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31.07.2014 - Voice of CA presents - Updates
Wednesday, July 30, 2014

  I. Today's Headlines:    

  1. CBDT releases clarification on taxation of 'Alternate Investment Funds' having status on non-cheritable trusts under the IT Act, 1961  (Click for detail)
  2. Noti. No. 33: Income Tax (Seventh Amendment) Rules, 2014 - Substitution of Form Nos. 3CA, 3CB & 3CD  (Click for detail)
  3. Key takeaways from new Form No. 3CD  (Click for detail)
  4. Politeness is the new mantra for the Income Tax department  (Click for detail)
  5. Top earners, high-growth sectors under tax scanner  (Click for detail)
  6. No KYC for Kisan Vikas Patra but interest payment to face TDS  (Click for detail)
II.  Direct Tax Case Laws:

1.   ACIT Vs. Anil Khandelwal, I.T.A. Nos. 5516 & 5517/Del/2012, Date of Order: 18.07.2014, ITAT - Delhi

Presumption u/s 134(4A)/292C is available only in the case of the person from whose possession and control the documents are found and it is not available in respect of a third party. Even in the case of such a person from whose possession and control any incriminating document is found, the presumption u/s 132(4A)/292C is a rebuttable one.

The AO has heavily emphasized on the fact that Shri.S.K.Gupta was an entry provider and since the names of the companies in which the appellant’s family members or relatives were interested was found mentioned in the document seized from Shri S.K.Gupta, it is enough to conclude that the appellant must have paid cash to Shri Gupta to receive accommodation entries from his group companies. Where as the appellant has denied the contents of the impugned seized documents and the person from whom the impugned documents were seized has also stated during cross-examination that there has been no cash transactions between him and the appellant or his family members or entities in which they are interested.

In the absence any corroborative evidence to suggest that the entries found in the seized documents were also reflected in the books of the appellant or his concerns. It is well settled in law that the loose papers, diaries and documents cannot possible be construed as books of account regularly kept in the course of business. Such evidence would, therefore, be outside the purview of Section 34 of the Evidence Act, 1972. Therefore, the revenue would not be justified in resting its case just on the loose papers and documents found from third party if such documents contained narrations of transactions with the assessee as decided by the Hon’ble Supreme Court in the case of Central Bureau of Investigation vs. V.C.Shukla (1988) 8 SSC 410 and Chuharmal vs. Commissioner of Income Tax (1988) 172 250/38 Taxman 190 (SC).

(Please click here for judgment)

2.   SPA Lifestyle (P.) Ltd. Vs. Assistant Commissioner of Income Tax, I.T.A. No. 6777 (Delhi) of 2013, Date of Order: 28.03.2014, ITAT - Delhi

No penalty shall be levied u/s 271B in case where assessee furnished form 3CB alongwith return of income and merely because audit report was not furnished in form 3CA.

The short controversy in the present appeal is that if an assessee is required to get its account audited under any other law but the said audit has not been completed by the specified date for furnishing the return of income then could he furnish tax audit report in form 3CB or not and if assessee has furnished the report in form 3CB whether any default can be imputed to assessee or not. In order to properly appreciate the controversy, we reproduce section 44AB along with Rule 6G and relevant reports in form 3CA and 3CB.

The object of legislature is to avoid duplicacy of audit - first under other law and then under Income Tax Act. There is no dispute that assessee had obtained report in form 3CB along with form 3CD on 30th September, 2009 and the relevant details were furnished in the return of income filed on line. Therefore, the assessee had made substantial compliance with the provisions of section 44AB. It is further noticeable that report in form 3CB requires the auditor to examine the balance sheet and profit and loss account and certify that the same are in agreement with the books of account maintained by the assessee, whereas form 3CA only requires the audit report along with audited financial statement to be annexed with the report. Thus, primarily the only difference in form 3CA and form 3CB is that in form 3CA the Auditors are not required to give separate audit report. Thus, when an assessee had furnished the tax audit report in form 3CB then it cannot be said that it has not complied with the provisions of sec. 44AB merely because the report is not in form 3CA which was not possible for assessee to furnish.

(Please click here for judgment)

 Golden Rules:

  "If you have a choice, choose the best but,
if you have no choice, do the Best"


  Thanks & Regards


Voice of CA 

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