Ignorance of law followed by misguidance by consultants are enough to quash penalty under sctions 76

ST : Ignorance of law is enough to set-aside penalty under Sections 76, 77 & 78, hence, penalties for not filing return and not paying service tax were set aside

ITAT can recall its order for reconsideration if it didn’t consider the SC’s decision on similar iss

IT : Where at time of disposing of issue relating to bad debts, Tribunal inadvertently failed to consider applicability of order passed by Supreme Court on similar issue to assessee's case, it was justified in recalling its earlier order for limited purpose of reconsideration of said aspect of case

Winding up petition against Co. to be dismissed if debts claim against respondent Co. is in dispute

CL : Where debt claimed by petitioner could not be said to be undisputed and petitioner failed to make a prima facie case under section 433, winding up petition against respondent-company was to be dismissed

Revenue recognition can take place on achieving a milestone of work nonetheless the year in which in

IT: Where only an invoice had been raised and work had not even commenced it did not constitute income for that year since revenue recognition on completion of certain milestone of work is an accepted method in mercantile system of accounting

Profits of Singaporean Co. from slot allocation to vessel operators on an Indian route would get tre

IT/ILT : Where assessee, a Singaporean company in connection with its business of sea faring cargo with India, entered into joint service agreement with vessel operators for slot allocation in feeder vessels for carrying cargo to its hub either at Singapore or at Sri Lanka, from where cargo was loaded into mother vessel for its destination port, its income was eligible for relief under article 8 of India-Singapore DTAA

Chennai ITAT applies SB ruling in LG’s Case to decide the TP adjustment in respect of AMP expenses

IT/ILT : TP Adjustments in respect of AMP expenses ITAT applies SB ruling in LG

Reassessment valid if assessee failed to make true and full disclosure of share transactions

IT : Where there was failure on part of assessee to make true and complete disclosure in respect of share transactions entered into by it, in view of proviso to section 147, Assessing Officer was justified in initiating reassessment proceedings even after expiry of four years from end of relevant assessment year

Penalty under sections 76 and 77 can’t be evaded for procedural failures; existence of mens rea not

ST : Penalties under provisions of sections 76 and 77 are imposable for procedural failures and do not need existence of mens rea

