Gist of recent important tax caselaws

Below are the recent important tax caselaws related to Income tax, Service tax, Excise in brief. The citation is made available for your benefit :

INCOME TAX

SECTION 145

METHOD OF ACCOUNTING - ADDITIONS TO INCOME

Emails as sale evidence : Where Assessing Officer made addition to assessee's income in respect of additional sale consideration received on sale of land merely on basis of an e-mail recovered during course of search action at premises of another person and there was no independent material available supporting such an addition, Tribunal was justified in deleting addition so made - Commissioner of Income-tax v. Alpha Impex (P.) Ltd. (2014) 45 taxmann.com 205 (Bombay)     SECTION 271(1)(c) PENALTY - FOR CONCEALMENT OF INCOME Agreed additions : In absence of concrete material on record indicating that assessee had concealed particulars of income, Assessing Officer could not pass penalty order merely on basis of declaration of undisclosed income by a partner of assessee-firm in course of search proceedings - Commissioner of Income-tax, Dhanbad v. Ganesh Trading Company (2014) 45 taxmann.com 209 (Jharkhand)       SERVICE TAX SECTION 73 RECOVERY - OF DUTY OR TAX NOT LEVIED/PAID OR SHORT-LEVIED/PAID OR ERRONEOUSLY REFUNDED Where Revenue was itself insisting on payment of service tax under reverse charge on services received from abroad prior to 18-4-2006, payment of tax and taking of credit by assessee could not be said to be against law - Ericsson India (P.) Ltd. v. Commissioner of Central Excise (Adjudication), New Delhi (2014) 45 taxmann.com 238 (New Delhi - CESTAT) SECTION 80 PENALTY - NOT TO BE IMPOSED IN CERTAIN CASES In view of finding of fact that there was no mala fide intent of assessee in not depositing service tax in time, penalty could be waived under section 80 - Commissioner of Central Excise v. Muniruddin (2014) 45 taxmann.com 218 (Allahabad)

Gist of recent important tax caselaws and judgements

Below are the recent important tax caselaws related to Income tax, Service tax, Excise in brief. The citation is made available for your benefit :

 INCOME TAX

SECTION 10(22)

EDUCATIONAL INSTITUTIONS

Misutilization of funds by trustee : Where genuineness of trust and objects of trust being charitable had not been disputed even if trustees had mismanaged or misutilised funds, exemption under section10(22) could not be denied - Anil Kumar Tantia v. Income-tax Officer (2013) 40 taxmann.com 333 (Jodhpur - Trib.)     SECTION 143 ASSESSMENT Natural justice : Where pursuant to search proceedings, assessee filed an application seeking copy of impounded documents so as to file revised return of income and Assessing Officer passed assessment order on basis of original return without supplying said copies, order so passed by Assessing Officer was not sustainable - Purvesh Mansukhbhai Shah v. Additional Commissioner of Income-tax (2013) 40 taxmann.com 425 (Gujarat)       SECTION 158BFA BLOCK ASSESSMENT - INTEREST/PENALTIES, LEVY OF Penalty order passed on deceased person : Where Assessing Officer passed penalty order under section 158BFA(2) in name of deceased assessee and son of deceased was never impleaded as a legal heir of his father, said penalty order was null and void - Chandrakant A. Gandhi v. Assistant Commissioner of Income-tax (2013) 40 taxmann.com 432 (Ahmedabad - Trib.) SECTION 158BG BLOCK ASSESSMENT IN SEARCH CASES - AUTHORITY COMPETENT TO MAKE Previous approval : Where Assessing Officer as a result of search conducted under section 132 upon one 'D' on 6-2-1996 passed block assessment order on one 'S', who was related to 'D', and Joint Commissioner had previously approved said order, as per proviso to section 158BG it was Commissioner who should have previously approved order of assessment - Commissioner of Income-tax v. Sri D.S. Srinivasa Rao & Brothers (2014) 41 taxmann.com 194 (Karnataka) SECTION 272A PENALTY - FOR FAILURE TO ANSWER QUESTION, SIGN STATEMENTS ETC. Failure to issue Form 16A to deductees : Where assessee was prevented by sufficient cause in not issuing Form 16A within prescribed time to persons from whom tax was deducted as PANs of deductees were not available with him, penalty order passed under section 272A(2)(g) in respect of default committed under section 203 was to be set aside - Commissioner of Income-tax (TDS) v. Collector, Land Acquisition, Department of Industrial & Commerce (2013) 40 taxmann.com 483 (Punjab & Haryana)       CENTRAL EXCISE ACT SECTION 11A RECOVERY - OF DUTY OR TAX NOT LEVIED/PAID OR SHORT-LEVIED/PAID OR ERRONEOUSLY REFUNDED Where CESTAT had directed pre-deposit without considering judgment of Commissioner (Appeals) in favour of assessee on merits, matter was remanded back to Tribunal to consider matter afresh in light of judgment of Commissioner (Appeals) - Chopra Steel Strips v. Commissioner of Central Excise and Service Tax (2014) 41 taxmann.com 131 (Punjab & Haryana)

High Court Sees Red At High-Handed And Defiant Recovery Action Of AO

Tata Teleservices (Maharashtra) Ltd vs. Ministry of Finance (Bombay High Court)

Action to recover tax before expiry of statutory period for filing appeal is high-handed & in defiance of law


Though the assessee had a statutory period of three months to file an appeal along with stay application before the CESTAT, the Asst CST directed the assessee to pay the demand within two days and threatened to take coercive action to recover the dues. The assessee filed a Writ Petition contending that the AO’s action was in breach of Circular dated 01.01.2013 issued by CBEC, and the demand was premature because the assessee had the right to file an appeal within 3 months. HELD by the High Court allowing the Petition:

(i) The AO’s insistence that the assessee should pay the amount is contrary to the provisions of the Finance Act which provides for a period of 3 months to file an appeal to the Tribunal. It is also contrary to the circular dated 01.01.2013 issued by the CBEC. The impugned communications, to say the least, is high handed. The statute has advisedly provided a period of three months to an assessee to file an appeal before the appellate authority and also obtain a stay. This is with a view to enable the assessee to seek proper advice and considered opinion on the adjudication order before taking a decision and then challenging the adjudication order in appeal proceedings;

(ii) In case, the Revenue is allowed to adopt coercive measures and/or if the assessee is required to pay tax determined immediately, it would lead to injustice to an assessee, as his opportunity to obtain a stay from the appellate authority would stand foreclosed. Moreover, the inherent right of an appellate authority to stay the order being appealed against would be rendered futile. In fact, this Court in Mahindra & Mahindra Limited (1959-ELT-505) had directed the Revenue to return the amounts recovered by encashing the bank guarantee of the assessee as it was done before the expiry of three months to file an appeal;

(iii) The officers of the Revenue would do well to realize that their job is much more than merely collecting the tax. They are officers of the State, administering the Finance Act, 1994 and fairness in approach to the tax payers and acting in accordance with the Rule of Law is a sine-qua-non in discharge of all its functions;

(iv) The impugned communications are not only in defiance of the CBEC circular dated 01.01.2013 but also in breach of the statutory provisions which gives a period of 3 months to enable the aggrieved party to file an appeal before the appellate authority.

Note: The same view has been taken in the context of the Income-tax Act in UTI Mutual Fund 345 ITR 71 (Bom) and MHADA (Bom)