AMIT BAJAJ ADVOCATE

There has been a lot of dispute on the issue whether the Petroleum products dealers should reverse the Input Tax Credit on the evaporation of petrol, diesel and other petroleum products as Rule 21(1) of Punjab VAT Rules, 2005 provides for disallowance of Input tax credit for tax paid on purchase of those goods which have been lost or damaged or destroyed beyond repair because of any theft, fire or natural clamity (please note the words because of any theft, fire or natural clamity have been removed from Rule 21(1) w.e.f 06-11-2008)
 
The Punjab & Haryana High Court in Bharat Petroleum Corporation Limited Vs. State of Punjab [(2009) 12 STM 463 (HC-P&H)] decided the above issue on merits in favour of the revenue and also at the same time dismissed the petition stating that the petitioner has the alternative statutory remedy of filing the appeal before lower appellate authorities.

I was once again to an ICC barrier today for a case regarding section 51 of Punjab VAT Act, 2005. This inspires me again to share some views on  levy of penalty u/s 51. I am re-sharing my earlier article on section 51 herebelow for the readers of my blog who might not have read it, this article was also published in Punjab & Haryana Taxes Law journal.

ITAT mumbai has held in an important case namely  DCIT Versus Housing Development Finance Corporation Ltd. that if the intimation u/s 143(1)(a) has been issued after the issue of notice u/s 143(2) of Income Tax Act then intimation issued u/s 143(1)(a) will be illegal, relying upon the Judgement of Supreme Court in  CIT v. Gujarat Electricity Board, 260 ITR 84 (SC) and further also held that no appeal will lie against intimation issued u/s 143(1)(a) after the amendment of 01/06/1999. The right cource is to file a ractification application u/s 154 of Income Tax Act.


Facts: The assessee is a company. It filed a return of income for assessment year 2006-07 on20/10/2006 declaring an income of Rs. 8,06,501,48,149. A notice under section 143(2) of the income-tax Act, 1961 (the Act) dated10/9/2007 was issued by the AO and served on the assessee on September, 2007. This is a notice for making a regular assessment u/s. 143(3) of the Act. The AO issued an intimation under section 143(1) of the Act, dated23/11/2007. This was later served on the assessee, only on5/2/2008. As against the above returned income of Rs. 8,06,01,48,145 a sum of Rs. 8,64,11,91,630 was shown as assessed income in the intimation under section 143(1) of the Act, without giving any basis for the same. A consequential interest of Rs. 99,39,417 under section 234C of the Act was also charged, without providing any basis for the levy of the same. As a result of the change in returned income and assessed income, the refund claimed by the Assessee was also allowed at a lesser figure than what was claimed by the Assessee.


Aggrieved by the aforesaid intimation under section 143(1) dated 23/11/2007 the assessee preferred appeal before CIT(A). The main contention of the assessee before CIT(A) was that pursuant to the return of income filed by the assessee on 20/10/2006 a notice under section 143(2) of the Act, dated 10/9/2007 was issued and served on the assessee an 14/9/2007 for making a regular assessment under section 143(3) of the Act. According to the assessee the intimation under section 143(1) dated 31/11/2007 could not have been issued by the Assessing Officer because a notice under section 143(2) has already been issued prior to the issue of intimation under section 143(1) of the Act. The assessee relied on the decision of the Hon’ble Supreme Court in the case of CIT v. Gujarat Electricity Board, 260 ITR 84 (SC) and Gujarat Poly-AVX Electronics Ltd. v. DCIT, 222 ITR 140 (Guj.), wherein it was held that it would not open to the revenue to issue an intimation under section 143(1)(a) of the Act after notice for regular assessment issued under section 143(2) of the Act. The CIT(A) accepting the plea of the assessee cancelled intimation u/s. 143(1) of the Act as illegal.
 
 Held:  In CIT v. Gujarat Electricity Board [2003] 260 ITR 84, the Supreme Court held that it was not open to the Revenue to issue intimation under section 143(1)(a) after notice for regular assessment is issued under section 143(2). Their Lordships said :




“The provisions of section 143(1)(a)(i) indicate that the intimation sent under section 143(1)(a) shall be without prejudice to the provisions of sub-section (2). The Legislature, therefore, intended that, where the summary procedure under sub-section (1) has been adopted there should be scope for the Revenue, either suo motu or at the instance of the assessee, to make a regular assessment under sub-section (2) of section 143. The converse is not available ; a regular assessment having been commenced under section section 143 (2), there is no need for summary proceedings under section 143(1)(a)”.


