Friday, April 21, 2017

Govt. extends due date for deposit under PMGKY to April 30, 2017

Government has extended date for making interest-free deposits for declarants who have paid tax and penalty under the Pradhan Mantri Garib Kalyan Yojna (PMGKY).

Under the PMGKY scheme, declarants had to deposit 25% of amount declared, in a bank for 4 years without interest. Due date for deposit such amount was March 31, 2017 which has now been extended till April 30, 2017.

Earlier, CBDT had also notified that if an assessee had made payment of tax, surcharge, penalty and deposit in the banks by the closing hours of 31st March, 2017, he shall be allowed to file declaration under the Scheme by the 10th of April, 2017.

Sec. 69A additions upheld as assessee failed to prove that bedroom from where cash was seized belonged to his sister

Facts:

a) Search action was carried out at the residence of the assessee. During search, some unexplained cash was found and seized from bedroom of assessee's sister.

b) Assessee contended that cash received from the bedroom of sister belonged to his sister who came to stay with him few days back and, therefore, the same could not be included as unexplained cash in the hands of the assessee.

c) Assessing Officer (AO) did not accept the contention of the assessee and added entire amount of cash found as unexplained under section 69A.

d) CIT(A) and ITAT confirmed the order of AO. Aggrieved-assessee filed instant appeal before the High Court.

High Court held in favour of revenue as under:

1) Assessee failed to bring on any record that the bedroom was in exclusive possession of the sister. Even, there were contradiction in the statement of assessee recorded under section 132(4) and the affidavit of the sister.

2) Assessee had stated that out of amount found in cash, Rs. 2,50,000 lakh belonged to his sister whereas sister in her affidavit stated to had cash possession of Rs. 6,38,800 which was received by her from in-laws being Stridhan.

3) There were material contradiction in the statement of assessee and his sister with respect to ownership of actual amount in cash. Further no evidence was produced with respect to any share received from her in laws.

4) Therefore, seized cash was rightly included in income of assessee as unexplained money under section 69A. - [2017] 80 taxmann.com 175 (Gujarat) 

AO's participation in raid doesn’t make reassessment void when he isn’t biased against assessee

The issue before the High Court was as under:

Whether ITAT fell into error in concluding that there was no infirmity in the framing of the assessment by an Officer who was involved in the search and seizure operations?

High Court held in favour of revenue as under:

1) Assessing Officer (AO) has been given the power under the Act to gather information for the purposes of assessment. The mode of gathering such information may vary from the mere issuance of a notice under Section 142 to the more intrusive method of entry and search/seizure envisaged under Section 133A, Section 133B and Section 132.

2) There is nothing inherently unconstitutional in permitting AOto gather the information and to assess the value of the information himself. It was not open to the High Court to have disabled AO from discharging his statutory functions.

3) If the assessee would establish that AO was in fact biased in the sense that he was involved in his personal capacity in the outcome of the assessment, it would be a good ground for setting aside the assessment order.

4) But to hold that bias was established only because the authorised officer under Section 132 and AO were the same person was an incorrect approach.

5) Assessee has, in addition to relying on the circumstance that the AO was a participant in the raiding party, not placed any other material to substantiate the allegation of bias.

6) No personal bias or malice or past history with the said official was alleged, much less proved. Thus, the argument that assessment was void on account of bias was unsustainable and had to be rejected. - [2017] 80 taxmann.com 257 (Delhi)

Grant of scholarship to deserving students to pursue higher studies was charitable in nature: HC

Facts:

a) The assessee was a society registered under Societies Registration Act, 1860 and was running several educational institutions in the State of U.P.

b) Assessing Officer (AO) disallowed payment of scholarship to the incumbent on the ground that it was not for charitable purpose and it would be considered as income of assessee.

c) On appeal, CIT (Appeals) deleted additions made by AO which was affirmed by the Tribunal on further appeal. Revenue filed instant appeal before the High Court

High Court held in favour of assessee as under:-

1) Scholarship to the incumbent was granted for pursuing Engineering course from University of California, Los Angeles, USA. The candidate was selected after a thorough process of selection and finding him most deserving candidate, scholarship was granted to the said incumbent.

2) This was in the process of charitable object of assessee Society for advancement of higher technical education to deserving students. It could not be doubted that advancement of education was a 'charitable purpose'.

3) The candidate, beneficiary, was directly or indirectly not related to Members of Society nor otherwise had any bearing or connection with the Society Members. Financial status of the said student or other things were immaterial so far as purpose for which scholarship to said incumbent was concerned.

4) Therefore, CIT (Appeals) was justified that grant of scholarship to deserving students to pursue higher studies was charitable in nature. [2017] 80 taxmann.com 96 (Allahabad) 

Monday, April 17, 2017

AO rightly treated bank as an assessee -in-default for allowing LTA claim to its employee travelling abroad

Facts:

a) A survey was conducted on nationalized bank under section 133A to verify the TDS compliance in the case of salary and perquisite payments made to its employees. 

b) Assessing Officer (AO) noticed that bank had allowed LTC exemption to its employeesfor the foreign travel. AO treated bank as an 'assessee-in-default' under section 201(1) for making short-deduction of tax.

c) CIT(A) confirmed the order of AO, aggrieved-assessee filed instant appeal before the Tribunal.

Tribunal held in favour of revenue as under:

1) As per the provisions of section 10(5), only the reimbursement of expenses which are incurred on travel of employees and their families to any place in India are exempt. Since the employees of the Bank had travelled to foreign countries, the benefit of exemption available under section 10(5) should not have been granted.

