Income Tax
Whether facts relating to AY 2005-06 can be assumed to be known to Revenue when it came to be known only in AY 2009-10 that interest on which deduction was claimed u/s 57 was infact related to home loan but same was diverted to purchase debentures - NO: HC
THE assessee had claimed deduction u/s 57 as "Interest paid to HDFC" as Rs.53,65,251/- for the AY 2005-06. The AO reopened the assessment for this AY on the ground that such interest was paid on home loan and so no deduction should have been allowed u/s 57. The AO recorded in the reasons for reopening of assessment as that during AY 2009 - 10, various loan documents, including loan application from the assessee and sanction letter by the HDFC Ltd,., was called for. From these, it was observed that the assessee had taken this loan in FY 2002-03, but that this loan was a Home Loan (under Adjusted Rate Home Loan Scheme- ARHL) taken for the purpose of purchasing a residential property.
The issues before the Bench are - Whether facts related to AY 2005-06 were already known to the Revenue when it was only during the assessment proceedings of AY 2009-10 it was revealed that interest expenditure on which deduction was claimed u/s 57 was infact related to home loan; Whether the theory of consistency can be applied, when each assessment is a separate assessment unit; Whether the obligation of the assessee to comply with the provisions of the Income Tax Act have to be complied with in each AY and Whether when the assessee may be able to satisfy the AO that reopening of the assessment was not justified, the assessment cannot be reopened, although the reasons recorded do indicate that there was prima facie evidence to form a reasonable belief of income escaping assessment. And the verdict goes against the assessee.
Historical background
Section 285BA was inserted in the Income Tax Act, 1961 (Act) by the Finance Act, 2003 w.e.f. 01.04.2004. The section read as under:-
"285BA – Annual Information Return (AIR) - Any assessee, who enters into any financial transaction, as may be prescribed, with any other person, shall furnish, within the prescribed time, an annual information return in such form and manner, as may be prescribed, in respect of such financial transaction entered into by him during any previous year".
The scope and effect of the new provision was explained by the Board in a circular No.72/20034 dated 05.09.2003 as under:-
"81. New provision for filing of Annual Information Return
81.1 In order to provide a mechanism wherein the flow of information regarding the material financial transactions entered into by a taxpayer with other persons is automatic so that the same can be utilized for widening and deepening of the tax base, the Finance Act, 2003 has inserted a new section 285BA. It provides that any assessee, who enters into any financial transaction, as may be prescribed, with any other person, shall furnish an annual information return in such form and manner, as may be prescribed, in respect of such financial transactions entered into by him during any previous year".
2. Further amendment to the section
The provisions originally enacted was too brief. Hence, the Finance (No.2) Act, 2004 substituted a new section 285BA for the earlier section w.e.f. 01.04.2005.
3. Impact of the changed law as explained by the CBDT
The scope and effect of the new provision was explained by the CBDT by its Circular No.5 dated 15.07.2005 (2005) 276 ITR (St) 151 as under:-
"Modification of the provisions for filing of AIR –Under the existing provisions of section 285BA, as inserted by the Finance Act, 2003, any assessee, who enters into any financial transaction, as may be prescribed, with any other person, is required to furnish an AIR in such form and manner, as may be prescribed, in respect of such financial transactions entered into by him during any previous year.
With a view to gather information from Govt. agencies and other authorities, who are valuable sources of information, the Finance (No.2) Act, 2004, has substituted the said section by a new section. The substituted section 285BA provides that an assessee or certain agencies responsible for registering or maintaining books of account or other document containing a record of any specified financial transaction, under any law for the time being in force, shall furnish an AIR in respect of such specified financial transaction as may be prescribed by the Board. The return shall be furnished in respect of transactions registered or recorded on or after the 1st day of April, 2004.
Sub-section (2) of the said section provides that the AIR shall be furnished within the prescribed time after the end of such F.Y. and in such form and manner as may be prescribed.
Sub-section (3) of the said section defines the 'specified financial transaction' to mean any transaction of purchase, sale or exchange of goods or property or right or interest in a property or transaction for rendering any service or transaction under a works contract or transaction by way of an investment made or expenditure incurred or a transaction for taking or accepting any loan or deposit as may be prescribed.
