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

High Court held in Thiagarajan Kumararaja [2017] 87 taxmann.com 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.

 

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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 taxmann.com 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 taxmann.com 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 taxmann.com 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”.

ITAT Ahmedabad’s applaudable initiatives for paper less Court mandated with effect from 31-12-2017

1.    Copies of ITAT orders to be sent to DRs, CIT A and DRP to be sent through e mail

2.    Registery of ITAT not to accept paper-books containing copies of any of the documents, copies of which are statutorily required to be filed anyway along-with the appeal itself, e.g. assessment order, CIT(A)’s order, DRP order, form 35, form 35A, form 36, grounds of appeal etc. The inclusion of these documents in paper-books is a common practice but it results in wholly avoidable wastage of paper, and is, therefore, discouraged.

 

3.    The registry will also not accept any paper book containing copies of judicial precedents reported in recognized journals and databases. The parties, however, may file copies of such reported judicial precedents when bench concerned, at the time of hearing, may specifically permit or require so.

4.    Paper to be used on both sides. o the extent possible and practicable to do so. Any document or paper-book, wherein paper is used only on one side and wilfully left unused on the other side, will not ordinarily be accepted by the Registry.

5.    Any document specifically prepared for the use of the Tribunal, including any applications and any written submissions, to be filed in our office, shall use the paper on both the sides, will use the font size of no more than 12.5 and will have an internal spacing of no more than 1.5 lines. Any documents or paper books, in violation of these guidelines, will not ordinarily be accepted by the Registry

 

6.    In all the internal functioning of this office, including in the judicial orders, the use of paper will be minimized to the extent possible by, inter alia, ensuring (i) that paper will henceforth be used on both the sides, ordinarily with a maximum font size of 12.5 and internal spacing of no more than 1.5 line.; (ii) that internal guard files for the judicial orders will henceforth be maintained only in digital mode; and that (iii) that use of email is required to be made, through secure official email accounts, as much as possible in all official communications. These requirements, however, do not restrict any officer of the Tribunal from making such exceptions to these general rules, as, in his considered opinion, may be justified or warranted on a case to case basis

7.    The hard copies of constitution of benches and the cause lists shall only be used for limited internal communications. However, a soft copy of the constitution of benches and the cause lists, in addition to being placed on the official website https://www.itat.gov.in and, with effect from today, in the twitter handle at https://twitter.com/itat_amd

 

8.    A guidance note on paperless operation of Court to be issued on or before 15-12-2017

A proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole

R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 (SC) The Division Bench of Delhi High Court followed the aforesaid decision in the case of CIT v. Rajinder Kumar [2014] 362 ITR 241/220 Taxman 3/[2013] 39 taxmann.com 126 (Delhi) and held that the amendment in the proviso to Section 40(a)(ia) of the Act is retrospective in nature.

Supreme Court Decisions on Income diverted at source before it accures to the assessee cannot be regarded as an income

1.    CIT v. Sitaldas Tirathdas [1961] 41 ITR 367 (SC),

2.       Provat Kumar Mitter v. CIT [1961] 41 ITR 624 (SC),

3.        Moti Lal Chhadami Lal Jain v. CIT [1991] 190 ITR 1/56 Taxman 49 (SC),

4.       CIT v. Sahara Investment India Ltd. [2004] 266 ITR 641/136 Taxman 61 (SC),

5.       CIT v. Chamanlal Mangaldas & Co. [1960] 39 ITR 8 (SC),

6.       Dalmia Cement Ltd. v. CIT [1999] 237 ITR 617/104 Taxman 97 (SC),

CIT v. Sunil J. Kinariwala [2003] 259 ITR 10/126 Taxman 161 (SC)