2) Though bank may not have been aware of the details of the employees' places visited or destination at the time of advancement of LTC amounts. Yet, at the final settlement of the claims of the employees under LTC, bank should have obtained all the relevant details, such as the places of visits (destinations), etc.

3) Thus, the bank was aware of the fact that its employees had visited foreign countries by availing of LTC concession. So they were not entitled for to reimbursement of LTC.Thus, bank was under an obligation to deduct tax at source treating such an amount as not exempt.

4) Since the bank had failed to enforce its duty to deduct tax at source under section 192, AO correctly treated Bank as an 'assessee-in-default'. - [2017] 80 taxmann.com 179 (Bangalore - Trib.)

‘Taxmann’ invites taxpayers to submit their practical difficulties faced in case of ITRs and TDS matters

‘All Gujarat Federation of Tax Consultants’ felt an urgent need for effective resolution of practical issues being faced by the taxpayers. Thus, it is organizing an open house at Ahmedabad to have meaningful interactions with concerned CPC authorities with a view to achieve effective resolution of several practical difficulties being faced by the taxpayers in relation to following activities:

A) Filing of e-returns, processing of ITRs and rectifications, issue of tax refunds, computation of interest, adjustment of tax demands against refunds, etc., handled by CPC (ITD) Bengaluru.

B) Filing and processing of TDS returns, grant of due credit and reconciliation of TDS or TCS and related issues dealt with by CPC (TRACES) Ghaziabad. 

The taxpayers and tax practitioners are requested to send their practical difficulties faced by April 17, 2017 at suggestions@taxmann.com which can be placed before CPC authorities at the open house.

Following departmental authorities will deal with such practical difficulties at the open house:

DGIT (System) – Shri S.S. Rathor

CIT-CPC (ITR) – Shri R. K. Mishra

CIT-CPC (TDS) – Shri Sunil C. Sharma

Delay in payment under IDS due to demonetization unacceptable- HC dismisses writ

Facts:

a) The petitioner had filed a declaration under the Income Declaration Scheme, 2016 (IDS) declaring total undisclosed income of Rs.11.59 crores.

b) He was unable to deposit the amount of Rs.1.19 crores being 25% of income declared which he was required to deposit before 30th November, 2016 under IDS in view of the demonetization of Rs.500/- and Rs.1000/-currency notes on 8th November, 2016.

c) Thus, he filed writ before the High Court seeking a direction to the Revenue to accept Rs.1.19 crores which he was unable to deposit on or before 30th November, 2016.

High Court held as under:

1) There was no provision under the IDS or in the rules made there under which would permit the revenue to accept payment of tax after due date.

2) High Court couldn’t issue any such directions as the revenue authorities were obliged to act in accordance with the Income Declaration Scheme, 2016 which was a part of the Finance Act, 2016

3) It must be borne in mind that the IDS was optional and the dates of payment were known at the time of filing the declaration. Therefore, filing writ seeking direction to accept payment of tax after due date wasn’t maintainable. [2017] 80 taxmann.com 167 (Bombay)

CBDT introduces digitally signed E-PAN card for applicants

Central Board of Direct Taxes (CBDT) has introduced the electronic PAN Card (E-PAN) which would be sent by email to all applicants in addition to issue of the physical PAN Card.

E-PAN would be digitally-signed which can be submitted by applicant as a proof of identity to other agency electronically directly or by storing in the government's Digital Locker.

Further, in order to improve the Ease of Doing Business for newly incorporated companies, CBDT has tied up with Ministry of Corporate Affairs (MCA) to issue PAN and TAN in one day.

Applicant companies have to submit a common application form SPICe (INC 32) on MCA portal. Once the data of incorporation is sent to CBDT by MCA, the PAN and TAN would be issued immediately without any further intervention of the applicant. Till 31st March 2017, 19,704 newly incorporated Companies were allotted PAN in this manner. During March, 2017, out of the 10,894 newly incorporated companies, PAN was allotted within 4 hrs in 95.63% cases and within 1 day in all cases. Similarly, TAN was allotted to all such companies within 4 hrs in 94.7 % cases and within 1 day in 99.73% cases, CBDT clarified.

Press Release dated 11-08-2017

Power of attorney holder can also file a complaint for dishonoring of cheque: HC

In general, a person who is entitled to prefer a complaint for dishonoring of cheque under the Negotiable Instrument Act, 1881 must be a “payee or a holder in due course” but law does not insist on that payee or holder in due course should personally file a complaint. His duly authorized power of attorney can also file a complaint on his behalf if cheque is issued in discharge of a legally enforceable debt.

Therefore, filing of complaint in respect of an offence under section 138 of the Negotiable Instrument Act is permissible through holder of power of attorney. - [2017] 80 taxmann.com 72 (Madras)

Bar Council of India can’t remand disciplinary proceedings transferred to it from State Bar Council: SC

The Disciplinary Committee of Gujarat Bar Council of India (BCI) could not complete its proceedings within a year as mandated under the provision of the Advocacy Act, 1961, as a consequence of which disciplinary proceeding had been transferred to the Bar Council of India. However, the BCI’s Disciplinary Committee got back the case to the State Bar Council with a direction to dispose of the matter within a stipulated period of time.

Being aggrieved by the action of Bar Council of India, Appellant filed a case before the Apex Court. It was held that when a disciplinary proceeding before a State Bar Council gets transferred to Bar Council of India (BCI) under the provision of the Advocates Act, 1961, the BCI cannot send it back to the State Bar Council with a direction to decide it within a stipulated time. - [2017] 80 taxmann.com 54 (SC)