TMI Tax Updates - e-Newsletter
August 15, 2020

Case Laws in this Newsletter:

GST Income Tax PMLA Indian Laws

Articles

1. THE APPOINTMENT OF ARBITRATORS BY THE CHIEF JUSTICE OF INDIA SCHEME, 1996

   By: DR.MARIAPPAN GOVINDARAJAN

2. E-invoice Schema / Format - mandatory fields

   By: Ganeshan Kalyani

News

1. India’s Foreign Trade: July 2020

2. Finance Minister holds 3rd review meeting of CPSEs on CAPEX

3. 584th Meeting of Central Board of the Reserve Bank of India

Notifications

GST - States

1. S.O. 150 - dated 10-8-2020 - Bihar SGST

Seeks to amend Notification No. S.O. 09, dated the 03rd January, 2019

2. S.O. 149 - dated 10-8-2020 - Bihar SGST

Seeks to amend Notification No. S.O. 101, dated the 29th June, 2017

3. S.O. 148 - dated 10-8-2020 - Bihar SGST

Bihar Goods and Services Tax (Seventh Amendment) Rules, 2020.

4. 38/1/2017-Fin(R&C)(166)/394 - dated 10-8-2020 - Goa SGST

Seeks to amend Notification No. 38/1/2017-Fin(R&C)(133), dated 30th March, 2020

5. 38/1/2017-Fin(R&C)(165)/393 - dated 10-8-2020 - Goa SGST

Goa Goods and Services Tax (Ninth Amendment) Rules, 2020

6. ERTS(T)2/2020/262 - dated 24-6-2020 - Meghalaya SGST

Seeks to bring into force Sections 118, 125, 129 & 130 of Finance Act, 2020 in order to bring amendment to Sections 2, 109, 168 & 172 of MGST Act w.e.f. 30.06.2020.

7. ERTS(T)2/2020/235 - dated 19-6-2020 - Meghalaya SGST

Meghalaya Goods and Services Tax (Sixth Amendment) Rules, 2020

Income Tax

8. 66/2020 - dated 13-8-2020 - IT

Central Board of Direct Taxes authorizes the Principal Commissioners of Income-tax (Regional e-Assessment Centre) (Verification Unit)

9. 65/2020 - dated 13-8-2020 - IT

Central Board of Direct Taxes notify the Income-tax Authorities of Regional e-Assessment Centres

10. 64/2020 - dated 13-8-2020 - IT

Central Board of Direct Taxes notify that the Income-tax Authorities of the National e-Assessment Centre

11. 63/2020 - dated 13-8-2020 - IT

Amendment in Notification No. 50/2014 dated 22 October 2014

12. 62/2020 - dated 13-8-2020 - IT

Amendment in Notification No. 73/2019 dated 26 September 2019

Highlights / Catch Notes

GST

• Court Grants Bail in GST Evasion Case; GST Authority to Consider Compounding Offense Request Independently.

  Case-Laws - HC : Grant of Bail - evasion of GST - since the petitioner and its company has already made a request to the GST authority in the nature of compounding of the offence upon payment of the GST dues, the GST authority, on its own, can deal with the request of the prayer so made with a object in mind to compound the offence. - HC
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Income Tax

• Revenue Appeals on Factual Question Criticized for Wasting Resources Despite Assessee's Amicable Resolution Offer.

  Case-Laws - HC : Revenue appeal against the pure question of facts - unnecessary litigation on the part of the Revenue Authorities - In the facts and circumstances, no disallowance was called for. Still, if the Assessee agreed to such addition to apparently buy peace with the Department, we fail to understand as to why the Revenue has filed these Appeals to drag cases further in the High Court incurring the loss of man hours and cost of litigation. - HC
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• High Court Quashes Reassessment Order u/s 147 Due to Full Disclosure by Petitioner, No Nondisclosure Alleged by Officer.

  Case-Laws - HC : Reopening of assessment u/s 147 - Perusal of the reasons extracted elsewhere in this order only referred to the issue of classification of royalty on merits and nowhere it is stated that there has been any failure by the petitioner in making a disclosure in this regard. To be fair to the Assessing Officer, he does not even make such allegation in the reasons for re-assessment and rightly so, since the material available would show a full disclosure by the petitioner at all stages of assessment - Reassessment order quashed - HC
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• Income Tax Evasion Case Prosecution Not Time-Barred Due to Petitioner's Delays; Case Filed in 1991.

  Case-Laws - HC : Evasion of income tax - Prosecution proceedings for offence under the Income Tax Act - Sequence of events only reveal that it was a continuous process for which the petitioner also was one of the instruments and, therefore, by no means, could it be stated that the prosecution was time barred, as the judicial proceedings, which was initially at the behest of the petitioner had consumed the time leading to the filing of the case in the year 1991. - HC
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• Section 263(2) of Income Tax Act: Order Must Be "Made," No Requirement for "Service," Emphasizing Issuance Over Delivery.

  Case-Laws - AT : Revision u/s 263 - Period of limitation - “service” of the order - From the reading of the provisions of Section 263(2) of the Act, it is clear that there is no mention about the “service” of the order, however, it is only mentioned that the order shall be “made”. With regard to “service” it has clearly been defined in the section 143(2) of the Income Tax Act but in section 263 of the Act nowhere about service of order has been mentioned. - AT
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• Revised Income Tax Return u/s 139(5) Valid for Carrying Forward Losses Claimed on February 13, 2017.

