AHMEDABAD, JUNE 27, 2014: THE issue before the Bench is - Whether non-disclosure of income by not filing return of income on which the TDS is deducted, can be treated as "undisclosed income" within the meaning thereof in Section 158B(b) under Chapter XIV-B. And the answer goes against the assessee.
Facts of the case
The assessee, an individual, is a salaried employee working as Works Manager with M/s. Khemani Distillery Private Limited, Daman from June, 1995 onwards. However, from 01.04.1987 to 31.03.1995 included in the block period the assessee was employed with Zandu Pharmaceutical Works Limited, Mumbai as Chief Engineer. The assessee had never filed his returns of income although he had income liable to tax during the block period. There was a search and seizure operation in the case of entire Khemani Group on 20.08.1997 and consequently the search was also conducted at the assessee's residence on 20.08.1997. In the course of search, cash of Rs.84,500/and jewelery of Rs.2,29,804/- were found, out of which, cash of Rs.50,000/- was seized. In the course of search, the assessee was also found to have investment in fixed deposit and other securities regarding to Rs.12,25,400/-. After search, the assessee consulted CA and he was advised that as the assessee had made the investment in FDRs etc. from his salary income and interest income, which can be considered as known sources, the salary and income from other sources can not be treated as undisclosed income. Accordingly, the assessee filed regular return of income of AY 1996-97 and 1997-98 u/s.139(4) showing salary and income from other sources considering it as normal income. Then the AO, issued a notice u/s 158BC which was served on the assessee on 09.10.1997. In response to the said notice, the assessee filed the return showing undisclosed income at Rs.13,64,954/- for the block period and paid full tax at the rate of 60% on this income. The assessment was however, framed by AO at a total income of Rs.18,33,771/- making certain other additions to the income of salary and interest/dividend disclosed by the assessee in the return of undisclosed income. AO also treated the returns of income filed u/s.139(4) of AYs 1996-97 and 1997-98 as invalid as he assessed the whole income of these assessment years in the assessment of undisclosed income. The AO however allowed deduction under Chapter VIA rebate u/S. 88 and TDS from salary and self assessment tax paid u/s.140A for AYs 1996-97 and 1997-98 against the assessment of undisclosed income.
On appeal before CIT(A), assessee did not raise the ground relating to the assessment of salary income earned by the assessee which was declared in the return of undisclosed income by way of abundant caution the assessee was of the opinion that the salary income cannot be treated as undisclosed income because TDS was deducted by the employer from the salary and form No.24 was filed by the employer with the Department as required u/s 206. The assessee raised certain other grounds with regard to the addition made to the undisclosed income on account of seized cash as well as addition on account of alleged unexplained investment in FDRs as well as alleged low household expenses which were dismissed by the CIT(A).
On further appeal, Tribunal had allowed the said appeal by holding and directing that the income earned by way of salary by the assessee cannot be treated as "undisclosed income" within the meaning thereof in section 158B(b) under Chapter XIV-B of the Act and also reducing the addition on account of unexplained investment of Rs.1,88,884/- to Rs.35,000/-.
Before HC, the Revenue's counsel had submitted that the Tribunal had materially erred in not treating the non-disclosure of the income earned by way of salary by the assessee as "undisclosed income" within the meaning thereof in section 158B(b) under Chapter XIV-B of the Act on the ground that on the aforesaid amount of salary TDS was deducted. It was submitted that as such the aforesaid issue was not res integra in view of the decision of SC in the case of ACIT v. A.R. Enterprises 2013-TIOL-04-SC-IT-LB. In that case SC held that since the tax to be deducted at source was computed on the estimated income of an assessee for the relevant FY, such deduction cannot result into disclosure of the total income for the relevant AY and therefore, mere deduction of TDS, does not amount to disclosure of income, nor does it indicate the intention to disclose income most definitely when the same was not disclosed in the returns filed for the concerned assessment years. It was submitted that therefore non-disclosure of the income received by the assessee by way of salary was required to be treated as "undisclosed income" within the meaning thereof in Section 158B(b) under Chapter XIV-B liable to tax at 60%. It was further submitted that in the present case even after the search and seizure the assessee did not file the return and subsequently filed the return only after initiation of block assessment proceedings and declaring the said income as "undisclosed income". It was submitted that therefore even considering the decision of SC in the case of A.R. Enterprises, non-disclosure of income earned by the assessee by way of salary was required to be treated as undisclosed income. with regard to reduction in the addition on account of unexplained investment of Rs.1,88,884/- to Rs.35,000/-, it was submitted that as such the aforesaid was without any evidence and no reasons had been signed by the Tribunal to reduce the addition on account of unexplained investment of Rs.1,88,884/- to Rs.35,000/-. Therefore, it was requested to allow the present appeal and answer the questions in favour of the revenue.
On the other hand, though served, nobody appeared on behalf of the assessee.
