Reassessment to tax so called accommodation entries not justified if reasons didn't purport assessee's failure to disclose
IT : Where notice under section 148 was issued beyond period of four years and reasons recorded for reopening assessment were that assessee had received sum from certain companies, which were in nature of accommodation entries
■■■
[2013] 33 taxmann.com 86 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax
v.
Viniyas Finance & Investment (P.) Ltd.*
BADAR DURREZ AHMED AND R.V. EASWAR, JJ.
IT Appeal NO. 271 OF 2012†
FEBRUARY 11, 2013
Section 147, read with section 68, of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts [To tax cash credits] - Assessment year 2002-03 - A notice under section 148 was issued for reopening of assessment beyond period of four years - Purported reasons to believe that income had escaped assessment were that a special information had been received from Director (Investigation) that assessee-company had received a sum from certain companies - Entries were in nature of accommodation entries and in reality it was assessee's own unaccounted money which had been shown in books of account as a receipt from aforesaid companies - Whether there was no mention in purported reasons that assessee had not made a full and true disclosure of material facts necessary for assessment; on the contrary purported reasons indicated that amount mentioned therein had been shown in books of account as receipt from companies mentioned therein - Held, yes - Whether, therefore, issuance of notice under section 148 was bad in law and so, too, all proceedings pursuant thereto - Held, yes [Paras 7 and 8] [In favour of assessee]
FACTS
Facts
| ■ | A notice under section 148 was issued by the Assessing Officer for reopening of the assessment beyond the period of four years. | |
| ■ | The case of the assessee was that there was no mention of any failure to disclose the material facts in the reasons which had been recorded. | |
| ■ | However, the Assessing Officer went ahead with the reassessment and completed the assessment making addition of Rs. 77 lakhs. | |
| ■ | The Commissioner (Appeals) held that reopening of the assessment was valid. However, on merits he deleted the entire addition. | |
| ■ | The Tribunal held that the issuance of notice under section 148 to be bad on account of the fact that there was no failure to disclose fully and truly all material facts for the purposes of assessment on part of the assessee. |
Issue involved
| ■ | Whether notice under section 148 issued beyond period of four years was valid? |
HELD
| ■ | On going through the purported reasons, it is found that there is no mention of the assessee not having made a full and true disclosure of the material facts necessary for assessment. On the contrary the purported reasons indicate that the amounts mentioned therein had been shown in the books of account as receipts from the companies mentioned therein. | |
| ■ | Also, the list of companies from which amounts have been allegedly received, the name of the assessee has been shown. This means that the assessee received the money from itself, which can hardly be an allegation in this case. [Para 7] | |
| ■ | For the foregoing reasons, the Tribunal has approached the matter in the correct perspective and has held the issuance of the notice under section 148 to be bad in law and so, too, all the proceedings pursuant thereto. | |
| ■ | There is no reason to interfere with the impugned order. [Para 8] |
CASES REFERRED TO
Wel Inter Trade (P.) Ltd. v. ITO[2009] 308 ITR 22/178 Taxman 27 (Delhi) (para 4) and Haryana Acrylic Mfg. Co. v. CIT[2009] 308 ITR 38/175 Taxman 262 (Delhi) (para 4).
Karan Khanna and Ms. Asmita Kumar for the Petitioner. S. Krishnan for the Respondent.
JUDGMENT
Badar Durrez Ahmed, J. - This appeal under Section 260A of the Income Tax Act, 1961 has been filed by the Revenue being aggrieved by the order dated 18.11.2011 in ITA No.4652/DEL/2009 pertaining to the assessment year 2002-03. These proceedings were initiated on the basis of a notice under Section 148 of the said Act issued by the Assessing Officer to the respondent-assessee for re-opening of the assessment pertaining to the said assessment year 2002-03. The said notice was issued on 30.07.2007 beyond the period of four years and, therefore, the respondent-assessee had raised the issue as to whether the Assessing Officer had jurisdiction at all to issue the said notice inasmuch as the provisions of Proviso to Section 147 would become applicable. One of the pre-conditions for invoking Proviso is that there must be failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment. It was the case of the respondent-assessee that this pre-condition had not been satisfied and, in fact, there was no mention of any failure to disclose the material facts in the reasons which have been recorded. However, the Assessing Officer went ahead with the re-assessment and completed the same on 30.12.2008 whereby he made an addition of Rs. 77 lakhs on account of said amount having allegedly escaped assessment in the first round when the assessment was originally framed under Section 143(3) of the said Act on 22.12.2004.
2. The respondent-assessee was aggrieved by the said addition, and, therefore, filed an appeal before the Commissioner of Income Tax (Appeals). The appeal was preferred both on the question of jurisdiction as well as on merits. Insofar as the plea of jurisdiction taken by the respondent-assessee was concerned, the Commissioner of Income-Tax (appeals) did not agree with the submissions of the respondent-assessee and held that re-opening of the assessment was valid under Section 147 of the said Act. However, on merits the Commissioner of Income Tax (Appeals) held in favour of the respondent-assessment and deleted the entire amount of Rs. 77 lakhs.
