Can the person chargeable with tax pay the amount of demand along with interest before the service of show cause notice under sub-section 73(1) or statement under section 73(3)?

Yes. The person chargeable with tax can pay the amount of tax along with interest under section 50 based on his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment in Form GST DRC-03. On receipt of such information, the proper officer shall issue an acknowledgement for accepting the payment made by the said person in Form GST DRC-04 and shall not serve any notice or statement with respect to the tax so paid.


Whether proper officer can issue similar show cause notice for any periods other than those covered under section 73(1)?

Yes. The proper officer may serve a statement under section 73(3) along with a summary electronically in Form GST DRC-02 containing details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized where the grounds relied upon by the proper officer for such periods are the same as are mentioned in the earlier notice issued under section 73(1). The service of such statement shall be deemed to be service of show cause notice on the person chargeable with tax.


What is the time limit for issue of show cause notice by the proper officer under section 73(2)?

The proper officer shall issue show cause notice at least 3 months prior to the time limit of 3 years for issuance of order i.e.
 Before completion of 3 years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates to, or
 within 3 years from the date of erroneous refund, as the case may be.


Under what circumstances, the proper officer shall invoke provisions of section 73(1) to serve show cause notice on the person chargeable with tax?

The proper officer shall serve notice under the provisions of Section 73(1) along with a summary, electronically in Form GST DRC-01 (as per Chapter XVIII-Demands and Recovery of the CGST Rules) on the person chargeable with tax for any reason other than:
 fraud
 willful misstatement
 suppression of facts,
when he has reasons to believe that tax has not been paid or short paid or erroneously refunded or input tax credit has been wrongly availed or utilized.


Request to furnish ITR without adhaar number turned down by Madras High Court in Thiagarajan Kumararaja

High Court held in Thiagarajan Kumararaja [2017] 87 125 (Madras) 06-11-2017 that :


Supreme Court in Binay Viswam has not stayed the Proviso to Sub-Section (2) of Section 139AA of the Act and the partial stay would be applicable only to facilitate the other transactions, which are mentioned in Rule 114B of the Rules, which pertains to transactions, in relation to which, PAN is to be quoted in all documents for the purpose of Clause (C) of Sub-Section (5) of Section 139A of the Act. Therefore, to state that the partial stay granted by the Hon’ble Supreme Court would enure to the benefit of the petitioner even for filing income tax returns is a plea, which is not sustainable and is liable to be rejected

Supreme Court Binoy Viswam 396 ITR 66 stays quoting of Adhaar number in respect of transactions mentioned in R. 114B on touchstone of sufferance in day to day dealings till the Constitution Bench authoritatively determines the argument of Article 21 of the Constitution.

Supreme Upholding the  validity of section 139AA  has held in Binoy Viswam held that the purpose behind the Act namely the Income Tax Act, 1961 is entirely different and the purpose being to curb black money, money laundering and tax evasion, etc. It has been further held that for achieving such objects, if the Parliament chooses to make the provision mandatory under the Act, the competence of the Parliament cannot be questioned on the ground that it is impermissible only because under the Aadhaar Act, the provision is directory in nature. The Hon’ble Supreme Court also held that it is the prerogative of the Parliament to make a particular provision directory in one Statute and mandatory/compulsory in the other and that by itself cannot be a ground to question the competence of the Legislature.



While considering the aforesaid submission of the petitioners, one has to keep in mind the aforesaid purpose of the impugned provision and what it seeks to achieve. The provision is aimed at seeding Aadhaar with PAN. We have already held, while considering the submission based on Article 14 of the Constitution, that the provision is based on reasonable classification and that has nexus with the objective sought to be achieved. One of the main objectives is to de-duplicate PAN cards and to bring a situation where one person is not having more than one PAN card or a person is not able to get PAN cards in assumed/fictitious names. In such a scenario, if those persons who violate Section 139AA of the Act without any consequence, the provision shall be rendered toothless. It is the prerogative of the Legislature to make penal provisions for violation of any law made by it. In the instant case, requirement of giving Aadhaar enrolment number to the designated authority or stating this number in the income tax returns is directly connected with the issue of duplicate/fake PANs.


 “124. Therefore, it cannot be denied that there has to be some provision stating the consequences for not complying with the requirements of Section 139AA of the Act, more particularly when these requirements are found as not violative of Articles 14 and 19 (of course, eschewing the discussion on Article 21 herein for the reasons already given). If Aadhar number is not given, the aforesaid exercise may not be possible.