Held that,
++ present tax appeal is of the year 2000 and therefore, this Court is proceeding with hearing of the present tax appeal ex parte. At the outset it is required to be noted that after search and seizure it was found that the asssessee did not disclose the income received by him by way of salary and thereafter the block assessment proceeding was initiated treating the non-disclosure of the said income received by the assessee by way of salary as "undisclosed income". Both, the AO as well as the CIT(A) held against the assessee. However, on an appeal, the Tribunal has held that as on the aforesaid income the TDS was deducted and therefore, it cannot be said that there was a non-disclosure of the income by way of salary;
++ the issue is not res integra in view of the decision of SC in the case of A.R. Enterprises. In this case SC considered the payment of advance tax and tax deducted at source. While dealing with the advance tax, it had observed and held that since the Advance Tax payable by an assessee is an estimate of his "current income" for the relevant financial year, it is not the actual total income, to be disclosed in the return of income. To repeat, the vital distinction being that the "current income" is an estimation or approximation, which may not be accurate or final; whereas the "total income" is the exact income disclosed in a valid return, assessable by the Revenue. The fact that the "current income" is an estimation implies that it is not final and is subject to further adjustments in the form of additions or reductions, as the case may be, and would have to be succeeded by the disclosure of final and total income in a valid return. It will be a misconstruction of the law to construe the undisclosed income for purposes of Chapter XIVB as an "estimate" of the total income, which is assessable and chargeable to tax. Therefore, we are unable to accept that payment of Advance Tax based on "current income" involves the disclosure of "total income", as defined in Section 2(45) of the Act, which has to be stated in the return of income. The same is evidenced in the scheme of Chapter XIVB, in particular. In view of the above, Tribunal has committed a grave error in directing that the income earned by way of salary by the assessee cannot be treated as undisclosed income for levying tax at 60% on the salary income as undisclosed income;
++ in the aforesaid decision in the case of A.R. Enterprises, SC has also considered one another aspect with respect to the intention of the assessee to disclose the income. In the aforesaid decision the SC has observed and held that return was filed only when the block assessment proceedings are initiated by the Assessing Officer declaring the income in the said return. It indicates that there was no intention to disclose the income. In the present case the assessee filed return of income declaring the income received by him by way of salary only after the block assessment proceedings were initiated by the Assessing Officer. Under the circumstances also, the Tribunal has materially erred in not treating the income earned by way of salary by the assessee as "undisclosed income". Under the circumstances, question (a) & (b) are answered in favour of the revenue and against the assessee;
++ so far as the question No.(c) is concerned, by impugned order the Tribunal has reduced the addition made by the AO on account of unexplained investment of Rs.1,88,884/-to Rs.35,000/-. It is required to be noted that at the time of search unexplained investment of Rs.1,88,884/-was found and even after the search the assessee did not file the return of income and declared the same at the time of filing the return after the block assessment proceedings were initiated. Considering the decision of SC in the case of A.R. Enterprises, when the return was filed by the assessee after the block assessment proceedings were initiated by AO as observed by SC in the aforesaid decision, the intention of the assessee is to be presumed that he was not to disclose the income and therefore, the same is required to be treated as undisclosed income within the meaning thereof in section 158B(b) under Chapter XIV-B of the Act. Even as such no specific reasons and/or evidence on record to reduce the addition on account of unexplained investment of Rs.1,88,884/-to Rs.35,000/-. Under the circumstances, the Tribunal has materially erred in reducing the addition on account of unexplained investment of Rs.1,88,884/- to Rs.35,000/-. Under the circumstances, the question No. (c) is also answered in favour of the revenue and against the assessee. In view of the above and for the reasons stated above, present tax appeal succeeds. Question Nos.(a), (b) & (c) are held in favour of the revenue and against the assessee. Consequently, the impugned judgment and award dated 04.07.2000 passed by the Tribunal is hereby quashed and set aside and the order passed by the Assessing Officer confirmed by the CIT(A) is hereby restored. No costs.
(See 2014-TIOL-1018-HC-AHM-IT)
| | |||
| | |
Clarification on holding of shares in a fiduciary capacity by associate company U/s. 2(6) of Companies Act, 2013
General Circular no. 24/2014, Date: 25.06.2014
Subject : Clarification with regard to holding of shares in a fiduciary capacity by associate company under section 2(6) of the Companies Act, 2013.
Sir,
In continuation of the General circular No. 20/2013 dated 27/12/2013, it is clarified that the shares held by a company in another company in a 'fiduciary capacity' shall not be counted for the purpose of determining the relationship of 'associate company' under section 2(6) of the Companies Act, 2013.
- This issues with approval of Competent Authority.
F. N: 01/ 13/2013 -CL-V
Yours faithfully,
(KMS Narayanan)
Asstt. Director
23387263
Has Penalty u/s 271(1)(c) become a Compulsory Consequence of Non filing of Quantum Appeal?
