S.147 [HC Guj] [In favour of Revenue] Re-opening , No return of income filed. Material available (from I&CI, Inv. Etc.) is tangible(vaild)

Section 147   
Court :  Gujarat High Court
[In favor of Revenue : ]
Citation :   2017-TIOL-1423-HC-AHM-IT  SPECIAL CIVIL APPLICATION NO. 12152 of 2017
Case Name : Mona Mahesh Bhojani Vs ITO 

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Reopening initiated in case of an assessee who had not filed his return, cannot be claimed by the assessee to be based on 'change of opinion'. when the AO has tangible material at his command to form a bonafide belief that income chargeable to tax has escaped assessment, the writ court would not interfere with the formation of such belief unless it is shown to be wholly perverse

S.147 ,in favour of Revenue, HC Guj: Re-opening , No return of income filed. Material available (from I&CI, Inv. Etc.) is tengible.

S. 132 [HC Del] [Favor Revenue] Statement under oath

S. 132    Court : High Court Delhi                        In favor of revenue

Citation :  31 taxmann.com 274, 215 Taxman 229, 351 ITR 143

Name of the case :Bhagirath Aggarwal Vs CIT

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An addition in assessee's income relying on statements recorded during search operations cannot be deleted without proving statements to be incorrect

S. 271(1)(c) [SC] [Favor Revenue] :- Depreciation on non exited assets , Penalty rightly levied.

[S. 271(1)(c)] [Court : Supreme Court] [In favor of revenue]

Citation : [2018] 99 taxmann.com 152 (SC) , Special Leave Petition (Civil) Diary No. 34548 of 2018 

Name of the case :Sundaram Finance Ltd.  v. Deputy Commissioner of Income-tax

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Section 271(1)(c), read with section 32, of the Income-tax Act, 1961 - Penalty - For concealment of income (Disallowance of claim, effect of) - Assessment year 1994-95 - Assessee-company, engaged in business of leasing of assets, purchased air pollution control equipment from company, PE and leased back same to company, PIL - During search conducted upon premises of PE, Assessing Officer found that no such equipment was supplied by PE to assessee and purchase and lease back transaction entered into between assessee and PIL was not a genuine transaction; rather it was simply a case of providing finance to PIL by assessee and, therefore, assessee was not entitled to depreciation on such equipment - High Court by impugned order held that by claiming depreciation on asset/equipment which did not exist or which was never supplied, assessee had not only concealed particulars of its income, but had also furnished inaccurate particulars of income, therefore, penalty under section 271(1)(c) was to be levied upon assessee for furnishing inaccurate particulars and concealment of income - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [Paras 12 and 13] [In favour of revenue]

S. 271(1)(c) [SC] [Favor Revenue] :- Incorrect adjustment of Depreciation ,liable for penalty.

Court : SUPREME COURT
Section : 271(1)(c)
Name of the case
Citation : 184 Taxman 8 (SC)/ [2009] 315 ITR 460 (SC)/ [2009] 222 CTR 213
Penalty under section 271(1)(c) confirmed for wrong adjustment of Unabsorbed Depreciation.

S. 148. Penny stock. HC-Guj. In favor of revenue. The re-opening is valid.

HIGH COURT OF GUJARAT
Nishant Vilaskumar Parekh v. Income-tax Officer, Ward 1(3)
J.B. PARDIWALA AND ILESH J. VORA, JJ.

SPECIAL CIVIL APPLICATION NO. 21929 of 2019
MARCH  15, 2021.

Section 10(38), read with section 147, of the Income-Tax Act, 1961 - Capital gains - Income arising from transfer of long-term securities (Reassessment) - Assessment year 2012-13 - Assessee company sold 40,000 shares of a company held by it and earned long-term capital gain (LTCG) of certain amount and claimed same as exempt income under section 10(38) - Same was allowed and an assessment order was passed - An information was received from AIMS module that shares sold by assessee were of penny stock - On basis of same, Assessing Officer issued a reopening notice against assessee - It was noted that said information was specific with regard to transactions of penny stock entered into by assessee - On basis of information received, Assessing Officer had made independent inquiry and applied his mind to such information and upon due satisfaction and materials gathered during inquiries, finally formed a belief that income had escaped assessment - Whether, on facts, impugned reopening notice issued against assessee after four years was justified - Held, yes 

[Paras 16, 17, 21 and 23] 

[In favour of revenue] 

TUNI TEXTILE Ltd

S. 271(1)(c) [SC] [Favor Revenue] :- 139(4) doesn’t allow Assessee to escape the Penalty

Court : SUPREME COURT

Section : 271(1)(c)

