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2022-04-26
Dear Professionals,
We are glad to present to you the 259th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
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Judicial “forward & backward reference”
a) [TS-7445-ITAT-2017(Jaipur)-O] Affirmed by HC, [TS-9617-HC-2018(
b) [TS-8166-ITAT-2021(Bangalore)-
c) [TS-5411-ITAT-2020(Mumbai)-O] followed in [TS-5534-ITAT-2022(Mumbai)-O] on draft assessment order was not required to be issued for the period prior to 1st April 2020
d) [TS-5828-HC-2014(ANDHRA PRADESH & TELANGANA)-O] distinguish in [TS-6722-HC-2021(Telangana)-O] on cash credit u/s 68 cannot be extended to unexplained investments u/s 69A
e) [TS-7580-HC-2018(Gujarat)-O] followed in [TS-5058-HC-2022(Calcutta)-O] on valuation of closing stock
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Expert Column
Recently, CBDT notified the ITR for AY 2022-23. Though the tax law itself has not substantially changed, some very important changes feature in the new ITR Forms.
Dr. CA Abhishek Murali (President, All India Taxpayers' Association (AITPA)) provides a lucid comparative analysis of ITR for current AY vis-à-vis ITR for last year. He suggests that the taxpayers should wait till the end of June for filing the return despite ITRs being notified. He explains that “Though the Income Tax Forms have been made available already, the Income Tax Filing process will only effectively start from the month of June, when all Taxpayers have filed their TDS returns. Only on filing the TDS return can the Form 26AS of Taxpayers' reflect the true position of their incomes and their tax credits.” He states that many salaried employees who filed the return of income in a simple manner by just copying and pasting their Form 16 are in for a surprise and discusses the importance of corroboration of information with AIR and TIS in addition to form 26AS.
Click here to read the article titled "Comparative Analysis of ITR"
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Key Takeaways from Handpicked Rulings
1) SC: Expresses reservation on HC's observation that CIT cannot examine merit while exercising revisionary powers, but dismisses SLP……….. Click here to read and download SC Order
2) ITAT: Ignorance of law not a reasonable cause for deleting penalty u/s 271B – ITAT upholds CIT(A) order, rejects assessee's plea that ignorance of law as a reasonable cause u/s.273 for deleting the impugned penalty; Notes that assessee, a salaried employee, indulged in trading in shares & derivatives / F&O and achieved a total turnover which is more than the threshold limit of Rs.1 Cr. stipulated u/s.44AB of the Act for compulsory audit of books of account; Also notes that the assessee is a well-educated person and employed with Cognizant Technologies and maintained the regular books of account for computing income/loss from the business, thus, cannot take the ground of ignorance of law in so far as getting the books of account audited in terms of Section 44AB on or before the specified date; ITAT finds no merits in assessee's vehement contentions and holds that mere ignorance of law pleaded herein at the assessee’s behest hardly deserves to be treated as a reasonable cause for disturbing the impugned penalty as upheld in the CIT(A)’s lower appellate discussion…………….Click here to read and download ITAT Order
Editorial Note: ITAT in [TS-5065-ITAT-2012(CHENNAI)-O] held that penalty must be levied unless the assessee shows that sufficient reasons were prevalent to justify the omission caused. Even though evidence cannot be produced in all cases, the explanations offered by an assessee must be plausible and convincing and answerable to the reasoning of a man of ordinary prudence.