CA Pankaj G. Shah
It has become a normal tendency to subject an Assessee to Penalty u/s 271(1)(c) in all cases where the Assessee refrains to file an appeal, with a hope to end the nightmare which began with selection of case for scrutiny by accepting the general additions in Assessment order. The peace and content that he will not have to face any unintended enhancement from a forum approached for justice in Appeal is not long lasting as then comes the show cause notice for penalty. Penalty is straightaway levied merely because no appeal has been filed against the quantum order is not a new phenomenon in the Department. It is only the judiciary which can check this misuse of power and blind folded practice though after going through the process of long drawn litigation which was sought to be avoided at the first instance by not filing an appeal.Why an Appeal against the quantum order is not filed by the Assessee if he is confident that there is no wrong doing, no concealment, no evasion? This question has been rightly answered by none other than Supreme Court in case of Sir Shadilal Sugar Mills (168 ITR 7051) holding that there may be a hundred and one reasons for no protesting and agreeing to an addition but that does not follow to the conclusion that the amount agreed to be added was concealed income. Indeed, there may be numerous reasons with the tax payer for not approaching the first appellate authority for justice, for example the following:
- To avoid the pains of further litigations, numerous hearings and mental tensions borne in it;
- The risk of enhancement at the first appellate authority on various technical issues;
- Nowadays commonly seen attitude of assessment in Appellate proceedings
- Heavy litigation cost of Representatives
- Withdrawn of appeal at instance of Assessee is the discretion of Appellate authority
Having said that, what is the defense available against the penal weapon of destruction? The Answer is by first bringing awareness in the fraternity on the law that exists in form of judicial pronouncements and further by taking this light of pronouncements in our reply to penalty notices.
First reliance should be placed on the decision of Hon'ble Karnataka High Court in case of CIT v. Manjunatha Cotton & Ginning Factory (2013 35 taxmann.com 250) where the High Court categorically held that
"The imposition of penalty is not automatic, i.e., imposition of penalty even if the tax liability is admitted, is not automatic. Even if the assessee has not challenged the order of assessment levying tax and interest and has paid the same, that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry concluded by authorities which has resulted in payment of such tax or such tax liability came to be admitted, and if not, it would have escaped from tax net as opined by the Assessing Officer in the assessment order. ……… [Para 63]"
……………..The very fact that the assessee agreed to pay tax and did not challenge the assessment order, cannot be construed as mala fide. Therefore, the Tribunal was justified in setting aside the orders passed by the Appellate Authority as well as the Assessing Authority. [Para 64]
This decision squarely addresses to a situation where penalty is sought to be levied merely for not filing an appeal against quantum order. After the decision of Apex Court in Dharmendra Textiles it is presumed by the Department that in every case where addition is made, penalty is a sine-qua-non. Now where appeal is filed before CIT(A) a shield is impressed upon the Assessee by virtue of Section 275 of the Act requiring the penalty to be kept in abeyance till outcome of appeal. However where the protection is not available due to non filing of appeal, we inevitably witness stereo-type penalty orders with reference and reliance by Department on the decision in case of Dharmendra Textiles, without even appreciating that the judgement was not in context of Income tax law and considering the correct interpretation of that judgement by numerous tribunals and High Courts. In such a situation, the aforesaid decision of High Court may come to some rescue to the much harassed Assessee. Some more direct decisions are given hereunder to equip the professionals with legal armor.
In the case of Rai Industrial Power Pvt. Ltd. Vs DCIT (ITA 4862/Del/2013), Delhi Bench of ITAT held that simply because the additions made were not challenged by the Assessee this fact by itself is not a good enough reason to confirm or impose penalty. It also held that there can be many reasons which may prevail on the mind of an Assessee on account of which the Assessee may not challenge the additions in a certain year and the mere fact of accepting the additions ipso facto does not lead to the conclusion that the Assessee has nothing to say.
In context of Section 68 where Cash credits are added, it is presumed to be a fit case for penalty and when there is no appeal by Assessee the case of concealment by the Department is fortified. For Assessee's entangled in similar situations the decision of Hyderabad Tribunal in case of Kalpalatha v. ACIT (66 TAXMAN 111 (HYD.)) may bring some relief. It was categorically held that
"It was, no doubt, true that the assessee did not go in appeal against the aforesaid addition made in the assessment proceedings on the ground that it represented a cash credit which was not proved to be genuine. But the fact remained that the assessee did not admit the amount in question to be representing the amount concealed income."
In an another decision by Ahmedabad Bench of ITAT reported as Yogeshkumar Chhotalal Shah vs. ITO ((2013) 36 CCH 003 (Ahd), there were addition u/s 68 of the Act was made in respect of unsecured loans taken in cash and the evidences of Assessee were not accepted by the department. Since no appeal was preferred against quantum, expectantly penalty was followed with. On such facts even though no appeal was filed against the quantum order, penalty was deleted by the Tribunal holding that If Assessee gives an explanation which is unproved but not disproved, i.e., it is not accepted but circumstances do not lead to reasonable and positive inference that assessee's case is false, explanation cannot help Department because there will be no material to show that amount in question was income of assessee. It was also held that No penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income with the hypothesis that it does.