It has also been provided that the Board may prescribe different monetary values for different transactions in respect of different persons. The said sub-section further provides that the value or the aggregate value of such transactions during a F.Y. so prescribed shall not be less than fifty thousand rupees.
Sub-section (5) of the said section provides that where any person, who is required to furnish an AIR has not furnished the same within the prescribed time, the prescribed income-tax authority may serve upon such person a notice requiring him to furnish such return within a period not exceeding 60 days from the date of service of such notice.
Vide Notification S.O. No.1316(E) dated 01.12.2004, a new rule 114E relating to furnishing of AIR has been prescribed. The form and manner in which the AIR shall be furnished has been prescribed in the said rule. Further, it has also been prescribed in the said rule that every person mentioned in column (2) of the Table below shall furnish an AIR in respect of transactions specified in the corresponding entry of column (3) of the said Table.
Table
| Sl. No. | Class of person | Nature and value of transaction | |
| [1] | [2] | [3] | |
| 1. | A banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act) | Cash deposits aggregating ten lakh rupees or more in a year in any savings account of a person maintained in that bank. | |
| 2. | A banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act) or any other company or institution issuing credit card | Payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to two lakh rupees or more in the year. | |
| 3. | A trustee of a mutual fund or such other person managing the affairs of the Mutual Fund as may be duly authorized by the trustee in this behalf | Receipt from any person of an amount of two lakh rupees or more for acquiring units of that Fund. | |
| 4. | A company or institution issuing bonds or debentures | Receipt from any person of an amount of five lakh rupees or more for acquiring bonds or debentures issued by the company or institution. | |
| 5. | A company issuing shares through a public or rights issue | Receipt from any person of an amount of one lakh rupees or more for acquiring shares issued by the company. | |
| 6. | Registrar or Sub-Registrar appointed u/6 of the Registration Act, 1908 | Purchase or sale by any person of immovable property valued at thirty lakh rupees or more. | |
| 7. | A person being an officer of the RBI, constituted u/s 3 of the Reserve Bank of India Act, 1934, who is duly authorized by the RBI in this behalf | Receipt from any person or an amount or amounts aggregating to five lakh rupees or more in a year for bonds issued by the RBI |
It has also been provided in the said rule that AIR shall be furnished on or before 31st August immediately following the F.Y. in which transaction is registered or recorded".
4. Sanction for enforcement of the provisions of section 285BA
The Finance (No.2) Act, 2004 also inserted a new section 271FA to provide for penalty for failure to furnish the AIR. The said section provides that where any person, who is required to furnish the AIR, fails to furnish the same within the prescribed time, the prescribed income-tax authority may direct that such person shall pay by way of penalty a sum of one hundred rupees for every day during which the failure continues.
Reference to the newly inserted section 271FA has been made in section 273B of the Act relating to penalty not to be imposed where assessee proves that there was reasonable cause for the failure.
5. Changes proposed by the Finance Bill, 2014
The Finance (No.2) Bill, 2014 replaces this section by a new section 285BA, which shall become operative after the passing of the Bill by the Parliament from 01.04.2015. The comparative position regarding the provisions of section 285B as these are at present and as these will be after the enactment of the new section by the Finance Act, 2014, presuming that there would be no changes in the new section 285BA during the course of discussion in Parliament is mentioned hereinafter:-
[i] The heading of the section has been changed from 'obligation to furnish AIR' to 'obligation to furnish statement of financial transaction or reportable account'. Thus, by the heading, the coverage of the section has been made more comprehensive.
[ii] The word 'AIR' in the body of the section has been changed to 'statement'.
