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Discussion / Limited scrutiny- Reopening u/s 147.
« Last post by rajul5234 on November 27, 2016, 04:20:27 PM »
Elecon engineering co. Gujarat high court. SCA 1641/2015. Dt. 30, 31/8/16.

Held, After Kelvinator's case of SC, when multiple reasons are recorded, limited scrutiny is permissible only to the extent of issues unprocessed at original scrutiny assessment u/s 143(3).

Refer para 21 in particular.

RK Patel
Discussion / Transfer Pricing. Reference to TPO
« Last post by rajul5234 on November 27, 2016, 04:15:24 PM »
Gujarat H C. SCA 772012016. Dt. 16/11/16. Alpha Nippon

Held, While making a reference to TPO, speaking order by AO is a mandatory requirement as per CBDT Instruction 3/2016.

R K Patel
So far we have been discussing the implications of section 270A, levy of penalty and rate of tax in case of any deposit made in the bank and offered to tax in the return.  We have not factored or discussed the implications of the Prohibition of Benami Property Transactions Act, 1988 which will give a severe blow to all those who are depositing money in their bank accounts which they will not be able to explain.

In yesterday's newspapers, the ministry of finance has given half page advertisement warning people not to permit use of their account by others for converting their black money and they may be prosecuted and punished for rigorous imprisonment of 7 years.

A question arises what if unaccounted money deposited in a bank account ? Can it be termed as 'Benami Property' and the consequences of the Prohibition of Benami Property Transactions Act, 1988 of confiscating the same and launch of prosecution may be taken up.

As per Section 2(9) of the Act, "Benami Transaction means"
(A) ...
(B) ...
(C) ...
(D) a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious.

Section 2(8) defines "benami property" to mean 'any property which is the subject matter of a benami transaction and also includes the proceeds from such property.'
Section 2 (26) defines "property" to mean 'assets of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal and includes any right or interest or legal documents or instruments evidencing title to or interest in the property and where the property is capable of conversion into some other form, then the property in the converted form also includes the proceeds from the property.'

Thus, any bank account is a property. If the depositor is not able to substantiate the source of money deposited, can it not be said that the person providing the consideration is not traceable, hence, it is a benami transaction and liable for action.

Merely by claiming the same to be depositor's money will not suffice. 

We have discussed a lot about applicability of income-tax provisions. We shall start discussing the implications of the new law.

Discussion / Re: Demonitization of Currency Notes
« Last post by balas123 on November 15, 2016, 10:56:40 PM »
Hi Dugar,

To supplement,  as clarified by GautamBaid,

a. Yes No Penalty can be imposed when the assesse declares undisclosed income in his return of income (ITR).

b. Penalty cannot be imposed without assesse being given an opportunity to be heard.

c. U/s 270A, penalty can be imposed equal to 200% of tax payable if under declared income arising from misreporting which includes misrepresentation or suppression of facts. If this were to be invoked, then penalty is leviable, to answer your query.

In the case cited, assesse is to declare entire amount as declared income in the ITR and thereby not attracting under reported  income and hence penalty will not get attracted.

d. Based on the nature of income being declared, other legal actions may get attracted which cannot be ruled out as this program has not stated immunity from prosecution. Service Tax (if service income) or Central Excise OR ED or BM/AML  related prosecutions MAY get attracted.

Hope this helps.

Balaji Srini FCA., LL.B.
Discussion / Re: Demonitization of Currency Notes
« Last post by CaGoutamBaid on November 15, 2016, 12:07:50 PM »
No penalty can be imposed u/s 271 for the AY 2017-18 onward, therefore AO cannot invoked provision of section 271 for the income declared for AY 2017-18.

Penalty u/s 270A can be imposed if authority found that assessee under reported its income. In absence of any provision in section 270A under which it can be said that assessee under reported its income in circumstances where assessee declares income in return filed by it but source of the same cannot explained, no penalty can be imposed u/s 270A.

In my opinion there is no other provision under which AO can impose penalty.

Legal consequence other than income tax may be arise in absence of explanation about source of income. (Enforcement Director, Money Laundering etc.)
Discussion / Demonitization of Currency Notes
« Last post by dugarsanjay on November 12, 2016, 04:51:20 PM »

Suppose a person has a undeclared income in form of cash. Due to demonetization he deposits the whole amount in his bank account and pays thereon tax @ maximum marginal rate.

In his Return of Income for AY 2017-18 he declared the same as Unexplained Cash Credits u/s 68.

Now since the income is being declared by him voluntarily and offered for tax, can AO impose penalty under section 271, 270A or any other sections of Income Tax Act.
Discussion / Re: Multiple Assessement
« Last post by satyanveshi on November 01, 2016, 10:39:16 AM »
Please ask for the reason on the basis of which fresh notice u/s 148 was issued. ......whether four years are already lapsed or not. Change of opinion also to be verified. First of all, please file the return of income and seek the reasons.....
Discussion / Re: Multiple Assessement
« Last post by balas123 on October 31, 2016, 10:18:04 AM »
Hi Mr. Sanjay,

Answer to your query is 'Yes'.

I guess the subject matter being reassessed is different to the matter under appeal. (pls. read point c below).

ITO can reassess to tax any income:
a. has reason to believe that any income chargeable to tax has escaped assessment / reassessment for any AY.

b. It is also provided if an assesses is assessed under sec 147 (your ref case), it is open to reassessment if any income chargeable to tax has escaped assessment for such AY, with the clause reading ' disclose fully and truly all material facts necessary for his assessment' .

The specific clause (relevant parts only) in the section is reproduced below :
Provided that where an assessment ...  or this section has been made for the relevant assessment year, ...unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee ...or to disclose fully and truly all material facts necessary for his assessment, for that assessment year:

c. Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal.

Hope this helps.

Balaji Srini FCA., LL.B.

Discussion / Legal Crystal: The Easiest and Reliable Law Search Engine
« Last post by StevenBaker on October 19, 2016, 01:54:36 PM »
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Discussion / s.11 exemption reopening
« Last post by rajul5234 on October 19, 2016, 08:30:19 AM »
SCA 15715/2010. Dt. 30/9/16. Gujarat text book board. Gujarat high court

Held, If s. 11 is processed in assessment, reopening cannot be permitted even within 4 years from end of relevant assessment year to process certain clauses of the same provision which are not touched upon in original scrutiny.

R K Patel
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