  Case-Laws - AT : Carry forward the loss claimed in the revised return of income - the return filed by the assessee u/s. 139(5) of the Act is in accordance with law and therefore the assessee is entitled to carry forward the loss claimed in the revised return of income dated 13/02/2017 provided such loss computed is as per the provisions of the Act - AT
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• CIT(A) Reduces 100% Income Addition to 12.50% Due to Lack of Evidence on Profit Rates by AO.

  Case-Laws - AT : Estimation of income - AO has made 100% addition, whereas the CIT(A) has scaled down addition to 12.50% profit on alleged bogus purchases. - Although, both authorities have taken different rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. We are of the considered opinion that 12.50% rate of profit adopted by the CIT(A) appears to be reasonable - AT
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• Court Questions Genuineness of Gifts u/s 68; Assessee Fails to Prove Authenticity, Raising Tax Evasion Concerns.

  Case-Laws - AT : Addition of gifts u/s. 68 - genuineness of the gifts - unable to produce the donor - The document produced by the assessee that is bank statement, ITR, Gift deed, bank accounts established that the gift received by the assessee is not genuine and is only to circulate his own money in the garb of gift and to evade the tax which is highly unlikely and against the human probability. - AT
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Case Laws:

• GST

• 2020 (8) TMI 285
  Permission for withdrawal of petition - refund of GST (Compensation cess) - HELD THAT:- The petition is dismissed as wiythdrawn.

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• 2020 (8) TMI 284
  Jurisdiction - power to issue SCN - case of petitioner is that impugned show cause notice has been issued by Superintendent, Central Goods Service Tax, Rudrapur; although, he is not competent for the purpose - HELD THAT:- List this matter after six weeks. In the meantime, there shall be stay of impugned notice dated 25.02.2020 provided petitioner deposits 75% of the amount demanded from the petitioner within three weeks from today. Such deposition shall however be subject to final outcome of this writ petition.

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• 2020 (8) TMI 283
  Maintainability of petition - Release of detained goods - at the time of inspection or detention of goods the transporter could not produce all the documents required for establishing that the goods is under valid transit - HELD THAT:- The issues raised are at preliminary stage and this Court is not convinced to entertain the writ petition and adjudicate upon merits at this stage. To confirm to the scheme under the Act, the writ petition is disposed of by this order. The petitioner submits bank guarantee for the tax and penalty as shown in Ext.P7 and applies for release of goods by enclosing a copy of this order within two days from today. The 2nd respondent shall release the goods detained under Ext.P6 and subjected to enquiry in Ext.P7 within twelve hours from the date and time of receipt of bank guarantee - Petition disposed off.

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• 2020 (8) TMI 282
  Review application - Permission to carry forward of unutilized CENVAT credit of duty paid - transitional credit - carry forward denied on account of nonfiling or incorrect filing of prescribed statutory Form i.e. TRAN-1 by the stipulated last date - HELD THAT:- Earlier Review Application moved by the UOI stands dismissed by this Court in M/S. AJAY HARDWARE INDUSTRIES PVT. LTD., VERSUS UNION OF INDIA AND OTHERS [ 2019 (12) TMI 414 - PUNJAB AND HARYANA HIGH COURT] where it was held that Merely, because the implementation has been stayed in Review by the Hon ble Gujarat High Court, in our considered opinion, is no ground to review our judgment, however, in our view, the appropriate remedy for the Revenue would be to approach the Hon ble Supreme Court by filing an appeal. Review application dismissed.

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• 2020 (8) TMI 281
  Validity of Rule 117 of CGST Rules 2017 and HGST Rules 2017 - vires of the provision of Section 140 of CGST Act, 2017 - reopening of portal for the petitioners to upload the form TRAN-01 - HELD THAT:- Similar issue decided in the case of M/S TRIVENI NEEDLES PVT. LTD., DHRUV CABLES AND CONDUCTORS, M/S NAWANSHAHR CO-OP SUGAR MILLS LTD., M/S AVLIGHT AUTOMOTIVES PVT. LTD., M/S DEE KAY ENGG. WORKS, M/S DYNAMIC FORGE, M/S SARVATRA INDUSTRIES, M/S VEE GEE PRECISION FORGINGS, M/S RADHEY IRON CEMENT STORE, M/S. MECHWELL FOUNDRY, M/S AMAR ELECTRONICS, M/S KHALSA MOTORS VERSUS UNION OF INDIA AND OTHERS [ 2020 (2) TMI 1050 - PUNJAB AND HARYANA HIGH COURT] where it was held that writ petitions are disposed of with the permission to the petitioners to file TRAN-0I Return, either electronically or manually, by 31.01.2020. Petition disposed off.

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• 2020 (8) TMI 280
  Unable to file TRAN-1 Declaration within the stipulated time due to technical error - Section 140(3) of the CGST Act, 2017 read with Rule 117(4) of the GST Rules, 2017 - HELD THAT:- The statement dated 10.1.2020 is recorded and taken on record, so that the petitioner may take the benefit of the submissions now made in the abovesaid statement dated 10.01.2020 rendered by the respondents 2 to 5, 7 and 8 and on doing so, it is for the competent authority and respondents 2 to 5, 7 and 8 to do the necessary as referred to in the statement. Petition disposed off.

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• 2020 (8) TMI 279
  Grant of Bail - non-payment of dues to the Government authorities on time - intent to evade or not - HELD THAT:- There has been default on the part of the petitioner in not complying with procedures under GST for the payment of revenue to the GST authority - Considering the gravity of the offence, the prayer for bail is refused. However, since the petitioner and its company has already made a request to the GST authority in the nature of compounding of the offence upon payment of the GST dues, the GST authority, on its own, can deal with the request of the prayer so made with a object in mind to compound the offence - application dismissed.