[iii] Other changes in the phraseology of the section are as under:-
| Existing section 285BA | [Proposed] new section 285BA |
Any person, being – [a] an assessee; or [b] the prescribed person in the case of an office of Govt.,; or [c] a local authority or other public body or association; or [d] the Registrar or Sub-Registrar appointed u/s 6 of the Registration Act, 1908 (16 of 1908); or [e] the registering authority empowered to register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988 (59 of 1988); or [f] the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898); or [g] the Collector referred to in clause (c) of section 3 of the Land Acquisition Act, 1894 (1 of 1894); or [h] the recognized stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); or [i] an officer of the RBI, constituted u/s of the RBI Act, 1934 (2 of 1934); or [j] a depository referred to in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996), who is responsible for registering, or maintaining books of account or other documents containing a record of any specified financial transaction, under any law for the time being in force, shall furnish an AIR in respect of such specified financial transaction, which is registered or recorded by him during any F.Y. beginning on or after the 1st day of April, 2004 and information relating to which is relevant and required for the purposes of this Act, to the prescribed income-tax authority or agency as may be prescribed. [2] The AIR referred to in sub-section (1) shall be furnished within the prescribed time after the end of such F.Y. in such form and manner (including on a floppy, diskette, magnetic cartridge tape, CD-ROM or any computer readable media) as may be prescribed. [3] For the purposes of sub-section (1), specified financial transaction means only – [a] transaction of purchase, sale or exchange of goods or property or right or interest in a property; or [b] transaction for rendering any service; or [c] transaction under a works contract; or [d] transaction by way of an investment made or an expenditure incurred; or [d] transaction for taking or accepting any loan or deposit, which may be prescribed: Provided that the Board may prescribe different values for different transactions in respect of different persons having regard to the nature of such transactions; Provided further that the value or, as the case may, the aggregate value of such transactions during a FY so prescribed shall not be less than fifty thousand rupees. [4] Where the prescribed income-tax authority considers that the Air furnished under sub-section (1) is defective, he may intimate the defect to the person, who has furnished such return and give him an opportunity of rectifying the defect within a period of one month from the date of such intimation or within such further period which, on an application made in this behalf, the prescribed income tax authority may in his discretion allow, and if the defect is not rectified within the said period of one month or as the case may be, the further period so allowed, then notwithstanding anything contained in any other provision of this Act, such return shall be treated as an invalid return and the provisions of this Act, shall apply as if such person had failed to furnish the AIR. [5] Where a person, who is required to furnish an AIR sub-section (1) has not furnished the same within the prescribed time, the prescribed income-tax authority may serve upon such person a notice requiring him to furnish such return within a period not exceeding sixty days from the date of service of such notice and he shall furnish the AIR within the time specified in the notice. | Any person, being – [a] an assessee; or [b] the prescribed person in the case of an office of Govt.,; or [c] a local authority or other public body or association; or [d] the Registrar or Sub-Registrar appointed u/s 6 of the Registration Act, 1908 (16 of 1908); or [e] the registering authority empowered to register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988 (59 of 1988); or [f] the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898); or [g] the Collector referred to in clause (c) of section 3 of the Land Acquisition Act, 1894 (1 of 1894); or [h] the recognized stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); or [i] an officer of the RBI, constituted u/s of the RBI Act, 1934 (2 of 1934); or [j] a depository referred to in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996), who is responsible for registering, or maintaining books of account or other documents containing a record of any specified financial transaction, under any law for the time being in force, shall furnish an AIR in respect of such specified financial transaction, which is registered or recorded by him during any F.Y. beginning on or after the 1st day of April, 2004 and information relating to which is relevant and required for the purposes of this Act, to the prescribed income-tax authority or agency as may be prescribed. A new clause (k) has been inserted, which reads as under:- "who is responsible for registering, or, maintaining books of account or other document containing a record of any specified financial transaction or any reportable account as may be prescribed under any law for the time being in force, shall furnish a statement in respect of such specified financial transaction or such reportable account which is registered or recorded or maintained by him and information relating to which is relevant and required for the purposes of this Act, to the income-tax authority or such other authority or agency as may be prescribed. [2] The proposed sub-section (2) would be as under:- "(2) The statement referred to in sub-section (1) shall be furnished for such period, within such time and in the form and manner, as may be prescribed". [3] No change. [4] Only some verbal changes have been made. The new sub-section (4) reads thus:- "(4) Where