No revised return to show black money as income of past years; Tax dept. cautions taxpayers

Under the existing provisions of section 139(5), revised return can be filed only if original return contains any omission or any wrong statement. Post demonetization of the currency, some taxpayers may misuse this provision to revise the return-of-income of earlier Assessment Years, for manipulating the figures of income, cash-inhand, profits, etc. with an intention to show the current year’s undisclosed income in the earlier return.

Thus, the CBDT has clarified that the provision to file a revised return of income has not been stipulated for making changes in the income initially declared so as to drastically alter the form, substance and quantum of the earlier disclosed income. Any instance coming to the notice of Income-tax Department which reflects manipulation in the amount of income, cash-in-hand, profits, etc. may necessitate scrutiny of such cases so as

to ascertain the correct income. It may also attract penalty or prosecution in appropriate cases.

‘No Reassessment circulars’ aren’t Amnesty Scheme for past sins

Demonetization has encouraged people to shift towards digital mode of payment while making financial transactions. By adopting digital mode of payment, no financial transactions would remain undisclosed and consequently an enhanced turnover of business might get reflected in the books of accounts.

Under the circumstances, an apprehension has been raised that increased turnover in the current year may lead to reopening of earlier years' cases causing undue harassment to tax payers. Thus, CBDT and CBEC (vide Circular No. 40/2016 and Circular No. 137/155/2012-Service tax) have advised tax officials not to re-open past assessments in income-tax and indirect tax cases only because increased turnover is reflected in books of accounts of business on account of increased use of digital means of payment.

It would be incorrect to construe the above Circulars as giving any amnesty to taxevaders. Nor do the above circulars say that any spurt in turnover reported in books of account of businesses of current financial year (and consequently in their ITRs or indirect taxes returns) would not need to be explained.

The Circulars do not give businessmen a license to show their accumulated black money in the form of demonetized notes as current year’s turnover and get away scot-free without any interest or penalty and by paying normal tax for current year. If such a license is given by the circulars, the proposed PMGKY Scheme and proposed amendments to section115BBE of Income-Tax Act and proposed new section 271AAC of that Act would be redundant. The Circulars are innocuous and merely caution tax o􀁹icials to adopt systematic approach under the law to enquire into sudden jumps and reopen past assessment only if enquiry

throws up reason to believe that past turnovers/incomes escaped assessment.

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Banks to request customers to indicate old and new currency in deposit slips: FinMin

Maintenance of records regarding deposit of old demonetized currency and new currency is essential both in the bank record as well as the customer’s record. Though most banks providing correct information to the customers yet to ensure that it is done in 100% of cases without fail, all the bank branches in the country be alerted to reflect correctly the cash deposit in old and new currency and inform the customers about the same. Thus, the Government has directed banks to display a prominent sign requesting their customers to fill-up deposit slips clearly indicating old and new currency and the denomination of notes.

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Mere increase in sales due to acceptance of digital payment won’t trigger reassessment of past years

Recent initiatives of the Government to curb the black economy in the country has encouraged people to shift towards digital mode of payment while making financial transactions. By adopting digital mode of payment, no financial transactions would remain undisclosed and consequently an enhanced turnover of business might get reflected in the books of accounts.

Thus, the CBDT has clarified that mere increase in turnover, because of use of digital means of payment or otherwise, in a particular year cannot be a sole reason to believe that income has escaped assessment in earlier years. Hence, Assessing Officers are advised not to reopen past assessments in cases merely on the ground that the current year's turnover has increased.

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Publication would have profit element which would be missing on reproduction of work by Teacher: HC

Copyright Act: Publication need not be for the benefit of or available to or meant for reading by all the members of the community. A targeted audience would also be a public. But, a publication would have the element of profit, which would be missing in the case of reproduction of work by teacher to be used in the course of instruction while imparting education to pupils. - [2016] 76 taxmann.com 157 (Delhi)

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New institute formed by Praveen Sharma for CA/CS aspirants doesn’t amount to cartelization: CCI

Facts:

a) Mr. Praveen Sharma and Mr. R.K. Mehta, renowned faculty, were running coaching classes for CA/CS aspirant under the Faculty Arrangement Agreement (‘FAA’) with coaching Institute ‘ETEN CA’. They shared all the confidential information under the agreement with each other.

b) ETEN CA alleged that Mr. Praveen Sharma and Mr. R.K. Mehta made certain illegal demands and threatened to discontinue ongoing batches if their demands were not fulfilled.

c) Further, it alleged that Mr. Praveen sharma had starteda new coaching institute in the name of ‘Adline Ventures’ and Mr. R.K. Mehta and others as faculty members were appointed in this new institute

d) ETEN CA filed complaint with CCI that Mr. Praveen Sharma and other faculty members abused their dominant position by influencing the students and misusing the confidential information provided by ETEN CA. Further, it alleged that they indulged in anti-competitive agreement by cartelizing and adopting unfair trade practices.

