Author: Vinamar Gupta

Supreme Court in S S Gadgil 53 ITR 231 has held that if limitation period is extended under the provisions of Income Tax law, the extended period of limitation shall not apply to assessments years, for which limitation period has expired before amending the law on limitation.

  Continue reading “If the right to act under the earlier statute has come to an end, it could not be revived by the subsequent amendment which extended the period of limitation”

Section 194LA is applicable for TDS on payments for Compulsory acquisition of immovable property exceeding Rs. 2,50,000 p.a.  @ 10% . However  u/s 194-IA TDS @ 1% is applicable on transfer of immovable property (other than compulsory acquisition) for consideration more than 50 lacs.

Continue reading “TDS on Compulsory Acquisition of Agricultural Land: Special Land Acquisition Officer [2016] 72 taxmann.com 255 (Gujarat) JULY 25, 2016”

Rumors about taxability of household jewellery negated by Government in press release dated 01-12-2016 saying that no new provision regarding chargeability of tax on jewellery have been introduced. Apprehension sought to be created that the jewellery with the household which is acquired out of disclosed sources or exempted income shall become taxable under the proposed amendment is totally unfounded and baseless.

Further press release has exhorted upon Instruction No.1916 dated 11-05-1994 of CBDT providing that during the search operations, no seizure of gold jewellery and ornaments to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family shall be made.

Author’s Comments:

It has been held by by Karnatka High Court in Smt Pati Devi 240 ITR 727 that weight of Jewellery as per Instruction dated 11-05-1995 is considered reasonable looking to the social circumstances prevailing in the country.

It has been held by Rajasthan High Court in Satya Narain Patni [2014] 46 taxmann.com

440 (Rajasthan) where  the authorized officers, in the first instance, did not seize the said jewellery as the same being within the tolerable limit or the limits prescribed by the Board , subsequent addition is also not justifiable on the part of the Assessing Officer.

Held by ITAT Mumbai in Harakchand N.Jain [1998] 101 TAXMAN 324 (MUM.) “………..we are conscious of the fact that in Indian society everyone receives gifts at the time of marriage and other occasions. Therefore, keeping in view the number of family members we are of the view that further rebate of 500 gms out of the entire jewellery may be treated as explained………..”

ITAT  Hyderabad Tribunal in R. Umamaheswar [2015] 60 taxmann.com 400 (Hyderabad – Trib.), ITAT Jabalpur in Smt. Sulochna Devi Jaiswal [2003] 1 SOT 624 (JAB.), ITAT Kolkatta in Smt Jyoti Bose [2004] 3 SOT 525 (KOL.), Allahabad High Court in CIT v. Ghanshyam Das Johri [2014] 41 taxmann.com 295 (Allahabad), Gujrat High Court in Rattan Lal Vyapari Lal Jain 339 ITR 351, ITAT Mumbai in Narendra D Patel, Rajasthan High Court in Kailash Chand Sharma 198 CTR 201, Madhya Pradesh High Court in M.S. Aggrawal HUF 11 DTR 169 have upheld the same view.

Hence in spirit of above instruction read with above court judgments , addition up to limits of Rs. 500 grams per married , 250 gms.  per unmarried lady and 100 gms per male member may not be sustainable, even if not explained and should be treated as explained.[As per Author’s Opinion]

Supreme Court in decision dated 16-12-2016 has refused to interfere into vires of Pradhan Mantri Garib Kalyan Yojna , aiming for 50% tax and 25% deposit redeemable over four years.

Supreme Court said tha it can not encroach upon policy making arena and suggest a different policy on the foundation that policy framed by Union of India could have been better.

There is difference between constitutional validity of policy and conception of framing of a better policy.

 

Important Excerpts from FAQ on online verification along with user guide already issued:

Continue reading “Date for online verification of cash deposits extended to 15th Feb 2017”

As per Board Circular dated 18-01-2017, Q.No. 4, a person to whom regular assessment including reassessment notice or search assessment notice has been issued can also avail benefit of PMGKY.

Continue reading “PMGKY (Pradhan Mantri Garib Kalyan Yojna) Important Information on Scope”

1. In case of an individual (other than minors) not having any business income,no further verification is required to be made if total cash deposit is up to Rs. 2.5 lakh.
2. In case of taxpayers above 70 years of age, the limit is Rs. 5.0 lakh per person.
3. In non business cases, where the person under verification has filed return of Income, a reasonable quantum can be considered as explained while quantifying the undisclosed amount, if any
4. In case of persons engaged in business or requirement to maintain books of accounts, no additional information is required to be submitted by the person under verification if total cash out of earlier income or savings (sum of responses for all cash transactions) is not more than the closing cash balance as on 31st March 2016 in the return for AY 2016-17
5. However, if the AO has reason to believe that the closing cash balance as on 31st March 2016 has been increased by revising the return or backdating transactions in the books of account, further verification may be carried out.
6. For cash received from identifiable persons without PAN, The AO needs to verify if the cash receipts are not in line with the normal practices of concerned business as mentioned in the earlier returns of Income after considering the remarks provided by the taxpayer, nature of business and earlier history before seeking additional information.
7. For Cash received from Unidentifiable persons, normal practice of business to be verified
8. AO may seek relevant information e.g. monthly sales summary (with breakup of cash sales and credit sales), relevant stock register entries, bank statement etc. to identify cases with preliminary suspicion of back-dating of cash sales or fictitious sales
9. Some indicators for suspicion of back dating of cash sales or fictitious sales could be :Abnormal jump in the cash sales during the period Nov to Dec 2016 as compared to earlier history.Abnormal jump in percentage of cash sales to unidentifiable persons as compared to earlier history.More than one deposit of specified bank notes in the bank account late in the demonetization period. Non-availability of stock or attempts to inflate stock by introducing fictitious purchases.Transfer of deposited cash to another account/entity which is not in line with earlier history.
10. In cases where online response has not been submitted, AO shall generate a letter from the Verification portal on ITBA to the person under verification for submission of online response on the e-filing portal and ensure its service. This process should be completed within 7 days of availability of information on the portal.
11. The person under verification is not required to attend the Income-tax office personally under any circumstance and at any stage during the verification exercise.
12. The Assessing Officer will also be able to send a request for additional information, if required.
13. No independent enquiry or third party verifications are required to be made by the Assessing Officer outside the online portal. Whatever information is necessary during verification, the same has to be collected through the person under verification using online platform only
14. Even telephonic queries are to be avoided.
15. It should be ensured that the communications made online with the persons under verification should be in very polite language without containing any element of threat or warning. No show cause of any kind should be given.
16. In cases of non compliance to cash verification window, if the cash deposit is not in line with the earlier return or information profile of the person under verification, necessary facts may be collected inter-alia by exercising the powers under section 133(6) with the approval of prescribed authority.
17. In appropriate cases depending upon the online response or otherwise, survey action u/s. 133A can be considered. During survey, where there is suspicion of back dating or fictitious cash transactions, CCTV recording of the cash counter at relevant banks may also be checked, if necessary. Reference can also be sent to the Investigation wing in appropriate cases.