the prescribed income-tax authority considers that the statement furnished under sub-section (1) is defective, he may intimate the defect to the person who has furnished such statement and give him an opportunity of rectifying the defect within a period of thirty days from the date of such intimation or within such further period which, on an application made in this behalf, the said income-tax authority may, in his discretion, allow; and if the defect is not rectified within the said period of thirty days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, such statement shall be treated as an invalid statement and the provisions of this Act shall apply as if such person had failed to furnish the statement". [5] Some verbal changes have been made. The proposed new sub-section (5) reads as under:- "(5) Where a person who is required to furnish a statement under sub-section (1) has not furnished the same within the specified time, the prescribed income-tax authority may serve upon such person a notice requiring him to furnish such statement within a period not exceeding thirty days from the date of service of such notice and he shall furnish the statement within the time specified in the notice". Two new sub-sections (6) & (7) have been included in the new section 285BA. These read as under:- [6] "(6) If any person, having furnished a statement under sub-section (1), or in pursuance of a notice issued under sub-section (5), comes to know or discovers any inaccuracy in the information provided in the statement, he shall within a period of ten days inform the income-tax authority or other authority or agency referred to in sub-section (1), the inaccuracy in such statement and furnish the correct information in such manner as may be prescribed". [7] "(7) The Central Government may, by rules made under this section, specify – (a) the persons referred to in sub-section (1) to be registered with the prescribed income-tax authority; (b) the nature of information and the manner in which such information shall be maintained by the persons referred to in clause (a); and (c) the due diligence to be carried out by the persons for the purpose of identification of any reportable account referred to in sub-section (1)". |
6. Amendment of section 271FA
The existing provisions of section 271FA of the Act provide for penalty for failure to furnish an annual information return. It is proposed to amend the said section so as to provide for penalty for failure to furnish statement of information or reportable account.
7. Insertion of new section 271FAA
It is proposed to insert a new section 271FAA so as to provide that if a person referred to in clause (k) of sub-section (1) of section 285BA, who is required to furnish a statement of financial transaction or reportable account, provides inaccurate information in the statement and where, (a) the inaccuracy is due to a failure to comply with the due diligence requirement prescribed under sub-section (7) of section 285BA or is deliberate on the part of the person; or (b) the person knows of the inaccuracy at the time of furnishing the statement of financial transaction or reportable account, but does not inform the prescribed income-tax authority or such other authority or agency; or (c) the person discovers the inaccuracy after the statement of financial transaction or reportable account is furnished and fails to inform and furnish correct information within the time specified under sub-section (6) of section 285BA, then, the prescribed income-tax authority may direct that such person shall pay, by way of penalty, a sum of fifty thousand rupees.
7.1 As stated earlier, the new provisions proposed are to be effective from 01.04.2015 i.e. from the A.Y. 2015-16.
8. Why changes?
The rationale for substitution of a new section 285BA in place of the existing one has been explained in the Explanatory Memorandum to the Finance (No.2) Bill, 2014. The relevant portion from the same is reproduced below:-
The existing provisions of section 285BA of the Act provide for filing of an annual information return by specified persons in respect of specified financial transactions which are registered or recorded by them and which are relevant and required for the purposes of the Act to the prescribed income-tax authority.
With a view to facilitate effective exchange of information in respect of residents and non-residents, it is proposed to amend the said section so as to also provide for furnishing of statement by a prescribed reporting financial institution in respect of a specified financial transaction or reportable account to the prescribed income-tax authority. It is further proposed that the statement of information shall be furnished within such time, in the form and manner as may be prescribed.
It is further proposed to provide that where any person, who has furnished a statement of information under sub-section (1), or in pursuance of a notice issued under sub-section (5), comes to know or discovers any inaccuracy in the information provided in the statement, then, he shall, within a period of ten days, inform the income-tax authority or other authority or agency referred to in sub-section (1) the inaccuracy in such statement and furnish the correct information in the manner as may be prescribed.
It is also proposed that the Central Government may, by rules, specify,- (a) the persons referred to in sub-section (1) of section 285BA to be registered with the prescribed income-tax authority; (b) the nature of information and the manner in which such information shall be maintained by the persons referred to in (a) above; and (c) the due diligence to be carried out by the persons referred in (a) for the purpose of identification of any reportable account referred to in sub-section (1) of section 285BA.
8.1 It may be mentioned that the changes made would be complete later when Rules and forms are notified on the basis of new section.
