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CASE LAWS
2016-TIOL-149-SC-IT
CIT Vs K K MARKETING: SUPREME COURT OF INDIA (Dated: March 8, 2016)
Income Tax - Section 234(b)(c).
Keywords - Adavance Tax - Cash - Search.
Whether when cash seized by the Revenue is adjusted against the liability of advance tax, the Revenue is liable to pay interest u/s 234(b)(c) for the intervening period - YES : SC
The assessee is a legal entity. Some cash was seized from the premises of the assessee during search. The Revenue, however, adjusted the same against the advance tax. For the intervening period, the question of payment of interest of the said amount arose, which had been allowed by the High Court by invoking the provisions of Section 234(b)(c) of the Act. Aggrieved Revenue filed appeal before the Supreme Court.
Held that,
++ we do not find any infirmity in the order passed by the High Court. The appeals are, accordingly, dismissed.
Revenue's appeal dismissed
2016-TIOL-1956-HC-AHM-IT
SHETH MULTI LINK PVT LTD Vs ITO: GUJARAT HIGH COURT (Dated: August 29, 2016)
Income Tax - Writ - Sections 143(1), 148 & 151.
Keywords - Accommodation entry - Beneficiaries - Share application money.
Whether reopening of assessment is justified when the Revenue has 'reason to believe' that profits or gains chargeable to tax have escaped assessment - YES: HC
The assessee is a company. The assessee filed its return for the relevant AY. Such return was accepted without scrutiny u/s 143(1). To reopen such assessment, the AO issued a notice. Further the Assessing Officer had received information from the investigation wing of the department intimating that during the assessment of one M/s. Kutch Ginning and Spinning Pvt. Ltd., it was found that the said company had received share application money/premium from a non-discript company, M/s. Bhumidev Credit Corporation Ltd. Upon inquiry, it was found that such company was non-genuine. During such inquiry, statement of Director of M/s. Bhumidev Credit Corporation Ltd. was also recorded, who accepted that the company was indulging in issuance of cheque on receiving equivalent cash amounts. Said M/s. Bhumidev Credit Corporation Ltd had also invested in the assessee-company as share application money vide two cheques. Thus, the assessee-company was one of the beneficiaries of accommodation entry in form of share application money from such M/s. Bhumidev Credit Corporation Ltd. It was on the basis of such information available, the Assessing Officer formed a belief that the income chargeable to tax in case of the assessee had escaped assessment. Matter finally reached before the High Court.
The HC held that,
++ it is equally well settled that at the stage of reopening of the assessment, what is required is the reason to believe that income chargeable to tax has escaped assessment and no proof, that additions will invariably, be made is necessary. These aspects were discussed at length by the Supreme Court in case of Assistant Commissioner of Income Tax vs. Rajesh Jhaveri Stock Brokers P. Ltd where it was held that .."to reopen the assessment is available in either case namely where a return has been accepted u/s 143(1) or scrutiny assessment has been framed under Section 143(3). A common requirement in both cases is that the Assessing Officer should have reason to believe that any income chargeable to tax has escaped assessment...";
++in our opinion, these were sufficient reasons to enable Assessing officer to form a belief that income chargeable to tax has escaped assessment. Counsel for the assessee, however, vehemently contended that the material before the Assessing Officer was insufficient. He submitted that unless and until there was a specific reference to the assessee-company in the statement of the Director, an automatic presumption would not arise that the investment made by the M/s. Bhumidev Credit Corporation Ltd in the assessee-company was also bogus. However, we must remind ourselves that, at this stage, what is required for the Assessing Officer is to form a reason to believe that income chargeable to tax has escaped assessment. Whether such additions would be sustained or not is not a relevant consideration. In exercise of writ jurisdiction, therefore, we would not hamper further progress in the assessment. This petition is, therefore, dismissed.
Assessee's Petition dismissed
2016-TIOL-1955-HC-AHM-IT
NISHANT CONSTRUCTION PVT LTD Vs ACIT: GUJARAT HIGH COURT (Dated: August 30, 2016)
Income Tax Act 1961 - Additional Evidences -On money - Principle of natural justice.
Whether a remand order can be cancelled and Tribunal can be ordered to decide the case on merit when there is no requirement of placing additional materials or seeking cross examination in connection with the assessment proceedings - YES : HC
Whether a remand order giving opportunity of hearing to the assessee can be rejected when assessee itself does not wish to avail this opportunity in justified circumstances - YES : HC
The assessee is a Company, engaged in the business of development of real estate. Search was carried out in relevant year. During assessment process, AO made certain additions in the income of the Assessee based on the documents impounded during the survey and prices of property in the locality. The assessee carried the matter in appeal before the CIT(A), who rejected the appeal of the assessee on the ground that the practice of receiving on money in such business was rampant. Assessee carried this order in appeal before the Tribunal. The Tribunal, remanded the proceedings for fresh consideration by CIT(A) to grant adequate opportunity of hearing to the assessee. As relying on the order of case M/s. Sambhav Infrastructure Pvt. Ltd., without confronting the assessee with the same was an error and was in breach of the principles of natural justice. The Assessee was not satisfied with this order of Tribunal hence filed appeal before the High Court.
After hearing parties, HC held that,
++ as noted, the sole ground, on which, the Tribunal was prompted to remand the proceedings before the CIT (A) was that she had relied on certain materials while confirming order of assessment without previously sharing the same with the assessee and thereby, in the opinion of the Tribunal, breached the principles of natural justice. To cure such defect, the proceedings were remanded. However, now that the assessee takes a stand that it does not wish to rebut such material except for raising legal contentions about its effect on the present assessment, we do not see any purpose in the remand. To make it clear, the assessee concedes before us that there is no requirement of placing additional materials or seeking crossexamination in connection with the assessment proceedings and the materials of such assessment in case of M/s. Sambhav Infrastructure Pvt. Ltd. and that the assessee would be satisfied, if the Tribunal were to decide all legal contentions of the assessee including that the assessment in case of M/s. Sambhav Infrastructure Pvt. Ltd. and collected materials would not establish the fact of on money receipt in case of the assessee;
++ we notice that the Tribunal had not considered other aspects of the matter. Under the circumstances, in view of the concession made by the counsel for the assessee, we set aside the order of the Tribunal and request the Tribunal to hear the assessee's appeal on the basis of materials on record permitting all legal contentions to both sides. Tax appeal alongwith civil application is disposed of accordingly.
Assessee's appeal allowed