3. The Revenue, being aggrieved by the decision on merits by the Commissioner of Income Tax (Appeals) preferred the said appeal ITA No.4652 (Del) of 2009 before the Tribunal on the question of deletion of the addition of Rs. 77 lakhs. The respondent-assessee preferred cross-objection with regard to the jurisdictional issue. The cross-objection was numbered as COA 29/Del/2010. The Tribunal has disposed of the said appeal and the cross-objection by the common impugned order dated 18.11.2011. The Tribunal accepted the cross-objection of the respondent-assessee on the point of jurisdiction and held the issuance of notice under Section 148 of the said Act to be bad on account of the fact that there was no failure to disclose fully and truly all material facts for the purposes of assessment on the part of the respondent-assessee. Insofar as the question of merits was concerned, the Tribunal did not examine the same inasmuch as it had held the re-opening itself to be bad.
4. On going through the decision of the Tribunal we find that the Tribunal was impressed by the fact that in the reasons there should have been recorded that there was failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment. The Tribunal followed the decisions of this Court in Wel Inter Trade (P.) Ltd. v. ITO[2009] 308 ITR 22/178 Taxman 27 and Haryana Acrylic Mfg. Co. v. CIT[2009] 308 ITR 38/175 Taxman 262 wherein this Court held that in situations where the reasons did not even contain and allegations that the escapement of the income had been occasioned by failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, the assessing officer would be barred from re-opening of the assessment already done at an earlier stage. In Wel Inter Trade (P.) Ltd. (supra) this Court has observed as under:-
"A plain reading of the said proviso makes it more than clear that where the provisions of section 147 are being invoked after the period of four years from the end of the relevant assessment year, in addition to the Assessing Officer having reason to believe that any income chargeable to tax has escaped assessment, it must also be established as a fact that such escapement of assessment has been occasioned by either the assessee falling to make a return under section 139 etc., or by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for that assessment year. In the present case, the question of making of a return is not in issue and the only question is with regard to the second portion of the proviso, which relates to failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Insofar as this pre-condition is concerned, there is not a whisper of it in the reasons recorded by the Assessing Officer. In fact, as indicated above, the Assessing Officer could not have made this a ground because the Assessing Officer had required the petitioner to furnish details with regard to loss occasioned by foreign exchange fluctuation which the petitioner did not by virtue of the reply dated 5.2.2002. Since the petitioner had fully and truly disclosed all the material facts necessary for the assessment, the pre-condition for invoking the proviso to section 147 of the said Act had not been satisfied.
10. In this connection, it may be relevant to note one decision, although there are several others. The said decision is that of the Punjab and Haryana High Court in the case of Duli Chand Singhania v. Asstt. CIT [2004] 264 ITR 192. In the said decision, the High Court of Punjab and Haryana was faced with a similar situation. The court noted that there was not even a whisper of an allegation that the escapement in income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The court observed that absence of this find, which is the sine qua non for assuming jurisdiction under section 147 of the Act in a case falling under the proviso thereto, makes the action taken by the Assessing Officer wholly without jurisdiction. We agree with these observations of the Punjab and Haryana High Court and are of the view that in the present case also, the Assessing Officer has acted wholly without jurisdiction. The invocation of section 147, the issuance of the notice under section 148 and the subsequent order on the objections are all without jurisdiction. The impugned notice as well as the proceedings pursuant thereto are quashed...."
5. We have considered these submissions and we are inclined to agree with the learned counsel for the petitioner. The proviso to section 147 reads as under:
"Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessment to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for the assessment year."
6. In the present case the purported reasons to believe that income had escaped assessment were as under:-
"Reasons of the belief that income has escaped Assessment.