COMMISSIONER OF INCOME TAX - III Vs. M/S SUREN INTERNATIONAL PVT LTD

THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 07.05.2013 + ITA No.289/2012 COMMISSIONER OF INCOME TAX - III ..... Appellant versus M/S SUREN INTERNATIONAL PVT LTD ..... Respondent Advocates who appeared in this case: For the Appellant :Mr Amol Sinha, Sr.Standing Counsel with Mr Deepak Anand, Mr.Anshum Jain & Mr Rahul Kochar, Advocates. For the Respondent :Mr S. Krishnan, Advocate. CORAM:- HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE VIBHU BAKHRU JUDGMENT VIBHU BAKHRU, J 1. This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as "the said Act") has been filed on behalf of the revenue challenging the order dated 23.12.2011 passed by the Income Tax Appellate Tribunal, in ITA No. 2941/D/2010, pertaining to the assessment year 2002-03. The Tribunal has, by its order dated 23.12.2011, quashed the proceedings initiated, by the Assessing Officer, on the basis of a notice under Section 148 of the said Act ITA No.289/2012 Page 1 of 16 issued for reopening the assessment pertaining to the said assessment year 2002- 03. The notice under Section 148 of the said Act was issued on 25.03.2009 which is beyond the period of 4 years from the end of the relevant assessment year. The Tribunal held that as there has been no failure on the part of the assessee to disclose material facts and the same is also not alleged either in the notice under Section 148 or in the reasons recorded for initiating reassessment proceedings, the reassessment proceedings are illegal and without jurisdiction. In absence of failure, on the part of the assesse, to disclose fully and truly all material facts necessary for the proceedings, the Assessing Officer would lack the jurisdiction to initiate reassessment proceedings. Consequently, the Tribunal has quashed the reassessment order. 2. The challenge on the part of the revenue to the order passed by the Tribunal has to be considered in light of the following facts. 3. The assessee filed its return of income on 31.03.2003 declaring an income of ` 30,18,779/-. The said return was initially accepted under Section 143(1) on 30.05.2003. However, subsequently on 20.10.2003, the same was taken up for scrutiny. The balance sheet and the books of account of the assessee disclosed that, during the relevant previous year, the assessee had received an aggregate sum of ` 4,82,01,000/- as share application money from various persons and the same was outstanding, pending allotment of shares. The Assessing Officer issued a detailed questionnaire to inquire into the said share ITA No.289/2012 Page 2 of 16 application money and sought details of the share applicants who had paid the share application money to the assessee company. The Assessing Officer thereafter conducted an inquiry to determine the genuineness and creditworthiness of the transactions relating to the share applications. The assessee produced confirmations from the concerned share applicants during the course of the assessment proceedings. In order to make further inquiries, the Assessing Officer issued summons under Section 131 of the Act to 25 parties from whom the share application money had been received. Initially, some of the summons were received back unserved and the assessee was asked to furnish fresh addresses, which were provided by the assessee. However even thereafter summons to certain persons were received back and the assesse again provided a fresh set of addresses with respect to those persons. The hearings for examining the noticees under Section 131 were fixed on 07.03.2005, 22.03.2005 and 23.03.2005. One of the persons examined under Section 131 declined to acknowledge any relationship with the assessee and consequently the amount of share application money deposited by the said party amounting to ` 5,00,000/- was added as income in the hands of the assesse, as unexplained credit in the books of accounts, in terms of Section 68 of the Income Tax Act. Whilst some of the parties to whom summons under section 131 were issued remained unserved, in certain other cases the share-applicants did not come forward on the scheduled dates of hearing for being examined. The Assessing Officer, thereafter, ITA No.289/2012 Page 3 of 16 concluded that a sum of ` 42,00,000/- on account of share application money was liable to be taxed as unexplained credit in the books of accounts under Section 68 of the Income Tax Act. 4. The assessment made by the Assessing Officer by the order dated 30.03.2005 was carried in appeal by the assessee. The assessee contested the assessment made by the Assessing Officer and in support of his contentions furnished letters of confirmation, photocopies of share application forms, photocopies of income tax returns, balance sheets, pan cards and bank statements of the share applicants in respect of whom the additions were made in the assessment order dated 30.03.2005. The assessee further produced evidence to show that in some cases, the share application money had since been refunded. The CIT (Appeals) forwarded the additional evidence produced by the assessee to the Assessing Officer for examining the same and furnishing a report thereon. The Assessing Officer submitted a report dated 07.10.2005 reiterating the issues mentioned in the assessment order. The CIT (Appeals) concluded that some of the persons to whom summons had been issued could not appear before the Assessing Officer due to paucity of time and, in the light of the subsequent evidence, deleted the additions made by the Assessing Officer to the extent of ` 37 lacs. The addition of ` 5 lacs in relation to the share applicant who had categorically stated that she had no link with the assesse was upheld by the CIT(A). ITA No.289/2012 Page 4 of 16 5. It can be seen from the above facts that the assessee furnished all particulars relating to the share application money including confirmations from the share applicants as well as other evidence in relation to those persons, who the Assessing Officer had found to be suspect. 