Similar views have been taken in following precedents:
- DCIT v. Max India Limited (ITA 94/Asr/2011)
- C. Basker (2013-TIOL-39-ITAT-MAD)
- Gulshan Rai v. ITO (ITA 1098/Del/2012)
It is interesting to note that wayback in year 1972, Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa 83 ITR 26 had laid down the correct position of law by holding that the Assessing Officer is not bound to levy penalty automatically simply because the quantum addition has been sustained. Also in case of CIT v. Khoday Eswara (83 ITR 369)(SC) incidentally reported in same ITR Volume, it is held that Penalty cannot be levied solely on basis of reasons given in original order of assessment. Supreme Court has recently reiterated the law in case of Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519 by holding in para 62 that finding in assessment proceedings cannot automatically be adopted in penalty proceedings and the authorities have to consider the matter afresh from different angle. These old but gold decisions should again be brought to the notice of the Authorities who have assumed penalty as another kind of compulsory tax after Assessment.
It may be noted that even a new plea can be taken at the time of Penalty proceedings in respect of quantum matter, which was in fact not taken during the Assessment proceedings. Allahabad High Court in case of Jaidayal Pyarelal v. CIT 1973 Tax LR 880 has held that the regular assessment order is not a final word upon the plea taken therein or which might have been taken at this stage. The Assessee is entitled to show cause in penalty proceedings and to establish by the material and relevant facts which may go to affect his liability or the quantum of penalty. He cannot be held to be debarred from taking appropriate plea simply on the ground that such a plea was not taken in the regular assessment proceedings.
In view of above, it is clear that neither the Assessment order is final and makes automatic way for penalty nor the non-filing of appeal causes any prejudice to Assessee's case in penalty or debars from contending the debatable nature of his claim and bonafide.
I hope this Article may prove useful to the professionals but would like to caution that the facts of each case are the most relevant factor in deciding the fate of each case and must be thoroughly studied and presented, though the role of case laws in the reply must be in the like manner as an icing on the cake.
(The author can be reached at pankajgshah@gmail.com or at 96918 93040)
Rate of Tax on Scraps of Breads, Biscuits, Ch,ips (not to be consumed by humans) & what is called cattle feed?
IN THE OFFICE OF COMMISSIONER
DEPARTMENT OF TRADE AND TAXES
GOVERNMENT OF N.C.T. OF DELHI
VYAPAR BHAWAN, NEW DELHI
DEPARTMENT OF TRADE AND TAXES
GOVERNMENT OF N.C.T. OF DELHI
VYAPAR BHAWAN, NEW DELHI
No.365/CDVAT/2014/ 266 , Date: 23.06.2014
M/s. M.D. Traders,
A-25, 26, Gali No.1,
Old Seemapuri,
Delhi-110095.
ORDER
Present for the Applicant: Sh. Mukhtar Ahmad, Counsel
Present for the Department: Sh. T.C. Sharma, Departmental Representative
The above named applicant filed an application on 30/04/2014 under section 84 of Delhi Value Added Tax Act, 2004 (hereinafter referred to as the "said Act") and the question put up for determination under the aforesaid provision of law is as under:-
"Rate of Tax on Scraps of Breads, Biscuits, Ch,ips (not to be consumed by humans) & what is called cattle feed?"
2. The application has been preferred in the prescribed format DVAT-42 and the requisite fee of Rs.500/- paid through demand draft No. 006543 dated 05.03.2014 of Axis Bank Limited, Dilshad Colony, Delhi-110095.
3. M/ s. M.D. Traders, A-25, is a registered dealer having TIN 07710347584 and is engaged in trading of scraps of biscuits, chips, breads etc. not to be consumed by humans.
4. Sh. Mukhtar Ahmad, Counsel of the applicant appeared and explained the grounds of the application and requested to determine the rate of tax on scraps of Breads, Biscuits and Chips (not to be consumed by humans).
5. Departmental Representative stated that as per Wikipedia, the word `feed' more often refers to Fodder. Cattle Feed or Animal Feed is given to domestic animals in the course of animal husbandry. Fodder includes hay, straw, silage, compressed and pelleted feeds, oils and mixed rations, and sprouted grains and legumes. Feed grains like wheat, oats, barrel and rice or the most important source of animal feed globally. Traditional sources of animal feed include household food ' scraps and the byproducts of food processing industries such as milling and brewing. Besides the above natural feeds, 'compound feed' is fodder that is blended from various raw materials and additives and are formulated according to the specific requirements of the target animal.
The Ministry of Food Processing, Government of India indicates the following segments within the Food Processing industry:
- Dairy, furits as vegetable processing.
- Grain processing.
- Meat & poultry processing
- Fisheries
- Consumer foods including packaged foods, beverages and packaged drinking water.
As per the Annual Report 2004 of Ministry of Food Processing India, the consumer foods include Snack food, Namkeens, Biscuits, Ready to eat food, Alcoholic and Non-alcoholic beverages.
6. The Entry No.3 of the First Schedule of Delhi Value Added Tax, 2004, is reproduced here:
"Aquatic feed, poultry feed and cattle feed including grass, hay and straw, supplement and husk of pulses, concentrates and additives, wheat bran and de-oiled cake."
In the above entry, the word 'including' has been used. So, here it is intended that the enumerated goods specified after the general expression are to be only illustrative but not exhaustive, the word "including" is used and where the intention of the legislature is that the enumerated commodities should be exhaustive, they used the word "namely" or "that is to say". (Balaji General Stores vs. Dy. CCT(1987) 65 STC 108 (AP-FB).
