Despite voluntary surrunder penalty u/s 271(1)(c) is justified if surrunder made after incriminating material is found

0 comments Sunday, January 29, 2012
I have found the following order of Delhi ITAT as very good one on the issue of levy of penalty u/s 271(1)(c). In this case it has been held that   If an assessee surrenders any income after department has collected incriminating material with regard to such income, it cannot be called a voluntary surrender for purpose of section 271(1)(c).

In this case some incriminating material showing possible income of the assessee was found, which was confronted to the assessee, but instead of rebutting the same, the assessee surrundered the amount as his income, whereby penalty u/s 271(1)(c) desipite of surrunder was levied which was upheld by the Tribunal in this case. 
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Due date for efiling of vat returns in Punjab for the quarter Oct.-Dec., 2011 extended to 31.01.2012

0 comments Friday, January 27, 2012

Due date of efiling VAT returns for the quarter 01-10-2011 to 31-12-2011 has been extended by one day from 30th January, 2012 to 31st, January 2012 due to elections to be held in Punjab on 30th January, 2012. The relevant public notice is being produced herebelow:
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CBDT launched special drive for verification of High Value Transactions


PRESS RELEASE NO. 402/92/2006-MC (03 OF 2012), DATED 18-1-2012
The Central Board of Direct Taxes has directed the Income Tax department to launch a special drive, from 20th January to 20th March, 2012, for verifying high value transactions (investments/deposits/expenditure) from persons who are not assessed to income tax or who have not furnished their PAN while entering into such transactions. In an instruction issued today, the CBDT issued proforma for query letters and responses to be issued to the high value investors/depositors/spenders.
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Delay in issue of notice u/s 143(2) renders reassessment proceedings invalid

0 comments Thursday, January 26, 2012

Delhi High Court in an important following case has held that delay in the issue of notice u/s 143(2) in reassessment proceedings renders the whole proceedings as invalid, more so when the objection to delay in serving the notice is raised during the assessment proceedings in view of section 292BB of Income Tax Act. It is notable here that after 01.10.2005 it is mandatory to issue notice u/s 143(2) of Income tax Act before reassessment proceedings u/s 147/148 are started.
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CIT(Appeals) has inherent powers to grant stay on disputed income tax demands

0 comments Monday, January 23, 2012

 Rajsthan High Court has held in an important case namely Maheshwari Agro Industries Vs. Union of India that CIT(Appeals) has inherent powers to grant stay of disputed income tax demand. It is notable that under the Income Tax Act, CIT(A) has no express power to grant stay from the disputed demand.

The HC held: “The powers of the appellate authorities are indisputably concurrent and co-extensive with that of the Assessing Authority but wider and superior in nature. Section 251 of the Act clearly stipulates that in disposing of an appeal, the CIT (Appeals) can confirm, reduce, enhance or annul the assessment. Section 251(1)(c) of the Act further provides that in other cases, he may pass such orders in appeal as he thinks fit.
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Peak Credit and telescoping theories in assessment proceedings under Income Tax.

2 comments Sunday, January 15, 2012

There may be some cases under Income Tax Assessment proceedings where there are a large number of unexplained credit and debit enteries of a person standing in books of account of an assessee. In such case the AO may tend to add all the aggregate enteries as unexplained income.

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Changed rate of tax on certain goods under Punjab VAT Act, 2005

0 comments Saturday, January 14, 2012
Punjab Government has changed rate of VAT on certain items under Punjab VAT Act, 2005. These items with changed  rate of tax are as follows:

Sales made to Punjab State Power Corporation Ltd.
and Punjab State Transmission Corporation Ltd.for
generation, transmission and distribution of electrical
energy against a certificate duly filled and signed by
the Designated officer                                                                                   5%

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Powers of Excise & Taxation Inspectors equivalent to ETOs extended till 31-12-2012

0 comments Wednesday, January 11, 2012
The powers of excise and Taxation Inspectors under Punjab VAT Act, 2005 to act as designated officers u/s11,13,14,26,27,28,29,30,31,32,36,38,39,40,41,45,46,47,48,49,52,53,54,55,56,57,
58,59,60,66,76,77,83, have been extended from 31st December, 2011 to 31st December, 2012.

The above powers include important powers like to make assessments, levy penalties and interest, Power of audit, Provisional assessments, grant & withhold refunds, Power to search & seizure, survey etc.
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Due date of service tax return for period ending Sept. 2011 extended to 20-1-2012

0 comments Tuesday, January 10, 2012

F. No. 137/99/2011 – Service Tax
Government of India 
Ministry of Finance 
Department of Revenue 
Central Board of Excise and Customs,
New Delhi, the 9th January 2012

ORDER NO 1 /2012 – Service Tax
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Deduction of depericiation on machinery and tools from the works contract should be allowed.