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• Income Tax

• 2020 (8) TMI 278
  Revenue appeal against the pure question of facts - unnecessary litigation on the part of the Revenue Authorities - Estimation of Net profit - net profit rate - estimation of profit - HELD THAT:- It is well known that where the books of accounts maintained by the contractors are not accepted by the Department, the estimation of profit made on the basis of history of Gross Profit rate and Net Profit rate of the Assessee in the previous years or comparable cases of contractors can be made. Once such profit rates are compared, the additions on account of non confirmation or non production of the sub contractors, etc. is totally irrelevant and cannot be made. In the hierarchy of the fact finding bodies created under the Income Tax Act, obviously the findings of the Assessing Authority stand superseded for all purposes, by the findings of the higher appellate authorities. Unless glaring perversity in the findings of the appellate authorities are pointed out and established by the Revenue in the Appeals filed by them under Section 260A of the Act, there is nothing for the High Court or Constitutional Courts to do in such matters. The findings of fact arrived at by the Authorities below are binding on the High Court under Section 260A of the Act, unless the perversity as aforesaid is clearly visible, established and proved. As against the perversity in these findings, we see abetter taxable income finally taxed in the hands of the Assessee, albeit with the agreement to disallowance to the extent of 10% of the payments made to the sub contractors, which the Assessee appears to have agreed under the compulsion of circumstances to avoid litigation and to buy peace. Results declared by the Assessee of the net profit rate at the rate of 3.83% was much better as compared to previous three years and only marginally less than the previous two years of 2005-06 and 2006-07, which were at the rate of 4.20% and 3.94%. In these circumstances, no disallowance was called for. Still, if the Assessee agreed to such addition to apparently buy peace with the Department, we fail to understand as to why the Revenue has filed these Appeals to drag cases further in the High Court incurring the loss of man hours and cost of litigation. Such unnecessary litigation on the part of the Revenue Authorities deserves to be strongly deprecated, but, the Revenue Authorities do not seem to be seeing the sense behind this and keep on filing Appeals under Section 260A of the Act, as a matter of routine. Though the provisions of Section 260A of the Act are intended only to settle the substantial questions of law arising from the order of the Tribunal, such appeals, against the pure findings of facts, are also filed in an absolutely reckless manner. We strongly deprecate this practice of the Revenue Authorities, as there seems to be no application of mind by the higher Authorities in sanctioning filing of these appeals before the High Court. We would have imposed exemplary costs in the present case also to compensate the Respondent/Assessee, who had to incur such litigation expenditure at all the levels of appellate forums, three in number, beyond the Assessing Authority, viz., before CIT(Appeals), before the Income Tax Appellate Tribunal and before the High Court.

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• 2020 (8) TMI 277
  Reopening of assessment u/s 147 - assumption of jurisdiction to re-assess the income of the petitioner - reasons for re-assessment are premised upon the classification of the royalty paid by the assessee being capital in nature, as against the claim of it being revenue in nature, by the assesssee/petitioner - HELD THAT:- All details relating to the payment of royalty have been supplied by the assessee commencing from the disclosures in the annexures to its return of income Queries and responses specific to the aforesaid issue were exchanged between the petitioner on the one hand and the TPO and AO on the other. Supporting evidences for the petitioners claim that the royalty was running royalty and thus revenue in nature was also filed. This issue has engaged the attention of the respondents since the TPO has specifically raised a query with regard to the classification of royalty as capital vis-a-vis revenue and sought an explanation in this regard. Relevant details being on record and having engaged the attention of the officers of the Department, this is not a case where the alleged escapement can be attributed to any failure on the part of the assessee/petitioner. Perusal of the reasons extracted elsewhere in this order only referred to the issue of classification of royalty on merits and nowhere it is stated that there has been any failure by the petitioner in making a disclosure in this regard. To be fair to the Assessing Officer, he does not even make such allegation in the reasons for re-assessment and rightly so, since the material available would show a full disclosure by the petitioner at all stages of assessment. The impugned order dated 26.08.2019 rejecting the objections to assumption of jurisdiction is liable to be quashed. As decided in PARASHURAM POTTERY WORKS CO. LIMITED VERSUS INCOME-TAX OFFICER, CIRCLE I, WARD A, RAJKOT[ 1976 (11) TMI 1 - SUPREME COURT ] hallmark of a civilized society is one that allows stale issues to rest without feeling the need to rake the same up repeatedly. So far as income-tax assessment orders are concerned, they cannot be reopened on the scope of income escaping assessment under section 147 of the Act of 1961 after the expiry of four years from the end of the assessment year unless there be omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. WP allowed.

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• 2020 (8) TMI 276
  Deduction u/s 10B - claim of assessee in respect of management fee while dealing with Section 10B especially when the service income was received from the Associate Enterprises which is not for any technical services rendred by the assessee? - Whether the income from Management fee could be treated as profit derived from export of valves and no deduction could be allowed to the Assessee u/s 10B since the Associate Enterprise has its own expertise to assemble the valves and therefore cannot be construed as technical services rendered by the assessee? - HELD THAT:- Finding stems from the details furnished by the assessee in Form No.3CEB. Admittedly, the amount will be received by the assessee through banking channels by way of convertible foreign exchange which has been defined in Section 10B(9A)(ii) which defines convertible foreign exchange to mean foreign exchage which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Management Act, 1999 and the Rules made thereunder or any other corresponding law for the time being in force. There is nothing on record to show that the convertible foreign exchange remittance did not fall within the definition as defined in Section 10B(9A)(ii). This Court, the decision in the case of Electronic Control and Discharge System Private Ltd. [ 2011 (7) TMI 541 - KERALA HIGH COURT] does not render any assistance to the case of the revenue. Furthermore, on facts we are satisfied that the only activity of the assessee is export as admitted by the revenue and the income generated by the Export Unit would be eligible for the benefit of Section 10B of the Act. For all the above reasons, we find no ground to disturb the finding of the Tribunal. - Decided against revenue.