Name of the case :- Amin Chand Payarelal

Citation : 285 ITR 546
Penalty under Section 271(1)(a) can be levied on a return filed under Section 139(4). The Apex Court has followed its earlier decision in the case of Pradip Lamps Works v. CIT [2001] 249 I.T.R 797 . In that case it has held that merely because sub-Section (4) of Section 139 enables the assessee to file his return at any time before the assessment is made, it does not mean that his liability to pay penalty under Section 271(1)(a) is erased.

s. 271(1)(c). SC. "Wrong advice given by Chartered Accountant" [In favor of Revenue]

s.271(1)(c)

Supreme Court 

Citation [2019] 103 taxmann.com 208 (SC)  

name of the case Jivanlal and Sons vs Assistant Commissioner of Income-tax

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IT: Where High Court confirmed penalty order passed by Tribunal rejecting assessee's explanation that it had claimed deduction in respect of tax paid on basis of wrong advice given by Chartered Accountant, SLP filed against decision of High Court was to be dismissed.

Section 271(1)(c), read with section 37(1), of the Income-tax Act, 1961 - Penalty - For concealment of income (Disallowance of claim, effect of) - In course of assessment, assessee claimed deduction in respect of tax paid - Assessing Officer taking a view that amount so paid was an inadmissible expenditure, disallowed same - He also initiated penalty proceedings under section 271(1)(c) for raising a false claim for deduction - Assessee raised a plea that deduction had been claimed on basis of advice given by Chartered Accountant - Assessing Officer having rejected assessee's explanation, passed penalty order under section 271(1)(c) - Tribunal confirmed said penalty order - High Court finding that there was no material in support of assessee's claim either in form of evidence of assessee or affidavit of Chartered Accountant, upheld penalty order passed by Tribunal - Whether, on facts, SLP filed against decision of High Court was to be dismissed - Held, yes [Para 1] [In favour of revenue]

S. 10(10), SC : Commencement date of payment of Gratuity (Amendment) Act, 2010, is 24-05-2010; it cannot be treated to be retrospective

Commencement date of payment of Gratuity (Amendment) Act, 2010, is 24-05-2010; it cannot be treated to be retrospective

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[2021] 129 taxmann.com 168 (SC)[13-08-2021] 

SUPREME COURT OF INDIA

Krishna Gopal Tiwary  v. Union of India *

HEMANT GUPTA and A.S. BOPANNA, jj.

Civil Appeal No. 4744 of 2021

AUGUST  13, 2021 

Section 10(10) of the Income-tax Act, 1961 - Gratuity (General) - Appellants were paid gratuity of Rs 10 lakhs in January 2007, however, Payment of Gratuity Act was amended and it received assent of President and came into effect from 2010 - Appellants challenged date of commencement of Amending Act as 24-5-2010 as tax had been deducted at source when gratuity was paid to appellants before commencement of Amending Act and asserted that it should be made effective from 1-1-2007 and consequently appellants would not be liable for deduction of tax on gratuity amount - High Court by order declined claim of appellants to declare applicability of Amending Act from 1-1-2007 - Whether benefit of higher gratuity was one-time available to employees only after commencement of Amending Act and hence, could not be treated to be retrospective - Held, yes [Paras 13 and 17][In favour of revenue]

FACTS

 

■		The appellants were the employees of CIL. The government of India enhanced the gratuity to the executives and Non-Unionized Supervisors of Central Sector Enterprises such as the CIL from a bracket of Rs. 3.5 lakhs to Rs. 10 lakhs in terms of office memorandum of Government of India dated 26-11-2008. The appellants were paid gratuity of Rs. 10 lakhs in January 2007 however the Payment of Gratuity Act was amended and it received the assent of the President in 2010 and it came into effect from the same year.
■		The grievance of the appellants was that the tax had been deducted at source when the gratuity was paid to the appellants before the commencement of the Amending Act. The appellants thus challenged the date of commencement as 24-5-2010 and asserted that it should be made effective from 1-1-2007 and consequently the appellants would not be liable for deduction of tax on the gratuity amount.
■		High Court by order declined the claim of the appellants to declare the applicability of Payment of Gratuity (Amendment) Act, 2010 from 1-1-2007.
■		On appeal to the Supreme Court:

HELD

 