In this case the assessment for the asstt. Year 2002-03 was made u/s 14(3) on 22.12.2004. A special information has been received from Director of Income Tax (investigation)- I, New Delhi vide letter dated 05.02.2007 that the assessee company has received a sum of Rs. 77,00,000/- from the companies as detailed below:-
| S. No. | Name of the companies | Amount | Instrument No. & Dt. | Name & Branch of Bank | |
| 1. | Rabik Exports Ltd. | Rs. 400000 | 2258 24.11.01 | Ratnakar Bank, K.B. | |
| 2. | -do- | Rs. 300000 | 92420 21.02.02 | Corpn. Bank, Pas.V. | |
| 3. | Mestrol Mktg. & Adg. (P) Ltd. | Rs. 500000 | 2156 28.11.01 | Ratnakar Bank, K.B. | |
| 4. | -do- | Rs. 500000 | 2163 14.12.01 | -do- | |
| 5. | Vin Fin & Investment | Rs.50000 | 841908 07.01.02 | KVB, Karol Bagh | |
| 6. | Fair "N" Square Exports (P) Ltd. | Rs.200000 | 816168 08.01.02 | Vijay Bank, R. Nagar | |
| 7. | Pololeasing & Fin. (P) Ltd. | Rs. 600000 | 162529 18.12.01 | SB Mysore, KB | |
| 8. | -do- | Rs. 350000 | 812701 20.12.01 | Vijay Bank, R. Nagar | |
| 9. | -do- | Rs.500000 | 812722 8.01.02 | -do- | |
| 10. | -do- | Rs. 500000 | 812730 18.01.02 | -do- | |
| 11. | -do- | Rs. 300000 | 812723 26.02.02 | -do- | |
| 12. | Satwant Singh Sodhi Const.(P) Ltd. | Rs. 100000 | 816140 18.01.02 | -do- | |
| 13. | -do- | Rs. 300000 | 816144 01.02.02 | -do- | |
| 14. | -do- | Rs. 600000 | 816143 06.02.02 | -do- | |
| 15. | -do- | Rs. 500000 | 826823 22.03.02 | -do- | |
| 16. | M.V. Mktg. (P) Ltd. | Rs. 300000 | 816086 01.03.02 | -do- | |
| 17. | Ethnic Creation (P) Ltd. | Rs. 650000 | 816235 08.01.02 | -do- | |
| 18. | -do- | Rs. 300000 | 816238 08.01.02 | -do- | |
| 19. | SGC Publishing (P) Ltd. | Rs. 150000 | 162524 08.01.02 | State Bank, Mysore | |
| 20. | Harpal Associates (P) Ltd. | Rs. 300000 | 803279 20.12.01 | Vijay Bank, R. Nagar | |
| 21. | Arun Finvest (P) Ltd. | Rs. 300000 | 811672 18.01.02 | -do- | |
| Rs. 7700000 |
According to the special information received, the entries are in the nature of accommodation entries and in the reality it is the assessee's own unaccounted money which has been shown in the books of accounts as a receipt from aforesaid companies.
In view of the above, I have reason to believe that income to the extent of Rs.77,00,000/- has escaped assessment."
7. On going through the purported reasons we find that there is no mention of the respondent-assessee not having made a full and true disclosure of the material facts necessary for assessment. On the contrary the purported reasons indicate that the amounts mentioned therein had been shown in the books of accounts as receipts from the companies mentioned therein. We also note that at serial No.5 of the list of companies from which amounts have been allegedly received, the name of the assessee has been shown. This means that the assessee received the received money from itself, which can hardly be an allegation in this case.
8. For the foregoing reasons we feel that the Tribunal has approached the matter in the correct perspective and has held the issuance of the notice under Section 148 dated 30.7.2007 to be bad in law and so, too, all the proceedings pursuant thereto. There is no reason for us to interfere with the impugned order inasmuch as no substantial question of law arises for our consideration.
9. The appeal is dismissed.
Lata Tax amendments to file Income-Tax return for AY 2013-14- CA GAURAV GARG
It is well known fact that tax payers are now required to file their Income-tax Return for the Financial Year 2012-13 relevant to the Assessment Year 2013-14. These Income-tax Returns in most cases have to be filed by 31st July, 2013. However, for the Corporate Sector as well as for persons who are having the requirement of tax audit the last date of filing Income-tax Return happens to be 30th September 2013.
The Central Board of Direct Taxes recently has amended certain provisions of the Income-tax Rules concerning filing of the Income-tax Return. Some of the points mentioned in this new amendment are really very very important for practical filing of the Income-tax Return by the tax payers for the Assessment Year 2013-14. Hence, in this article an attempt is being made to highlight all those important points which are required to be kept in mind while filing the Income-tax Return for the Assessment Year 2013-14. The Income-tax (3rd Amendment) Rules, 2013 which have been issued vide Notification No. 34/2013 dated 1.5.2013 provides for amendments in Rule 12 of Income-tax Rules, 1962 and also through these rules certain Income-tax Return Forms have been substituted. The substituted Return Forms are SAHAJ ITR 1, ITR 2, ITR3, SUGAM ITR 4S, ITR 4 and ITR V. Please use the new Income tax Return forms while filing Income-tax Return for the A.Y. 2013-2014.
The following are some of the important amendments which have been made in the Income-tax Rules with reference to filing of Income-tax Return for the Assessment Year 2013-2014:-
The following are some of the important amendments which have been made in the Income-tax Rules with reference to filing of Income-tax Return for the Assessment Year 2013-2014:-
1. Until last year the Income-tax Return in Form No. SAHAJ-ITR1 was permitted to be filled up by all individuals having salary income as also income from house property and income from other sources except income from lottery or from horse races. However, as a result of the new amendment the individual if he has got any loss under the head Income from Other Sources, then such person will not be able to file Income-tax Return in Form No. SAHAJ (ITR1). It is specifically mentioned in the new amendment that persons taking advantage of filing Income-tax Return in the SAHAJ Form should not have any loss under the head Income from Other Sources.