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• 2020 (8) TMI 275
  Evasion of income tax - Prosecution proceedings for offence under the Income Tax Act - Whether complaint is mandatory before maintaining Charge u/s 193 IPC - No Due Certificate having already been issued in the year 1995 - petitioner plead that the said No Due Certificate would nullify the case pending before the trial court - submission of the petitioner that the complainant/respondent was aware of the said transaction even in the year 1982, but for reasons best known, no action was taken and the present action in the year 1991 is time barred - HELD THAT:- It is to be noted that against the stay on the prohibitory orders passed by the Calcutta High Court, Special Leave Petition was filed before the Hon ble Supreme Court, leading to the ordering of an enquiry by the Hon ble Supreme Court. In essence, it is to be noted that the Special Leave Petition has resulted in the enquiry and the findings in the enquiry has ended in the filing of the case before the trial court. Therefore, pleading that there is no complaint as mandated u/s 195 Cr.P.C., for making out an offence u/s 193 IPC is wholly unsustainable, as the enquiry is the outcome of the judicial proceedings culminating in the filing of the case. The enquiry report, by itself, is a complaint and, therefore, it cannot be stated that there is no complaint on the basis of which the case has been filed. This Court, by no means is implying that the stand of the petitioner that a complaint is mandatory for maintaining a charge u/s 193 IPC and, in the present case, this Court is not inclined to go into the said issue, as this Court has already held supra that the enquiry on the basis of the direction of the Hon ble Supreme Court has led to the filing of the enquiry report leading to the filing of the present case before the trial court. Prosecution being time barred - Sequence of events only reveal that it was a continuous process for which the petitioner also was one of the instruments and, therefore, by no means, could it be stated that the prosecution was time barred, as the judicial proceedings, which was initially at the behest of the petitioner had consumed the time leading to the filing of the case in the year 1991. Therefore, it cannot be held that the prosecution is time barred, as contended by the learned counsel for the petitioner. No Due Certificate issued by the respondent - When a matter is sub judice, it is not only administratively, but also judicially wrong on the part of the department to issue the No Due Certificate and such certificate cannot have any sanctity in the eye of law, that too, as pointed out above, when a complaint is pending against the petitioner. The case has been taken cognizance of by the trial court and unless it reaches it logical conclusion or a petition is filed by the prosecution to withdraw the case, mere issuance of a No Due Certificate would not be suffice to hold that the case against the petitioner is unsustainable or that the petitioner has paid the dues that are due to the respondent. It is for the respondent to place before the Court that the petitioner has paid the dues to the respondent and even then, in the nature of charges framed against the petitioner, it is for the trial court to accept or reject such submissions on behalf of the respondent. Only on the trial reaching its logical conclusion, would the petitioner either absolve himself of the charges or face the consequences of the verdict against him. It is neither open to the department to issue such certificates, which would undermine and defeat the prosecution nor is it open to the petitioner to harp on the said certificate and plead before this Court that the said certificate would nullify all the charges framed against the accused. Therefore, the above contention advanced on behalf of the petitioner deserves to be rejected. Detailed enquiry conducted at the instance of the orders of the Hon ble Supreme Court has brought to light various irregularities committed by the petitioners, which requires to be put to trial to find out the culpability of the petitioners and other connected with the said offence and, therefore, putting a stop at this point of time would not only be against the prosecution, but also in defiance of the orders of the Hon ble Supreme Court, as the Hon ble Supreme Court, even on the basis of the limited materials placed before it had directed the enquiry and subsequent to the enquiry, many materials having come to light, the same have to be tested at the time of trial and, therefore, it would be wholly unsafe to preclude the prosecution from going on with the trial. A holistic appreciation of the materials available on record categorically reveals that the issues, that are before the trial court, are triable issues, which cannot be quashed at the present stage and it has to be taken to its logical end and, therefore, the present petition for quashment of the case at the instance of the petitioner, does not inspire the confidence of this Court and, according, the same deserves to be rejected. Present criminal original petition, being devoid of merits is liable to be dismissed.

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• 2020 (8) TMI 274
  Addition on account of unsecured loans u/s 68 - HELD THAT:- Learned counsel provided detail of each entry of the credit received from Mrs Sunita Mittal and also informed source of the each credit therefore, in the interest of the substantial justice, we feel it appropriate to restore this issue back to the file of the Assessing Officer for examining the nature and source of the credit in terms of section 68 - assessee may file all the documentary evidences in support of the credits appearing in ledger account of Sunita Mittal in the books of the assessee. Grounds of the appeal are allowed for statistical purposes.