Similarly, the entry "all arms including rifles, revolvers, pistols" opens with the general expression "all arms" and merely by way of illustration uses the inclusive portion by reference to rifles, revolvers and pistols. Therefore, even if an article is not a riflspr revolver or pistol, it will come within the entry if it falls within the scope of arms. (Standard Fire Works Ind. Vs. State of Tamil Nadu (1977) 40 STC 403 (Mad).
The Departmental Representative stated that keeping in view the meaning of animal feed as per Wikipedia and also as per common parlance meaning and as per the practice of the society and industry, the scraps of Breads, Biscuits, Chips (not for human consumption) are cattle/animal feeds.
7. I have perused in detail the application filed under Section-84 of the Delhi Value Added Tax Act, 2004, various schedules appended to, the DVAT Act, 2004, and after having heard both the parties, I am of the considered view that the scraps of Breads, Biscuits, Chips, which are the bye products of the food processing industry at the time of manufacturing, and are not traded in sealed pack and which carry labels such as 'Not for human consumption' are cattle/animal feed and are covered under Entry No.3 of the First Schedule appended to the DVAT Act, 2004, hence, exempt from levy of VAT.
8. However, the scraps of Breads, Biscuits, Chips sold in sealed pack, in general, without any specific labelling such as Not for human consumption' are not covered by the entry No.3 of the First Schedule.
9. Held accordingly.
(Prashant Goyal) Commissioner, VAT
IT is Budget Time. And for the Modi Sarkar, it is perhaps the most
challenging time as it is not very clear whether tough decisions Mr
Modi recently talked about in Goa, would really be taken kindly and
with a shade of healthy understanding by the same vox populi which
extended whole-hearted support to his clarion call for a brand new
government. What must have confused the core team of the Prime
Minister was the unexpected decibel of protest against the pre-budget
rail fare hike. Although Mr Modi and the entire community of financial
wizards know for sure that the financial health of the Indian Railways
is rickety at best but the Opposition Parties, the common commuters
and even the industry did not take the hike in their gentle stride.
Although the Government has not really rolled back much of the hike
but it has granted symbolic relief to a particular sector of the
commuters' community. Close came yet another Pre-Budget announcement
of extending the Central Excise Duty benefits to the capital goods and
auto sectors for another bout of six months. Since the Government
knows for sure that too many sub-sectors of the manufacturing
undisputedly require additional pairs of legs to keep themselves
afloat, the Government had no choice but to extend the sops for some
more months as it was about to expire by June-end.
Now, the million-dollar question is - Whether similar kind of maturity
is going to be on display vide the budgetary announcements on July 10?
It is difficult to predict. So far, if one tries to collect some
insights from isolated statements of various key Ministers in Modi
Sarkar, one may come to the conclusion that although all of them are
talking about the need for hard decisions, there is hardly any space
to accommodate bitter pills of policy initiatives. Since it is their
FIRST Budget, most of their supporters and also others who extended
one-time support to Mr Modi, are looking for some sort of relief in
personal taxation, corporate taxation, booster dose for the capital
market and overall, an invitation to the FDI carriers. Whether there
is really going to be something good for all these sectors or not but
what TIOL expects from Mr Jaitley is that he should be announcing
certain concrete measures to de-choke the judicial system with rapidly
galloping graph of litigation. Any tax dispute on merit may not
generate much concern but dispute for the sake of litigation and
filing appeals mechanically and hopelessly is dangerous for the
economy. Although Revenue alone cannot be blamed 100 per cent but the
Government carries greater responsibility to avoid any engagement in
court-craft as much as it can. Shirking responsibility to take
decisions responsibly has been the mother of growing litigation in the
tax arena. No doubt, the adjudicators in the Revenue may be having
multiple valid reasons for doing so but the fact remains that a major
chunk of government revenue is getting stuck in litigation or even
precious working capital of a business-doing entity getting diverted
to an unproductive sector - both tend to hurt the interests of the
economy.
Let's take a quick look at what did the Tax Administration Reform
Commission (TARC) find out about such an unprecedented reality of the
fiscal history of the country. The TARC notes:
"In the recent past, it has been widely claimed by taxpayers
represented by major chambers during stakeholder consultations held by
the TARC in the five metros that revenue authorities have been making
arbitrary/irrational demands because of the revenue target-linked
performance evaluation and incentive policy for tax officers. While
such an evaluation policy encourages revenue collection, the policy
cuts both ways – from the tax administration's standpoint, it creates
undue pressure on tax officials to augment revenues leading to
arbitrary/frivolous demands in certain cases; from taxpayers'
standpoint, it casts doubt on the sanctity of the entire tax
administration, reducing the taxpayer's willingness for compliance,
thus indirectly creating incentives for non- compliance ..."
