We are glad to present to you the 217th edition of ‘Taxsutra Database Bulletin’, with a new feature “Judicial forward & backward reference”. This new feature aims to update readers about the judicial impact of a ruling in terms of the other rulings where it has been relied on, followed, distinguished etc. Hence forth, every issue of the Database Bulletin will contain 10 rulings with judicial forward & backward references along with updates of current trends in the tax arena!
On Aug 13, the Government launched a transparent platform for faceless assessment, faceless appeals and Citizens Charter. In this backdrop, author CA Sachin Kumar BP (Partner, Manohar Chowdhry & Associates, Chartered Accountants) discusses the niceties and nuances of the new scheme and states that faceless assessment scheme attempts to overcome the lacunae existing in the current structure of the Income tax department - functional specialisation and impersonality. The author opines that the scheme “intends to achieve it by eliminating the interface between the Assessing Officer and the taxpayer to the extent technologically feasible and by optimising utilisation of the resources through economies of scale and functional specialization.”. Encouraging the tax professionals to embrace this change, the author signs off suggesting that “Let us face the ever-changing and ever-growing challenges in the profession by constantly and continuously updating and improving the professional knowledge”
Click here to read the article titled, “Faceless assessments and appeals - A shift from People-dependent to Process-dependent Governance”
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Key Takeaways from Handpicked Rulings
1) SC: Amount mentioned in a letter from a bank suggesting assessee to get a draft re-validated cannot be treated as assessee’s unexplained income - SC dismisses Revenue’s appeal against HC order; HC holds that mere letter from a bank suggesting assessee to get a draft re-validated would not establish a relation between the payable amount and the assessee, particularly when the draft was in favour of a limited Company; Notes that a search was conducted at the premises of a third party from where, bank drafts were recovered one of which was drawn in favour of assessee and one in favour of....... Click here to read and download SC order
2) HC cannot assume the role of an appellate authority defined under the Black Money Act under its writ jurisdiction – HC dismisses assessee’s writ petition challenging notice of penalty under the Black Money Act for failure to furnish the return of income and information, observes that the procedure for assessment has been prescribed under the Act and the remedy of appeal before the Commissioner of Appeal and the Tribunal was also provided; On behalf of Assessee, it was submitted that he was a non-resident and after his retirement returned to India and filed his income tax return for the AY 2016-17; In the meanwhile, Parliament introduced the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015; The assessee was under the bona fide belief that disclosure under Schedule FA was to be made only from the assessment year 2017-18........Click here to read and download HC Judgment
3) Assessing Officer should rectify Taxpayers’ mistake when it is brought to their notice and when they are satisfied with the genuineness of the claim – ITAT dismisses Revenue’s appeal, upholds CIT(A) direction to AO to compute the tax in accordance with provisions of section 115JB by reducing the amount of income to which section 10 applies, if such amount is credited to the profit and loss account; Notes that assessee computed the book profits while crediting the sale consideration of agricultural land to the profit and loss account and offered the same to tax which was a mistake..........Click here to read and download ITAT Order
Note: Delhi HC in [TS-6377-HC-2016(DELHI)-O] held that CIT u/s 264-revisionary powers can rectify taxpayer's mistakes resulting in over-assessment. HC held that there is nothing in s. 264, which places any restriction on the Commissioner's revisional power to give relief to the assessee in a case where the assessee detracts mistakes because of which he was over-assessed after the assessment was completed. Once it is found that there was a mistake in making an assessment, the Commissioner had power to correct it under s. 264(1).
4) One deeming provision cannot be extended by importing another deeming provision, rejects invoking Sec 50C on land contributed by partner to firm as capital contribution - ITAT upholds the order passed by CIT(A) who referred to the order of the ITAT in assessee's own case for the AY 2012-13 wherein ITAT rejected AO’s invocation of deeming fiction u/s. 50C in computing capital gains on land introduced into an LLP as a capital contribution during AY 2012-13; Assessee (a private limited company and a partner in LLP) computed capital gains on land transferred by taking the amount recorded in the books of the LLP as full value of consideration u/s 45(3), however, Revenue invoked Sec. 50C and recomputed capital gains by adopting higher fair market value as determined by the stamp duty authority at the time of registration ........ Click here to read and download ITAT Order
5) Provisions of sec 2(47) r.w.s 53A of the Transfer of properties Act, 1882 are not applicable to transfer of development rights held by the Assessee as business asset – ITAT upholds the order passed by CIT(A), holds that the term transfer as defined in Sec.2(47)(v) applicable only in case of capital assets held by the assessee; Notes that assessee was engaged as civil contractor and the income earned from the stated project was assessed as Business Income and the development rights were held as business assets; Further, on year of taxability of consideration received, notes that from the terms of the Joint Venture Agreement that only part income accrued .........Click here to read and download ITAT Order
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About Taxsutra Database!
“Taxsutra Database”, a true Income-tax research tool, is an archive of over109100+ 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:
· Comprehensive coverage of all latest cases powered by an advanced search engine to provide a seamless user experience;
· Effective search results supported by active filters around Court Level, Location, Case Numbers and Citation;
· Enhanced search feature, using the Unique Bulls Eye Application, by including "Exact words", "Any of these", "none of these" options.
· Judicial “forward & backward reference”
The Taxsutra Database comes at a very special Annual Subscription price of 4200+ GST AND includes an annual license to the Taxsutra Library.
On Aug 13, the Government launched a transparent platform for faceless assessment, faceless appeals and Citizens Charter. In this backdrop, author CA Sachin Kumar BP (Partner, Manohar Chowdhry & Associates, Chartered Accountants) discusses the niceties and nuances of the new scheme and states that faceless assessment scheme attempts to overcome the lacunae existing in the current structure of the Income tax department - functional specialisation and impersonality. The author opines that the scheme “intends to achieve it by eliminating the interface between the Assessing Officer and the taxpayer to the extent technologically feasible and by optimising utilisation of the resources through economies of scale and functional specialization.”. Encouraging the tax professionals to embrace this change, the author signs off suggesting that “Let us face the ever-changing and ever-growing challenges in the profession by constantly and continuously updating and improving the professional knowledge”
