as determined, where positive, or, as the case may be, at nil.
Payment of income tax, inasmuch as the same is already in the know of the Revenue, where apparently not explained on the basis of the disclosed income, can also lead to s. 153A assessment, though, in absence of any other material, limited to the assessment, in whole or in part, for the said sum only.
Decision - The assessments are, accordingly, setting aside the impugned orders in part, set aside to the file of the AO to re-work the additions, if any, for the years subject to s.153A assessment. He shall, in this, be guided by our adjudication herein. The assessee/s shall furnish all the information and workings as required by the AO and, further, within a reasonable time, i.e., participate and cooperate in the proceedings. Even otherwise incumbent, this becomes mandatorily so in view of the directions by the Hon'ble High Court, so that the proceedings are completed in a time bound manner
-
2023 (12) TMI 268
Addition u/s 43CA - difference in the value taken by the Registration Authority for the purpose of stamp duty and the actual sale consideration - HELD THAT:- The payment through cheque is required to ensure that the agreement to sell, if any, relied upon by the assessee has been actually executed and acted upon as back dated cheque payment cannot be claimed by an assessee. In the case in hand, though some of the parties had not made initial payment i.e. on or before the date of agreement through cheque/banking mode, however, the facts show that the some of the payments were made in each case much before the execution of the sale deed.
Under the circumstances, it cannot be said that the ‘agreement to sell’ relied upon by the assessee are bogus, rather, the payment of consideration in this case has been settled and paid as per the terms of the agreement. Under the circumstances, in the peculiar facts and circumstances, it will not be justified to adopt the stamp duty value as on the date of execution of the sale deed, rather, the object and purpose of the provisions will be achieved by taking the stamp duty value as on the date of execution of the agreement in the light of the peculiar facts and circumstances of this case.
Moreover, the issue is otherwise decided by the Coordinate bench of the Tribunal in the case of Disha Construction [2021 (6) TMI 614 - ITAT MUMBAI] wherein Tribunal further relied upon the decision of Swananda Properties (P) Ltd [2019 (9) TMI 1270 - BOMBAY HIGH COURT] held that the provisions of Sec.43CA would not have retrospective application and accordingly, do not apply to agreement executed prior to its introduction.
Thus since the provisions to section 43CA have been introduced w.e.f. 01.04.2014 and the ‘agreement to sell’ was entered prior to the 1st April 2014 and therefore, the condition of payment or part payment of consideration on or before the date of agreement cannot be imposed back-dated as the assessee could not have foreseen the introduction of section 43CA.
Thus additions made by the Assessing Officer/CIT(A) on the above issue are not sustainable and the same are accordingly ordered to be deleted.
Additions on account of concealment of sale consideration - Assessee submit that in fact the flat no. 2 was sold by the land-owner and not by the assessee and similarly flat no. 8 was also transferred by way of gift by the land-owner and not by the assessee - HELD THAT:- We find that since the sale consideration was not received by the assessee as the said flat was sold by the land-owner as per the development agreement and not by the assessee, hence, the addition made by the Assessing Officer on this issue is not sustainable. In view of our findings given above, the additions made by the Assessing Officer/CIT(A) in this issue was not sustainable and the same are accordingly ordered to be deleted.
-
2023 (12) TMI 267
Revision u/s 263 - as per CIT AO has not verified transaction of sale / purchase of shares offered to tax as Income from Capital Gain, disallowance of expenditure relatable to exempt income u/s. 14A of the Act r.w.r.8D of the Income Tax Rules, 1962 and deduction claimed u/s. 35D of the Act, towards preliminary expenses - HELD THAT:- Disallowance u/s. 14A of the Act r.w.r.8D of the Income Tax Rules, 1962, and deduction u/s. 35D of the Act, the Ld.Counsel for the assessee fairly agreed that the order passed by the Ld.CIT u/s. 263 of the Act, survives on these two issues and thus, we are inclined to uphold the findings of the Ld.CIT on the issue of disallowance u/s. 14A of the Act, and deduction u/s. 35D of the Act.
Correct head of income - assessment of profit derived from purchase & sale of shares, the assessee has declared profit under the head ‘short term capital gains’ - CIT was of the opinion that profit derived from sale of shares is assessable under the head ‘profits & gains of business and profession’ - It is very clear that the assessee was maintaining two portfolios i.e. one for investment and another for trading and there was a clear demarcation in the books of accounts of the assessee in respect of both segments. Therefore, we are of the considered view that the assessee has rightly declared profit derived from purchase & sale of shares under the head ‘short term capital gains’. But, it is only the Ld.CIT wrongly invoked his jurisdiction u/s. 263 of the Act, without pointing ‘how & why’ assessment order passed by the AO on the issue of profit derived from purchase & sale of shares is incorrect and erroneous in so far as it is prejudicial to the interest of the Revenue.