■		Sub-section (5) of section 4 of the Gratuity Act protects the right of an employee to receive better terms of gratuity under any award or contract with the employer. The gratuity paid to the appellants on the strength of office memorandum dated 26-11-2008 would fall in the said sub-section.[Para 12]
■		However, what is exempt from the Income-tax Act is the amount of gratuity received under the Gratuity Act to the extent it does not exceed an amount calculated in accordance with the provisions of sub-sections (2) and (3) of section 4 of the Gratuity Act. The Gratuity Act contemplated rupees ten lakhs as the amount of gratuity only from 24-5-2010. Such gratuity is the amount payable only once. Thus, the cut-off date cannot be said to be illegal, it being one-time payment. Therefore, such amendment in the Gratuity Act cannot be treated to be retrospective. Therefore, the provisions of the statute cannot be said to be retrospective.[Para 13]
■		In a judgment of this Court reported as Sri Vijayalakshmi Rice Mills v. State of Andhra Pradesh [1976] 3 SCC 37, the new rate of supply of rice was made effective on 23-3-1964. The question arose was as to whether the rice supplied earlier would have the benefit of beneficial provision as contained in the later notification dated 23-3-1964. This Court held that price as was prevalent on the date of sale alone would be payable and not the higher price introduced by amendment. It was held that the aforesaid sales in the instant cases having been made by the appellants before the coming into force of the Rice (Andhra Pradesh) Price Control (Third Amendment) Order, 1964, and the property in the goods having passed to the Government of Andhra Pradesh on the dates the supplies were made, the appellants had to be paid only at the controlled price obtaining on the dates the sales were effected and not at the increased price which came into operation subsequently.[Para 14]
■		In another judgment reported as Orient Paper & Industries Ltd. v. State of Orissa 1991 Supp. (1) SCC 81, it was held that since the executive has been empowered to choose the date of commencement of the Act, such delegation cannot be said to be case of excessive delegation. The Court held that even if the section were to be seen as a delegation of power, it is a power conferred on the government to give full effect to the policy behind the legislation. It is with a view to achieving that purpose that the executive has been empowered to choose the time, place and forest produce for bringing the Act into operation having regard to the particular facts and circumstances in the contemplation of the legislature. There is no excessive delegation in such statutory grant of power.[Para 15]
■		In a recent judgment reported as Himachal Road Transport Corpn. v. Himachal Road Transport Corpn. Retired Employees Union [2021] 4 SCC 502, in the case of payment of increased quantum of death-cum-retirement gratuity, it was held that the cut-off date cannot be said to be arbitrary which was fixed keeping in view financial constraints.[Para 16]
■		In view of the above, it is found that the date of commencement fixed by the Executive in exercise of power delegated by the Amending Act cannot be treated to be retrospective as the benefit of higher gratuity is one-time available to the employees only after the commencement of the Amending Act. The benefit paid to the appellants under the office memorandum is not entitled to exemption in view of specific language of section 10(10)(ii).[Para 17]
■		Consequently, there is no error in the order passed by the High Court. The appeal is dismissed.[Para 18]

147. 143(3): (SC), ( Revenue Favor): The Assessing Officer is free to initiate proceedings under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless.

Key Word : The Assessing Officer is free to initiate proceedings under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless

Court : SUPREME COURT

Section : 147

Name of the case : ACIT Vs Rajesh Jhaveri Stock Brokers (P.) Ltd

Citation : [2007] 161 Taxman 316 (SC)/ [2007] 291 ITR 500 (SC)/ [2007] 210 CTR 30 (SC)
So long as the conditions of section 147 are fulfilled, the Assessing Officer is free to initiate proceedings under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings, even when intimation under section 143(1) has been issued ADANI EXPORTS v. DCIT[1999] 240 ITR 224 (Guj) distinguished.

Del HC : Jurisdiction of Assessing Officer can not be questioned after one month of service of the notice. Sec. 124

Section 124    (Jurisdiction of the Assessing Officer)

In case of : Abishek Jain... Citation :- 405 ITR 1

DELHI HC  

In terms of Section 124(3)(b) jurisdiction of an Assessing Officer cannot be called in question by an assessee after expiry of one month from date on which he was served with a notice for reopening assessment under Section 148.

Supreme Court : [Favore of Revenue] Service of notice is not a condition precedent to conferment of jurisdiction in ITO but it is a condition precedent to making of order of assessment .

Shanabhal P. Patel R.K. Upadhaya SUPREME COURT 

166 ITR 163
33 Taxman 229

[ Decision year 1987] [AY 1963-64 , May be as notice u./s 147 is to serve written as 31.03.1970, Six Year]

Service of notice is not a condition precedent to conferment of jurisdiction in ITO but it is a condition precedent to making of order of assessment .