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• 2020 (8) TMI 273
  Penalty u/s 271(1) - Mandatory requirement of issuing a draft assessment order u/s 144C (1) by-passed - Validity of the draft assessment order - HELD THAT:- As relying on Dipak Babaria [ 2015 (8) TMI 775 - SUPREME COURT ] we are of the considered opinion that by issuing the demand notice on 27.12.2018 itself the Assessing Officer has by passed all the mandatory sub-sections of section 144C A perusal of Section 144C of the Act shows that the Assessing Officer shall, at the first instance, forward a draft of the proposed order of assessment and on receiving such order, the assessee may approach the DRP by raising objections. If the assessee accepts the variation, then the Assessing Officer shall proceed by framing the final assessment order and if the objections are raised before the DRP, then, upon receipt of directions issued by the DRP, the assessee shall complete the assessment. However, we find that while framing the said draft assessment order, the Assessing Officer not only issued and served demand notice, but has also initiated the penalty proceedings. We have no hesitation to hold that the proceedings culminated on 27.12.2018 when the demand notice was issued and served upon the assessee along with penalty notice u/s 274 of the Act and, therefore, all the subsequent proceedings and orders become non est. The additional ground is, accordingly, allowed.

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• 2020 (8) TMI 272
  Revision u/s 263 - Period of limitation - service of the order - HELD THAT:- Assessment order u/s.143(3) of the Act was passed on 22.03.2013 and the Pr. CIT has passed his order on 30.03.2015, therefore, the order is within two years from the relevant date. From the reading of the provisions of Section 263(2) of the Act, it is clear that there is no mention about the service of the order, however, it is only mentioned that the order shall be made . With regard to service it has clearly been defined in the section 143(2) of the Income Tax Act but in section 263 of the Act nowhere about service of order has been mentioned. Therefore, this argument of the assessee with regard to ground No.1, is dismissed. No adequate opportunity of hearing has been provided by the Pr. CIT before passing the order - In the present case, we find that the assessee was not afforded opportunity, much less the sufficient opportunity to give reply to the show cause notice. Therefore, it is clear that the Pr. CIT in a hurriedly manner without affording opportunity of hearing to assessee had passed impugned order by violating principle of audi alteram partem. In view of above factual position as well as the judicial pronouncements cited supra, we are of the opinion that the Pr.CIT has committed a gross error in not providing any effective/reasonable opportunity of being heard to the assessee before passing the order. Accordingly, we quash the revisional proceedings framed u/s.263 of the Act by the Pr. CIT - Decided in favour of assessee.

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• 2020 (8) TMI 271
  Penalty u/s 271(1)(c) - Non specification of charge - whether the assessee is accused of concealment of particulars of any taxable income or he had furnished inaccurate particulars of such income? - HELD THAT:- It emerges from the penalty notice dated 15.12.2016 that the AO did not specify as to whether the assessee is accused of concealment of particulars of any taxable income or he had furnished inaccurate particulars of such income. This tribunal s co-ordinate bench s decision in Nishith Kumar Jain Vs. ACIT [ 2016 (3) TMI 642 - ITAT KOLKATA] has deleted an identical penalty. We hold that levy of penalty in the present case cannot be sustained. We therefore cancel the orders imposing penalty on the Assessee and allow the appeal by the Assessee. On the issue of defect in show cause notice u/s 274 of the Act, we are not dealing with the other arguments made on merits of the orders imposing penalty on the assessee. Also See DR. MURARI MOHAN KOLEY [ 2018 (9) TMI 1 - CALCUTTA HIGH COURT] - Decided in favour of assessee.

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• 2020 (8) TMI 270
  Deduction u/s 80P(2)(a)(i) - as per AO assessee was essentially doing the business of banking, and therefore, in view of insertion of section 80P(4) with effect from 01.04.2007, the assessee will not be entitled to deduction u/s 80P - HELD THAT:- AO after perusing the narration of the loan extracts for the financial period 2016-2017, came to the conclusion that out of the total loan disbursement, only a minuscule portion has been advanced for agricultural purposes. The narration in loan extracts / audit reports by itself may not conclusive to prove whether loan is a agricultural loan or a non-agricultural loan. The gold loans may or may not be disbursed for the purpose of agricultural purposes. Necessarily, the A.O. had to examine the details of each loan disbursement and determine the purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In this case, such a detailed examination has not been conducted by the A.O. A.O. has not examined to what extent loans, if any, has been disbursed to non-members. There is a passing statement in the assessment order that there have been disbursement of loans to non-members as well. There should be fresh examination by the AO as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not. A.O. shall list out the instances where loans have disbursed to non-members of assessee-society, for nonagricultural purposes etc. and accordingly conclude that the assessee s activities are not in compliance with the activities of primary agricultural credit society functioning under the Kerala Co-operative Societies Act, 1969, before denying the claim of deduction u/s 80P(2) - The issue raised in this appeal is restored to the files of the Assessing Officer. - Decided in favour of assessee for statistical purposes

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• 2020 (8) TMI 269
  Disallowance u/s. 14A - assessee has not earned any exempt income during the year - HELD THAT:- It is undisputed fact that the assessee has not earned any exempt income during the year and therefore, no additional disallowance u/s 14A could be made by revenue authorities. The said position is well-settled by catena of binding decisions. The Hon ble Bombay High Court in its recent decision of Pr. CIT Vs. Huntsman International (India) Pvt.Ltd. [ 2019 (2) TMI 1457 - BOMBAY HIGH COURT ] hold that where there is no exempt income earned by the assessee, no disallowance u/s 14A could be made. - Decided in favour of assessee.