This, position is clarified by the CBDT in their Circular No.4/2007 dated 15.06.2007, where, various parameters have been prescribed for verification of share transactions and none of parameters prescribed by the Board is adversely affecting the transactions of the assessee.
Board has very clearly stated that the tax payers can have two portfolios i.e. one for investment and another for trading, but there should be clearly demarcation in the books of accounts in respect of both portfolios. In this case, the assessee has filed all evidences to prove that it was having two portfolios and maintaining separate records for investment portfolios and trading portfolio. Therefore, we are of the considered view that the assessee has rightly declared ‘short term capital gains’ towards profit derived from purchase & sale of shares, and thus, the assumption of jurisdiction by the Ld.CIT fails on this issue.
Order of the Ld.CIT u/s. 263 of the Act, is valid, in case, there is no enquiry at all. In this case, as we have already stated that it is not a case of lack of enquiry. Therefore, case law relied upon by the Ld.DR does not apply to the facts of the present case.we are of the considered view that the assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue.
CIT without appreciating the facts simply invoked his jurisdiction and set aside the assessment order passed by the AO u/s. 143(3) of the Act .
-
2023 (12) TMI 240
Penalty u/s 271(1)(c) - disallowance of claim of loss - AO received information from DDIT (Investigation), exhibiting the fact that certain entry providers and hawala operators involved in providing entries of bogus LTCG, STCL and bogus business loss and AO issued notice u/s 148 - HELD THAT:- A perusal of the assessment order would reveal that AO has nowhere demonstrated as to how the loss claimed by the assessee is bogus. He only issued a show-cause notice and the Assessee withdrew its claim just in order to avoid litigation with Department.
But when the Department intended to impose a penalty upon the assessee u/s 271(1)(c), the assessee has contested the issue in the penalty proceeding. AO instead of entertaining the arguments on merit summarily rejected it on the ground that all these issues must have been raised during the assessment proceedings and must have been rejected. He observed that this penalty proceeding cannot take the character of assessment and cannot sit in judgment.
It is pertinent to observe that the addition is only on the admission of the assessee that it withdrew its claim. Nowhere, it has been demonstrated that the claim of the assessee was false or bogus.
Explanation 1 to section 271(1)(c) provides that, if the assessee fails to offer an explanation or offers an explanation which is found by AO to be false, but now in the present case, the assessee has an explanation and it has buttressed this explanation with the following documentary evidence, i.e.Trading of shares was done through broker in a recognized stock exchange, Payment and receipt is through banking channel, Documentary evidence for transactions like contract note, demat statement, and bank statement are enclosed. Assessee offered the loss voluntarily to avoid litigation and requested the Assessing Officer to not initiate penalty proceedings u/s 271(1)(c), paid the tax due and challan copy is enclosed. No appeal is filed.
These documents have not been held as false either by the AO during the assessment proceeding or during penalty proceeding. Therefore, the assessee does not deserve to be visited with penalty. Assessee appeal allowed.
-
2023 (12) TMI 228
Estimation of income - Bogus purchases - As decided by HC [2023 (1) TMI 835 - GUJARAT HIGH COURT] AO has chosen not to reject the books of accounts of the assessee and had made the estimated additions of the pieces of the purchases. Both, the CIT (Appeals) and the Tribunal, have concurrently and rightly held to make the additions, which the CIT (Appeals) had done @ 12.5% of the impugned purchases, which have been reduced and restricted to 6%.
HELD THAT:- In view of the dismissal [2023 (12) TMI 144 - SC ORDER] following the said order, this special leave petition is also stand dismissed.
Pending application(s), if any, shall stand disposed of.