1 comments Sunday, January 8, 2012

There are two components in every works contract one is material component and other is labour component. Material incorporated in a works contract is considered as deemed sales to the contractee and hence is liable to VAT or sales tax. To arrive at the material component involved in a works contract deductions for labour component are allowed.
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Specified provisions of Income Tax Act which shall apply to Centralised Processing of Returns Scheme, 2011

0 comments Saturday, January 7, 2012

Section 143 of the Income-tax Act, 1961 – Assessment – General – Specified provisions of the Act which shall apply to Centralised Processing of Returns Scheme, 2011

Notification No. 3/2012 [F. No. 142/27/2011-SO (TPL)], dated 4-1-2012

In exercise of powers conferred by sub-section (1B) of section 143 of Income Tax Act, 1961 (43 of 1961), for the purpose of giving effect to the Centralised Processing of Returns Scheme, 2011 made under sub-section (IA) of section 143 of the said Act, the Central Government hereby directs that, the following provisions of the Act relating to processing of returns shall not apply or shall apply with such exceptions, modifications and adaptations as specified hereunder, namely: -
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CBDT notifies Centralised Processing of returns scheme 2011

CBDT has notified Centralised Processing of Returns Scheme, 2011, wherein the various terms and conditions relating to the Centralised processing of returns have been prescribed. 

Centralised processing of returns is being going on in CPCs for some years now, but the scheme for such centralised processing has been finally made now, which answers a lot of questions regarding processing of efiled returns, which many people had in their minds unanswered.
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No penalty merely because audit report is not furnished in time, unless deliberation on part of assessee

0 comments Friday, January 6, 2012

I have found the following order of ITAT Mumbai as very important as it has been held that Merely because, the assessee did not furnish the report before the due date of filing of the return, that may not automatically attract the penalty.
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Addition referable to previous year's loans in subsequent year not justified


Mumbai ITAT has in the following case deleted the additions made on account of opening balances of unsecured loans and the notional interest on such loans. The Tribunal held that only fresh loans or additions to the loans during the year in question can be considered for the purpose of addition. Previous years loans cannot be added to subsequent year's income by claiming them to be unexplained.

This is one case law which I will suggest everyone to go through. The AO has made arbitrary additions during assessment proceedings, which the Tribunal has deleted by taking strict note of the same and the appeal has been dismissed with costs to the revenue. The AO in this case has made additions on irrelevant grounds.
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Undisclosed contract receipts are not income but gross receipts


Kolkata ITAT has held in the following case namely ITO Vs. M/s St. Joseph Construction that where contract receipts are not disclosed in the return of income, the whole receipt cannot be added to the income of assessee as its a part of gross receipts only, It is the net profit arising or estimated from it, should be added to the income.

In this case ITO added the whole of undisclosed contract receipts to the income of the assessee but CIT(A) deleted the addition and added only 8% of such receipts to the income of the assesee, which was upheld by the Tribunal on subsequent appeal.

The facts of the case are not complicated and it can be simply understood even by a student studying income tax that contract receipts are always the gross receipts wherefrom the expenses are borne by the assessee and net profit is arrived at thereby. But how the assessing officer fails to understand the same? The assessee had to go for appeal to get the justice.

It is generally seen that  AO decides the case prima facie only and whenever the question of interpretation of law or fact comes before the AO, they tend to interpret the same in the favour of revenue as if they are representatives of the revenue only. One basic thing should be understood that the assessment proceedings are quasi judicial in nature and the assessee should be met with justice while concluding the proceedings. The AO should not favour either revenue or the assessee, but the case in hand should be decided on the merits.


I.T.A No. 1057/Kol/2011-  Assessment Year: 2008-2009

 Income Tax Officer


 M/s. St. Joseph Construction

Date of Pronouncement: 26.12.2011


Per Shri S.V. Mehrotra, Accountant Member

This appeal filed by the Revenue is against the order of ld. Commissioner of Income- Tax (Appeals)-XXXVI, Kolkata dated 18.05.2011 for the assessment year 2008-09.