6. It is the case of the revenue that during certain investigation proceedings, a statement of one Shri Deepak Gupta was recorded on 25.09.2004 (that is, while the assessment proceedings were still pending). Shri Deepak Gupta has allegedly admitted that he was providing accommodation entries to the assessee. It has been contended on behalf of the revenue, that based on the statement made by the said Deepak Gupta, the Assessing Officer came to believe that income during the relevant previous year had escaped assessment and the Assessing Officer issued the notice dated 25.03.2009 under Section 148 of the Act, seeking to reassess the income of the assessee under Section 147 of the Act. The assessee requested for the reasons for issuance of notice under Section 148 of the said Act which were furnished by the Assessing Officer. The assessee objected to the reasons, however the same were rejected by the Assessing Officer. 7. The reasons for issuance of the notice under Section 148, inter alia, alleged that the assessee had taken certain accommodation entries. The reasons for reopening of the assessment proceedings furnished by the Assessing Officer are as under :- ITA No.289/2012 Page 5 of 16 "12.03.2009 Reasons for issue of notice u/s 148 in the case of M/s Suren International Pvt. Ltd AY 2002-03 Return in this case was filed at an income of ` 10,74,990 on 29.10.2002 Enquiries were conducted by the Investigation Wing of the Dept. In this inquiry it was found that one Mr Deepak Gupta S/o Late Shri J.N. Gupta R/o Shastri Nagar, Delhi 110052 was indulging in providing accommodation entries. In his statement recorded on 25/09/2004, he has admitted that he takes cash from various parties and gives them DD/Cheque by charging his commission. This DD/Cheque is then introduced by these parties as share Capital or Loan in their books of accounts. M/s Suren International Pvt Ltd has taken following accommodation entries from the accounts operated by Deepak Gupta which have been credited in its account with BOP, Karol Bagh Branch in A.Y 2002-03, THE DETAILS ARE GIVEN BELOW: VALUE INSTRU DATE ON NAME OF BANK BRANCH A/C NO OF MENT WHICH ACCOUNT FROM OF ENTRY ENTRY NO BY ENTRY HOLDER WHICH ENTRY GIVING TAKEN WHICH TAKEN OF ENTRY ENTRY GIVING ACCOUN ENTRY GIVING GIVEN BANK T TAKEN ACCOUNT 500000 26-JUL-01 B.I.C. SBP DG 50088 CONSULT ANT S P LTD 500000 26-JUL-01 --DO-- --DO-- --DO-- 50088 500000 26-JUL-01 --DO-- --DO-- --DO-- 50088 500000 26-JUL-01 --DO-- --DO-- --DO-- 50088 500000 26-JUL-01 --DO-- --DO-- --DO-- 50088 500000 26-JUL-01 --DO-- --DO-- --DO-- 50088 500000 495673 21-JUL-01 DINANAT OBC MINTO 19 H ROAD LAHURIW ITA No.289/2012 Page 6 of 16 ALA 500000 495673 21-JUL-01 --DO-- --DO-- --DO- 19 500000 495673 21-JUL-01 --DO- --DO- --DO- 19 500000 495673 21-JUL-01 --DO- --DO- --DO- 19 500000 495673 21-JUL-01 --DO- --DO- --DO- 19 500000 495673 21-JUL-01 --DO- --DO- --DO- 19 500000 495673 21-JUL-01 --DO- --DO- --DO- 19 250000 142208 30-JUN-01 DINESH JAILAXMI FATEHP 11246 GUPTA URI COOP BANK 250000 142208 30-JUN-01 --DO-- --DO-- --DO-- 11246 250000 142208 30-JUN-01 --DO-- --DO-- --DO-- 11246 250000 142208 30-JUN-01 --DO-- --DO-- --DO-- 11246 250000 142208 30-JUN-01 --DO-- --DO-- --DO-- 11246 250000 142208 30-JUN-01 --DO-- --DO-- --DO-- 11246 500000 257601 6-JUL-01 ENPOL(PV --DO-- --DO-- 3340 T) 500000 257601 6-JUL-01 --DO-- --DO-- --DO-- 3340 500000 257601 6-JUL-01 --DO-- --DO-- --DO-- 3340 500000 257601 6-JUL-01 --DO-- --DO-- --DO-- 3340 500000 257601 6-JUL-01 --DO-- --DO-- --DO-- 3340 500000 257601 6-JUL-01 --DO-- --DO-- --DO-- 3340 450000 499344 24-MAY-01 LANDMAR --DO-- --DO-- 3194 K COMMUNI CATION PVT LTD 450000 499344 24-MAY-01 --DO-- --DO-- --DO-- 3194 450000 499344 24-MAY-01 --DO-- --DO-- --DO-- 3194 450000 499344 24-MAY-01 --DO-- --DO-- --DO-- 3194 ITA No.289/2012 Page 7 of 16 450000 499344 24-MAY-01 --DO-- --DO-- --DO-- 3194 450000 499344 24-MAY-01 --DO-- --DO-- --DO-- 3194 500000 145084 02-JUL-01 LEELA --DO-- --DO-- 8644 DHAR 500000 145084 02-JUL-01 --DO-- --DO-- --DO-- 8644 500000 145084 02-JUL-01 --DO-- --DO-- --DO-- 8644 500000 145084 02-JUL-01 --DO-- --DO-- --DO-- 8644 500000 145084 02-JUL-01 --DO-- --DO-- --DO-- 8644 500000 145084 02-JUL-01 --DO-- --DO-- --DO-- 8644 500000 329725 30-JUN-01 MANOHA --DO-- --DO-- 1556 R LAL MANISH KUMAR 500000 329725 30-JUN-01 --DO-- --DO-- --DO-- 1556 500000 329725 30-JUN-01 --DO-- --DO-- --DO-- 1556 500000 329725 30-JUN-01 --DO-- --DO-- --DO-- 1556 500000 329725 30-JUN-01 --DO-- --DO-- --DO-- 1556 500000 329725 30-JUN-01 --DO-- --DO-- --DO-- 1556 480000 269479 18-MAY-01 PROFAN IND BAK CH 5035 FINANCE CHOK & INVESTME NT LTD 480000 269479 18-MAY-01 --DO-- --DO-- --DO-- 5035 480000 269479 18-MAY-01 --DO-- --DO-- --DO-- 5035 480000 269479 18-MAY-01 --DO-- --DO-- --DO-- 5035 480000 269479 18-MAY-01 --DO-- --DO-- --DO-- 5035 480000 269479 18-MAY-01 --DO-- --DO-- --DO-- 5035 500000 311122 18-JUL-01 SUMA CORPN KB 2919 FINANCE INVESTME NT LTD. 500000 311122 18-JUL-01 --DO-- --DO-- --DO-- 2919 ITA No.289/2012 Page 8 of 16 500000 311122 18-JUL-01 --DO-- --DO-- --DO-- 2919 500000 311122 18-JUL-01 --DO-- --DO-- --DO-- 2919 500000 311122 18-JUL-01 --DO-- --DO-- --DO-- 2919 500000 311122 18-JUL-01 --DO-- --DO-- --DO-- 2919 500000 311122 18-JUL-01 --DO-- --DO-- --DO-- 2919 500000 311122 18-JUL-01 --DO-- --DO-- --DO-- 2919 250000 135415 30-JUN-01 SUSHIL JAILAXMI FATEHP 10081 GOYAL COOP URI BANK 250000 135415 30-JUN-01 --DO-- --DO-- --DO-- 10081 250000 135415 30-JUN-01 --DO-- --DO-- --DO-- 10081 250000 135415 30-JUN-01 --DO-- --DO-- --DO-- 10081 250000 135415 30-JUN-01 --DO-- --DO-- --DO-- 10081 250000 135415 30-JUN-01 --DO-- --DO-- --DO-- 10081 500000 503258 27-JUL-01 SWETU OBC MINTO 33 STONE P. ROAD LTD 500000 503258 27-JUL-01 --DO-- --DO-- --DO-- 33 500000 503258 27-JUL-01 --DO-- --DO-- --DO-- 33 500000 503258 27-JUL-01 --DO-- --DO-- --DO-- 33 500000 503258 27-JUL-01 --DO-- --DO-- --DO-- 33 500000 503258 