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• 2020 (8) TMI 268
  Validity of reopening of assessment u/s 147 - Eligibility of reason to believe - HELD THAT:- There is no tangible material in this case. Admittedly, re-opening is done for mere verification of certain transactions. We will not dig into the merits of the issue and correctness of the addition at this stage without deciding on the legal issue. Re-opening is done for mere verification only. In our view, such attempts of the AO are not approved by the decisions of higher judicial authorities as well as the Co-ordinate Bench of the Tribunals. Absence of any tangible material, AO s reason of mere verification for re-opening the assessment, jurisdiction assumed by the AO in this case is not valid. Accordingly, relevant ground / additional grounds are allowed in favour of the assessee.

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• 2020 (8) TMI 267
  Estimation of Income - Bogus purchases - correct rate of profit - HELD THAT:- ITAT, Mumbai, in number of cases had considered an identical issue and depending upon facts of each case, directed the Ld.AO to estimate gross profit of 10% to 15% on total alleged bogus purchases. In this case, considering the nature of business of the assessee AO has made 100% addition, whereas the ld. CIT(A) has scaled down addition to 8% profit on alleged bogus purchases. Although, both authorities have taken different rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. As consistent with view taken by the Co-ordinate Bench in number of cases, including in assessee own case for AY 2009-10, we are of the considered opinion that 8% rate of profit adopted by the ld. CIT(A) appears to be reasonable and accordingly, we are inclined to uphold the findings of the ld. CIT(A) and dismiss appeal filed by the Revenue.

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• 2020 (8) TMI 266
  CIT(A) powers of enhancement u/s 251(1) - Disallowance u/s 14A r.w. Rule 8D - HELD THAT:- The case of Kashi Nath Candiwala [ 2004 (12) TMI 21 - ALLAHABAD HIGH COURT] what was enhanced was a new source of income. AO in that case assessed to tax, income from business, after making certain additions on account of excessive claim of deduction. This source of income from business was enhanced by the ld. CIT(A) in that case. In the case on hand, the AO made a statutory disallowance u/s 14A - Under the circumstances, disallowance of salary is enhancement of income from a new source which was not considered by the AO. Thus, we agree with the argument of the assessee and quash the enhancement of the assessment by the ld. CIT(A). Appeal of the assessee is allowed.

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• 2020 (8) TMI 265
  Carry forward the loss claimed in the revised return of income - Return filed by the assessee u/s. 139(5) - HELD THAT:- We find merit in the submission of the Ld. AR. On an identical circumstance in KERALA STATE ELECTRONICS DEVELOPMENT CORPORATION LTD VERSUS DY. CIT, CIR. 1 (1) THIRUVANANTHAPURAM [ 2012 (3) TMI 655 - ITAT COCHIN] had set-aside the order of the AO and the CIT (A) and directed the AO to process the revised return filed by the assessee u/s. 139(5) of the Act quantifying the loss in accordance with law by treating the return of loss filed u/s. 139(3) of the Act as if the return of income had been filed u/s. 139(1) of the Act. In the case of the assessee, it is apparent that the assessee had filed its return of loss within the due date of filing of the return U/s. 139(3) of the Act i.e., on 30/09/2015. Further, the assessee has revised its loss return for the second time u/s. 139(5) of the Act on 13/02/2017 i.e., within the expiry of one year from end of the relevant assessment year 2015-16. We hereby hold that the return filed by the assessee u/s. 139(5) of the Act is in accordance with law and therefore the assessee is entitled to carry forward the loss claimed in the revised return of income dated 13/02/2017 provided such loss computed is as per the provisions of the Act. - Decided in favour of assessee.

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• 2020 (8) TMI 264
  Estimation of income - Addition u/s 69C - self made vouchers - assessee had failed to discharge the onus to establish the genuine of the transactions and also failed to furnish corroborative evidences in support of his claim - HELD THAT:- As directed the AO to estimate gross profit of 10% to 15% on total alleged bogus purchases. Considering the nature of business of the assessee the AO has made 100% addition, whereas the CIT(A) has scaled down addition to 12.50% profit on alleged bogus purchases. Although, both authorities have taken different rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. We are of the considered opinion that 12.50% rate of profit adopted by the CIT(A) appears to be reasonable and accordingly, we are inclined to uphold the findings of the CIT(A) and reject grounds taken by the Revenue. Adhoc disallowances of various expenses - CIT(A) has recorded categorical findings that the AO has not given any specific reason for making adhoc disallowances of expenses - HELD THAT:- Revenue fails to bring on record any evidences to prove the findings of facts recorded by the CIT(A) is incorrect. Therefore, we are of the considered view that there is no error in the findings of the CIT(A) and hence, we are inclined to uphold order of the ld. CIT(A) and reject ground taken by the Revenue. Appeal filed by the Revenue is dismissed.

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• 2020 (8) TMI 263
  Conversion of limited scrutiny into a complete scrutiny - Assumption of jurisdiction by AO for Complete Scrutiny whereas the case was selected for Limited Scrutiny under CASS - HELD THAT:- Approval shall be accorded by the PCIT/ CIT in writing after being satisfied about the merits of the issue necessitating complete scrutiny in that particular case. When these fact was pointed to the learned Sr. Departmental Representative, he could not state any of the approval accorded by the CIT or PCIT in writing or there is no satisfaction of CIT/ PCIT recorded in this case. Even otherwise, the escapement pointed out in the assessment order is limited to interest of fixed deposit amounting to Rs. 1,72,158/- whereas, the circular put a limit of Rs. 10 lacs, this being a case of Metro city like Bombay. None of the above conditions are met by the Assessing Officer for converting limited scrutiny into a complete scrutiny. Now, the question arises whether the Circular is binding on the Revenue authorities or not. Identical issues of conversion of limited scrutiny into a complete scrutiny by the decision of Hon ble Andhra Pradesh High court in the case of Smt. Nayana P. Dedhia [ 2004 (8) TMI 99 - ANDHRA PRADESH HIGH COURT] and Amal Kumar Ghosh [ 2014 (4) TMI 244 - CALCUTTA HIGH COURT] AO has travelled beyond his jurisdiction for converting limited scrutiny case into complete scrutiny case. Hence, we quash the assessment order as well as the order of Commissioner of Income Tax (Appeals). - Decided in favour of assessee.