2. The new amendment makes it very clear that the provisions relating to filing of Income-tax Return by the individuals in Form SAHAJ (ITR1) shall not be applicable to a person who is resident, other than not ordinarily resident in India specially if such person has assets (including financial interest in any entity) located outside India or such person has signing authority in any account located outside India.
3. The SAHAJ Income-tax Return form also cannot be used by an individual claiming any double taxation tax relief under sections 90 or 90 A or 91 of the Income-tax Act, 1961.
4. It is provided in the new amendment that Income-tax Return for the A.Y. 2013-2014 also cannot be filed in form No. SAHAJ by all individuals having income not chargeable to tax exceeding Rs. 5,000/-.
5. It is well known fact that tax payers are not required to enclose any papers or documents with their Income-tax Return. However, the new amendment provides that where the assessee is required to furnish a report of Audit as per section 115AB or 92E or 115JB of the Income-tax Act, 1961, then such audit report shall be furnished electronically with the Income-tax Return.
6. Last year individuals and Hindu Undivided Families having total income in excess of Rs. 10 lakhs were required to furnish the Income-tax Return electronically under Digital Signature or transmitting the data in the Return electronically and thereafter submitting the verification of the Return in Form ITR V. Now as a result of the amendment not merely individuals or Hindu Undivided Families but all persons other than companies and persons filing Form No. 7 (like Educational Institutions, Trusts etc.) if their income exceeds Rs. 5 lakhs would be required to furnish the Return for the Assessment Year 2013-14 electronically under Digital Signature or transmitting the data in the Return electronically and thereafter submitting ITR V. This is really very very important new amendment whereby it is now compulsory for persons having income in excess of Rs. 5 lakhs for the Assessment Year 2013-14 to file their Income-tax Return in the Electronic Form. However, the charitable trusts and educational institutions etc. who are required to file their Income-tax Return in Form No 7 will not be compulsorily required to file the Return electronically irrespective of their income.
7. All those tax payers who are claiming relief of tax in terms of section 90 or 90A or 91 of the Income-tax Act and are filing their Income-tax Return for the AY 2013-14 and subsequent years will now be required to furnish their Income-tax Return electronically under Digital Signature or transmitting the data in the Return electronically and thereafter submitting the verification of the Return in Form ITR V. It may be clarified here that the impact of this new amendment will be with reference to all such persons who are taking benefit of relief in respect of income-tax paid or deducted in foreign country or specified territories. This means all those tax payers who are taking advantage of Double Taxation Avoidance Agreements or any other agreements which have been executed by the Central Government with specified associations for double taxation relief as well as persons who are taking advantage of Double Taxation Relief with countries where there is no agreement, all such persons will now be required to file their Income-tax Return electronically under Digital Signature and they can also submit the Return electronically and thereafter submit the verification of the Return in Form ITR V.
8. Tax payers are aware that since last year Form No. SUGAM (ITR 4S) was provided for filing Income-tax Return by the persons who are taking advantage of computing their income in terms of section 44AD or section 44AE of the Income-tax Act for computation of their business income based on a percentage of the profit. It may be noted that this return form be used only when the turnover of the business is less than Rs. 1 crore. The new amendment to Rule 12 of Income-tax Rules now provides that the provisions relating to filing of Income-tax Return in Form SUGAM (ITR 4S) will not apply to a person who is a resident, other than not ordinary resident in India and has any assets (including financial interest in any entity) located outside India or has a signing authority in any account located outside India. Likewise, the SUGAM (ITR 4 S) cannot be used by individual claiming Double Taxation Relief. Finally, the SUGAM (ITR 4 S) cannot be filed by persons having income not chargeable to tax exceeding Rs. 5,000 and such persons should file return in Form No. 4.
9. The most important amendment with reference to filing Income-tax Return is with reference to a new "Schedule AL" which is introduced in ITR 3 & ITR 4. This schedule contains details of Assets & liabilities of an individual or HUF. This schedule is to be filled up when the income of the individual or HUF exceeds Rs. 25 lakhs.
Conclusion: The tax payers in particular who are having income in excess of Rs. 5 lakhs for the Assessment Year 2013-14 in particular to carefully understand the new provisions relating to filing of the Income-tax Return Form whereby it has been now compulsory for them to file their Income-tax Return electronically. Likewise persons who are having tax audit should also not forget to submit the audit report with the Income-tax Return electronically. The Income tax Return forms which are required to be filled in for the AY 2013-14 are basically almost at par with the Income-tax Return Form as was being used in the previous years. All assets abroad and all incomes abroad are required to be mentioned in the Income-tax Return.
