Connect us       New User?     Subscribe Now
Confirm your Email ID for Updates
18.10.2018 - Voice of CA presents - Latest Updates
Thursday, October 18, 2018

  I. Headlines Today:   

  1. MCA Notification: Changes made to Sch. III for AS & Ind AS compliant companies  (Click for detail)
  2. IT officer cant take away your tax refund and adjust against outstanding  (Click for detail)
  3. Financial service providers outside the purview of IBC, says NCLAT  (Click for detail)
  4. Companies rush to match input tax credit with vendor returns  (Click for detail)
  5. CVC shares report on 100 bank frauds with govt, RBI  (Click for detail)
  6. How to understand your credit card statement and avoid penalties  (Click for detail)

  II. Direct Taxes Case Laws: 

1.  Surendra Kumar Jain Vs. Principal Commissioner of Income Tax,  W.P.(C) 4304/2018 & CM APPL. 16759/2018 Date of Pronouncement: 01/10/2018. Delhi High Court

Whether limitation period in cases of block reassessment proceedings concerning search, seizure assessments be governed by period prescribed u/s 153(2A)(Relevant to AY 2005-06 to 2012-13).

Held: Yes

Brief facts:
The brief facts of the case are that pursuant to search and seizure proceedings u/s 132 of Income tax Act’1961 on the assessee, the assessment was completed for the block period on 28.03.2013 by the concerned Ld. AO. Ld. CIT(A) partly allowed the assessee’s appeal on 14.08.2014.On appeal, the Hon’ble ITAT remitted the matter back to Ld.AO to complete the assessment de novo who completed the assessment of block period by order dated 22.12.2017.The assessee contended that the impugned order is per se illegal and void on the ground that Ld.AO should have completed the assessment up to 31.12.2016 as per proviso to Sec 153(2A).(Applicable to AY 2005-06 to AY 2012-13).
Being aggrieved, the assessee has filed writ petition before the Hon’ble High Court.

The Hon’ble High Court by placing reliance on judgement in case of Odeon Builders Pvt. Ltd. vs. PCIT held that as per proviso to Section 153(2A), the period in case of reassessment was nine months from the financial year in which notice for reassessment is served.
Further, the Hon’ble Court held that two year period of limitation as was contended by revenue shouldn’t be applied in remand proceedings (as was the case in hand) in cases of block reassessment proceedings.
Therefore, the appeal was held in favour of assessee and against the revenue.

Cases Referred:
1.    Odeon Builders Pvt. Ltd. vs. PCIT (2017) 393 ITR 27 (Delhi HC).
2.    Nokia India (P) Ltd. vs. DCIT, (2017) 85 291 (Delhi HC).
3.    CIT vs. Bhan Textile P. Ltd, (2008) 300 ITR 176 (Delhi HC).
4.    PCIT vs. PPC Business and Products P. Ltd., (2017) 398 ITR 71(Delhi HC).

(Please click here for judgment)


2.  ACIT Vs. M/s Cast & Blower Co. Pvt. Ltd., I.T.A. No. 750/Rjt/2014, Date of Pronouncement: 04.10.2018, ITAT - Rajkot

Whether the provisions of Section 292C of the Income Tax Act, 1961 can be applied in respect of unsigned Agreement to Sell found during the course of Survey at the premises of assessee in the name of third party, on the basis of Statement of Director of assessee?

Held: Yes

Brief facts:
The assessee company is engaged in manufacturing of water pumps under the brand ‘TRISHUL’. A survey operation under s.133A of the Act was carried out at the business premises of the assessee company on 19.10.2010. In the course of survey proceedings, a Satakhat (agreement to sale) on a stamp paper no. 3997 of Rs.50/- was found pertaining to an agricultural land for consideration of Rs.2,57,00,000/-. The aforesaid Satakhat was duly signed by the sellers but remained unsigned on behalf of the assessee. At the back of the Satakhat, a manual jotting of various entries were observed which shows that the assessee has made certain payments on various dates to the intending sellers aggregating to Rs.1,71,25,000/- in cash as on-money in cash in part consideration of land. As per the statement of Director of assessee company, it was found that the assessee has decided to purchase the land in the name of son of the Director. The assessee contended that no such dealing as mentioned in the documents impounded were actually carried out.

The AO accordingly invoked Section 292C of the Act which enables the Revenue to presume that the documents found in the course of the survey belong to the person in possession and the contents thereof are true. The AO made an addition of Rs.1,71,25,000/- towards unexplained money under s.69A r.w.s. 292C of the Act. Aggrieved by the order of the AO, the assessee preferred appeal before the CIT(A). The CIT(A) has deleted the addition on the ground that the impugned Satakhat found during the course of survey action in the business premises of the assessee company is a piece of dumb document & without any corresponding independent evidence, no additions can be made based on mere statements recorded during course of survey action, which cannot be acted upon as an evidence for the purposes of making additions. The Revenue, being aggrieved, filed an appeal before the Hon’ble ITAT.

The Hon’ble ITAT held that absence of any formal signature on behalf of the buyer in the Satakhat agreement found in its custody is not detrimental to assessee company per se. It is only elementary that the transaction of on-money in cash is between the two parties would be done secretly. Typically, flows of cash are unearthed by the chain of circumstances. There can possibly be no direct manner to gather the proof of the cash transactions. The preponderance of probabilities thus leans against the assessee when the facts and circumstances are seen in natural perspective. Further, when the document i.e. Satakhat is read as a whole in the circumstances existing, we find that presumption of unaccounted transactions in the deal as recorded in the manual jottings is clearly discernible and has a sound basis. The retraction made by the Director subsequent to survey and affidavit placed before the CIT(A) is clearly opposed to what is obvious and thus ostensibly unreliable and devoid of any value. It is concluded on facts that the contents of the document found are relevant and true which establishes the existence of unaccounted cash transactions, non-detection of physical cash per se would not be a handicap to invoke the provisions concerning assessment of unexplained and unaccounted assets and/or income. For these reasons, the question is answered in favour of the revenue and against the assessee.
Hence, the appeal was held in favour of the revenue and against the assessee.

(Please click here for judgment)

Golden Rules:

  Reflection Cannot Be Seen In Boiling Water.
The Same Way, Truth Cannot Be Seen In A State Of Anger.
So "Analyze Before Finalize" 


Thanks & Regards


Voice of CA 

« Back
Online Poll
Connect Us       New User?     Subscribe Now