 As rightly contended on behalf of the Revenue, the aforesaid decision of the Hon’ble Supreme Court was rendered in the context of the law as it stood prior to1/6/1999. The law laid down in the said decision will apply to the present assessment year also and to this extent we agree with the submissions of the ld. Counsel for the assessee. Since the appeal before the CIT(A) was not maintainable this decision could not have been relied upon by the CIT(A). The assessee is at liberty to seek appropriate remedy in accordance with law. In the given facts and circumstances of the case we are of the view that the appeal before CIT(A) by the assessee was not maintainable and the objection of the revenue in this regard found to be justified. In our view the grounds raised by the revenue are broad enough to cover even the objection regarding maintainability of the appeal by the assessee before the CIT(A). The ld. D.R in the course of his arguments submitted that if the assessee is aggrieved by the intimation under section 143(1) of the Act he would have field an application under section 154 of the Act and thereafter would have carried the matter further in appeal. We find that the period of four years for passing an order under section 154 of the Act from the end of the Financial Year in which the order sought to be amended was passed was still available. It is for the assessee to work out its rights in accordance with law. We, therefore, uphold the plea of ld. D.R and hold that the appeal before the CIT(A) was not maintainable. With the aforesaid observations we allow this appeal by the revenue.


 In the result, the appeal of the revenue is allowed.




Full Judgement can be downloaded herebelow:

DCIT Versus Housing Development Finance Corporation Ltd.

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 The Pune ITAT has imposed costs on the revenue for causing harrasment to the assessee in recovery proceedings in a case namely Shramjivi Nagari Sahakari Pat Sanstha V ACIT. The bank account of assessee was attached even before the communication of CIT(A)'s order to the assessee. This is an important order as it is generaly seen that the department ussualy adopt coercive measures for recovery proceedings, I hope the department take some lesson from this order.

Facts: The assessee, a credit co-operative society, contravened s. 269SS & 269T because of which penalty u/s 271E was levied. The CIT(A) confirmed the levy of penalty. Before service of the CIT(A)’s order, the assessee’s bank account was attached u/s 226(3). The assessee filed a stay application and claimed that as the assessee had to bear costs owing to the illegal action of the AO, costs had to be awarded to it. HELD upholding the assessee’s plea:

The Delhi High Court in an important case namely CIT V Safetag International India Pvt Ltd. has held that in case of reassessment proceedings u/s 147 of Income Tax Act if the assessee doesnot demand reasons recorded by AO for reopening of case then AO is not bound to supply the same suo moto to the assessee. 

 
Brief Facts: The assessee’s assessment was reopened u/s 147. The assessee did not ask for the recorded reasons. Even before the CIT(A), though the assessee challenged the reopening as being without jurisdiction, it did not ask for the reasons. Before the Tribunal, the assessee claimed that it was not aware that it could demand the reasons and object thereto. Pursuant thereto the Tribunal remitted the case to the AO with direction that the reasons & opportunity to object be provided and denovo assessment be framed if objections were rejected. On appeal by the department, the appeal was allowed:

Section 8-A of Punjab VAT Act 2005 provides for lump sum schemes for such goods or class of goods or such persons subject to such conditions as may be prescribed by State Government. The provisions of section 8-A are applicable irrespective of anything contained contrary in the other Provisions of Punjab VAT Act.

As a result the Punjab Government has uptill now provided lump sum schemes for Dhaba Owners and for Brick Klin owners. But it is to be noted that these lump sum schemes are optional only. A dealer may or may not choose to pay under lump sum schemes.

The Bihar Human Rights Commission took on the Income Tax Department for violating Human Rights of an asseessee while conducting search and seizure operation. The commission asked the Department to carry on  serach & seizure operations without violating one's basic Human Rights.

In this case the income-tax department conducted search and seizure operations u/s 132 at the premises of the assessee when interrogation & recording of statement was conducted for more than 30 hours and till the odd hours of the night without any break or interval. The assessee filed a complaint alleging violation of human rights. The commission upheld the plea as under:

Delhi High Court in an important case namely CIT V. Simbhaoli Sugar Mills Ltd. has held that reassessment proceedings u/s 147 cannot be initiated merely  on the basis of  internal audit report objections when no new fact has come to light. This is very important decision as many a times the objections are raised by internal audit department on the Assessment orders.

The implication of this judgement would be that if a case is reopened for reassessment u/s 147 merely on the basis of internal audit report objections, when the assessee has made full disclosure of information in the original assessment proceedings and no new material has come to light then such reopening of case will be a mere change of opinion, for which action u/s 147/148 is not allowed.