Such observations of the Commission reveal the presence of the twin
maladies of irrational fixation of revenue targets and producing
disincentive for compliance with the tax laws. Unless target fixation
becomes more scientific and rational based on a large basket of
economic parameters, the historical practice of looking at what the
Government needs for its various development programmes and the same
must be collected, would continue to 'nourish' the virus ailing the
system. Unless the health of the economy occupies the centre stage for
the process of target fixation, any target based on assumptions and
presumptions would lead to migraine-triggering pressure on tax
officials who would in turn put pressure on assessees to pay extra
taxes and claim refund in the next fiscal. Since the same practice was
followed by the previous regime, Mr Jaitley finds himself footing huge
unpaid bills and a large chunk of tax refunds. Once field officials
are forced to go beyond the Laxman Rekha of rules and laws, they tend
to develop vested interests for repeating the same throughout the
year, and that goes to hurt the equity and fair play any law promises
to achieve as its goal. And this ultimately leads to issuance of
frivolous demands. Such a practice tends to strengthen the resolve of
even honest taxpayers that litigation is the only way out to avoid
snatching of one's working capital and also survival against
cut-throat competition in the market.
What the Commission observed in its Report was nicely encapsulated by
the noted senior advocate from Bangalore, Mr B N Gururaj, who wrote on
TIOL Message Board yesterday evening:
"There is urgent need to discipline the adjudicating authorities to
adhere to and respect judicial precedents, be they for or against the
interest of revenue. Most of the adjudicators don't even discuss how a
case law relied on by the assessee is distinguishable. Even dozen
cases relied on are rejected with cryptic observation that "the cases
relied on by the assessee are distinguishable and are of no help to
the assessee". There is no attempt to examine and compare the facts
before the Authority to those of the precedent relied on, what were
the issues decided in the precedent and draw conclusion as to whether
the case law applies to the matter before the authority. To borrow
supreme Court's observation in the Fiat India case, the Authorities
compare the colour of cases and decide on the inapplicability. The
Tribunal and the superior courts rarely take such failures seriously
and make strong observation on the judicial indiscipline. CBEC, the
apex body is least concerned with quality of orders passed by the
adjudicating authorities. Lastly, in our country, there is no
punishment for passing bad orders which are in favour of Revenue. But,
even well reasoned orders in favour of the assessee with expose the
adjudicators to harassment. In this cat and mouse game of
adjudication, there is none to bell the cat."
The crux of his observation evidently mirrors the frustration of the
taxpayers' community, the propensity among the adjudicators to pass
non-speaking order and to ignore judicial discipline; tendency to err
on the revenue side etc. Worse, the senior advocate believes that
whether it is the UPA Government or the Modi Sarkar, there is none to
'bell the cat' our adjudicators have become! If need be, let there be
a separate cadre of officers who need to face the sword of
departmental vigilance which happens to be one of several reasons for
the first stage appellate authorities to ignore merit and err on the
side of revenue!
--
Regards,
*Pawan Singla ,** LLB*
*M. No. 9825829075*
challenging time as it is not very clear whether tough decisions Mr
Modi recently talked about in Goa, would really be taken kindly and
with a shade of healthy understanding by the same vox populi which
extended whole-hearted support to his clarion call for a brand new
government. What must have confused the core team of the Prime
Minister was the unexpected decibel of protest against the pre-budget
rail fare hike. Although Mr Modi and the entire community of financial
wizards know for sure that the financial health of the Indian Railways
is rickety at best but the Opposition Parties, the common commuters
and even the industry did not take the hike in their gentle stride.
Although the Government has not really rolled back much of the hike
but it has granted symbolic relief to a particular sector of the
commuters' community. Close came yet another Pre-Budget announcement
of extending the Central Excise Duty benefits to the capital goods and
auto sectors for another bout of six months. Since the Government
knows for sure that too many sub-sectors of the manufacturing
undisputedly require additional pairs of legs to keep themselves
afloat, the Government had no choice but to extend the sops for some
more months as it was about to expire by June-end.
Now, the million-dollar question is - Whether similar kind of maturity
is going to be on display vide the budgetary announcements on July 10?
It is difficult to predict. So far, if one tries to collect some
insights from isolated statements of various key Ministers in Modi
Sarkar, one may come to the conclusion that although all of them are
talking about the need for hard decisions, there is hardly any space
to accommodate bitter pills of policy initiatives. Since it is their
FIRST Budget, most of their supporters and also others who extended
one-time support to Mr Modi, are looking for some sort of relief in
personal taxation, corporate taxation, booster dose for the capital
market and overall, an invitation to the FDI carriers. Whether there
is really going to be something good for all these sectors or not but
what TIOL expects from Mr Jaitley is that he should be announcing
certain concrete measures to de-choke the judicial system with rapidly
galloping graph of litigation. Any tax dispute on merit may not
generate much concern but dispute for the sake of litigation and
filing appeals mechanically and hopelessly is dangerous for the
economy. Although Revenue alone cannot be blamed 100 per cent but the
Government carries greater responsibility to avoid any engagement in
court-craft as much as it can. Shirking responsibility to take
decisions responsibly has been the mother of growing litigation in the
tax arena. No doubt, the adjudicators in the Revenue may be having
multiple valid reasons for doing so but the fact remains that a major
chunk of government revenue is getting stuck in litigation or even
precious working capital of a business-doing entity getting diverted
to an unproductive sector - both tend to hurt the interests of the
economy.