27-JUL-01 --DO-- --DO-- --DO-- 33 500000 25-JUL-01 TECNOCO SBP DG 50060 M ASSOCIAT ES PVT. 500000 25-JUL-01 --DO-- --DO-- --DO-- 50060 500000 25-JUL-01 --DO-- --DO-- --DO-- 50060 500000 25-JUL-01 --DO-- --DO-- --DO-- 50060 500000 25-JUL-01 --DO-- --DO-- --DO-- 50060 500000 25-JUL-01 --DO-- --DO-- --DO-- 50060 ITA No.289/2012 Page 9 of 16 500000 145067 02-JUL-01 VIPIN JAILAXMI FATEHP 9378 KUMAR COOP URI BANK 500000 145067 02-JUL-01 --DO-- --DO-- --DO-- 9378 500000 145067 02-JUL-01 --DO-- --DO-- --DO-- 9378 500000 145067 02-JUL-01 --DO-- --DO-- --DO-- 9378 500000 145067 02-JUL-01 --DO-- --DO-- --DO-- 9378 500000 145067 02-JUL-01 --DO-- --DO-- --DO-- 9378 3,65,80, TOTAL 000 AMOUN T In this case information have been received that their goods have been seized by DRI and also penalty of Rs 2 Crores is levied by Commissioner Customs (ICD). From the above details and the Statement of Mr. Deepak Gupta who has admitted that he has not carried out any business activity accept that of providing accommodation entries as described above that of providing accommodation entries as described above, it is seen that the assesee has diverted its own money into the business by way of taking accommodation entries. Thus the amounts stated in table above taxable u/s 68 of the Act and hence, I have reason to believe that an amount of Rs 3,65,80,000/- has escaped assessment within the meaning of section 147 of the IT Act 1961. Since 4 years have been elapsed, the assessment record is being submitted for kind perusal and approval of the Commissioner of Income-Tax, Delhi-III, New Delhi according to section 151 (1) of the IT Act, 1961 for issuance of notice u/s 148 of I.T. Act. -sd/- (D.D. YADAV) Asstt. Commissioner of Income Tax Circle 9(1), New Delhi" ITA No.289/2012 Page 10 of 16 8. The alleged accommodation entries, tabulated in the reasons for issuance of the notice under section 148, totaling ` 3,65,80,000/- formed the basis of initiating the reassessment proceedings. The Assessing Officer recorded that he had reason to believe that the amount of ` 3,65,80,000/- has escaped assessment. It is relevant to state that the reasons as furnished by the Assessing Officer, first of all, did not disclose any allegation that the assessee had failed to make any disclosure for the purposes of the assessment. Secondly, it would be pertinent for us to mention that a bare perusal of the entries listed in the table forming a part of the reasons indicate that most of the entries have been repeated six times to form the total of ` 3,65,80,000/-. The Assessing Officer has thus made an addition on the basis of certain set of alleged entries which ex facie include the same entries which have been repeated multiple times to arrive at the figure of ` 3,65,80,000/-. This is clearly evident from the fact that the details of instruments through which payments are alleged to have been made are also similar. 9. We may also add that although the said reasons as furnished by the Assessing Officer contain a statement that information had been received that certain goods of the assessee had been seized by DRI and penalty had been levied by Commissioner Customs (ICD), there is no allegation that any income had escaped assessment on that count and thus the only reason for initiating ITA No.289/2012 Page 11 of 16 proceedings under Section 147/148 are the alleged accommodation entries purportedly totaling ` 3,65,80,000/-. 10. The Assessing Officer once again commenced inquiries with regard to the amount received by the assessee as share application money, in the reassessment proceedings and concluded that the identity, creditworthiness of the share applicants and the genuineness of the transactions in relation to share application money totaling a sum of ` 4,75,01,000/- was not established and accordingly made an addition of the said amount. The Assessing Officer made a further addition of ` 3,46,00,000/- to the income of the assesse on the alleged ground of concealment of goods. The order of reassessment dated 24.12.2009 was carried in appeal by the assessee, however the same was dismissed by the CIT (Appeals) by an order dated 25.03.2010. 11. The assessee thereafter preferred an appeal before the Tribunal against the order dated 25.03.2010 passed by the CIT (Appeals), inter alia, on the ground that the reassessment proceedings were based on change of opinion and the same were initiated without there being a reason to believe that income had escaped assessment. The Tribunal allowed the appeal holding that no omission or failure to disclose all material facts, fully and truly, on the part of the assesse, was alleged and consequently the reassessment proceedings were illegal and without jurisdiction. ITA No.289/2012 Page 12 of 16 12. The Tribunal also noted that the statement of Shri Deepak Gupta was recorded on 25.03.2004 that is, prior to the framing of the first assessment and subsequently the matter had traversed its course in appeal before the CIT(A). The Tribunal also noted that a sum of ` 3,59,85,000/- had also been stated to be refunded by the assessee to the share applicants. The Tribunal concluded that the conditions for reopening the assessment under Section 147 were not satisfied and hence, the reassessment proceedings initiated pursuant to the notice dated 25.03.2009 were illegal and quashed the same by the impugned order. 13. We have heard counsels for the parties at length. 14. The learned counsel for the appellant contended that even though there is no specific allegation that the assessee had failed to disclose all the material facts but the same can be gleaned from the reasons itself. We are unable to accept this contention. In the first instance, we do not find the reasons as recorded by the Assessing Officer to be reasons in law, at all. A bare perusal of the table of alleged accommodation entries included in the reasons as recorded, discloses that the same entries have been repeated six times. This is clearly indicative of the callous manner in which the reasons for initiating reassessment proceedings are recorded and we are unable to countenance that any belief based on such statements can ever be arrived at. The reasons have been recorded without any application of mind and thus no belief that income has escaped assessment can be stated to have been formed based on such reasons as recorded. 