Monday, 15 June 2015

S. 143(3)153A Addition made solely on the basis of a disclosure and without any incriminating material is not sustainable if facts show that disclosure was under duress

Pursuant to a search and seizure operation u/s 132, the assessee made a disclosure of unaccounted income of Rs. 20 crore. He later claimed that the disclosure was not voluntary but was because the assessee was under tremendous pressure and harassment in the form of repeated search action, survey and freezing of assets. It was also claimed that no incriminating material was found during the search. It was also claimed that the disclosure was "pro tem", meaning tentative and subject to correction. The AO & CIT(A) rejected the claim. On appeal by the assessee to the Tribunal HELD allowing the appeal:

(i)           Whether the disclosure was voluntary or given under coercive circumstances.

Conclusion: The contentions raised by ld. Counsel for the assessee lead to a clear inference that the disclosure of the assessee cannot be regarded as voluntary. The pressure of restrained DDs. of 31.48 crs. against a disclosure tax liability of about 7 crs is palpable. It has the propensity to derail the business and creating enough pressure for businessmen to somehow avoid the pressure. Besides the chronology of events and attendant circumstances do not convince us that this summary disclosure was voluntary and on the scale of merit it can override the other facts. Consequently we have no hesitation in holding that the solely relied disclosure was involuntary. In these circumstances the desirability of additions is to be judged on other facts and circumstances. Reliance is placed on Hon'ble Rajasthan High Court in the case of CIT v. Ashok Kumar Soni 291 ITR 172 for the proposition that admission in statement during search proceedings is not conclusive proof. Besides Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co.vs. State of Kerala 91 ITR 18 has also held so that such statement can be explained in the light of correct facts.

(ii)          Whether in the light of CBDT instruction dtd 10-03-2003, search proceedings and assessment can be based incriminating material and not on such disclosures.

Conclusion: A perusal of the CBDT instruction reveals that even Board is aware of such laconic disclosures and expects its officers to rely on incriminating evidence. Thus CBDT also is not in favor of search assessments being based only on such disclosures; it wants them to be based on incriminating material. In view the facts, circumstances, CBDT instruction and various case laws relied on by the assessee we are unable to uphold the additions solely on the basis of disclosure which doesn't meet the eye and have been held by us to involuntary.

(iii)        Whether the additions are based on any incriminating material discovered as a result of search in terms of sc. 153A.

Conclusion: There is no reference to impugned additions being based on any worthwhile incriminating material or evidence except raising some suspicions. The sole basis of additions in both cases is proposed to be the disclosure. Consequently the additions made are not as a result of any material found during the course of search, in view thereof impugned additions cannot be sustained as they do not conform to mandate of sec. 153A.

(iv)        Whether the assessees furnished proper explanation about the bank a/c and and transactions.

Conclusion: As the facts emerge the Corporation bank a/c belonged to Raghubir, the proceeds deposited therein came to him through banking channel on account of agreement to sell his share in ancestral land to G P Realtors not connected to assessees….. As the final disclosure remained at 20 crs., assesses to avoid the harassment agreed for its inclusion as it did not take the tax liability any further. Apropos departments contention that why assesses did not tell this in first blush assessee has demonstrated that they requested for some time to verify from parties who cooperated. The affidavits, bank certificates, documents relating to G P Realtors including compromise deed all corroborate the assesses contentions. Therefore no adverse inference or addition can be drawn against assesses in this behalf.

(v)         Whether on merits the impugned additions can be made in a search assessment u/s 153A which is meant for assessment of undisclosed income consequent to search proceedings.

Conclusion: By detailed observations we have held that neither any worthwhile incriminating material, information, and evidence was discovered as a result of impugned multiple search operations nor the additions sustained are based on any such material. The sole basis of additions is the disclosure which we have held to be involuntary. Consequently the additions do not conform to the mandate of sec. 153A.

Sunday, 14 June 2015

Levy of late fee on late filing of TDS return

Amendment in section 200A by Finance Bill 2015 w.e.f. 01-06-2015.

Till 31-5-2015 Income tax department has no power to process TDS return U/s 200A to levy TDS late fee U/s 234E

But w.e.f. 1-6-2015 as per Sec. 200A income tax department can levy late fee U/s 234E @ Rs. 200/- per day on delayed filing of TDS return.

Therefore if any late fee is levied before 1-6-2015 appeal can be filed for this or rectification application U/s 154 can be filed to get it cancelled.