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• 2020 (8) TMI 262
  Maintainability of appeal - low tax Effect - HELD THAT:- We find that vide CBDT circular No.17/2019 in F.No.279/Misc.142/2007- ITJ(Pt) dated 8th August, 2019, the income tax department has further liberalized its policy for not filing appeals against the decisions of the appellate authorities in favour of the taxpayers, wherein tax involved is below certain threshold limits, and announced its policy decision not to file, or press, the appeals, before this Tribunal, against the appellate orders favourable to the assessee in the cases in which overall tax effect, excluding interest except when interest itself is in dispute, is Rs. 50,00,000/- or less. This circular, only enhances the monetary limits and gives further relaxation. The old circular, beyond any dispute or controversy, categorically applied to the pending appeals as on the date of issuance of circular. The circular dated 8th August 2019 is not a standalone circular. It is to be read in conjunction with the CBDT circular No. 3/2018 (subsequent amendment thereto), and all it does is to replace paragraph nos. 3 and 5 of the said circular. The Hon ble Supreme Court in the case of The Commissioner of Income Tax-5,New Delhi Vs. Keshav Power Ltd. . [ 2019 (8) TMI 811 - SC ORDER] held Since the tax effect involved in the matter is less than Rs. 2 crores, going by the latest circular issued by the CBDT, we see no reason to interfere in this matter. The Special Leave Petition is dismissed. Thus appeals filed by the Revenue are found to be non-maintainable.

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• 2020 (8) TMI 261
  Maintainability of appeal - low tax Effect - HELD THAT:- We find that vide CBDT circular No.17/2019 in F.No.279/Misc.142/2007- ITJ(Pt) dated 8th August, 2019, the income tax department has further liberalized its policy for not filing appeals against the decisions of the appellate authorities in favour of the taxpayers, wherein tax involved is below certain threshold limits, and announced its policy decision not to file, or press, the appeals, before this Tribunal, against the appellate orders favourable to the assessee in the cases in which overall tax effect, excluding interest except when interest itself is in dispute, is Rs. 50,00,000/- or less. This circular, only enhances the monetary limits and gives further relaxation. The old circular, beyond any dispute or controversy, categorically applied to the pending appeals as on the date of issuance of circular. The circular dated 8th August 2019 is not a standalone circular. It is to be read in conjunction with the CBDT circular No. 3/2018 (subsequent amendment thereto), and all it does is to replace paragraph nos. 3 and 5 of the said circular. The Hon ble Supreme Court in the case of The Commissioner of Income Tax-5,New Delhi Vs. Keshav Power Ltd. . [ 2019 (8) TMI 811 - SC ORDER] held Since the tax effect involved in the matter is less than Rs. 2 crores, going by the latest circular issued by the CBDT, we see no reason to interfere in this matter. The Special Leave Petition is dismissed. Thus appeals filed by the Revenue are found to be non-maintainable.

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• 2020 (8) TMI 260
  Disallowance u/s 14A r.w.r 8D - no exempt income claimed by the assessee - HELD THAT:- In the present case it is an admitted fact that the Ld. CIT(A) by following the judgment of the Hon ble Jurisdictional High Court deleted the impugned disallowance made by the A.O. under section 14A of the Act for the reasons that there was no exempt income claimed by the assessee, therefore, no disallowance could have been made for the expenses. On a similar issue the Hon ble Jurisdictional High Court in the case of CIT Vs. Winsome Textile Industries Ltd. [ 2009 (8) TMI 220 - PUNJAB AND HARYANA HIGH COURT] held that in the present case, admittedly, the assessee did not make any claim for exemption, in such situation section 14A could have no application. In the present case also it is an admitted position that the assessee had not claimed any exempt income, so there was no question of making disallowance under section 14A - Decided against revenue

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• 2020 (8) TMI 259
  Disallowance u/s 14A - disallowance u/s 14A is restricted by CIT- A i.e. to the extent of dividend income claimed as exempt - HELD THAT:- No illegality or perversity in the findings returned by the ld. CIT (A) as it is settled principle of law that disallowance u/s 14A cannot exceed the exempt income earned by the assessee. Hon ble Delhi High Court in the case of Joint Investments Pvt. Ltd. vs. CIT [ 2015 (3) TMI 155 - DELHI HIGH COURT ] held that, the disallowance more than exempt income earned by the assessee during the year under assessment cannot be made. Consequently, the appeal filed by the Revenue is hereby dismissed.

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• 2020 (8) TMI 258
  Penalty u/s 271(1)(c) - non-deduction of TDS - HELD THAT:- Once, there is non-deduction of TDS on any expenditure disallowance is made but genuineness is not in doubt, penalty u/s 271(1)(c) of the Act cannot be attracted and hence, on this issue, we delete the penalty and allow the appeal of the assessee. See VENUS ENGINEERS [ 2011 (8) TMI 1163 - GUJARAT HIGH COURT] and SHRI VISHAL MADHUSUDANBHAI CHOKSHI [ 2014 (1) TMI 910 - ITAT AHMEDABAD] Undisclosed rent received - HELD THAT:- We noted from the records and it is clear that there is a rent accrued to the assessee to the extent of Rs. 1,49,500/-, which is in dispute, but not disclosed by assessee in the return of income. Even before CIT(A), no evidence was produced in regard to this rent. Now, before us also no argument or no fact is brought on record and hence, the assessee is unable to explain its case that it is a bonafide mistake. In the absence of the same, we confirm the penalty of this amount of rent receipt not disclosed to the extent of Rs. 1,49,500/-. Appeal of the assessee is partly allowed.