15. Having stated the above, we are also unable to accept the contention that there has been failure on the part of the assessee to disclose all material facts in his return as, first of all, there is no such allegation in the reasons as furnished to ITA No.289/2012 Page 13 of 16 the assesse; secondly, we cannot ignore the fact that the enquiry into the share application money had been conducted in detail by the Assessing Officer in the first round of assessment. Having framed his assessment after enquiry into the identity, genuineness and the creditworthiness of the share applicants, it would not be open for the Assessing Officer to re-examine the same without there being any material allegation of failure, on the part of the assesse, to make a full and true disclosure. It is well-settled that in order to invoke the provisions of Section 147 of the Act, after a period of four years from the end of the relevant assessment year, in addition to the Assessing Officer having reason to believe that any income has escaped assessment, it must also be established that the income has escaped assessment on account of the assessee failing to make returns under Section 139 or on account of failure on the part of the assessee to disclose, fully and truly, the necessary material facts. This Court in the case of Wel Intertrade P. Ltd. & Anr. v. ITO: (2009) 308 ITR 22 (Del) and Haryana Acrylic Manufacturing Company v. CIT &Anr.: (2009) 308 ITR 38 (Del) held that it would not be open for the Assessing Officer to reopen the assessment already done beyond the period of four years unless the income has escaped assessment on account of failure, on the part of the assesse, to disclose all the material facts. In the case of Wel Intertrade P. Ltd (supra) it has been held as under: "A plain reading of the said proviso makes it more than clear that where the provisions of section 147 are being invoked after the period of four years from the end of the relevant assessment year, in addition to the Assessing Officer having reason to believe that any income chargeable to tax has escaped assessment, it must also be established as a fact that such escapement of assessment has been occasioned by either the assessee failing to make a return under section 139, etc., or by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for that assessment year. In the present case, the question of making of a return is not in issue and the only question ITA No.289/2012 Page 14 of 16 is with regard to the second portion of the proviso, which relates to failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Insofar as this pre- condition is concerned, there is not a whisper of it in the reasons recorded by the Assessing Officer. In fact, as indicated above, the Assessing Officer could not have made this a ground because the Assessing Officer had required the petitioner to furnish details with regard to loss occasioned by foreign exchange fluctuation which the petitioner did by virtue of the reply dated February 5, 2002. Since the petitioner had fully and truly disclosed all the material facts necessary for the assessment, the pre-condition for invoking the proviso to section 147 of the said Act had not been satisfied. In this connection, it may be relevant to note one decision, although there are several others. The said decision is that of the Punjab and Haryana High Court in the case of Duli Chand Singhania v. Asstt. CIT : (2004) 269 ITR 192. In the said decision, the High Court of Punjab and Haryana was faced with a similar situation. The court noted that there was not even a whisper of an allegation that the escapement in income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The court observed that absence of this finding, which is the sine qua non for assuming jurisdiction under section 147 of the Act in a case falling under the proviso thereto, makes the action taken by the Assessing Officer wholly without jurisdiction. We agree with these observations of the Punjab and Haryana High Court and are of the view that in the present case also, the Assessing Officer has acted wholly without jurisdiction. The invocation of section 147, the issuance of the notice under section 148 and the subsequent order on the objections are all without jurisdiction. The impugned notice as well as the proceedings pursuant thereto are quashed." 16. In the reasons as furnished by the Assessing Officer, we find that there is neither any allegation that the assessee had failed to truly disclose any material facts at the time of assessment, nor can we readily infer the same in view of the ITA No.289/2012 Page 15 of 16 fact that a detailed enquiry had been conducted by the Assessing Officer with regard to the identity and creditworthiness of the share-applicants and genuineness of the transactions in relation to the share application money received by the assessee. Further the mere statement that the DRI has seized certain goods of the assessee and levied a penalty also cannot be stated to be a reason for reopening of assessment of the assessee as the said statement made is neither followed by the recording of a belief that the income escaped on that count or that the assessee has failed to disclose all relevant material, fully and truly, at the stage of the first assessment. 17. We, accordingly, do not find any merit in the present appeal and no substantial question of law has been raised for our consideration. The present appeal is, accordingly, dismissed. Parties are left to bear their own costs. VIBHU BAKHRU, J BADAR DURREZ AHMED, J MAY 07, 2013 RK ITA No.289/2012 Page 16 of 16

