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Discussion / Meaning of tax for penalty
« Last post by sujittalukder on Today at 03:39:53 pm »
Penalty u/s 271(1)(c) is imposed which may rnage from 100 to 300 percent of tax ought to be avoided. In this case, what does the 'tax' mean? Does it mean only the basic tax or tax including surcharge and education cess?
Please clarify.

Discussion / Outstanding decision of ITAT Mumbai
« Last post by brettlee on September 18, 2014, 12:39:04 pm »
Recently I have read a very good decision of the Mumbai Bench of the ITAT in the case of Veena developers wherein the Hon'ble Bench has observed as under:-
++we deem it necessary to point out here that once an issue is adjudicated and settled by the higher judicial authority, it is not open to the lower income tax authorities to reopen, make assessment or reassessment on the basis of same facts and circumstances and in the absence any incriminating or new material, information or evidence or of a contrary decision of superior judicial authority in order of hierarchy. If the Revenue officials choose to do so, then it is to be treated as not only the misuse but also abuse of their authority and in such an event defenses like protecting the interest of Revenue, keeping the issue alive etc. will not be sufficient to absolve them of the likely penal consequences against them. It reminds us of another case titled as "ITO V/s M/s. Deepa Restaurant & Bar P. Ltd.," ITA No.1336/M/2012 decided on 05.02.2014. In the said case the assessee had disputed the legality of the notice issued by the AO u/s 143(2) of the act. The Tribunal had upheld the order of the CIT(A) vide which he had annulled the assessment made by the AO u/s 143(3) by holding that the notice issued by the AO under section 143(2) was not in time. However, the AO thereafter observed that since the assessment in this case had been annulled on the legality of notice under section 143(2) of the Act and the case had not been heard on merits at any of the stage including appellate proceedings, hence, there was a reason to believe that the income assessed in this case had escaped and therefore he reopened the assessment u/s 147 of the Act. The matter again travelled to the Tribunal. The Tribunal while adjudicating the issue in para 5 of the said order observed as under:
++ In the facts of the present case, if such an act of making additions u/s 153A on the alleged ground of maintaining consistency in the stand of the Revenue and for keeping the issue alive, is allowed or not condemned, it may lead continuous harassment of assessee and never ending litigation on the same issue, such as, if the said additions are deleted by the higher judicial authorities even up to the level of Apex Court, the AO still would reopen the assessment and make additions on the same issue and on the basis of same facts u/s 147 of the Act. If the further appeals also meet the same fate of setting aside of such additions, then the ld. Commissioner would step into to make the same additions on the same issue again, by way of invoking the provisions of section 263 of the Act and so on. In such circumstances, there will not be any end to litigation on the same issue in the case and also to the harassment, loss and agony of the assessee.
++Coming back to the merits of the present case, we hold that in the facts and circumstances of the case, there is no infirmity in the order of the CIT(A) in deleting the additions made by the AO u/s 153A. We hold accordingly. However before parting with the order, we direct the registry to send a copy of the order to the Chairman of the CBDT so that the necessary instructions may be issued to the Income Tax officers/Commissioners in this regard and in future due care be taken, not to disrespect or disobey the orders of the higher judicial authorities and also not to file frivolous appeals

For the first time in my carrier I have seen such a dynamic decision of the ITAT hats off to these members. This type of approach is required to built the faith of a poor assessee.
Leading judgment of justice Chagla on jurisdiction of bench of HC and principal seat of HC to decide particular matter

In the case of State of Maharashtra vs. Narayan, reported in AIR
1983 SC 46 three Judges of the Apex Court in paragraph 26 relied on the ratio
of the decision rendered by Chagla, C.J. at the Bombay High Court.  It would
be appropriate to quote paragraph 26 in its entirety, which reads thus :

“26.As to the scope and effect of sub­s. (3) of s. 51 of the Act, 
the question came up for consideration before Chagla, C.J. and 
Badkas, J. in Seth Manji Dana v. Commissioner of Income­tax, 
Bombay, Civil Appeal No.995 of 1957(Bom),  decided on July 
22,   1958.  This  was   an  application  by which  the  validity of 
Rule 254 of the Appellate Side Rules was challenged insofar as 
it provided that all income­tax references presented at Nagpur 
should   be   heard   at   the   principal   seat   of   the   High   Court   at 
Bombay, and the contention was that the result of this rule 
was   that   it   excluded   income­tax   references   from   the 
jurisdiction   of   the   High   Court   functioning   at   Nagpur.   In
repelling the contention, Chagla, C. J. observed :