It may be noted that the impact of amendments in Rule 12 of the Income-tax Act would now mean that if an individual is having exempted income in excess of Rs. 5,000, in that situation such individual will not be able to file the Income-tax Return SAHAJ (ITR 1). For example let us say a salaried employee has got income from salary income and some bank interest income. But if he has got dividend income of Rs. 10,000, in that situation he will not be able to file the Income-tax Return in Form SAHAJ (ITR1) because the new amendment specifically mentions that the Return Form SAHAJ cannot be used by an individual having income not chargeable to tax exceeding Rs. 5,000. Such persons have to file the Return in Form No. 2. Similarly an individual or a Hindu Undivided Family carrying on business having turnover less than Rs. 1 crore and normally required to file the Return in Form SUGAM (ITR4S) will not be able to file the Return in the said SUGAM Form for the AY 2013-14 if he were to have exempted income say like dividend, interest income or income from Mutual Fund or income from Tax Free Bond exceeding the sum of Rs. 5,000. Hence, all individuals and Hindu Undivided Families in particular carrying on business and computing income on presumptive basis and also having income not chargeable to tax exceeding the sum of Rs. 5,000, cannot use the Income-tax Return Form SUGAM and will, therefore, be required to file the Return in Form No. 4. Persons filing ITR 3 & ITR 4 and having income in excess of Rs. 25 lakhs should carefully fill up "Schedule AL" to give details of assets& liabilities.
Please take care of the above mentioned important new amendments to the Income-tax Rules relating to filing of Income-tax Return and thereafter file your Income-tax Return correctly in the correct applicable form depending upon your facts and circumstances and also do not forget to file the Income-tax Return in the specific mode which is required in terms of the provisions contained in the Income-tax Law.
Capital gain invested within extended period for filing of return is also eligible for Sec. 54F deductions
IT : Where assessee paid substantial amount of sale consideration of a residential house for purchase of another residential property within extended period of limitation of filing of return under section 139, his claim for deduction under section 54F was to be allowed
■■■
[2013] 33 taxmann.com 38 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Commissioner of Income-tax, Rohtak
v.
Jagtar Singh Chawla*
HEMANT GUPTA AND Ms. Ritu Bahri, JJ.
IT Appeal No. 71 of 2012 (O&M)†
MARCH 20, 2013
Section 54F, read with section 139, of the Income-tax Act, 1961 - Capital gains - Exemption of, in case of investment in residential house [Purchase of property] - Assessment year 2007-08 - Assessee sold his agricultural land and residential house vide sale deed dated 20-6-2006 - On same date, assessee claimed to have written a letter to Bank to deposit said amount in capital gain account, - However, amount earned by assessee was deposited in a 'Flexi General Account', which was saving as well as fixed deposit account - Subsequently, assessee purchased a residential house from sale proceed so received - Revenue authorities rejected assessee's claim for deduction under section 54F on ground that assessee failed to deposit sale proceeds of capital asset in capital gain account in terms of section 54F(4) within period of one year of sale or acquire a new asset within one year i.e., in terms of section 139(1) - Whether since assessee had proved payment of substantial amount of sale consideration for purchase of a residential property on or before 31-3-2008, that is within extended period of limitation of filing of return, he was not liable to pay any capital gain tax - Held, yes [Paras 12 and 13] [In favour of assessee]
CASES REFERRED TO
CIT v. Rajesh Kumar Jalan [2006] 286 ITR 274/157 Taxman 398 (Gau.) (para 9) and Fathima Bai v. ITO [IT Appeal No. 435 of 2004, dated 17-10-2008] (para 10).
Inderpreet Singh for the Appellant.
ORDER
Hemant Gupta, J. - The Revenue is in appeal under Section 260A of the Income Tax Act, 1961 (for short 'the Act') against an order dated 30.6.2011 passed by the Income Tax Appellate Tribunal, Delhi Bench 'D' New Delhi (for short 'the Tribunal') in ITA No. 4923/Del/2010 for the assessment year 2007-08.
2. The Revenue has sought the following substantial question of law:-
"Whether on the facts and circumstances of the case, the Hon'ble ITAT, New Delhi is justified in law in reversing the finding of CIT(A) in confirming the addition of Rs.76,85,829/- made by the Assessing Officer by disallowing the claim of exemption u/s 54F of the I.T. Act as the assessee failed to deposit the unutilized consideration of capital gains in the Capital Gains Accounts Scheme as per the limit prescribed under the Act?
3. As per facts on record, the assessee sold his agricultural land and residential house at Karnal for Rs.2,16,00,000/- and Rs.8,25,000/- respectively, vide sale deed dated 20.6.2006. On the same date, the assessee claims to have written a letter to the Bank to deposit the said amount in the capital gain account, but it appears that the said amount was not deposited in the capital gain account. However, the same was deposited in a "Flexi General Account", which is a saving as well as fixed deposit account. The assessee purchased a residential house from the sale proceeds so received.