Y. P. Trivedi vs. JCIT (ITAT Mumbai)

Delay in filing appeal due to CA’s fault is bona fide & must be condoned The assessee filed an appeal before the Tribunal which was delayed by 496 days. In the application for condonation of delay, the assessee claimed that he had handed over the papers to his Chartered Accountant and that the latter had mixed up the papers with other papers in his office which led to the delay. The department opposed the application on the ground that there was “gross negligence” on the part of the assessee and that sufficient cause for the delay was not explained. HELD by the Tribunal: The facts do not suggest that the assessee has acted in a malafide manner or that the reasons explained are only a device to cover an ulterior purpose. It is a settled proposition of law that Courts should take a lenient view on the matter of condonation of delay provided the explanation and the reason for delay is bonafide and not merely a device to cover an ulterior purpose or an attempt to save limitation in an underhand way. The Court should be liberal in construing sufficient cause and should lean in favour of such party. Whenever substantial Justice and technical considerations are opposed to each other, cause of substantial Justice has to be preferred. On facts, the reasons explained by the assessee show that due to bonafide mistake and inadvertence, the appeal could not be filed within the period of limitation. Accordingly, the delay of 496 days has to be condoned (Mst. Katiji 167 ITR 471(SC) referred).

Reducing the subsidy from cost of assets without examining their nature and purpose isn’t correct

IT : Where nature of subsidy, purpose for which same was made available and all other relevant factors were not examined, reducing subsidy from cost of depreciable asset required fresh consideration

Case remanded as sec. 68 additions were deleted without considering evidences filed by the parties

IT: Where Tribunal while deleting addition made under section 68, did not consider material produced by respective parties, impugned order passed by it was to be set aside and, matter was to be remanded back for disposal afresh

