September 16th, 2011
Government of India
Office of the Director of Income-tax (Legal & Research)-I
3rd Floor, Drum Shape Building, I P Estate, New Delhi – 110002
Phone: 2337 8302 Fax: 2337 8826
No DIT(L&R)-I/NZ/SLP/393/2011/5091 Date: 16/09/11
Office of the Director of Income-tax (Legal & Research)-I
3rd Floor, Drum Shape Building, I P Estate, New Delhi – 110002
Phone: 2337 8302 Fax: 2337 8826
No DIT(L&R)-I/NZ/SLP/393/2011/5091 Date: 16/09/11
To
All Chief Commissioners of Income-tax
All Directors General of Income-tax
Sir / Madam,
All Chief Commissioners of Income-tax
All Directors General of Income-tax
Sir / Madam,
Sub: Summary dismissal of departmental appeal by Delhi High Court by retrospective application of monetary limits of tax effect –
(i) suggestion to file recall petition instead of review in High Court
(ii) filing of review / recall petition in cases where tax effect is below Rs 4 lacs – reg
(i) suggestion to file recall petition instead of review in High Court
(ii) filing of review / recall petition in cases where tax effect is below Rs 4 lacs – reg
Ref: Directorate of L&R letters dtd 02/09/11 for filing of review petition & dtd 01/09/11 for sending SLP proposal
Kindly refer to the above.
2. Subsequent to the letter under reference, some suggestions have been received that instead of filing review petition, a recall petition may be filed in High Court on the basis of Supreme Court order in Surya Herbal case. This is because for filing review petition there is a time limit of 30 days from the date of relevant order which will not be applicable for filing recall petition. In view of the above, the field officers are advised to file review or recall petition as may be suggested by the Sr Standing Counsel in a particular case.
3. Another confusion in the field relating to this matter is whether or not review petition is to be filed in those cases where tax effect is less than Rs 4 lacs. It was suggested by this Directorate letter No Addl DIT(L&R)-I/SLP/2011-12/4502 dtd 01/09/11 addressed to all CCsIT / DGsIT at Delhi that proposal to file SLP was not to be sent in such cases. In this regard it is clarified that as per letter dtd 24/08/11 the Board's decision only not to file SLP due to smallness of tax effect was conveyed. However since appeal to High Court was filed as per the relevant Instruction applicable at the time of filing, review / recall petition in such cases is also to be filed where tax effect is less than Rs 4 lacs, if filing appeal to High Court was permissible as per Instruction applicable at the time of filing.
Yours faithfully
(R. K. Gupta)
Director of Income-tax (L&R) – I
New Delhi
Director of Income-tax (L&R) – I
New Delhi
CAPITAL GAINS
In favour of: Assessee
Capital gains on sale of property cannot be assessed in the hands of power of attorney holder, when no consideration was paid to the actual owner at the time of execution of the power of attorney and the assessee had acted merely as an agent, since there was no transfer to or enabling enjoyment of property in favour of agent in any manner so as to attract Section 2(47)(vi).
High Court Of Madras
Commissioner Of Income Tax Vs C. Sugumaran : (2014) 90 CCH 0173 ChenHC
Decided On: Nov 03, 2014
In favour of: Assessee
Capital gains on sale of property cannot be assessed in the hands of power of attorney holder, when no consideration was paid to the actual owner at the time of execution of the power of attorney and the assessee had acted merely as an agent, since there was no transfer to or enabling enjoyment of property in favour of agent in any manner so as to attract Section 2(47)(vi).