-
2023 (12) TMI 227
Accrual of income u/s 2(24) - Scope of Amendment to Section 2(24) by the insertion of sub-cause (xviii) - incentives given by the Government - eligible unit under the ultra mega project - scheme being, ‘Package Scheme of Incentives, 2013’ effective from 1st April 2013 for a period of five years - constitutional validity of sub-clause (xviii) to Section 2(24) of the Act - whatever purpose of objective are to be treated as income, irrespective of the fact as to whether or not the same is in the nature of capital assistance and or revenue assistance? - Petitioner’s argument regarding the violation of Article 14 stems from the assertion that the amendment to Section 2(24)(xviii) of the Act, which brings various subsidies under the ambit of taxable income, is discriminatory and arbitrary
HELD THAT:- As held by the Apex Court in Union of India V/s. Exide Industries Limited and Anr. [2020 (4) TMI 792 - SUPREME COURT] relied upon the approach of the Court in testing the constitutional validity of a provision is well settled and the fundamental concern of the Court is to inspect the existence of enacting power and once such power is found to be present, the next examination is to ascertain whether the enacted provision impinges upon any right enshrined in Part III of the Constitution.
In the present case, the legislative power of the Parliament to enact sub-clause in the light of Article 245 of the Constitution is not doubted at all. Now to the next step of examination, i.e., whether the said clause contravenes any right enshrined in Part III of the Constitution, either in its form, substance or effect. It is no more res integra that the examination of the Court begins with a presumption in favour of constitutionality.
This presumption is not just borne out of judicial discipline and prudence, but also out of the basic scheme of the Constitution wherein the power to legislate is the exclusive domain of the legislature/Parliament. This power is clothed with power to decide when to legislate, what to legislate and how much to legislate. Thus, to decide the timing, content and extent of legislation is a function primarily entrusted to the legislature and in exercise of judicial review, the Court starts with a basic presumption in favour of the proper exercise of such power.
The time-tested principle of checks and balances does not empower the Court to question the motives or wisdom of the legislature, except in circumstances when the same is demonstrated from the enacted law.
In the very nature of taxing statutes, the legislature holds the power to frame laws to plug in specific leakages. “Such laws are always pin-pointed in nature and are only meant to target a specific avenue of taxability depending upon the experiences of tax evasion and tax avoidance at the ground level”. The general principles of exclusion and inclusion does not apply to taxing statutes with the same vigour unless the law reeks of constitutional infirmities. No doubt, fiscal statutes must comply with the tenets of the Constitution.
The imposition of tax on these subsidies under the amended provision does not constitute “taking away” of a benefit but rather represents a recalibration of fiscal advantages in line with broader economic and policy considerations. Profits, by their nature, are subject to fluctuations resulting from various factors, taxation being but one.
Section 2(24)(xviii) of the Act is an example of this balancing act, and its imposition is a reflection of a subsidy's life cycle coming to its fiscal fruition. Petitioner's argument, is ostensibly rooted in concerns over profitability. This does not, in substance, however, provide a tenable basis to impugn the constitutional validity of the amended provision. Hence, petitioner’s argument of eroded profitability due to taxation lacks constitutional merit. An extension of this logic could open floodgates of untenable demands from loss-incurring entities seeking tax exemptions to improve profitability. This could potentially create a taxing standard that is inconsistent and prone to manipulations.
In Nazeria Motor Service etc. [1969 (8) TMI 88 - SUPREME COURT] the Apex Court held that even on the assumption that the profits would be diminished or greatly reduced, it cannot be held that there is any infringement of Article 19(1)(g) under Part III of the Constitution of India.
The chronology of events is pivotal in assessing the merits of petitioner's arguments against the constitutional validity of Section 2(24) (xviii) of the Act. When petitioner applied for the subsidy, the amendment to the Act specifically the inclusion of sub-clause (xviii) to Section 2(24), had been in effect for more than two years.
Therefore, petitioner, at the time of application, was having full knowledge or ought to have had full knowledge of the tax treatment of such subsidies post-amendment. Secondly, the act of applying for a subsidy after the amendment came into force indicates an acceptance of the prevailing tax regime. It is reasonable to infer that by choosing to partake in the subsidy scheme, petitioner implicitly acknowledged and consented to the accompanying tax obligations as legislated by the amendment. Thirdly and furthermore, it is a well-settled principle that ignorance of the law is no excuse. Petitioner cannot claim ignorance of the amendment or its implications. The legislative change was not done surreptitiously but was the result of a transparent legal process, providing ample opportunity for all stakeholders to acquaint themselves with the new provisions.
A retrospective annulment of this provision would cause a state of chaotic disarray. Individuals and entities that have availed of subsidies and concessions and complied with the tax obligations thereof stand to face an untenable situation. They have acted in good faith under the existing legislative policy, and to dismantle this retrospectively would be to penalize compliance and create an environment of uncertainty and unpredictability in tax matters. Moreover, such a judicial step would likely instigate a flood of claims and litigations for refund of taxes paid under the provision, straining the administrative machinery and judicial resources. This would not only disrupt the revenue stream but also place an undue burden on the exchequer. Hence we are not inclined to strike down Section 2(24)(xviii).