4. The Revenue disallowed the claim of the assessee under Section 54F of the Act and added a sum of Rs.76,85,829/- under the head 'long term capital gains', vide order dated 24.12.2009 (Annexure A-1). The said order of the Assessing Officer was upheld by the Commissioner of Income Tax (Appeals) Rohtak, vide its order dated 20.9.2010 (Annexure A-II). However, in further Appeal, the Tribunal vide its order dated 30.06.2011 (Annexure A-III) set aside the order of the Commissioner of Income Tax (Appeals) Rohtak, on the ground that the assessee has purchased the residential house within the period prescribed under Section 139 of the Act and thus, the addition is not sustainable.
5. Feeling aggrieved against the order of the Tribunal, the Revenue preferred the present appeal.
6. Learned counsel for the appellant has vehemently contended that the assessee was required to deposit the sale proceeds of capital asset in the capital gain account in terms of Sections 54F(4) of the Act, within the period of one year of the sale or was required to acquire a new asset within one year i.e. in terms of Section 139(1) of the Act. Since, the assessee has not exercised any of the two options, the order of the Tribunal is not sustainable whereas the orders of the Assessing Officer as well as Commissioner of Income Tax (Appeals) Rohtak are legal.
7. Before we proceed further, the relevant provisions of the Act i.e. sub-section (4) of Section 54F and Section 139(1) & (4) of the Act, are required to be reproduced. The same are as under:-
| "54F** | ** | ** |
(4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under Section 139, shall be deposited by him before furnishing such return such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of Section 139 in an account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purpose of sub-section (1), the amount, if any, already utilized by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset.
| ** | ** | ** |
139. (1) Every person -
| (a) | being a company (or a firm); or | |
| (b) | being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to the income tax, shall on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. |
| ** | ** | ** |
(4) Any person who has not furnished a return within the time allowed to him under sub-section(1), or within the time allowed under a notice issued under sub section (1) of Section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year, whichever is earlier."
8. The provisions of Section 54F(4) of the Act are pari-materia with Section 54(2) of the Act. Section 54 deals with the profit on sale of a residential house, whereas Section 54F deals with the transfer of any long term capital assets not being a residential house.
9. A Division Bench of the Gauhati High Court in a case reported as CIT v. Rajesh Kumar Jalan [2006] 286 ITR 274/157 Taxman 398, held that only Section 139 of the Act is mentioned in Section 54(2) of the Act in the context that the unutilized portion of the capital gain on the sale of property used for residence should be deposited before the date of furnishing the return of the Income Tax under Section 139 of the Act and that it would include extended period to file return in terms of Sub Section 4 of Section 139 of the Act. It was held as under:-
"From a plain reading of sub-section (2) of Section 54 of the Income-tax Act, 1961, it is clear that only section 139 of the Income-tax Act, 1961, is mentioned in section 54(2) in the context that the unutilized portion of the capital gain on the sale of property used for residence should be deposited before the date of furnishing the return of the Income-tax under section 139 of the Income-tax Act. Section 139 of the Income-tax Act, 1961, cannot be meant only section 139(1), but it means all sub-sections of section 139 of the Income-tax Act, 1961. Under sub-section (4) of section 139 of the Income-tax Act any person who has not furnished a return within the time allowed to him under sub-section (1) of Section 142 may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year whichever is earlier."
10. The said judgment was relied upon by a Division Bench of the Karnataka High Court in Fathima Bai v. ITO, ITA No.435 of 2004 Decided on 17th October 2008, wherein it was held to the following effect:-
"11. The extended due date under section 139(4) would be 31.3.1990. The assessee did not file the return within the extended due date, but filed the return on 27.2.2000. However, the assessee had utilized the entire capital gains by purchase of a house property within the stipulated period of section 54(2) i.e., before the extended due date for return under section 139. the assessee technically may have defaulted in not filing the return under section 139(4). But, however, utilized the capital gains for purchase of property before the extended due date under section 139(4). The contention of the revenue that the deposit in the scheme should have been made before the initial due date and not the extended due date is an untenable contention."
11. A Division Bench of this Court in which one of us (Hemant Gupta, J.) was a member, had an occasion to consider the provisions of Section 54(2) of the Act, wherein it has been held that sub-section (4) of Section 139 of the Act is in fact a proviso to Section 139(1) of the Act. Therefore, since the assessee has invested the sale proceeds in a residential house within the extended period of limitation, the capital gain is not payable. The judgments in Rajesh Kumar Jalan's case (supra) and Fathima Bai's case (supra) were referred to. It has been held as under:-
"Having heard learned counsel for the parties, we are of the opinion that sub-section (4) of Section 139 of the Act is, in act, a proviso to sub-section (1) of Section 139 of the Act. Section 139 of the Act fixes the different dates for filing the returns for different assesses. In the case of assessee as the respondent, it is 31st day of July, of the Assessment Year in terms of clause (c) of the Explanation 2 to sub-section 1 of Section 139 of the Act, whereas sub-section (4) of Section 139 provides for extension in period of due date in certain circumstances. It reads as under:-
"(4) Any person who has not furnished a return within the time allowed to him under sub-section (1), or within the time allowed under a notice issued under sub-section (1) of Section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier;
Provided that where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year."