9. Compliance requirements
In the era of voluntary compliance and acceptance of nearly 98 to 99% of the income tax returns, two aspects relating to making of assessments by the I.T. Dept. became imperative namely –
[i] To make the columns in the income-tax returns comprehensive to contain detailed information regarding business/investment activities of the taxpayers relating to the years to which the returns relate; and
[ii] To obtain information concerning assessment aspects independently from different sources to do the in-house checking regarding the accuracy of returns and the information furnished by the taxpayers and discover new taxpayers from the information received. Enactment of section 285BA is in pursuance of the exercise mentioned at (ii) earlier.
9.1 Section 285BA, as originally enacted in the year 2003 and later substituted by new section in the year 2004, effective from 1.4.2005 provided for filing of AIRs. The persons required to furnish the information could be an assessee or any other person, including officers of Govt., a local authority, a public body, registering authority under the Registration Act and Motor Vehicles Act, Post-Master General, Collector functioning under the Land Acquisition Act, Stock Exchange, RBI and Depositories under the Depository Act. To the list, the Finance (No.2) Bill, 2014 proposes to add some more authorities.
9.2 The matters on which in formation is sought may relate to the Registration Act and Motor Vehicles Act, Post-Master General, Collector functioning under the Land Acquisition Act, Stock Exchange, RBI and Depositories under the Depository Act. It has to be furnished in electronic form in computer readable media to enable automatic check through the computer. Earlier, it was left to the Board to prescribe the matter now made part of the statute.
9.3 Present position regarding rules and forms
The nature of the transactions and the threshold value above which information has to be submitted in the AIR are prescribed in the table in rule 114E of the I.T. Rules, 1962 extracted earlier. Rule 114E has been amended vide Notification No.182/2005 dated 11.07.05. The form in which the return is to be filed is Form No.61A, notified vide Notification No.185/2005. The CBDT has authorized NSDL, Trade World, 4th Floor, Kamala Mills Compound, Lower Parel, Mumbai-400013 as the agency authorized to receive AIs on behalf of the Commissioner of Income Tax (Central Information Branch). The filers can furnish the AIR with the facilitation centres of NSDL located in different parts of the country. The addresses of these facilitation centres are available on the website www.incometaxindia.gov.in and www.tin.nsdl.com.
9.4 The filer is required to quote his folio number in para 3 of Part-A of Form 61A and para 4 of Part-B of Form 61A for filing of the AIR. This folio number will be the unique identity of the filer for all purposes of the AIR. It has been decided hat the folio number will be in the case of Govt. filers the TAN of the filer and in the case of non-Govt. filers, the TAN of the principal office of the person filing the AIR. Persons filing the AIR should quote TA as above in both Part-A & Part-B of Form No.61A in the relevant column of the AIR. It is further clarified that persons filing AIRs should furnish only one return eve if they may have more than one branch.
9.5 In exercise of powers conferred under sub-section (2) of section 285BA of the Act (43 of 1961), read with sub-rule (7) of rule 114E [S.O. No.979(E), Notification 182/2005/F.No.142/44/2003-TPL dated 11.07.2005] the CBDT has designated DGIT (Systems), ARA Centre, E-2, Jhandewalan Extn., New Delhi, to act as 'Annual Information Return Administrator' under rule 114E of the I.T. Rules, 1962.
10. The CBDT's guidelines regarding the use of information received as per section 285BA [issued in the year 2006 on October 26],
The CBDT have laid down the following guidelines for dealing with grievances arising out of cases selected for scrutiny on the basis of information contained in AIR:-
• All cases selected for scrutiny on the basis of information contained in AIR during a month will be displayed by the 15th of the following month.
• Queries made on the basis of information contained in AIR will be specific and to the point.
• It shall be mentioned in the scrutiny notice that written reply along with supporting documentary evidence will be sufficient compliance to the scrutiny notice.
• It shall be affixed on the scrutiny notice that 'personal attendance not essential.
• If the information and supporting evidence received in response to the scrutiny notice is sufficient, personal attendance of the taxpayer shall not be insisted upon.
• Chief Commissioners and Commissioners shall fix a reasonable period every day to hear grievances of such taxpayers, if any, without prior appointment and display the same publicly.