Amendment to Section 2(24) by the insertion of sub-cause (xviii) of the Finance Act, 2015, is a perfect example of a legislative endeavour to align the definition of “income” with the evolving economic landscapes and judicial precedent of it being an inclusive and elastic term. The submissions of petitioner though appear to be of fiscal concern were, in our view, more an argument of diminished profits and a narrow interpretation of income which the Apex Court has time and again expanded. The submissions of petitioner fall short of appreciating the overarching legislative intent to foster a comprehensive and equitable taxation regime. The amendment to Section 2(24) by insertion of the impugned sub-clause that includes various subsidies and concessions only indicates the well established jurisprudential path ensuring that the income tax laws remain attuned to the economic realities and continue to serve as a vital cog in the nation's fiscal machinery. As submitted by ASG, it is the duty of the legislature to ensure that taxation policy reflects a balance between incentivizing economic activity and ensuring the equitable distribution of fiscal resources.
Petition dismissed.
-
2023 (12) TMI 226
Validity of assessment order u/s 144C - non adherence to DRP directions - Whether assessment in accordance with the prescribed procedure? - AO mandation to pass the final order including the view expressed by the DRP - HELD THAT:- This Court is in agreement with the view expressed in Sulzer Pumps [2021 (12) TMI 891 - BOMBAY HIGH COURT] decision. Once the objections have been filed by the assessee against a draft assessment order within the time limit prescribed under Section 144C(2)(b), the rest of the procedure should be followed as prescribed and the final assessment order ought to be passed by the Assessing Officer in accordance with the directions issued by the DRP.
This Court is further of the view that no prejudice will be caused to the Respondent-Department if the present petition is allowed and the impugned assessment order is set aside as Respondent-Department would be well within its rights to pass a fresh assessment order post the receipt of direction from the Respondent No. 3-DRP.
Accordingly the impugned assessment order, the computation sheet as well as all the subsequent notices are set aside and the writ petition is allowed.
-
2023 (12) TMI 225
Offence u/s 276CC - petitioner failed to file his return of income for the assessment year 2013-2014 as required under Section 139 - only contention raised by the petitioner is that the search conducted was premature since the tax due was only on 30.09.2013 - HELD THAT:- Search was conducted on 03.09.2013. Though the search was conducted on 03.09.2013, it is not an impediment for the petitioner to file his return of income on or before 30.09.2013. Filing return of income is mandatory as contemplated u/s 139(1) - mere search conducted by the authority concerned would not preclude the petitioner to file his return of income.
Further, it is mandatory in nature and further expanded that if the returns are not filed within the stipulated time, then a presumption as to the culpable mental state can be drawn u/s 278E - The non filing of return of income within the time as stipulated under Section 139(1) and 153 of Act, offence stands complete and there can be a presumption for existence of mens rea and it is for the accused to prove the contrary beyond reasonable doubt, only before the trial court during the trial.
Therefore, the issue as to whether there was wilfulness in not filing the returns on time and not paying the tax on time is only a matter of fact, which can be ascertained only through appreciation of evidence before the trial court. Therefore, these grounds cannot be considered by this Court, that too under Section 482 of Cr.P.C since onus is upon the petitioner to rebut the presumption and that can be done only before the trial court during the trial by letting in evidence.
Petitioner vehemently contended that once notice issued u/s 153A of the Act, it overrides all other provisions such as Sections 139, 147, 148, 149, 151 and 153 of the Act - If a person wilfully fails to furnish in due time, the return of income which he is required to furnish under sub section (1) of Section 139 or by notice given by sub section (1) of Section 142 or Section 148 shall be punishable. Therefore, the search under Section 132 and subsequent notice under Section 153A are completely different from filing the return of income as contemplated under Section 139(1) of the Act. At any point of time, a search can be made under Section 132 of the Act if any incriminating material to show that the assessee evaded certain income in his return of income, notice under Section 153 will be issued to file his return of income for the concealed income.