NEW DELHI HOTELS LTD Vs. ACIT

THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 17.05.2013 + ITA 238/2013 + ITA 239/2013 + ITA 240/2013 NEW DELHI HOTELS LTD ... Appellant versus ACIT ... Respondent Advocates who appeared in this case: For the Appellant : Mr Anoop Sharma For the Respondent : Mr Abhishekh Maratha CORAM:- HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE VIBHU BAKHRU JUDGMENT BADAR DURREZ AHMED, J (ORAL) 1. The present appeals have been filed on behalf of the assessee under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the "said Act") challenging the order dated 07.12.2012 passed by the Income Tax Appellate Tribunal. The Tribunal had, by the order dated 07.12.2012, disposed of three appeals being ITA Nos. 3742/DEL/2012, 3743/DEL/2012 and 1462/DEL/2012 which had been preferred by the ITA Nos. 238/13,239/13&240/13 Page 1 of 4 revenue relating to the assessment year 2004-05, 2009-10 and 2008-09, respectively. 2. These appeals raise a common question and thus, have been taken up together. 3. The issue sought to be raised in the present appeals is:- "Whether the rental income derived from the unsold flats which are shown as stock-in-trade in the books of the appellant/assessee would fall within the head "Profits and gains from business and profession" or under the head, "income from house property". 4. The Tribunal held that it would fall under the head of "profits and gains from business and profession", whereas it is the appellant/assessee's contention that it would fall within the head "income from house property". It appears that this issue is no longer debatable in view of the decision in the case of CIT v Ansal Housing Finance & Leasing Co. Ltd. decided on 31.10.2012 in ITA No. 18/1999. That decision has, subsequently, been followed in CIT v. Discovery Estates Pvt. Ltd (in ITA Nos. 1089/11 and 1090/2011) and CIT v. Discovery Holding Pvt. Ltd. (in ITA No. 1097/2011) decided on 18.02.2013. One of the questions raised in Discovery Estates Pvt. Ltd and Discovery Holding Pvt. Ltd (supra) was "whether the Income-tax Appellate Tribunal was right in holding that the rental income should be assessed in the income from the business and not under the head "income from house property"?" This court answered that question in the negative by ITA Nos. 238/13,239/13&240/13 Page 2 of 4 following the decision in the case of Ansal Housing Finance & Leasing Co. Ltd (supra). 5. Mr Maratha appearing on behalf of the revenue contended that Ansal Housing Finance & Leasing Co. Ltd (supra) was a decision where the question was with regard to deemed rent on the basis of annual letting value (ALV) whereas in the present appeals, the issue is with regard to the actual rent received in respect of flats let out by the appellant/assessee. However, we find that in Discovery Estates Pvt. Ltd and Discovery Holding Pvt. Ltd (supra) the issue was in the backdrop of actual rent receipts and not on the basis of deemed rent. Therefore, the decision of this court in Discovery Estates Pvt. Ltd and Discovery Holding Pvt. Ltd (supra) would govern the present case also. 6. Consequently, while framing the question as to whether the Income-tax Appellate Tribunal was right in holding that rental income should be assessed under the head of "profits and gains from business and profession" and not under the head "income from house property", we answer the same in the negative. We may add, however, that the learned counsel for the appellant had also taken the plea of consistency ITA Nos. 238/13,239/13&240/13 Page 3 of 4 but, we have not examined the same as it was not necessary for us to do so because of the position indicated above. 7. These appeals are allowed as above. BADAR DURREZ AHMED, J VIBHU BAKHRU, J MAY 17, 2013 kb ITA Nos. 238/13,239/13&240/13 Page 4 of 4

Ministry issues clarifications on queries of prospective investors on FDI policy for multi-brand ret

FDI/FEMA/ILT : Circular 1 of 2013 - Consolidated FDI Policy - Clarification on Queries of Prospective Investors/Stakeholders On FDI Policy for Multi-Brand Retail Trade

Y. P. Trivedi vs. JCIT (ITAT Mumbai)

Delay in filing appeal due to CA’s fault is bona fide & must be condoned The assessee filed an appeal before the Tribunal which was delayed by 496 days. In the application for condonation of delay, the assessee claimed that he had handed over the papers to his Chartered Accountant and that the latter had mixed up the papers with other papers in his office which led to the delay. The department opposed the application on the ground that there was “gross negligence” on the part of the assessee and that sufficient cause for the delay was not explained. HELD by the Tribunal: The facts do not suggest that the assessee has acted in a malafide manner or that the reasons explained are only a device to cover an ulterior purpose. It is a settled proposition of law that Courts should take a lenient view on the matter of condonation of delay provided the explanation and the reason for delay is bonafide and not merely a device to cover an ulterior purpose or an attempt to save limitation in an underhand way. The Court should be liberal in construing sufficient cause and should lean in favour of such party. Whenever substantial Justice and technical considerations are opposed to each other, cause of substantial Justice has to be preferred. On facts, the reasons explained by the assessee show that due to bonafide mistake and inadvertence, the appeal could not be filed within the period of limitation. Accordingly, the delay of 496 days has to be condoned (Mst. Katiji 167 ITR 471(SC) referred).