3) HC: Holds Sec. 32(2)(a) of Benami Act as unconstitutional; Directs Govt. to frame provision in light of SC ruling in R.Gandhi’s case, immediately - HC allows writ petition challenging provisions of Section 32(2)(a) that mandates appointment of judicial member of the Appellate Tribunal under the Benami Act who has been a member of the Indian Legal Services and held the post of Addl. Secretary or equivalent; HC analyses various SC rulings on the appointment of tribunal members viz., S.P. Sampath Kumar, R. Gandhi and also relied on coordinate bench ruling in Shamnad Basheer in the context of the Intellectual Property Appellate Board where considering the issue that the proceedings before the Tribunal would be judicial in nature, the necessity for appointment of a member from the judiciary or the bar was realized and for the reason that prior to constitution of the Tribunal, the adjudication was done by Courts; Thus, adopting the Westminister policy which prescribes the qualification akin to that of the judicial officer who has been dealing with such matters prior to the constitution of the tribunal, the necessity and importance of a judicial member and, that too, a person who served as a Judge or a member of the Bar was felt and, accordingly, the coordinate bench held certain provisions of the Trademarks Act, 1999 and the Patents Act, 1970 to be unconstitutional; HC, thus, directs the Central Government to frame the provision keeping in mind the directions of the Apex Court in the case of R. Gandhi which was followed by the coordinate bench in Shamnad Basheer’s case and bring the amendment immediately………………. Click here to read and download HC Judgment
4) HC: Remands Tata Teleservices' stay application over deposit of less than 20% of demand - HC holds that the requirement of payment of twenty percent (20%) of disputed tax demand is not a pre-requisite for putting in abeyance recovery of demand pending first appeal in all cases; The said pre-condition of deposit of twenty percent of the demand can be relaxed in appropriate cases; Takes note of Office Memorandum dt. 29th February, 2016 and observes that where addition on the same issue has been deleted by the appellate authorities in earlier years or where the decision of the SC or jurisdictional HC is in favour of the assessee, stay at lower deposit can be granted; Relies on SC ruling in LG Electronics India [TS-5393-SC-2018-O], obs
5) HC: Modifies appellate order over unserved notices to creditors for taxability under Sec.41(1) & 68 - Karnataka HC modifies appellate order on Assessee’s review petition, directs Revenue to examine the 12 cases where the notices returned unserved and whether there was cessation of liability of debt payable by the Assessee in light of the coordinate bench ruling in Alvares and Thomas; Further directs that on such verification, the tax liability of the Assessee can be determined applying the provisions of Section 41(1) and Section 68 after providing an opportunity to examine/cross-examine the creditors on this aspect with respect to 12 creditors where the notices were returned unserved……….Click here to read and download HC Judgment
6) ITAT: Not capital gains where land used for agricultural activities despite conversion into non-agricultural land - ITAT holds Assessee not liable to capital gains since subject property was converted into non-agricultural land yet the Assessee continued agricultural operations on the converted land and there was no evidence before the Revenue regarding non-agricultural activities; ITAT observes that the Assessee filed copies of RTC which were obtained much after the date of sale of the land which shows that the crops Ragi and Paddy were cultivated on the subject land; Holds that it is not possible to hold that the land was non-agricultural land liable for capital gains tax; Remarks that the Revenue unilaterally decided that the land was not subject matter of agricultural operations without any basis; Follows coordinate bench ruling in Shri M.R. Anandaram (HUF); Also follows Madras HC ruling in Ashok Kumar Rathi where it was held that if the land is recorded as agricultural land in the revenue records, it would only enure in favour of the assessee as agricultural land and assessee is entitled to get exemption from tax……Click here to read and download ITAT Order
Editorial Note: SC in [TS-5049-SC-1993-O] had laid out 13 indicators/questions which would help to determine the character of land.
Bombay HC in [TS-5250-HC-2017(Bombay)-O] held that local land laws relevant for characterization as agricultural land, rejects un-cultivable land plea. In the case of [TS-5661-HC-2010(Bombay)-O] HC held the assessee was not liable to capital gains when land was shown by the Govt. as agricultural land and that land was never used as non-agricultural land till it was sold;
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About Taxsutra Database!
“Taxsutra Database”, a true Income-tax research tool, is an archive of over 116560+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’. It is a completely integrated service with the following features:
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· Judicial “forward & backward reference”
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