Even if due to mistake any late fee U/s 234E is paid then refund will be granted of such excess late fee.

ITAT Amritsar has given a decision on this subject.

Before going to the decision, first we are reproducing the  amendment in section 200A wef 01.06.2015 .

In section 200A of the Income-tax Act, in sub-section (1), for clauses (c) to (e), the following clauses shall be substituted with effect from the 1st day of June, 2015, namely:— 

"(c) the fee, if any, shall be computed in accordance with the provisions of section 234E; 

(d) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of the amount computed under clause (b) and clause (c) against any amount paid under section 200 or section 201 or section 234E and any amount paid otherwise by way of tax or interest or fee; 

(e) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (d); and (f) the amount of refund due to the deductor in pursuance of the determination under clause (d) shall be granted to the deductor.

So clause (c) was inserted only wef 01.06.2015 and prior to 1st June 2015, there was no enabling provision in the act for raising a demand in respect of levy of fees under section 234E.

Now ITAT ,Amritsar in the case of Sibia Healthcare Private Limited  Vs. Dy. Commissioner of Income-tax (TDS) I.T.A. No.90 /Asr/2015 dated 09.06.2015, has given a Decision on section 234E of Income tax act on Late Fee on late filing of E TDS return.

Extract of decision is given as under 

In view of the above discussions, in our considered view, the adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A.

This intimation is an appealable order under section 246A(a), and, therefore, the CIT(A) ought to have examined legality of the adjustment made under this intimation in the light of the scope of the section 200A. Learned CIT(A) has not done so.

He has justified the levy of fees on the basis of the provisions of Section 234E. That is not the issue here. The issue is whether such a levy could be effected in the course of intimation under section 200A.

The answer is clearly in negative.

No other provision enabling a demand in respect of this levy has been pointed out to us and it is thus an admitted position that in the absence of the enabling provision under section 200A, no such levy could be effected.

As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage.
In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234 E is unsustainable in law. We, therefore, uphold the grievance of the assessee and delete the impugned levy of fee under section 234E of the Act.

So in Light of above decision it is very much clear that Late fee can not be imposed before 01.06.2015

Saturday, 13 June 2015

Mumbai ITAT allows set-off of long-term capital loss arising from sale of STT paid equity shares

Mumbai ITAT allows set-off of long-term capital loss arising from sale of STT paid equity shares

June 12, 2015[2015] 58 115 (Mumbai - Trib.)

IT : Long-term capital loss of sale of equity shares attracting STT is allowed to be set off against long term capital gain on sale of land in accordance with section 70(3)

• Section 10(38) excludes in expressed terms only the income arising from transfer of Long term capital asset being equity share or equity fund which is chargeable to STT and not entire source of income from capital gains arising from transfer of shares.

• It does not lead to exclusion of computation of capital gain of Long term capital asset or Short term capital asset being shares.

• Accordingly, Long term capital loss on sale of shares would be allowed to be set off against Long term capital gain on sale of land in accordance with section 70(3).

M/s N.K. Goel & Bros.
Chartered Accountants
CA Yashu Goel

Thursday, 11 June 2015

Suo motto review of mismatches 2013-14

LATEST information from Dvat Deptt.

-The assessment orders/Review orders of Tax+intt & Penalty on a/c of  2A/2B mismatch cases for AY 2013-14,

based on data of mismatches in systems as on 31/3/15 shall be hosted in dealers login

by Monday i.e. 15/6/15.

Wednesday, 3 June 2015

Open Letter to the Sales Tax Bar Association, New Delhi.

Sales Tax Bar Association
New Delhi

It is the need of the hour for the Bar to create an online repository for all the judgments, circulars, notifications etc. and allow ease of access to all its members 24 x 7 to all the material necessary for purpose of practice.

The Dvat Act and Rules (Bare Act) should be made available online with up to date amendments for easy reference.

A Newsletter service should be initiated from the office of the BAR Association for regular and crucial updates for the members.

Social Media Such as twitter, Facebook, WhatsApp etc. should be used to spread awareness at large, this will not only benefit the members but also create a Brand Image of the STBA.

A separate committee responsible for providing updates should be constituted and be made responsible for giving invaluable and to the point information for the members and not just for the sake of giving information.

Hoping that these suggestions shall bring about the much needed required changes for the benefit of the members.

M/s N.K. Goel & Bros.
Chartered Accountants
CA Yashu Goel