A reading of the aforesaid sub-section would show that if a person has not furnished the return of the previous year within the time allowed under sub-section (1) i.e. before 31st day of July of the Assessment Year, the assessee can file return before the expiry of one year from the end of ever relevant Assessment Year."
12. In the present case, the assessee has proved the payment of substantial amount of sale consideration for purchase of a residential property on or before 31.3.2008, that is within extended period of limitation of filing of return. Only a sum of Rs.24 lacs was paid out of total sale consideration of Rs. Two Crores on 23.4.2008, though possession was delivered to the assessee on execution of the power of attorney on 30.3.2008. Since the assessee, has acquired a residential house before the end of the next Financial Year in which sale has taken place, therefore, the assessee is not liable to pay any capital gain. Such is the view taken by the Income Tax Appellate Tribunal.
13. In view of the above, we do not find any merit in the present appeal. Hence, the same is dismissed.
Sunil IT : A representative appearing before ITAT had no right to claim mandamus for restraining an authority constituted under Act (i.e., Members of ITAT) from discharging functions entrusted to them by statute
■■■
[2013] 33 taxmann.com 193 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Yoginder Kumar Sud
v.
President Income Tax Appellate Tribunal
HEMANT GUPTA AND MS. RITU BAHRI, JJ.
C.W.P. No. 9731 of 2013
MAY 8, 2013
Section 252 of the Income-tax Act, 1961, read with article 226, of the Constitution of India - Appellate Tribunal - General - Petitioner, Chartered Accountant was appearing as representative of parties before ITAT - He filed instant petition seeking writ of mardamus against Accountant and Judicial Member of ITAT on ground that he was facing lot of harassment at hands of those members as he had not been able to meet their expectation and illegal demands - However petitioner could not establish details as to when and how demands were raised - Whether not only writ petition was bereft of any material particulars but also petitioner had no right to claim mandamus for restraining an authority constituted under Act from discharging functions entrusted to it by statute - Held, yes [Para 4]
Akshay Bhan for the Petitioner.
ORDER
Hemant Gupta, J. - The petitioner has claimed a writ of mandamus for restraining respondents No.2 and 3, i.e., Judicial and Accountant Members of Income Tax Appellate Tribunal, Amritsar from discharging their functions and directing the President of Income Tax Appellate Tribunal to decide represention dated 18.3.2013 in the time bound manner.
2. The petitioner is a Chartered Accountant and has been appearing before the Income Tax Authorities as well as before various Benches of the Income Tax Appellate Tribunal. The grievance of the petitioner is that the petitioner is facing lot of harrassment at the hands of respondents No.2 and 3, who are Judicial and Accountant Member of the Tribunal at Amritsar as the petitioner has not been able to meet their expectations and illegal demands.
3. It is also pointed out that the Tribunal is delaying the matters of the petitioner or passing unreasoned orders or by totalling ignoring him. It is also pointed out that respondent No.2 was transferred out of Amritsar on a representation submitted by the petitioner but after one year respondent No.2 has been again posted as a Judicial Member of Amritsar Tribunal. The petitioner claims that the Members are totally prejudice against the petitioner on account of his having made a complaint against respondent No.2 to the President.
4. It appears that the present writ petition is to settle the scores which the petitioner might have raised during the course of his conduct as representative of the assessees. The petitioner has asserted that he is not able to meet the expectations and illegal demands raised by the Members but there is no details as to when and how the demands were raised. Not only the writ petition is bereft of any material particulars but also the petitioner has no right to claim mandamus for restraining an authority constituted under the Act from discharging the functions entrusted to it by the Statute. The present writ petition is gross abuse of process of law and, therefore, it is dismissed.
■■
Exemption u/s. 10(23C)(vi) can be claimed without applying for registration u/s. 12A
HIGH COURT OF ALLAHABAD
Commissioner of Income-tax
v.
Jeevan Deep Charitable Trust
IT Appeal No. 471 of 2011
Date of pronouncement – 29.10.2012
ORDER
1. The present appeal has been filed under Section 260-A of the Income-tax Act, 1961, hereinafter referred to as "the Act" against the order dated 08.12.2009 passed by the Income Tax Appellate Tribunal, Allahabad. The Revenue has proposed the following three substantial questions of law said to be arisen out of the order of the Tribunal.
"(1) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in coming to the conclusion that registration granted to the assessee has been cancelled u/s 12-AA(3) of the Act merely on the ground that approval u/s 10(23C) (vi) of the Act had been denied to the assessee by completely overlooking and ignoring the fact that the CIT had cancelled the registration after having satisfied himself that the activities of the assessee society were not charitable in nature?