"Legally, the position is quite clear. Under section 51 (3)
of the States Reorganization Act, the Judges sitting at Nagpur 
constitute a part of the High Court of Bombay. They are as 
much a part of the High Court of Bombay, and if we might say
so distinguished part of the High Court of Bombay, as if they 
were sitting under the same roof under which Judges function
in Bombay. All that happens is that the Chief Justice, under 
the powers given to him under the Letters Patent distributes 
the   work   to   various   Judges   and   various   Divisional   Benches, 
and acting under that power he distributes certain work to the 
Judges sitting at Nagpur."
He then continued:
"All that rule 254 does is to permit as a matter of convenience 
certain   matters   to   be   presented   at   Nagpur   to   the   Deputy
Registrar. If rule 254 had not been enacted, all matters would 
have   to   be   presented   at   Bombay   and  then   the   Chief  Justice 
would   have   distributed   those   matters   to   different   Judges, 
whether sitting in Bombay or at Nagpur. It is out of regard and 
consideration   for   the   people   of   Vidarbha   and   for   their 
convenience that this rule is enacted, so that litigants should 
not be put to the inconvenience of going to Bombay to present 
certain   matters.   Therefore,   this   particular   rule   has   nothing
whatever   to   do   either   with   section   51   (3)   of   the   States 
Reorganisation Act or with the Constitution." With regard to 
Rule 254, he went on to say :
"Now, having disposed of the legal aspect of the matter, we turn 
to the practical aspect, and let us consider whether this rule 
inconveniences the people at Nagpur. If it does, it would certain
call for an amendment of that rule. Now, there is particular 
reason   why   all   Income   Tax   References   should   be   heard   in 
Bombay and that reason is this. The High Court of Bombay for 

He then concluded :
many   years,   rightly   or   wrongly,   has   followed   a   particular 
policy with regard to Income Tax References and that policy is 
that the  same   Bench  should   hear  Income   Tax References,   so 
that there should be a continuity with regard to the decisions 
given on these References. I know that other High Courts have 
referred to this policy with praise because they have realised 
that the result of this policy has been that Income Tax Law has 
been laid down in a manner which has received commendation 
from various sources. The other reason is and we hope we are 
not   mistaken   in   saying   so   that   the   number   of   Income   Tax 
References from Nagpur are very few. If the number was large, 
undoubtedly a very strong case would be made out for these 
cases to be heard at Nagpur."

"After all, Courts exist for the convenience of the litigants and 
not in order to maintain any particular system of law or any 
particular system of administration. Whenever a Court finds 
that   a   particular   rule   does   not   serve   the   convenience   of 
litigants, the Court should be always prepared to change the 
The ratio to be deduced from the decision of Chagla, C. J. is 
that the   Judges   and   Division   Courts   sitting   at  Nagpur   were 
functioning as if they were the Judges and Division Courts of
the High Court at Bombay.”


Mrs. Sayali wife of Swapnil Kuber,

 // VERSUS //
Swapnil S/o. Harischandra Kuber,

DATED    :   SEPTEMBER 19, 2013.
Citation; 2014(5) ALLMR97
Discussion / Guidelines to judges for writing judgments and orders
« Last post by bpagrawal on September 09, 2014, 07:50:45 pm »
Guidelines to judges for writing judgments and orders
We, therefore, before proceeding
to decide the matter on merits, once
again would like to reiterate few
guidelines for the courts, while

writing orders and judgments to follow
the same. These guidelines are only
illustrative in nature, not exhaustive
and can further be elaborated looking
to the need and requirement of a given
(a) It should always be kept
in mind that nothing should be
written in the judgment/order,
which may not be germane to the
facts of the case; it should have
a co-relation with the applicable
law and facts. The ratio decidendi
should be clearly spelt out from
the judgment/order.
(b) After preparing the
draft, it is necessary to go
through the same to find out, if
anything, essential to be
mentioned, has escaped discussion.
(c) The ultimate finished
judgment/order should have
sustained chronology, regard being
had to the concept that it has
readable, continued interest and
one does not feel like parting or
leaving it in the midway. To
elaborate, it should have flow and
perfect sequence of events, which
would continue to generate
interest in the reader.
(d) Appropriate care should
be taken not to load it with all
legal knowledge on the subject as

citation of too many judgments
creates more confusion rather than
clarity. The foremost requirement
is that leading judgments should
be mentioned and the evolution
that has taken place ever since
the same were pronounced and
thereafter, latest judgment, in
which all previous judgments have
been considered, should be
mentioned. While writing a
judgment, psychology of the reader
has also to be borne in mind, for
the perception on that score is
(e) Language should not be
rhetoric and should not reflect a
contrived effort on the part of
the author.
(f) After arguments are
concluded, an endeavour should be
made to pronounce the judgment at
the earliest and in any case not
beyond a period of three months.
Keeping it pending for a long time
sends a wrong signal to the
litigants and the society.
(g) It should be avoided to
give instances, which are likely
to cause public agitation or to a
particular society. Nothing should
be reflected in the same which may
hurt the feelings or emotions of
any individual or society.
Second Appeal No. 340 of 1999

M/s. Hindustan Petroleum Corporation
Sau. Nivedita wife of
Pritamsingh Jain,

Date : 20th March, 2014.
Citation; 2014(4) MHLJ 874 Bom
Read original judgment here; click here
Discussion / Interpretation of proviso to section 153C-
« Last post by brettlee on September 08, 2014, 04:18:17 pm »
Proviso to section 153C provides that date of handling our of the document would become the date of search for the purpose of second proviso of 153A. Therefore a question would arise that what six year for the person covered under section 153C would be reopened by the AO. Whether the years which are relevant for the searched person or the years which relates to deemed date of search. Though this issue is pending before the High Court of Dehi and would come on its own turn. However I would like to the views of the learned members of the site.