• Chief Commissioners and Commissioners may also hold open house meetings in this regard.
• Drop boxes shall be provided for such taxpayers who wish to file their grievance in wring.
• Steps shall be taken to redress such written grievances expeditiously.
10. Concluding comments
A provision like section 285BA has to, by its very nature, keep on changing from time-to-time in tune with the experience gained by the operation of the existing provisions, new areas for doing business/making investments keep on emerging and to bring the same within the purview of the information, seeking provision, changes are inevitable. The third change in the section i.e. substitution by a new section is based on experience gained by the I.T. Dept. on the basis of the section as enacted in the year 2004. It would be no wonder if the new section proposed by the Bill, 2014 may need another review for change after sometime. The proposed section is based on the experience of its working gained so far and one could hope that it would provide appropriate information for assisting the suo-motu income tax assessments in the I.T. Dept. and detecting new taxpayers
AHMEDABAD, JULY 15, 2014: ON 18.04.2013, an amendment was made in the Foreign Trade Policy, wherein exemption from antidumping duty and safeguard duty on materials imported against transfer of DFIA licence was withdrawn by inserting para 4.2.6 (d) in Foreign Trade Policy in Chapter IV of Foreign Trade Policy, vide Notification No.2 (RE-2013)/2009-14.
Consequently, vide Notification No.24/2013-CUS dated 18.04.2013, the earlier Customs Notification No.98/2009-CUS was amended, wherein the exemption from antidumping duty and safeguard duty on materials imported against transfer of DIFA license was withdrawn.
Thereafter, by further Notification No.45/2013-CUS dated 17.09.2013 it was notified that exemption from antidumping duty and safeguard duty shall not be available on materials imported against DFIAs, which have been transferred on or after 18.04.2013.
As for the case on hand, the facts go thus -
+ The Appellant imported a consignment of Soda Ash and filed B/E on 25.03.2014 seeking duty free clearance under Notification No.98/2009-CUS dated 11.09.2009, including exemption from levy of antidumping duty, by presenting a Transferable Duty Free Import Authorization (DFIA) which was issued on 19.06.2012 as per the provisions of Foreign Trade Policy in force on that date.+ On presentation of B/E, since the transferability was endorsed on 14.06.2013 i.e. after cutoff date 18.04.2013, the exemption from antidumping duty was denied to the Appellant.
Against this order, the appellant is before the CESTAT.
The Bench after hearing the lengthy submissions took note of the apex court decision inAsian Food Industries 2006-TIOL-147-SC-CUS & the Calcutta High Court decision in Soubhik Exports Ltd 2007-TIOL-92-HC-KOL-EXIM and observed -
"Thus, in exercise of the powers conferred under section 5 of the FTDR Act, the Policy can be amended however any oppressive amendment to the Policy is applicable only prospectively. The judgment of Hon'ble Apex Court in Purbanchal Cables & Conductors (P) Ltd. Vs. Assam SEB (supra) also supports the argument of the Appellant, and in view of the same, the view taken by the Hon'ble Bombay High Court in Kingfisher Airlines Ltd (supra) would have to be ignored. The subsequent law would not affect the contractual obligations of contracts already existing, can be a view in given facts of a case."
Nonetheless, the Bench further observed -
++ In the instant case, the lower authority has taken the impugned decision on the basis of the amended Customs Notification, which is against the grant of exemption.++ There may be force in the argument of the appellant regarding the fact that the purpose of Notification issued by the Central Government through Ministry of Finance was only to give effect to the amendment in the FTP by Central Government through Ministry of Commerce, however, it is not for us to look into this aspect.++ The Respondent lower authority as well as this Tribunal are creature of Statute, and cannot take any decision contrary to the same, on considerations of equity or justice. We cannot even sit in appeal over correctness or otherwise of a Customs Notification. If the Appellant is aggrieved by the correctness of the Customs Notification the remedy lies elsewhere, and we surely have no jurisdiction to entertain any such challenge directly or indirectly.
In fine, the appeal was dismissed.