(2) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the assessee is eligible for continued registration despite the fact that the assessee does not fulfill the requirement of being a charitable institution?
(3) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in not taking into consideration the decisions relied upon by the CIT in his order u/s 12-AA (3) of the Act while cancelling the registration of the assessee society?"
2. Briefly stated that the facts giving rise to the present appeal are as follows:
The respondent-assessee was granted registration under Section 12A of the Act being a charitable institution. It claimed exemption under Section 10(23C)(vi) of the Act on the ground that the income earned by it is relating to educational institution as the institution is solely for the educational purposes. The claim of exemption under Section 10(23C)(vi) of the Act was disallowed by the Chief Commissioner of Income Tax, Varanasi vide order dated 25th February, 2009 on the ground that in the objects of the institution there are certain other objects, which proves that the institution has not solely been established for educational purposes. Relying on the said order proceeding under Section 12AA(3) of the Act was initiated and vide order dated 12th October, 2009, the Commissioner of Income Tax, Varanasi cancelled the registration granted to the respondent-assessee under Section 12A of the Act. Feeling aggrieved by the order dated 12th October, 2009 cancelling the registration granted under Section 12A of the Act, the respondent-assessee preferred an appeal before the Income Tax Appellate Tribunal, Allahabad which was registered as I.T.A. No.252(Alld)09. The Tribunal vide impugned order dated 8th December, 2009 had allowed the appeal and set aside the order of the Commissioner of Income Tax dated 12th October, 2009 and the registration had been restored. The Tribunal had come to the conclusion that the proceeding under Section 10(23C) (vi) of the Act is an independent proceeding and cannot be made the sole ground for cancellation of the registration granted under Section 12A of the Act. It further found that the deduction under Section 11 of the Act has been allowed to the respondent-assessee herein for the Assessment Year 2006-07 and in the assessment order passed for the Assessment Year 2004-05 exemption under Section 11 of the Act was disallowed, which order was reversed in appeal by the Commissioner of Income Tax (Appeal), Varanasi, allowing the deduction under Section 11 of the Act vide order dated 3.10.2007, which order has been accepted by the Revenue as no second appeal was preferred against the said order.
3. We have heard Sri Dhananjay Awasthi, learned Standing Counsel for the Revenue and Sri Kunal Ravi Singh, learned counsel appearing for the respondent-assessee.
4. Sri Awasthi, learned counsel, submitted that as the institution has been established solely for the educational purposes and is a profit earning institution exemption under Section 10(23C) (vi) of the Act having been rightly denied to it as it ceased to be a charitable institution., therefore, the Tribunal has erred in restoring the registration. The submission is wholly misconceived. Admittedly, one of the objects of the trust was for running educational institutions and imparting education. The trust , however, has other objects also, which are reproduced below:
"(i) Development of Scientific Education amongst Indian Children.
(ii) Modern Education with moral duty and character building in accordance with Indian culture as well as development of educational atmosphere.
(iii) To provide as well as arrange commercial and practical education to children.
(iv) Development as well as publicize the Indian culture and arts.
(v) To establish the school and management thereof from Primary education to Intermediate Education.
(vi) To publicize as well as to educate and propagate the Cottage Industries as well as industries based on village amongst the youth so that they may lead their life independently and freely."
5. In our considered opinion, exemption under Section 10(23C)(vi) of the Act can be claimed by an assessee without applying for registration under Section 12A of the Act as it is not required to fulfil the conditions mentioned under Section 11 of the Act while claiming exemption under Section 10(23C) (vi) of the Act. Further in the order passed by the Commissioner of Income Tax, there is no whisper that the assessee has not fulfilled any of the conditions of the Section 11 of the Act for claiming it to be a charitable institution. He had solely relied on the order of the Chief Commissioner of Income Tax passed under Section 10(23C) (vi) of the Act while denying the exemption under the aforesaid sub-section. We are, therefore, of the considered opinion that the Tribunal had rightly restored the registration on the ground that in the Assessment Years 2004-05 and 2006-07 benefit of exemption/deduction under Section 11 of the Act was allowed to the respondent-assessee.
6. In view of the foregoing discussion, we do not find any error in the impugned order passed by the Income Tax Appellant Tribunal, Allahabad. The appeal fails and is dismissed.
Thanks & Regards,
CA AMRESH VASHISHT, FCA, LLB, DISA (ICAI)
Member,ICAI Committee For DIRECT TAXES 2011-12
Member,ICAI Committee Capacity Building of CA Firms 2010-11
1 1 5, Chappel Street, Meerut Cantt, UP, INDIA.
Phone: 0 1 2 1-2 6 6 1 9 4 6. Cell: 9 8 3 7 5 1 5 4 3 2.
Moderator of 25000 CA Group http://in.groups.yahoo.com/group/ICAI_CIRC_MEERUT_CAFOLLOW http://twitter.com/caamresh
__._,_.___
No comments:
Post a Comment