Having said so, it becomes clear from the aforesaid discussion that those who are not PAN holders, while applying for PAN, they are required to give Aadhaar number. This is the stipulation of sub-section (1) of Section 139AA, which we have already upheld. At the same time, as far as existing PAN holders are concerned, since the impugned provisions are yet to be considered on the touchstone of Article 21 of the Constitution, including on the debate around Right to Privacy and human dignity, etc. as limbs of Article 21, we are of the opinion that till the aforesaid aspect of Article 21 is decided by the Constitution Bench a partial stay of the aforesaid proviso is necessary. Those who have already enrolled themselves under Aadhaar scheme would comply with the requirement of sub-section (2) of Section 139AA of the Act. Those who still want to enrol are free to do so. However, those assessees who are not Aadhaar card holders and do not comply with the provision of Section 139(2), their PAN cards be not treated as invalid for the time being. It is only to facilitate other transactions which are mentioned in Rule 114B of the Rules. We are adopting this course of action for more than one reason. We are saying so because of very severe consequences that entail in not adhering to the requirement of sub-section (2) of Section 139AA of the Act. A person who is holder of PAN and if his PAN is invalidated, he is bound to suffer immensely in his day to day dealings, which situation should be avoided till the Constitution Bench authoritatively determines the argument of Article 21 of the Constitution. Since we are adopting this course of action, in the interregnum, it would be permissible for the Parliament to consider as to whether there is a need to tone down the effect of the said proviso by limiting the consequences.”

Audit Report for 80IC filed in time but return filed late: 80-IC allowed by ITAT

ITAT Relied upon following decisions:

  • Jagriti Aggarwal (P&H): Due date for furnishing the return of income as per Section 139(1) of the Act is subject to the extended period provided under sub-section (4) of Section 139 of the Act


  • Hansa Dalakoti (ITAT Del): Audit Report for 80IC filed in time but return filed late: 80-IC



  • Fiberfill Engineers(ITAT Del):. Section 139(4) is to be allowed as proviso to Section 139(1)


  • Bajaj Tempo Ltd.(SC): incentive provision has to be interpreted in a manner so as to advance the objects of economic activities in the country and not to deny the claim merely on technical grounds



  • Poddar Pigments Ltd (Del HC): Claim u/s 80IB had not been made in the original return and the time period for filing of the revised return had also lapsed. The assessee preferred an application u/s 264 for condoning the delay. The Court held that “delay occurred due to bona fide reasons and there is no mala fide intent of the assessee in delaying in filing of the revised return”.


  • Venktiah(Hyd Bench) Delay in filing of return due to loss of computer data condoned and 80-Ic deduction allowed. Confirmed by the Hon’ble High Court of Andhra Pradesh vide order dated 26.06.2013



  • Dhir Global Industries (P.) Ltd.(ITAT Delhi): claim of deduction u/s 10B, the claim had been allowed by the ITAT holding that delay in late filing the return is reasonable.


  • Rajwinder Kaur Maha (ITAT Chd): Heera Moti Agro Industries: Delay in filing of return because copies of seized documents were not made available to the assesse. Hence 80-IC deduction should be allowed

Symbiosis Pharmaceuticals (P.) Ltd. [2017] 87 32 (Chandigarh – Trib.) 04-10-2017

Delay of 21 days on wrong advice of CA condoned by ITAT

Appeal was handed over to the Chartered Accountant Shri Sumit Aggarwal. The said counsel advised that four months time was available for filing the appeal before the ITAT and since he was not appearing before the ITAT, he would engage some other professional for filing of the appeal. The said Chartered Accountant on his visit to a professional in Ambala for filing of the appeal, it was submitted, then learnt that the time limit for filing the appeal before the ITAT was infact 60 days from the date of the order and not 120 days as understood by him. Acting on the said information, the assessee was accordingly advised who promptly filed the appeal. The said appeal, it was submitted, was late by 21 days solely on account of the ignorance of the counsel. Relying upon; (a) Improvement Trust Ludhiana v. Ujagar Singh Civil Appeal No. 2395 of 2008 of June 9, 2010, (b) Jayvantsinh N Vaghela v. ITO [2013] 40 491 (Gujarat) and (c) Paras Rice Mills Kurukshetra v. CIT ITA No. 657 of 2009 (Punj. & Har.), prayer for condoning the delay was made.

Symbiosis Pharmaceuticals (P.) Ltd. [2017] 87 32 (Chandigarh – Trib.) 04-10-2017

Supreme Court in Madhur Housing and Development Co. on 05-10-2017 has held that loan/advance by closely held company to another company in which shareholder of closely held company having more than 10% voting power also had substantial interest in the borrowing company, although is taxable as deemed dividend income but the income is taxable in the hands of shareholder and not the borrowing company

Presumption underlying the deeming provision is that that the loans or advances would ultimately be made available to the shareholders of the company giving the loan or advance. The legal fiction in s. 2(22)(e) enlarges the definition of dividend but does not extend to, or broaden the concept of, a “shareholder”.