High Court Of Madras
Commissioner Of Income Tax Vs C. Sugumaran : (2014) 90 CCH 0173 ChenHC
Decided On: Nov 03, 2014
Illusionary entry passed by assessee to impress bankers and stakeholder didn't represent real income; not taxable
November 12, 2014[2014] 49 taxmann.com 403 (Calcutta)/[2014] 361 ITR 632 (Calcutta)
IT: Where illusory entry passed by assessee company to impress bankers and to please shareholders and same did not represent any real income/receipt, same would not be taxable
Notice u/s 143(2) issued prior to filing of return in response to notice u/s 147 is invalid, even if return is filed late
Hon'ble Bangalore ITAT has in the case of Shri G.N.Mohan Raju,v/s ITO in ITA No.242 & 243(Bang) 2013 has held that notice u/s 143(2) issued prior to filing of return in response to notice u/s 147 is invalid, even if return is filed late. AO could not treat a return filed prior to issue of notice u/s 148 of the Act as a return filed by the assessee, pursuant to such notice unless and until assessee had given a direction or request on these lines. Operation of Section 143(2) of the Act is with reference to a return filed by the assessee. The assessments were completed u/s 143(3) r.w.s.147 of the Act and not u/s 144 of the Act. Unless and until the assessee had either filed a return pursuant to the notice u/s 148 of the Act or made a request for treating the earlier return filed by it to be one filed pursuant to notice u/s 148 of the Act. AO could not proceed with an assessment u/s 143(3) of the Act.There could be no presumption that a return filed prior to a notice issued u/s 148 of the Act is one under or in pursuance to such notice.
Hon'ble Bench has held as under:-
"Once the original return filed by the assessee was subject to processing u/s 143(1) of the Act, the procedure of assessment pursuant to such a return, in our opinion came to an end, since AO did not issue any notice within the 6 months period mentioned in proviso to section 143(2)(ii). No doubt, if the income has been understated or the income has escaped assessment, an AO is having the power to issue notice u/s 148 of the IT Act. Notice u/s 148 of the Act, issued to the assessee required it to file a return within 30 days from the date of service of such notice. There is no provision in the Act, which would allow an AO to treat the return which was already subject to a processing u/s 143(1) of the IT Act, as a return filed pursuant to a notice subsequently issued u/s 148 of the Act. However, once an assessee itself declare before the AO that his earlier return could be treated as filed pursuant to notice u/s 148 of the IT Act, three results can follow. Assessing Officer can either say no, this will not be accepted, you have to file a fresh return or he can say that 30 days time period being over I will
not take cognizance of your request or he has to accept the request of the assessee and treat the earlier returns as one filed pursuant to the notice u/s 148 of the IT Act. In the former two scenarios, AO has to follow the procedure set out for a best of judgment assessment and cannot make an assessment under section 143(3). On the other hand, if the AO chose to accept assessee's request, he can indeed make an assessment under section 143(3). In the case before us, assessments were completed under section 143(3) read with section 147. Or in other words AO accepted the request of the assessee. This in turn makes it obligatory to issue notice u/s 143(2) after the request by the assessee to treat his earlier return as filed in pursuance to notices u/s 148 of the IT Act was received. This request, in the given case, has been made only on 05-10-2010. Any issue of notice prior to that date cannot be treated as a notice on a return filed by the assessee pursuant to a notice u/s 148 of the Act. Or in other words, there was no valid issue of notice u/s 143(2) of the IT Act, and the assessments were done without following the mandatory requirement u/s 143(2) of the IT Act. This in our opinion, render the subsequent proceedings all invalid"
not take cognizance of your request or he has to accept the request of the assessee and treat the earlier returns as one filed pursuant to the notice u/s 148 of the IT Act. In the former two scenarios, AO has to follow the procedure set out for a best of judgment assessment and cannot make an assessment under section 143(3). On the other hand, if the AO chose to accept assessee's request, he can indeed make an assessment under section 143(3). In the case before us, assessments were completed under section 143(3) read with section 147. Or in other words AO accepted the request of the assessee. This in turn makes it obligatory to issue notice u/s 143(2) after the request by the assessee to treat his earlier return as filed in pursuance to notices u/s 148 of the IT Act was received. This request, in the given case, has been made only on 05-10-2010. Any issue of notice prior to that date cannot be treated as a notice on a return filed by the assessee pursuant to a notice u/s 148 of the Act. Or in other words, there was no valid issue of notice u/s 143(2) of the IT Act, and the assessments were done without following the mandatory requirement u/s 143(2) of the IT Act. This in our opinion, render the subsequent proceedings all invalid"
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