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29.10.2018 - Voice of CA presents - Latest Updates
Monday, October 29, 2018

  I. Headlines Today:   

  1. Central Board of Direct Taxes (CBDT) has unveiled the final notification amending Form no. 13 & rules  (Click for detail)
  2. GST Council met 30 times, took 918 decisions in 2 years: Finance Ministry  (Click for detail)
  3. Received income tax notice under section 143(1)(a)? here’s how to deal with it  (Click for detail)
  4. How returns from debt mutual funds are taxed  (Click for detail)
  5. Electoral Bond Scheme 2018 - Sale of Electoral Bonds at Authorised Branches of SBI  (Click for detail)
  6. Sebi proposes relaxed norms for startup listing  (Click for detail)

  II. Direct Taxes Case Laws: 

1.  Bhupendra Murji Shah Vs. DCIT, W.P. No. 2157&2160, Date of Pronouncement: 11.09.2018, Bombay High Court

Whether AO is justified in insisting on payment of 20% of the demand based on CBDT's instruction dated 29.02.2016 during the pendency of appeal before the CIT(A)and this approach may defeat & frustrate the right of the assessee to seek protection against collection and recovery pending appeal?

Answer: No

Brief Facts:
The assessee filed an appeal before the CIT (Appeals) challenging the demand raised in assessment order.The assessee also filed an application for stay of demand during pendency of appeal. The Deputy Commissioner rejected assessee's stay application and communicated to assessee that it should pay 20% of the outstanding amount failing which collection and recovery would continue.

Once it is an appealable order and the appeal has been filed, it is pending, then, the appellant should have been given either an opportunity to seek a stay during the pendency of the appeal, which power is also conferred admittedly in the Commissioner or Deputy Commissioner should have held the demand in abeyance as prayed by theassessee. He does neither, but proceeds to communicate to theassessee that his application for stay is dismissed.

If the demand is under dispute and is subject to the appellate proceedings, then, the right of appeal vested in the assessee by virtue of the statute should not be rendered illusory and nugatory. That right can very well be defeated by such communication from the revenue/department as is impugned herein. That would mean that if the amount as directed by the impugned communication being not brought in, the assessee may not have an opportunity to even argue his appeal on merits or that appeal will become infructuous, if the demand is enforced and executed during its pendency. In that event, the right to seek protection against collection and recovery pending appeal by making an application for stay would also be defeated and frustrated. Such can never be the mandate of law.

In the circumstances, the petition is disposed of with directions that the Appellate Authority shall conclude the hearing of the appeal as expeditiously as possible and during pendency of these appeals, the assessee shall not be called upon to make payment of any sum, much less to the extent of 20 per cent under the Assessment Order/Confirmed Demand or claim to be outstanding by the revenue.
The appeal is in favour of the assessee and against the revenue.

(Please click here for judgment)


2.  CIT Vs. Aquatic Remedies Pvt. Ltd., I.T.A. No. 904 of 2016, Date of order: 25.07.2018, Bombay High Court

Whether the notice issued is out of jurisdiction if permission/sanction to issue notice to re-open the assessmentis not sought from the designated/ priscribed authoritybut from the other superior authority?

Held: Yes

Brief facts:
The assessee is engaged in the business of pharmaceutical products. The Ld. AO has issued a notice u/s 148 of the Income Tax Act, 1961 to reopen the assessment for the A.Y. 2004-05. The assessee challenged the issuance of the reopening notice on the ground that the permission/ sanction for issuing of the notice had to be obtained from the Addl. CIT u/s 151 (2) of the Act whereas the sanction has been obtained from the CIT and hence, the notice was without jurisdiction.The Ld. AO did not accept the assessee’s contention &passed the reassessment order u/s 143(3) r.w.s.147 of the Act.The hon’ble CIT (A)dismissed the appeal of the assessee.Being aggrieved, the assessee filed an appeal before hon’ble ITAT.The hon’ble ITAT reversed the order of CIT(A).The department filed an appeal before the Hon’ble High Court.

It was held that u/s 151(2) of the Act, the sanctioning/ permission to issue notice u/s 148 of the Act has to be issued by the Addl. CIT. The Ld. AO had not sought the approval of the Designated Officer but of the CIT. It is clear from the Form that the CIT had granted permission to initiate re-opening proceedings against the assessee. There was no final sanction granted by the Addl. CIT for issuing the notice to re-open the assessment.  The approval which has been granted is not by the Addl. CIT but by the CIT.There is no statutory provision under which a power to be exercised by an officer has been excercised by a superior officer. When the statute mandates the satisfaction of a particular manner, it has to be done in that manner. Therefore, powers which are conferred upon a particular authority have to be exercised by that authority and the satisfaction which the statute mandates of a distinct authority cannot be substituted by the satisfaction of another. Accordingly, the order was quashed and the notice issued was out of jurisdiction.
Hence, the appeal was held in favour of theassessee and against thedepartment.

Case cited:Ghanshyam K. Khabrani V/s Assistant Commissioner of Income Tax, 346 ITR 443, Bombay- HC

(Please click here for judgment)

Golden Rules:

  "We believe that good luck will do someday something for us.
But we don't know, good luck is also waiting that
we do something, someday" 


Thanks & Regards


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