AHMEDABAD, JULY 15, 2014: THE issue before the Bench is - Whether when the assessee has failed to produce any proof towards its claim that the goods inventorized at the time of survey also included the goods received from its customers for remodeling, such a claim is to be construed as an afterthought. And the answer goes against the assessee.
Facts of the case
A survey u/s. 133A was conducted at the business premises of the assessee, during which stock of gold and silver lying at the business premises was inventorized and it was found that the assessee had actual physical stock of gold of 21610.620 grams and of silver 111.493 kgs. The book stock of the assessee on that day was worked out at gold 19332.578 grams and silver 106.916 kgs. The assessee was required to explain the difference. During survey, partner of the firm admitted that the above difference in stock in gold and silver was unaccounted income of the assessee. Accordingly, the unaccounted stock of gold 2278.048 grams was valued at Rs 25,34,322/- and the difference in silver of 5.577 kgs. was valued at Rs 70,028/- and thus a total addition of Rs 26,04,350/- was offered to tax over and above the regular income of the current year. The partner Shri Ramjibhai Patel assured of making payment of advance tax of Rs 8,04,000/- and paid Rs 4,00,000/- as advance tax on 15.03.2008. However, in the return of income filed for the assessment year 2008-09, the income was shown at Rs 16,369/- only. AO found that the gold and silver ornaments were given to the assessee by the persons for job work and that as per the details submitted by the assessee, from the date of survey the jewellery were not lying in the business premises of the assessee and hence the total physical stock found during the course of the survey proceedings at the business premises of the assessee belonged to the assessee and represented the additional income of Rs 26,04,350/- declared by the assessee as its unaccounted income. Therefore, he made addition of the same to the income of the assessee
On appeal, the Tribunal held that,
Excess stock
++ the claim of the assessee is that the goods inventorized at the time of survey also include the goods which were not owned by the assessee but were received by the assessee from its customers for remodelling. The Assessing Officer has not accepted the above contention of the assessee on the ground that at the time of the survey, it was stated that the goods received from customers were handed over to the karigars immediately i.e. such goods were not present in the premises of the assessee and consequently not included in the inventory prepared at the time of the survey. We find that copy of the statement which was recorded at the time of the survey was not produced before us to rebut the above contention of the Assessing Officer. Copy of inventory prepared at the time of survey was also not produced before us by the assessee to point out therefrom that such inventory included the goods received from customers for remaking or remodelling. The Commissioner of Income Tax (Appeals) pointed out that in the affidavits of the karigars it is not stated that they carried out work of repairing/remodelling at the premises of the assessee and kept such goods at the premises of the assessee. We find that no material was brought before us to controvert the above point highlighted by the Commissioner of Income Tax (Appeals). In the absence of any such material, we do not find any good reason to interfere with the orders of the lower authorities. Therefore, this ground of appeal of the assessee is dismissed;
Labour charges
++ no labour charge expenses were incurred for earning the said labour charges income is not justified without cogent material. Further, the Commissioner of Income Tax (Appeals) allowed labour charge expenses at the rate of 50% of the labour charge receipt which is also without any basis. In absence of any specific defect being pointed out in the vouchers of labour charge expenses, in our considered view, the disallowance of Rs 66,459/- made by the Commissioner of Income Tax (Appeals) is unsustainable. We, therefore, delete the disallowance of Rs 66,459/- under the head 'labour charge expenses' and allow this ground of appeal of the assessee;
Disallowance u/s 40(a)(ia)
++ the Authorized Representative of the assessee could not controvert this finding of the Commissioner of Income Tax (Appeals), hence we find no infirmity in the order of the Commissioner of Income Tax (Appeals) in confirming disallowance of Rs 75,601/- paid under the head hallmark checking expenses from out of the total expenditure of Rs 1,08,646/-. Thus, this ground of appeal of the assessee is dismissed;
Unaccounted income
++ no material has been brought before us by the Revenue to rebut the finding of the Commissioner of Income Tax (Appeals). In absence of any such material, we do not find any good reason to interfere with the order of the Commissioner of Income Tax (Appeals) and therefore, this ground of appeal of the Revenue is dismissed.
Good Luck to Parthanaji For First Appearance Before I T A T And winning the case.It is now Too Late.
C A Shah D J
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