It is true as per search u/s 132 or requisition under Section 132A, the assessment officer assessed or re-assessed the total income in respect of each assessment year falling within six assessment years, taking into consideration of the incriminating materials collected during the search and other material pending would abate. It is nothing to do with the mandatory provision u/s 139(1) of the Act to file his return of income. Admittedly, in the case on hand, the petitioner failed to file his return of income on or before 30.09.2013. Further, there was not even an attempt by the petitioner to file his return of income till 29.01.2014 as contemplated under Section 139 sub clause (4) of the Act till the notice under Section 153A. That apart, the petitioner also failed to file his return of income even after receipt of the notice under Section 153A of the Act within the period of 30 days from the date of receipt of the notice under Section 153A of the Act.
Therefore, the respondent rightly initiated prosecution against the petitioner and this Court finds no grounds to quash the same. Accordingly, this criminal original petition is dismissed. Consequently, connected miscellaneous petition is closed.
-
2023 (12) TMI 224
Estimation of income - unexplained purchases - ITAT restricted the disallowance at the rate of 6% - HELD THAT:- This Court in case of Pankaj K. Choudhary [2023 (3) TMI 1402 - GUJARAT HIGH COURT] when the Tribunal has thought it fit to reduce the disallowance at 6% from 12.5%, the Tribunal had before it the facts which were duly analysed by it. No interference is called for in the said conclusion and findings of the Tribunal in the present appeal by this court. No substantial questions of law can be said to have arisen in the facts of the present case.
-
2023 (12) TMI 223
Capital gain - real owner of property - Addition in the hands of AOP or members of AOP - whether the respondent-assessee members of the AOP were taxed in their respective hands and not the respondent- AOP with regard to the sale of property in question in the year 2007 relevant to the assessment year 2008-09 ? - Tribunal upheld the order passed by the CIT (A), holding that the members of the AOP were the real owners of the property in question and therefore, the income was liable to be taxed in the members hands
HELD THAT:- As the facts are clear in as much as though it is true that the respondent-AOP purchased the property in auction from the Income Tax Department in the year 1994 and the conveyance deed was executed in the year 2005 but in the meanwhile the respondent-assessee allotted the share in the property in question to its members for the contribution made by it in the year 1999.
This fact is not disputed by the appellant-Revenue and accordingly, the members of the AOP became the owner of the property in question qua their respective shares in which the allotment was done by the AOP. Therefore it cannot be said that the AOP continued to be the owner of the property as Association of Person is formed by the members for their joint interest in the property and accordingly, once the share of the respective member is allotted by the AOP then the AOP cease to be the owner of the property in question from the year 1999 with respect to the shares which were allotted by issuing the allotment letter. No substantial question of law arising out of the impugned order passed by the Tribunal. No substantial question of law arises.
-
2023 (12) TMI 222
Bogus LTCG - Penny stock transaction - proceedings initiated against the petitioner only based on the statement of one Naresh Jain - As argued respondent had not provided any opportunity to the petitioner to cross-examine the said Naresh Jain - as contented the oral statement of Naresh Jain was not relied upon by the respondent, however, only the documents, which were obtained based on the statement of Naresh Jain was relied upon - HELD THAT:- As the respondent had only relied upon the documents, which were obtained based on the statement of Naresh Jain. Hence, this Court is of the view that the petitioner is entitled to get a copy of those documents, which were obtained from various sources based on the statement of Naresh Jain, since furnishing the said documents will enable the petitioner to file her detailed reply.
In the present case, the learned Senior Standing counsel for the respondent had fairly submitted that though the respondent had relied upon very many documents to substantiate the case against the petitioner, some of the documents were not provided to the petitioner and the same will be provided at the earliest. Hence, after receipt of the said documents, the petitioner shall file her detailed reply. If no reply is filed, there is no doubt that it will go against the petitioner.
-
2023 (12) TMI 221
Condonation of delay of one day in filing the income tax return - Power of Principal Commissioner/the Principal Chief Commissioner of Income Tax to condone the delay in filing return, on consideration given to the application filed by an assessee for not filing return on time - HELD THAT:- On a perusal of Section 119(2)(b) of the Act, it is evident that the said Section only empowers the Board to admit an application or claim for exemption, deduction, refund or any other relief under the Act, after the expiry of the period specified by or under the Act for making such application or claim and deal with the same on merits, in accordance with law.
The Board has delegated such power to the Principal Chief Commissioner of Income Tax/the Principal Commissioner of Income Tax vide its circular No. 9/2015 dated 9.6.2015.
