PAN and TAN may now also be obtained online

PAN and TAN may now also be obtained online through   Aadhaar e-Signature based application process of Digital Signatures on the portal of NSDL. PAN/TAN shall be allotted with in one day from completion of valid online application. This is available for Individual applicants. Seeding of Adhar in PAN is aimed at curbing the problem of duplicate PANs [Press Release dated 22-07-2016]

IDS Form 1 amended to provide for revised declaration

CBDT has amended Form-1 to make provision for revised declaration under Income Declaration Scheme [Notification dated 20-07-2016]. Earlier in Circular dated 14-07-2016, it was provided that revised declaration can be filed provided the amount of undisclosed income in revised declaration is not lesser than amount reflected in original declaration

No Capital Gain without incurring cost

Where Whole amount of sale consideration was taxed by the Assessing Officer as capital gains without giving assessee any benefit with regard to cost of acquisition or cost of construction because the assesse could not prove the expenditure.

Held by ITAT that  It can be nobody's case that the assessee had acquired the property without paying any cost. Some value for cost of acquisition has to be given to the assessee. Even in cases of properties acquired through gifts, etc. the cost of acquisition as incurred by the previous owner is given to the assessee.

Nand lal Popli [2016] 71 taxmann.com 246 (Chandigarh - Trib.)]

cash flow statement cannot be considered as keeping the books of account

Keeping or preparing a cash flow statement cannot be considered as keeping the books of account.[Para 15 of Judgement in case of Nand lal Popli [2016] 71 taxmann.com 246 (Chandigarh - Trib.)]

No Addition u/s 69C for actual expenditure lesser than presumptive expenditure

Under Section 44AD, 8% of Income is presumed to be Income of the assesse. Hence automatically 92% shall be presumed to be expenditure of the assesse. Now, if assesse through his cash flow is not able to prove expenditure of 92%, but is able to substantiate much lesser expenditure, whether AO can invoke section 69C saying that source of balance expenditure [92%- Actual Expenditure] is not satisfactorily explained especially when section 44AD does not over ride section 69C.

Held by ITAT Chandigarh in Nand lal Popli [2016] 71 taxmann.com 246 (Chandigarh - Trib.)]

a)    Section 69C can be applied only if assesse has incurred some expenditure and not otherwise

b)    Asking the assessee to prove to the satisfaction of the Assessing Officer, the expenditure to the extent of 92% of gross receipts, would defeat the purpose of presumptive taxation as provided under section 44AD of the Act or other such provision. Since the scheme of presumptive taxation has been formed in order to avoid the long drawn process of assessment in  cases of small traders or in cases of those businesses where the incomes are almost of static quantum of all the businesses,

Addtion u/s 69C can be made only once the case is carved out of glitches of S. 44AD. Hence no addition is sustainable u/s 69C

Department after AIR Transactions without PAN

As per a Press Release dated 21-07-2016, Income Tax department has information about 90 lakh transactions in AIR where PAN is not quoted. These transactions pertain to 2009-10 to 2016-17. Income Tax department has identified 14 lakh transactions out of above.

The Income Tax department shall issue letters to identified persons. Such persons can own or disown such transactions and provide online response to transactions on efiling website. Where no response is received action shall be initiated by the department.

The persons who received such letters can make use of department’s helpline instead of making direct contact with Income Tax Officials.

[Note: Department on 05-07-2016 also had issued a letter regarding NON PAN AIR Information in which commissionrate wise list of 60 lacs was provided.

Signed Hard Copy of digitally signed Excise Invoice can be accepted

Notification No. 18/2015 dated 06-07-2015, authorized assesses to issue Excise invoices using digital signs. But the people who receive such invoice do not have infrastructure  to accept or received digitally signed invoice . So, CBEC vide Circular dated 19-07-2016, has permitted to take print of hard copy of such invoice and hand over after manual signatures. Thus such invoices shall stand authenticated twice.

“Project Insight” to catch hold of tax defaulters

The Income Tax department is engaged in “Project Insight” to catch hold of tax defaulters, by widening tax base and data mining.  Income tax department has signed a pact with L&T Infotech Ltd. For implementation of Project Insight.

New infrastructure is aimed at implementing FATCA [Foreign Account Tax Compliance Act]

Compliance Management CPC  also to be set up to promote voluntary compliance  and to enable resolution of simple compliance related issues in online manner without visiting Income Tax Office.