Let's take a quick look at what did the Tax Administration Reform
Commission (TARC) find out about such an unprecedented reality of the
fiscal history of the country. The TARC notes:
"In the recent past, it has been widely claimed by taxpayers
represented by major chambers during stakeholder consultations held by
the TARC in the five metros that revenue authorities have been making
arbitrary/irrational demands because of the revenue target-linked
performance evaluation and incentive policy for tax officers. While
such an evaluation policy encourages revenue collection, the policy
cuts both ways – from the tax administration's standpoint, it creates
undue pressure on tax officials to augment revenues leading to
arbitrary/frivolous demands in certain cases; from taxpayers'
standpoint, it casts doubt on the sanctity of the entire tax
administration, reducing the taxpayer's willingness for compliance,
thus indirectly creating incentives for non- compliance ..."
Such observations of the Commission reveal the presence of the twin
maladies of irrational fixation of revenue targets and producing
disincentive for compliance with the tax laws. Unless target fixation
becomes more scientific and rational based on a large basket of
economic parameters, the historical practice of looking at what the
Government needs for its various development programmes and the same
must be collected, would continue to 'nourish' the virus ailing the
system. Unless the health of the economy occupies the centre stage for
the process of target fixation, any target based on assumptions and
presumptions would lead to migraine-triggering pressure on tax
officials who would in turn put pressure on assessees to pay extra
taxes and claim refund in the next fiscal. Since the same practice was
followed by the previous regime, Mr Jaitley finds himself footing huge
unpaid bills and a large chunk of tax refunds. Once field officials
are forced to go beyond the Laxman Rekha of rules and laws, they tend
to develop vested interests for repeating the same throughout the
year, and that goes to hurt the equity and fair play any law promises
to achieve as its goal. And this ultimately leads to issuance of
frivolous demands. Such a practice tends to strengthen the resolve of
even honest taxpayers that litigation is the only way out to avoid
snatching of one's working capital and also survival against
cut-throat competition in the market.
What the Commission observed in its Report was nicely encapsulated by
the noted senior advocate from Bangalore, Mr B N Gururaj, who wrote on
TIOL Message Board yesterday evening:
"There is urgent need to discipline the adjudicating authorities to
adhere to and respect judicial precedents, be they for or against the
interest of revenue. Most of the adjudicators don't even discuss how a
case law relied on by the assessee is distinguishable. Even dozen
cases relied on are rejected with cryptic observation that "the cases
relied on by the assessee are distinguishable and are of no help to
the assessee". There is no attempt to examine and compare the facts
before the Authority to those of the precedent relied on, what were
the issues decided in the precedent and draw conclusion as to whether
the case law applies to the matter before the authority. To borrow
supreme Court's observation in the Fiat India case, the Authorities
compare the colour of cases and decide on the inapplicability. The
Tribunal and the superior courts rarely take such failures seriously
and make strong observation on the judicial indiscipline. CBEC, the
apex body is least concerned with quality of orders passed by the
adjudicating authorities. Lastly, in our country, there is no
punishment for passing bad orders which are in favour of Revenue. But,
even well reasoned orders in favour of the assessee with expose the
adjudicators to harassment. In this cat and mouse game of
adjudication, there is none to bell the cat."
The crux of his observation evidently mirrors the frustration of the
taxpayers' community, the propensity among the adjudicators to pass
non-speaking order and to ignore judicial discipline; tendency to err
on the revenue side etc. Worse, the senior advocate believes that
whether it is the UPA Government or the Modi Sarkar, there is none to
'bell the cat' our adjudicators have become! If need be, let there be
a separate cadre of officers who need to face the sword of
departmental vigilance which happens to be one of several reasons for
the first stage appellate authorities to ignore merit and err on the
side of revenue!
--
Regards,
*Pawan Singla ,** LLB*
*M. No. 9825829075*
NOTICE
All members are kindly requested to provide the details of the appeals pending before the Hon'ble Bombay High Court where the issue involved is similar to ACIT vs Bhaumik (P) Ltd (2009) 118 ITD 1 (SB)(Mumbai) or CIT vs Universal Medicare (P) Ltd. (2011) 324 ITR 263 (Bom) as the Bench presided over by Hon'ble Justice Shri S.C. Dharmadikari and Hon'ble Justice Shri B.P Colabawalla is pleased to direct the registry to place all such appeals on board on the Friday the 4th July 2014. The matters would appear on the supplementary board to be published on Thursday, 3rd July, 2014. The details be provided to the staff of the lTAT Bar Association Library by Wednesday, 2nd July, 2014. The appeals pending for admission may be disposed of finally at the stage of admission and appeals which are admitted may be disposed of finally.
For ITAT Bar Association
NOTICE
All members are kindly requested to provide the details of the appeals pending before the Hon'ble Bombay High Court where the issue involved is similar to ACIT vs Bhaumik (P) Ltd (2009) 118 ITD 1 (SB)(Mumbai) or CIT vs Universal Medicare (P) Ltd. (2011) 324 ITR 263 (Bom) as the Bench presided over by Hon'ble Justice Shri S.C. Dharmadikari and Hon'ble Justice Shri B.P Colabawalla is pleased to direct the registry to place all such appeals on board on the Friday the 4th July 2014. The matters would appear on the supplementary board to be published on Thursday, 3rd July, 2014. The details be provided to the staff of the lTAT Bar Association Library by Wednesday, 2nd July, 2014. The appeals pending for admission may be disposed of finally at the stage of admission and appeals which are admitted may be disposed of finally.