A Division Bench of this Court had an occasion to consider the provisions of Section 119(2)(b) of the Act and the said circular in the case of Daisy [2023 (10) TMI 1323 - KERALA HIGH COURT] wherein the Court has been of the opinion that the Circular empowers the Principal Chief Commissioner/the Principal Commissioner of Income Tax to consider the merits of the refund claim while exercising the delegated power under Section 119(2)(b) of the Act, which would amount to circumvent the provisions of the Act. It has been further held that the Principal Chief Commissioner or the Principal Commissioner of Income Tax has no power to consider the merits of the refund application and what is required to be considered is the merits of the application for condonation of delay only.
Considering the provisions of Section 119(2)(b) of the Act and the Circular dated 9.6.2015 aforesaid, the order impugned herein, Ext. P7, is unsustainable and the same is hereby set aside. The writ petition stands allowed. The matter is remitted back to the file of the Principal Commissioner of Income Tax to pass fresh orders on the application of the petitioner-assessee for condonation of delay in filing the return.
-
2023 (12) TMI 220
Rectification of mistake - Income Tax Returns were filed showing the rental income as income under two heads - assessee shown rental income in his returns under two heads, i.e. one under the heading “Business Income” and another under the heading “Income from House Property”, so the same was assessed twice and accordingly the income tax was paid double the amount of actual tax - petitioner also filed a revision application u/s 264 and the same came to be dismissed by the first respondent
HELD THAT:- A reading of the Division Bench judgment Annamallais Agencies [2002 (9) TMI 62 - MADRAS HIGH COURT] referred to by the learned Senior Counsel for the petitioner would go to show that in the event, if the Assessing Officer has not taken anything into consideration which are mentioned in the returns, in such cases, the rectification can be carried out. It is not that in the returns, if something is wrongly mentioned, the Assessing Officer can make correction and pass orders.
This court is of the view that the AO is justified in rejecting the rectification application and also the revision petition which requires no interference.
The issue that the assessee / petitioner has committed an error in filing the returns and by virtue of the said error, the assessee has shown the income under two heads and thereby his income was taxed twice under two heads and this error is apparent on the Income Tax return. The said fact was admitted by the respondent and even the respondent submitted that it is a mistake purely on the part of the petitioner.
Thus ultimately justice has to be rendered as nobody's income has to be taxed twice. Only re-course available in this case is by filing the revised Income Tax Returns, which is available under Section 139 (5) of the Income Tax Act, 1961. However the petitioner has not chosen to file the same in time. He has to file the revised returns instead, he had filed the application for rectification before the second respondent, revision petition before the first respondent and two writ petitions before this Court. Because of the wrong guidance and ill advise, the petitioner should not be penalised.
This Court is inclined to grant permission to the petitioner/assessee to file the revised return, within 15 days from the date of receipt of a copy of this order. Upon filing of the revised returns by the petitioner, the Assessing Officer shall process the returns in accordance with law.
-
2023 (12) TMI 219
Assessee to be reheard when there is change of AO - Denial of natural justice - non-provision of opportunity of personal hearing - HELD THAT:- No notice, subsequent to the receipt of reply from the petitioner, was issued to the petitioner and further, no evidence has been produced by the respondent to show that the notice was issued to the petitioner for personal hearing before passing the impugned order and the opportunities, that were stated to have been provided to the petitioner were only for the purpose of calling forth certain details/reply from the petitioner, those opportunities, cannot be deemed to be an opportunities of hearing to the petitioner since the question of affording opportunity of personal hearing would come into picture only after the receipt of reply/objections from the petitioner.
Thus, in the present case, it is evidently clear that after the petitioner filed reply dated 22.07.2022 to the clarification sought for by the respondent finally vide letter dated 19.07.2022, the petitioner has not been afforded with any opportunity of personal hearing and in these circumstances, the impugned order came to be passed, which would per se prove that the order has been passed in clear violation of principles of natural justice.
Even assuming that the impugned order is passed by an incumbent Officer, who continued the proceedings in the place of earlier Assessing Officer and even the earlier AO, who existed before the incumbent Officer has not issued any notice for personal hearing after the petitioner's filed reply. Therefore, the contention of the learned Senior Standing Counsel for the respondent-Department that the petitioner has failed to make a use of the opportunity granted under Section 129 I.T.Act, as he has not sought for an opportunity of rehearing is untenable and it would only means to putting the cart before horse.
Writ Petition is allowed, the impugned order is set aside and the matter is once again remanded back to the respondent for re-consideration of the assessment proceedings after providing an opportunity of personal hearing to the petitioner.