[Press Release dated 19-07-2016]

Lawyers presumed to Know law, not judges

There is presumption in law that lawyer knows the law but there is no absolute presumption that a judge should know the law. A Judge is only called upon to balance the two sides of an argument presented before him

J. Rajiv Narain Raina in Punjab and Haryana High Court in Nirmal Singh and Others vs. Tarsem Singh and Others [CR No. 3791 of 2013 (O&M) dated 01-05-2014]

Apna Tax Scheme of Punjab Government

Punjab Government in its Budget for 2016-17 presented on 15-03-2016 had promised to launch apna tax scheme. The Purpose is to encourage customers to procure bills from retail vendors which would ensure tax compliance in a systematic, non-intrusive and non-regulatory manner.

Features of the scheme:

1.    App can be downloaded from Google play or pextax.com

2.    Upload the bill details on the app

3.    Chance to win 5 times the value of bill (excluding Vat and Tax free goods). A person can win cash prize up to Rs. 50,000/-

4.    Monthly draw of prized on 15^th of the month for entries from Ist day to last day of the month.

5.    Min number of cash prizes = 10

6.    First draw on 15^th of the August

Issues:

1.       Most of the items being procured by customers from retail vendors are covered under first point taxation and are tax free in the hands of retail vendors being subsequent dealers under First Point taxation Scheme. So, how the objective of the scheme shall be met ?

2.       Whether all the bills uploaded by the customers shall be verified for accuracy by the government.

3.       Shops like Walmart  can not sell in retail ,so, their bills shall remain excluded.

4.       How the government shall determine that goods have been purchased from retail vendor.

5.       Right now, not available on Google play store or pextax.com.

6.       Retail vendors do not enter bill wise detail in their returns, then how shall this scheme work.

Investigation Wing of Income Tax department launches following drive to locate tax evaders in wake of Income Declaration Scheme [ Letter dated 05-07-2016] as under

1.      Non PAN AIR Information to be targeted. In CIT-1, Amritsar there are 6928 cases of Non PAN AIR Information. In CIT-2, Amritsar, there are 8357 cases of Non PAN Air Information. Jammu is much ahead with 32150 cases. Jalandhar 50728 cases. Chandigarh with 2382 cases only.

2.      Functionality to own up non PAN data being developed

3.      Non filers with potential tax liabilities to be targeted.

4.      Penny Stock cases where shares are purchased off the market at little value and sold at high market value to earn exempt long term capital gain on shares

[Note : Recent Court Orders have cancelled the additons made by department for penny stocks like Farah Marker dated 13-06-2016 Indravan Jain HUF  dated 16-06-2016 by ITAT Mumbai, Mukesh Rati Lal Marolia (Bombay High Court) 13-06-2016]

Introduction of a new entry and inclusion of certain services in that entry would pre-suppose that there was no earlier entry covering the said services

Bombay High Court in the case of Indian National Shipowners' Association-v.-Union of India, 2009 (14) STR 289, at paragraph 38 of the judgment, held in the context of the Finance Act, 1994 that introduction of a new entry and inclusion of certain services in that entry would pre-suppose that there was no earlier entry covering the said services

As per Section 19(7) of GST Law, registration is required to be granted with in prescribed period. Further As per section 19(9), if registration is not granted with in stipulated period and also no deficiency is communicated to the dealer, the registration under GST law shall be deemed to have been granted. Comments: This is a welcome provision under GST law. This is just like section 12AA(2) of Income tax law, where after six months from end of month in which application for grant of registration of trust is made, if application is not rejected, the assesse trust is granted deemed registration. Such like provision does not exist in present vat or service tax law. [GST Law Note-4]

Tug of War for Limitation period for penalties not linked to assessment of Income like 271D/271E/271C imposable by Range Heads i.e. Joint Commissioners

Under Section 271D penalty is imposable by Joint Commissioner for failure to comply 269SS i.e. accepting loan or deposit for Rs. 20,000/- or more otherwise than through account payee cheque equal to amount of loan or deposit. Similarly Under Section 271E, there is penalty for repayment of the amount of loan or deposit otherwise than through account payee cheque, where loan or deposit is outstanding for Rs. 20,000 ruprees or more.