For ITAT Bar Association
CBI arrests Excise Superintendent & Inspector from Hyderabad in bribery case
The Central Bureau of Investigation has arrested a Superintendent and an Inspector, both working in Central Excise, Hyderabad in a bribery case of Rs.15,000/-
A case was registered U/s 7 of PC Act 1988 against Superintendent, Service Tax, Commissionerate-II, Central Excise, Hyderabad (Andhra Pradesh), on the allegations of demanding bribe of Rs.15,000/- from the Complainant for considering surrender of Service Registration of Comlainant's firm and showing him favour. The Superintendent, Central Excise had further directed Inspector, Service Tax, Group-IX, Hyderabad to receive bribe amount of Rs.15,000/- from the Complainant. CBI laid a trap and the Inspector was caught red handed while demanding and accepting bribe of Rs.15,000/- from the Complainant. The Superintendent was also arrested.
CBI Press Release- New Delhi , 27.06.2014
Solution to restricted use of email ID for 4 times only on I T E-filing Website
Recently, on www.incometaxindiaefiling.gov.in , assessee is compulsorily required to get its email ID and password registered. Further, maximum permissible usage of each of them is 4 times only. We know that most of the assessees in India do not have email ID. So, nowadays consultants have started to create additional email IDs. This takes substantial time and in future we have to remember those IDs and their passwords.
But the solution is found out. For example, I can use my email ID tejasinvites@gmail.com for thousand of accounts. Let us teach you how we can use Gmail Features to get the benefit of Multiple email accounts with one Gmail account. With our solution one email id can be used for 8192 (yes, Eight Thousand One Hundred and Ninety Two) assessees!!!
Multiple Google Email Addresses – One Gmail Account
Google Gmail is a very slick, free email product. One Gmail feature that you may not be aware of is that multiple Google email addresses can be created from one Gmail account. These bonus email addresses are easy to create and manage and can take a few different forms.
Having multiple Gmail addresses can provide a range of uses including easily separating personal and business email and tracking incoming email from specific subscriptions and mailing list. There are three main methods for expanding the number of usable Google email addresses that you can have from a single Gmail account:
- Using the @googlemail.com domain.
- Using the "dot" or period in your email name.
Using the "@googlemail.com" Domain Name
Let's start with the use of the @googlemail.com domain name. With every Gmail account you actually get a second email address – one is the regular myname@gmail.com address while the second address has @googlemail.com as the domain. So Gmail will actually see myname@gmail.com as the same as myname@googlemail.com. All email messages that are sent to myname@googlemail.com will be delivered to your myname@gmail.com address.
Using a Dot or Period in the Email name
Another interesting facet of Gmail addresses is what is sometimes referred to as "Dot Blindness". In an interesting twist Gmail does not recognize dots, "."or periods as characters in Google email address user names. This means that Gmail "sees" my.name@gmail.com or myna.me@gmail.com as the same address as myname@gmail.com. You can also use multiple "dots" in the username such as my.na.me@gmail.com.
The same "dot blindness" also applies to email addresses using the @googlemail.com domain name with my.name@googlemail.com or my.na.me@googlemail.com being routed to the same Inbox as myname@gmail.com.
If my email ID is tejasinvites@gmail.com, then gmail will consider t.ejasinvites@gmail.com or t.e.jasinvites@gmail.com or t.e.j.a.s.i.n.v.i.t.e.s@gmail.com as the same ID only. But at the same time, www.incometaxindiaefiling.gov.in will consider all these IDs as different IDs, so you can use each of them 4 times.
To cross check, if your email ID is say info@gmail.com and it is already used for 4 times, then you may now write as i.nfo@gmail.com and check your account, you will get the email and now see the "To" address in that mail, it will be i.nfo@gmail.com
But this benefit is available to Gmail users and only those domain users whose domain admin ignore .(dot) in the email ID.
Test these out for yourself and see what works best for you. All the variations below are from the same Google email account and will all end up in the myname@gmail.com Gmail Inbox:
myname@gmail.com
myname@googlemail.com
my.name@gmail.com
my.name@googlemail.com
my.na.me@gmail.com
my.na.me@googlemail.com
Simplified Google Email Address Management
Having multiple Google email addresses is a useful tool for addressing a number of different email needs. The benefits of having a centralized email account that can easily process a number of different email addresses without having to go out and set up numerous new accounts with additional usernames and passwords can be a real plus. And they are all managed from a single Gmail account.
So, now enjoy the E-filing.
(Written by CA. Tejas K. Andharia, B. COM, F.C.A., D.I.S.A.(ICAI), D.I.R.M.(ICAI), Bhavnagar, Gujarat, Email: tejasinvites@gmail.com with Inputs from CA Sandeep Kanoi)
__._,_.___
No comments:
Post a Comment