-
2023 (12) TMI 218
Validity of reassessment proceedings - Authentication of notices and other documents u/r 127A - Scope of new regime u/s 148A - two notices issued - as argued notice issued u/s 148 are unsustainable as they are neither signed and have been simply uploaded and transmitted to the petitioner for the first time on 15.04.2021 after Section 148A was inserted of the Income Tax Act, 1961 with effect from 01.04.2021 - new procedure under the new regime under Section 148A of the Income Tax Act, 1961 ought to have been followed - HELD THAT:- There are two notices issued u/s 148 for the same Assessment Year 2013-2014. The first notice issued to the petitioner is dated 30.03.2021. It is not digitally signed. Same notice has been issued in time. It is beyond the limitation under Section 147 of the Income Tax Act, 1961 as it stood till 31.03.2021. The second notice issued to the petitioner is dated 07.04.2021.
If notice issued on the later dated on 07.04.2021 is considered valid, the trajectory of the Assessment has to be completed in accordance with the new regime with effect from 01.04.2021 in terms of the decision of the Hon'ble Supreme Court in Union of India vs. Ashish Agarwal, [2022 (5) TMI 240 - SUPREME COURT]
On the other hand, if the notice was issued to the petitioner on 31.03.2021, the question of either challenging the notice dated 30.03.2021 issued u/s 148 or the consequential Assessment Order dated 30.03.2022 cannot be countenanced and therefore the Writ Petitions have to be dismissed.
Therefore, the argument of petitioner that the notice issued on 30.03.2021 under Section 148 of the Income Tax Act, 1961 cannot be construed to be a notice in the eye of law because it was not signed cannot be countenanced in the light of Rule 127A of the Income Tax Rules, 1962.
In the annexure to the notice issued under Section 142(1) to the petitioner on 16.08.2021, it is confirmed that the notice was served on the petitioner on 07.04.2021. Although the reference to the date of the notice has been given as 31.03.2021, it is evident it refers to 30.03.2021.
It has to be therefore construed that the reference to the date 31.03.2021 in annexure to Section 142(1) notice dated 16.08.2021 refers to impugned notice dated 30.03.2021 issued under Section 148 of the Income Tax Act, 1961, as it stood prior to its substitution with effect from 01.04.2021.
Considering the above, the proceedings should have been decided in accordance with paragraph Nos.7 to 10 of the decision of the Hon'ble Supreme Court in Union of India vs. Ashish Agarwal, case supra.
Thus, the impugned notice dated 30.03.2021 ought to have been decided in accordance with the new provisions with effect from 01.04.2021 in terms of decision of Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] as it has been admittedly served on the petitioner only on 07.04.2021 in terms of annexure to Section 142(1) notice dated 16.08.2021.
Consequently, the impugned Assessment Order dated 30.03.2022 pursuant to impugned notice dated 30.03.2021 is liable to be quashed for passing a fresh order under the new regime as expeditiously as possible, preferably within a period of six (6) months from the date of receipt of a copy of this order.
Considering the fact that the dispute pertains to the Assessment Year 2013-2014, issuing of the second notice dated 07.04.2021 under Section 148 of the Income Tax Act, 1961 was unnecessary. Therefore, impugned noticed dated 07.04.2021 under Section 148 of the Income Tax Act, 1961 is quashed. Accordingly W.P. is allowed.
-
2023 (12) TMI 217
Validity of Reopening of assessment u/s 147 - condition precedent for invoking the extended period of six years for re-assessment u/s 147 - assumption of jurisdiction in the absence of a finding that the income chargeable to tax has escaped assessment by reason of the failure to fully and truly disclose material particulars - gain on sale of land - LTCG or business income - HELD THAT:- Failure to render a finding that income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to fully and truly disclose the material facts necessary for assessment is a condition precedent to invoke the extended period beyond four years under section 147 of the Act. Absence of such finding would vitiate the reassessment proceeding.
As relying on this court case M/S. Seshasayee Paper And Board Limited Rep. By Its Director (Finance) & Secretary Sri V. Pichai [2023 (3) TMI 1111 - MADRAS HIGH COURT] the impugned notice and consequential proceedings invoking the extended period of limitation beyond 4 years for making a reassessment under Section 147 read with Section 148 of the Act in the absence of any finding as to the existence of the condition precedent viz., that income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to fully and truly disclose the material particulars vitiates the entire proceedings and thus liable to be set aside. Assessee appeal allowed.