CIT vs. Syed Ali Adil (Andhra Pradesh High Court)

S. 54/54F deduction allowable for purchase of multiple independent house units The assessee offered long term capital gains on sale of property and claimed s. 54 deduction on the ground that he had purchase two adjacent residential flats. The AO held that the deduction could not be given for both flats on the ground that they were independent units, separated by a strong wall. The CIT(A) and Tribunal allowed the claim on the basis that s. 54 deduction was available for purchase of multiple flats, even if the flats were on different floors. On appeal by the department to the High Court, HELD dismissing the appeal: The expression “a residential house” in s. 54 (1) has to be understood in the sense that the building should be of residential nature and “a” should not be understood to indicate a singular number. Where an assessee had purchased two residential flats, he is entitled to exemption u/s 54 in respect of capital gains on sale of its property on purchase of both the flats, despite the fact that the flats were purchased by separate sale deeds. Deduction is allowable even if the flats are on different floors. On facts, as the two flats purchased by the assessee are adjacent to one another and have a common meeting point, the deduction cannot be denied (D. Ananda Basappa 309 ITR 329 (Kar), K. G. Rukminiamma 331 ITR 211 (Kar) followed; Susheela M. Jhaveri 107 ITD 327 (Mum) (SB) held not good law)

Credit may be allowed even if documents are not in the name of service recipient

ST : As per proviso to rule 9(2) of CENVAT Credit Rules, 2004, name of service recipient on documents is not an essential requirement for availment of credit, provided services are received and accounted for as per law

INDIAN TAX APPELLATE TRIBUNAL, MUMBAL CONSTITUTION OF BENCHES FROM 10..06.2013 TO 13.06.2013

[unable to retrieve full-text content]INDIAN TAX APPELLATE TRIBUNAL, MUMBAL CONSTITUTION OF BENCHES FROM 10..06.2013 TO 13.06.2013 {ad} For more information...

No question of law if lower authorities upheld additions on basis of retracted statement given durin

IT: Where assessee at time of survey conducted under section 133A stated that cash in question represented its unaccounted money and lower authorities during assessment proceedings did not accept assessee's altogether different explanation made with respect to said cash and added same to its income, no question of law arose for consideration

Onus on assessee to prove that docs unearthed during search of other person doesn’t belong to him

IT : Where an incriminatory note refers to some payment being made by assessee, it is for assessee to explain as to why he should not be treated or considered as owner of said sum

For Financial Year 2013-14 Cost Inflation Index notified as ‘939’

IT : Section 48, Explanation (v) of the Income-Tax Act, 1961 - Capital Gains - Computation of - Notified Cost Inflation Index for Financial Year 2013-14

Notification No 16 (RE-2013)/2009-2014 dated 06-06-2013

GOVERNMENT OF INDIA

MINISTRY OF COMMERCE AND INDUSTRY

DEPARTMENT OF COMMERCE

Notification No. 16 (Re 2013)/2009-2014

New Delhi, Dated The 6^th June, 2013

Subject: Amendment in Para 2.35 (b) of Foreign Trade Policy, 2009-2014.

S.O. (E): In exercise of powers conferred under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph 2.1 of the Foreign Trade Policy, 2009-2014, as amended from time to time, the Central Government hereby makes the following amendment in paragraph 2.35 (b) of Foreign Trade Policy, 2009-2014:

2. The existing sentence in Para 2.35(b) of Foreign Trade Policy, 2009-2014 will be followed by:
   

   “…………except to countries as notified by DGFT from time to time. Export of such goods will be permitted against payment in Indian rupees to the notified countries subject to at least 15% value addition.”

   
   


3. After the amendment, Para 2.35(b) of Foreign Trade Policy, 2009-2014 shall read as under:
   

   “Exports of such goods imported against payment in freely convertible currency would be permitted against payment in freely convertible currency except to countries as notified by DGFT from time to time. Export of such goods will be permitted against payment in Indian rupees to the notified countries subject to at least 15% value addition.”

   
   


4. Effect of this Public Notice:
   

   An enabling provision has been made to allow export of goods imported against payment in freely convertible currency where export proceeds will be realized in rupees. This dispensation will be applicable to such countries as would be notified by DGFT from time to time. They also have to achieve 15% value addition.

   
   

Sd/-
(Anup K. Pujari)

Director General of Foreign Trade
Email:dgft@nic.in

[Issued from F. No. 01/93/180/25/AM-12/PC-2(B)]

Assessee can choose to pay ST on services used for export and claim credit thereof

ST : I. Custom house agent's services, shipping agent services and clearing & forwarding agent services and courier agency services used for purpose of export are 'input services'