The Competition Commission held as under:

1) Many other coaching centers such as CA club India, J.K. Shah Classes, Institute of grooming, etc., were also providing similar online and offline coaching services for CA/CS aspirants. With the presence of other players in the market, it did not appear that Adline Ventures enjoyed a dominant position.

2) Further, new entity (i.e., Adline Ventures) formed for competing with ETEN-CA doesn’t amount to cartelization as Mr. Parveen Sharma and other faculty members used their experience and expertise to operate their own business in the area of providing coaching classes. - [2016] 76 taxmann.com 140 (CCI)

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Latest updates from RBI

1. Unchanged Repo Rate: On the basis of an assessment of the current and evolving macroeconomics situation, the monetary policy committee of RBI has decided to keep the policy repo rate unchanged at 6.25 %. [Press Release : 2016-2017/1442, Dated 07-12-2016]

2. Relaxed norms for card payment: RBI has decided to relax authentication norms for card payment up to Rs. 2000. [Circular no. DPSS.CO.PDNo.1431/02.14.003/2016-17, Dated 06-12-2016]

3. Additional Point of Sale Terminals: To expand the digital payments eco-system and facilitate the move towards cashless transactions, the Govt. has directed banks to install an additional one million Point of Sale terminals by March 31, 2017. [Press Release, Dated 06-12-2016]

4. Re-activate Dormant bank account: Many customer are approaching banks for reactivation of dormant bank account. Thus, RBI has directed bank to follow the due-diligence procedure while re-activating dormant account of the customers. [Circular no. DBR.AML.BC.No.44/14.01.001/2016-17, Dated 06-12-2016]

Income-Tax Dept. found Rs 1.64 cr. black money deposited in Jan-Dhan Accounts

The Income-Tax Department conducted investigation across India due to sudden surge in cash deposits in Jandhan accounts. Investigation revealed undisclosed moneys of approximately Rs.1.64 Crore deposited into Jan-Dhan Accounts. Such deposits have been made by persons who have never filed returns of income and whose income is below the taxable limits.

Such Jan-Dhan accounts have been detected at Kolkata, Midnapore, Ara (Bihar), Kochi and Varanasi. Rs. 40 Lakh has been seized from one such account in Bihar. Undisclosed income so detected will be brought to tax as per the provisions of the Income Tax Act, apart from other actions depending upon the outcome of investigations.

The CBDT has again urged the account holders not to consent to any kind of misuse of their accounts which would expose them to the dangers of being held responsible for the tax evasion by unscrupulous elements.

Currency Notes printed for RBI held as goods : Madhya Pradesh HC

Assessee was a company, engaged in the business of printing of currency notes for Government of India. The VAT department raised demand on assessee on the ground that currency notes were goods. The assessee filed writ before the High Court and argued that it was performing the sovereign functions of the Govt. of India and could not be said to be a dealer engaged in any business activities.The currency notes could not be termed as goods and the sale and supply of currency was out of the definition of goods.

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FAQs on Pradhan Mantri Garib Kalyan Yojana

The Government has announced demonetization of existing currency of Rs. 500/1000 with effect from the 9th November, 2016. However, concerns have been raised that some of the existing provisions of the Income-tax Act, 1961 ('Act') could possibly be used for concealing black money. So, the Government has introduced Taxation Laws (Second Amendment) Bill, 2016 in the Lok Sabha to amend the provisions of Income-Tax Act. The Bill was also cleared in the Lok Sabha.

The Government has announced Pradhan Mantri Garib Kalyan Yojana 2016 (PMGKY) in the Taxation Laws (Second Amendment) Bill, 2016. As per this PMGKY black money deposited in banks or held in cash can be offered for taxation at 49.9% (i.e., 30% tax, 9.9% surcharge and 10% penalty).

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