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• 2020 (8) TMI 257
  Addition of gifts u/s. 68 - genuineness of the gifts - HELD THAT:- AO has given ample opportunities to produce the donors and file evidences supporting the claim of the assessee. But the assessee was unable to produce the donor and other relevant evidences for substantiating the claim. Credits appearing in the books of the assessee cannot be accepted as gift because this gift is against human probability for such large sum of money gifted to the strangers. The assessee was unable to produce evidences to counter the requirement and to prove the genuineness of the transaction. The document produced by the assessee that is bank statement, ITR, Gift deed, bank accounts established that the gift received by the assessee is not genuine and is only to circulate his own money in the garb of gift and to evade the tax which is highly unlikely and against the human probability. Assessee has failed to prove the genuineness of the gifts in dispute by not producing sufficient evidences before the Revenue authorities. Therefore, the addition in dispute made by AO u/s 68 is as per law and no interference is called for in the impugned order passed by the Learned First Appellate Authority, because the same has been passed after examining the provisions of law as well as documentary evidences filed by the assessee along with various case laws mentioned in the impugned orders. Appeal of the assessee is hereby dismissed.

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• PMLA

• 2020 (8) TMI 256
  Contempt petition - release of freezed Bank accounts of petitioner - contention of petitioner is that despite order dated 14.11.2019 quashing the freezing of the bank account, respondent Bank had not permitted the operations of the bank account - HELD THAT:- There is no wilful default on part of the respondent bank in not permitting operation of the bank account for the period that they were seeking clarification from the Enforcement Directorate as well as the Income Tax Department. The bank seems to have acted only by way of an abundant caution in seeking a clarification from the Enforcement Directorate as well as from the Income Tax Department. The cautious approach of the bank seems justified in view of the fact that the Enforcement Directorate has passed a further provisional attachment order attaching the amount of Rs. 19,22,11,271/-, which was the credit balance in the subject account. Petition dismissed.

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• 2020 (8) TMI 253
  Grant of Regular bail - Money Laundering - siphoning of funds - the allegation is that the amount was given by RFL to entities which were, directly or indirectly, owned or controlled by the applicant, or in which the applicant otherwise had financial interest, including companies linked to RHC - it was held by High Court that this court is persuaded to the applicant to regular bail in the proceedings registered under sections 3/4 of the Prevention of Money Laundering Act 2002. HELD THAT:- Issue Notice - List for hearing in the next week.

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• Indian Laws

• 2020 (8) TMI 255
  Direction for early disposal of application - grievance of the Petitioner in this petition is that despite the matter being reserved for orders, no orders were pronounced in the Order XII Rule 6 application - HELD THAT:- As per the settled law, orders which are reserved have to be pronounced within two months. If the same are not pronounced for three months, the litigant is entitled to approach the High Court. The same is clear from a reading of the Supreme Court s judgment in Anil Rai v. State of Bihar [2001] 7 SCC 318 [ 2001 (8) TMI 1330 - SUPREME COURT ] Petition disposed off.

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• 2020 (8) TMI 254
  Condonation of delay in filing revision application - Dishonor of cheque - no rebuttal to prove innocence - quantum of punishment granted - HELD THAT:- At the time of the pronouncement of the judgment, the applicant was not present in the Court and later on he surrendered himself before the J.M.F.C. On 29.08.2019 and sent to the judicial custody. The applicant has completed the jail sentence of six months and he is going to complete the remaining jail sentence i.e. six months in place of payment of fine, therefore, no useful purpose would be served to condone the delay as the applicant is neither having a good prima facie case nor hope to succeed in it. He has already undergone a major part of the sentence. He has no amount to offer for payment to the complainant. He has already applied before the competent Court seeking a declaration to be bankrupt, therefore, even if the delay is condoned, there would be a chance of success in this Revision on merit - The Tehsildar, Anjad has initiated proceeding for attachment and auction sale of his house No.15, M.G. Road, Anjad for recovery of Rs. 19,55,000/- for payment of the fine amount already imposed in five cases filed against him under Section 138 of the Negotiable Instruments Act, thus, there are no ground to condone the delay and admit this Revision for final argument. Revision dismissed.

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• 2020 (8) TMI 252
  Grant of Bail - impugned judgment is incorrect or contrary to record - HELD THAT:- Although, the petitioner may be justified in relying upon documents brought on record to indicate that the finding of fact noted by the High Court in the impugned judgment is incorrect or contrary to record even so, taking overall view of the matter, we decline to interfere with the order granting bail to respondent No.2. However, at least, two additional conditions be imposed on respondent No.2, in addition to the conditions specified in paragraph 39 of the impugned judgment of the High Court for grant of bail - First, the respondent No.2 shall forthwith deposit his passport with the Investigating Officer and not later than one week from today - The second aspect is to clarify that the finding recorded by the High Court on certain factual aspects shall not come in the way of the prosecution and the Trial Court shall not be influenced by the same at the time of trial. The Trial Court shall, however, decide the matter on the basis of evidence brought on record by the concerned parties. SLP disposed off.

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