2. Brief facts of the case are that in the relevant assessment year, the assessee-firm derived income from business of civil construction. The assessee had filed its return of income declaring total income of  Rs. 68,970/-. The Assessing Officer noticed from the audited Balance sheet and Profit & Loss A/c. the total receipt shown by the firm was at  Rs. 57,73,804/-. In support of its receipts, the assessee-firm had filed TDS certificates received from Missionaries of Charity, which certified making a total payment of  Rs. 57,73,804/- during the financial year 2007-08. The Assessing Officer observed that while examining the 26AS of the assessee-firm generated from the Departmental data base, it was found that the assessee-firm received the following amounts during the financial year 2007-08 from different organizations and TDS had been deducted accordingly as per chart below :-

SNTANName      of     the
concern         from
whom      payment
received            for
construction work
Amount paid by the concern to the assessee-firm during               the
financial        year
  by the assessee- firm2007-08 
  1. 1.
CALJ03089CJesus and Mary
West          Bengal
Education Society
  1. 2.
CALMO3197FMissionaries      of
3.CALTO4029EThe              Roma
Catholic     Diocese
of Krishnanagar
  TotalRs. 1,12,29,347/-Rs.2,49, 109/-

From these information’s, the Assessing Officer concluded that the assessee had not disclosed receipts totaling to  Rs. 54,55,543/- in its accounts. The Assessing Officer issued summons under section 131 to the Accountant of The Roman Catholic Diocese of Krishnanagar, Nadia, who produced following documents before the Assessing Officer :-

(1) Work order of The Roman Catholic Diocese of Krishnanagar given to assessee vide Memo No. CM(K) 2006 dated 20.02.2006,

(2) Photocopy of TDS certificate;

(3) Photocopy of payment certificate for the financial year 2007-08;

(4) Provisional receipt copy of submission of TDS return in Form No. 26Q.

From these documents, the Assessing Officer concluded that the assessee-firm had received an amount of  Rs. 50,00,000/- from The Roman Catholic Diocese of Krishnanagar during the financial year 2007-08, but the assessee-firm did not disclose this gross receipt as well as income to the revenue. The Assessing Officer has also examined the date of issue of cheque by The Roman Catholic Diocese of Krishnanagar, and also deposit in the assessee’s Bank a/c., the details of which are given at pages 5-6 of assessment order and from these details, he pointed out that the partners of the assessee-firm admitted that an additional amount was received besides the amount specified earlier in the return filed for the assessment year 2008-09. He has reproduced the details from the written submissions of the partners. The Assessing Officer also examined the purchases made by the assessee and from all the details after considering the assessee’s explanation concluded that the assessee concealed the receipts from different organizations amounting to  Rs. 54,55,53/- and made an addition of  Rs. 54,55,543/-. He also observed that the details of purchases furnished by the assessee from Hindustan Hardware, Krishnanagar, Nadia amounting to  Rs. 17,56,021/- were genuine and, therefore, no action was called for on this account.

3. Ld. CIT(Appeals) after considering the assessee’s submissions directed the Assessing Officer to reject the books of accounts of the assessee-firm since the assessee had concealed huge contractual receipts to the tune of  Rs. 54,55,543/-. He also directed the Assessing Officer to estimate the profit @ 8% on the entire receipts of  Rs. 1,12,29,347/- equivalent to  Rs. 8,98,348/-, net of all expenses including salary and interest payments to partners.

4. At the time of hearing, none appeared on behalf of the assessee. Learned Departmental Representative relied on the order of Assessing Officer.

5. We have considered the submissions of ld. D.R. By considering the totality of the facts and circumstances of the case, in our opinion, no interference is called for in the order of ld. CIT(Appeals) as he has directed the Assessing Officer to compute net profit at 8% on the entire receipts including the receipts found to have been concealed by the assessee. In any case, the entire receipts, as added by the Assessing Officer, could not be added because it is not disputed that the impugned amount had been received from the contract work carried on by the assessee. It is not the case of Assessing officer that the source of impugned sum of  Rs. 54,55,543/- was other than the business. Therefore, we confirm the order of ld. CIT(Appeals) and reject the ground of appeal taken by the Revenue.

6. In the result, the appeal filed by the Revenue is dismissed.

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Download new VAT-2 form under PVAT Act, in excel format

6 comments Monday, January 2, 2012
Excise & Taxation Department, Punjab has notified new VAT 2 challan form for tax deposits under Punjab VAT Act, 2005. Earlier there were three challan forms namely VAT-2, VAT-2A and VAT-2B, which the dealers had to fill up for depositing tax under PVAT Act, 2005.

This new form replaces all the earlier three forms, now only one form is required to be filled up. This new form is applicable w.e.f 01-01-2012. The new form in excel format can be downloaded herebelow:
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