CBDT vide letter dated 11-07-2016 has provided three revised format of issuing notices u/s 143(2). 1. Limited Scrutiny 2. Complete Scrutiny 3. Mannual Scrutiny

CBDT vide letter dated 11-07-2016 has provided three revised format of issuing notices u/s 143(2). 1.       Limited Scrutiny 2.       Complete Scrutiny 3.       Mannual Scrutiny In Limited Scrutiny, issues identified for examination to be specified. Notice for Complete scrutiny shall specify that case is selected for complete scrutiny. In case of manual scrutiny, specific parameter for selection of case along with reference to manual instruction no. of compulsory scrutiny guidelines shall be given. Assessee is required to produce evidence in support of his return or if assesse wishes to send no evidence, he may send his communication to AO. If on the basis of response of assesse, any adverse view is contemplated, show cause notice/questionnaire shall be given . In case of Ahemadabad, Bengluru, Chennai, Delhi , Hyderabad , Kolkatta and  Mumbai, it is to be stated in notice that email based assessment is proposed to be made. Email id provided by assesse in return or alternate id provided by the assesse shall be used for the purpose. Assessees not wishing to opt for email based assessment may convey refusal to AO. Subsequent withdrawl from email based assessment is possible only with prior permission of AO. Also in Instruction No. 20/2015 dated 29-12-2015, CBDT had mentioned that AO to provide reasons for scrutiny in cases which have been selected on the parameter(s) of AIR/CIB/26AS data . Further Specific issue based enquiry is to be conducted only in those scrutiny cases which have been selected on the parameter(s) of AIR/CIB/26AS data. In such cases, the Assessing Officer, shall also confine the Questionnaire only to the specific issues pertaining to AIR/CIB/26AS data Regards Ca Vinamar Gupta

Revised Return can be filed even after intimation u/s 143(1) is issued since the same is not considered as an assessment order in the court law though referred to as summary assessment. Since even after the issuance of intimation u/s 143(1), regular/scrutiny assessment can be done without any restriction. There is a case law of Gujarat High court in which the court held that the assessee can file revised return even after intimation is served . S. R. Koshti v. Commissioner of Income-tax [2005] 276 ITR 165 (Guj). The issue is settled to rest by the decision of Supreme Court in the case of ACIT vs Rajesh Javeri Stock Brokers (P) Ltd. 291 ITR 500 in which it was held that intimation although deem to the notice of demand U/s. 156 can not taken as assessment order. Revised return can be filed after intimation u/s 143(1)(a)-AO must amend such intimation on the basis of revised return-Gujarat HC [2011] 333 ITR 0508 Commissioner of Income-tax Versus Himgiri Foods Limited

Crown Consultants (P.) Ltd. v. CIT [2014] 362 ITR 368/224 Taxman 81 (Mag.)/44 taxmann.com 397 (Bombay High Court) has taken a view that where an objection is not taken before the Assessing officer while responding to the reasons in support of a notice seeking reopen an assessment, then it is not open to assessee to raise such objection for the first time before this (High) Court in writ proceedings under Article 226. The exception of course being if the impugned notice is ex-facie without jurisdiction and no determination of facts are required to establish it is without jurisdiction.

During the regular assessment proceedings leading to the assessment order, the eight lenders referred to in the reasons were a subject matter of examination and then assesse provided evidence in the form of loan confirmation to establish its genuineness. However, during search of one person, he admitted to have given entry only. Thus, it is submitted by the assesse that this is a case of change of opinion. High Court held that the exact nature of the transaction is only privy to the parties to the transaction and when one of the parties to the transaction states that what appears is not factually so, then the Assessing Officer certainly has tangible material to form a reasonable belief that income chargeable to tax has escaped assessment. [para 8] Bright Star Syntex (P.) Ltd. [2016] 71 taxmann.com 64 (Bombay)

Supreme Court in Phoolchand Bajranglal v. ITO [1993] 203 ITR 456/69 Taxman 627 - "One of the purposes of Section 147 appears to us to be to ensure that a party cannot get away by willfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn round and say "you accepted my lie, now your hands are tied and you can do nothing."

The Court will certainly interfere in 148 matters where the reason to believe that income has escaped assessment, is a clear case of change of opinion i.e. the same material was subject to consideration in regular assessment proceedings or where the reopening is being done only on suspicion and/or to carry out investigation or where the assessment is sought to be reopened after a period of more than four years from the end of the relevant assessment year and there has been no failure on the part of the assessee to truly and fully disclose all material facts necessary for assessment [para 6] Bright Star Syntex (P.) Ltd. [2016] 71 taxmann.com 64 (Bombay)