As far as my view which happens to be the view of the ITAT benches of Delhi is that six year relevant to the date of handling of the documents would be reopened. However, there are certain people who are saying that six year would remain same as of the searched person and the only thing which is changed is the abatment of proceedings has to be seen from this day.

Therefore in their view if a search has happened in 2008 and documents received by the AO of the other person in 2010 then years from 2010 onwards including six years of the searched person would be reopened, which means the AO of the other person would open eight years of the other person and the other person who cannot foreseen the future proceedings in present have to secure his books and other documents up to unlimited period because there is no time limit for the purpose of recording of satisfaction. Therefore the other person would suffer much than the person searched. This is not the intention of the legislature. Because legislature don't want to grill the other person on high nodes than that of searched person
 My humble request to the all the legal personalities of the Bombay to ponder on this issue seriously because it has serious remifications on the assessments of other persons
Whether "commercial transaction" include "professional transaction." for purpose of S34 of CPC?

In view of this, 'profession' will have to be treated as different from 'industry', 'trade', and 'business'. There is a clear distinction between the profession on one hand, and industry, trade and business on the other. While dealing with the 'commercial transactions" for the purpose of Section 34, C.P.C. the Legislature has not used the word 'profession' along with the words, 'industry' 'trade, or 'business'. The commercial transactions which are strictly connected with the industry, trade or business alone are included for the purposes of Section 34, C.P.C. as provided in Explanation II. Though the 'commercial transaction" is inclusive of "industry, trade and business", but it is exclusive of "profession". The fact that the Legislature has not included the word 'profession' along with the, words "industry, trade and business" to specify the "commercial transaction" cannot be igorned. The proviso to Section 34, C.P.C. will, therefore, not govern the cases where the
loan is advanced for the 'profession' or for "professional transactions".
 In our opinion, the words "commercial transaction" do not include the "profession" or "professional transaction."
We, therefore, find that the learned trial Judge was right in holding in the absence of any evidence to that effect that the present loan is a professional loan, and cannot be termed as a commerical transaction. Awarding future interest at the rate of 6 p.c. p.a. cannot be said to be in contravention of the provisions of Section 34, C.P.C.

Bombay High Court
Dena Bank, Ahmednagar vs Prakash Birbhan Kataria And ... on 26 April, 1993
Equivalent citations: AIR 1994 Bom 343, 1994 (1) BomCR 537, 1994 (1) MhLj 198
Dishonour of “AT PAR” Cheques,which court has jurisdiction to try case? Leading Bombay high court judgment

Giving huge relief to the Creditors, Bombay High Court held that Dis-honour of “AT PAR” Cheque cases can be filed to the Court within whose local jurisdiction the nearest available branch of bank of the drawer situated.

Dishonour of “AT PAR” Cheque; Complaint can be filed in the Court within whose local jurisdiction the nearest available branch of Drawer’s bank situated. SC Judgment in Dashrath v. State is not applicable to “AT PAR” Cheques

It is thus clear that in the present case by issuing cheques payable at all branches, the drawer of the cheques had given an option to the banker of payee to get the cheques cleared from the nearest available branch of bank of the drawer. It, therefore, follows that the cheques have been dishonoured within the territorial jurisdiction of Court of Metropolitan Magistrate at Kurla. In view of judgment of Hon’ble Supreme Court in the matter of Dashrath v. State of Maharashtra, the learned Metropolitan Magistrate of Kurla Court has jurisdiction to entertain and decide the complaint in question”.

Mr.Ramanbhai Mathurbhai Patel
State of Maharashtra & Anr.


Discussion / Re: Taxation of Carbon Credits
« Last post by pawansingla on August 29, 2014, 09:41:44 pm »
That,s correct.let see how the cat jumps.
Discussion / Re: Taxation of Carbon Credits
« Last post by satyanveshi on August 28, 2014, 05:53:15 am »
Since the Hyd ITAT decision is upheld by High Court of AP which was reported in 365 ITR 82, the decision of Cochin Bench need not be followed and the decision of AP High Court will have precedent value till it is reversed by Supreme Court. Further, in the recent Finance Act also, legislature is silent on this aspect and only in DTC, a provision was incorporated in the section equivalent to sec. 28 that carbon credits are taxable. Anyhow, the issue will take an interesting twist, once  the Kerala High court uphelds the decision of ITAT Cochin bench in future. Till that time the public at large  will argue the AP High Court decision is correct  and the revenue will take support from the decision of Cochin Bench. This will open another pandoras box...............
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