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II. Direct Taxes Case Laws:
1. Rajesh
T. Shah and others Vs. Tax Recovery Officer, Writ Petition No. 1657 of
1998, Date of Pronouncement: 13.03.2020, Bombay High Court
Whether
the Revenue is entitled to attach the properties belonging to a Private
Trust to recover dues of the trustees, who was a director of a company
which had allegedly defaulted in paying its tax dues.
Held: No
Brief Facts:
The trustees of Ramniklal r. Laliwala Famiy Benefit Trust
(hereinafter referred to as ‘the trust’) have filed this Petition on
behalf of the trust against the orders of attachment and garnishee
notices issued u/s 226 (e) of the Income Tax Act, 1961. Smt.Sushila R.
Laliwala during her lifetime settled the trust for the beneft of her
grand children. By Will deed dated 05-03-1985 Smt. Sushila R. Laliwala
bequeathed all her properties in favour of the trust and appointed the
original petitioner No.1 namely Harish R. Laliwala as the executor
thereof. The original petitioner No.1, Harish R. Laliwala in the year
1986 joined M/s. Verma Extrusions Pvt. Ltd. (assessee company) as
Managing Director and resigned from the company in the year 1993. The
Revenue by order dated 15th December-12-1993 issued under Section 179
(1) of the Act held the original petitioner No.1 Harish R. Laliwala
jointly and severally liable for payment of arrears of tax of
Rs.1,78,00,750/- in the case M/s. Verma Extrusions Pvt. Ltd. of which he
was the Managing Director. For realisation of the above liability, by
separate attachment orders dated 27th August 1997, revenue attached the
three properties belonging to the trust on the premise that the said
three properties belonged to the original petitioner No.1 in his
individual capacity. The contention of the Revenue appears to be that
the property being attached does not belong to the Trust but is a
property of one late Mrs. Sushila Laliwala- the mother of the defaulting
trustee. Therefore, the properties could be attached to the extent it
devolved upon the ex-director of the defaulting company as her legal
heir.
Held:
In the present case, the Hon’ble High court held “it is evident that
the subject properties belong to the trust which was settled by Smt.
Sushila R. Laliwala’s Will before initiation of recovery proceedings by
the Revenue against the original petitioner No.1. The said properties
did not belong to the original petitioner No. 1 or his legal heirs /
representatives. The trust being formed in the year 1978 and the Will
of Smt. Sushila R. Laliwala made in 1985 much before initiation of
recovery proceedings, there is no question of the said properties being
diverted to the trust to evade payment of due tax.
Accordingly, the attachment orders and garnishee notices against
the trust were quashed and the petition would also stand interfered
with.
(Please click here for judgment)
2. ITO vs. Shri Habib Khan, I.T.A. No. 655/JP/2019, Date of Pronouncement: 12.03.2020, ITAT - Jaipur
Whether
intelligence wing of income tax department is part of income tax
department and is not an ‘External Law Enforcement Agency’. Held: Yes
Where
addition is based on the information received from the investigation
wing, then it falls under the exception 10(e) of Circular 3/2018 dated
11.07.2018 for filing of appeals by the Department in case of low tax
effect. Held: No
Brief Facts:
In the present case, the appeal was filed by the Department against
the order dated 19.02.2019 of ld. CIT(A)-I, Jaipur for the assessment
year 2009-10. As per the grounds of appeal, the tax effect calculated by
the AO in respect of the relief granted by the ld. CIT (Appeals) which
has been challenged in the present appeal is Rs. 1,43,924/-, which is
not exceeding the monetary limit as specified by the CBDT for the
purpose of filing of appeal by the department before the Income Tax
Appellate Tribunal. However, the ld. DR submitted that the case falls
under exception as per clause 10(e) of Circular no. 03 of 2018 as the
case was reopened u/s 148 basis information received from Investigation
Wing, Mumbai and therefore, the present appeal has been preferred by the
Revenue and the same should therefore be heard on merits and not
dismissed on account of low tax effect.
Held:
The Hon’ble ITAT held that “the exception 10(e) which has been
referred by the ld DR relates to cases where addition is based on
information received from external sources in the nature of law
enforcement agencies such as CBI/ ED/ DRI/ SFIO/ Directorate General of
GST Intelligence (DGGI). Both administratively and functionally, there
cannot be any dispute that the Investigation Wing of Income Tax
Department is part of Income Tax Department and is therefore clearly not
an external law enforcement agency and that too, as specified in the
aforesaid exception. Therefore, in the instant case, where the matter
has been reopened based on information received from Investigation Wing
and the assessment has been completed by the Assessing officer where the
matter under appeal has tax effect less than the prescribed limit, it
will continue to be governed by low tax effect circular issued by the
CBDT which is binding on the Revenue.
Therefore, the appeal of the revenue is dismissed on account of
low tax effect given the matter not covered by any exceptions so
specified.
(Please click here for judgment)
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