-
2023 (12) TMI 216
Reopening of assessment u/s 147 - Reason to believe - notice beyond four years - change of opinion - whether there is change of opinion or otherwise is a question of fact which ought to be examined by the statutory authority? - assessee sold two land properties and received the sale consideration by way of cash and has offered the same under short term capital gains - HELD THAT:- Whether absence of a finding that the income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment would vitiate / prove fatal to a reassessment invoking the extended period of limitation under Section 147 of the Act is no longer res-integra. It has been decided by the Division Bench of this Court in the case of ACIT vs. Seshasayee paper and Board Ltd. [2023 (3) TMI 1111 - MADRAS HIGH COURT] and Durr India (P.) Ltd. [2022 (8) TMI 1340 - MADRAS HIGH COURT] that finding as to failure on the part of the assessee to disclose fully truly material particulars is a condition precedent for invoking extended period and in the absence of such finding, initiation of invoking extended period would stand vitiated.
Thus finding that income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment is a sine qua non and a condition precedent to invoke power of reassessment under Section 147 read with Section 148 of the Act beyond 4 years from the relevant assessment year and failure to render such a finding would prove fatal to the validity of such proceeding. Assessee appeal allowed.
-
2023 (12) TMI 215
Reopening of assessment - notice issued beyond the period of four years - income earned out of the sale of the agricultural land undisclosed - HELD THAT:- For the specific request of the respondent, the sale deed was produced. Hence, it cannot be construed as that it would fall under the explanation (1) of Section 147 of the Act.
Sale deed is not a “Books of accounts”. Upon perusal of the exempted income, since the details furnished in the category with regard to sale of agricultural property were not fully disclosed, these details were called for. Therefore, the respondent's contention that in terms of explanation (1) to Section 147 that merely producing the Sale deed would not amount to providing the entire material facts fully and truly cannot be accepted. Further, he would submit that the explanation also provides “other evidences”. It is not that without specific request, these evidences were furnished. In order to justify whether the sale of property comes under capital gain income or not, the specific request was made calling upon the petitioner to file the sale deeds.
The petitioner had disclosed the information with regard to the sale of the agricultural land and all the particulars with regard to sale of agricultural land was disclosed before the Assessing officer in full extent. Further, a perusal of the materials placed before this Court would suffice to arrive at a conclusion that there is no failure on the part of the petitioner with regard to providing material facts and the notice issued under Section 148 and 149 of the Act for re-opening assessment for the Assessment Year 2013-14 is not sustainable and the same is liable to be set aside - Decided in favour of assessee.
-
2023 (12) TMI 214
Approval u/s 80G - denial of claim as assessee is established for spending Corporate Social Responsibility (“CSR”) funds of Huhtamaki India Ltd. and the material produced by the assessee is again sold in the market which is a commercial activity and thus it doesn’t come under the purview of charitable activities - HELD THAT:- The assessee was settled as an irrevocable trust, vide Trust Deed dated 09/10/2019, with the main object to work in the area of preservation of environment. The assessee is registered under the Bombay Public Trusts Act, 1950. Further, the assessee has also received a Registration Certificate for recycling plastic waste issued by the Maharashtra Pollution Control Board under the Environment (Protection) Act, 1986 read with the Plastic Waste Management Rules, 2016.
From the perusal of the financial statements of the assessee for the financial years 2020-21, 2021-22, and 2022-23, we find that the assessee earned income only from donations, sale of scraps, and sale of finished goods and no such service was rendered to any entity. In any case, it is to be noted that such a service even if it is rendered by the assessee, the same will only be for the preservation of environment and thus is a charitable activity. It is evident from the record that no other objection was raised by the learned CIT(E) while denying the approval u/s 80G of the Act to the assessee.
Further, no doubt has been raised by the Revenue regarding the genuineness of the activity conducted by the assessee. Accordingly, we are of the considered view that the assessee satisfies all the conditions for the grant of approval under section 80G - the impugned order dated 30/03/2023 denying the grant of approval u/s 80G of the Act is set aside and the grounds raised by the assessee are allowed.
-
2023 (12) TMI 213
Estimation of income - Bogus purchases - HELD THAT:- We find force in the contention of the assessee that the CIT(A) erred in sustaining the 100% disallowance of purchases from two concerns and thus, erred in confirming the addition u/s 69C of the Act. Therefore, as per the ratio laid down by the Hon’ble Courts, profit embedded in the transaction need to be brought to tax particularly when the tax authorities have not disturbed the sales declared by the assessee.
We note that the assessee had himself offered profit element @ 6% from purchases from the named parties, thus AO is directed to restrict the addition @ 6% of the disputed purchases. Appeal of the assessee is partly allowed.
............
|
9911796707
