JUNE 23, 2021

By Vijay Kumar

Where women are worshiped, there lives the Gods.

Wherever they are not worshiped, all actions result in failure.

From the ancient time, women in India are having special place in family and society. We have many women as role model in Indian history to a name a few Mata Zizabai (Mother of Chaterpati Shivaji Maharaj), Ahaliya Bhai, Laxmi Bai, Phoole, Anne Besant, Captain Lakshmi Swaminathan (better known as Lakshmi Sahgal), of INA, though were house wife, but had contributed a lot as and when occasion so demanded. Further many housewives had even contributed by way of cash and jewelry during freedom movement.

On July 13, 1927, Mahatma Gandhi addressed a gathering at the Mahila Seva Samaja in Basavanagudi. Gandhi encouraged women to be change-makers and contribute to the Freedom movement and Harijan Movement by donating their streedhan and other money. Similar call was given Former PM Pt Nehru, during 1962 war thereby calling on the women of India to give their jewelry to the cause. Above said had been recorded here just to show that women in India were always saving some money for the family.

The sheer amount of time and effort that is dedicated to household work by individuals, who are more likely to be women than men, is not surprising when one considers the plethora of activities a housemaker undertakes. A housemaker often prepares food for the entire family, manages the procurement of groceries and other household shopping needs, cleans and manages the house and its surroundings, undertakes decoration, repairs and maintenance work, looks after the needs of the children and any aged member of the household, manages budgets and so much more. In rural households, they often also assist in the sowing, harvesting and transplanting activities in the field, apart from tending cattle.

Women all over the country had been accumulating cash that they had saved for themselves from household budgets, by haggling with vegetable sellers, tailors, grocers and assorted traders, years of stashing in whatever little cash gifts they received from relatives during festival times and years of tucking away the change they found in the pants that they washed every day. However suddenly they were left with no option but to deposit the amount in the denomination of Rs 500 and Rs 1000 notes in the banks on account of Demonetisation scheme 2016; these notes were no more legal tenders. Lot of concerned were raised by political and social organisation bring on fore the plight of women folks, on account of scheme of 2016.

Why all this in a tax column? Well, what you have read above, is an extract from an order of the Income Tax Appellate Tribunal (ITAT) Agra Bench, pronounced on 18.06.2021. (ITA No.35/Agr/2021) - 2021-TIOL-1035-ITAT-AGRA

This is the story:

The appellant, an individual filed return of income for Assessment Year 2017-18 on 13/03/2018, declaring total income of Rs. 1,30,810/-. During the period of demonetization, the assessee deposited the cash of Rupees 2,11,500 /-in her bank account. It was the case of the assessee that the assessee had collected/saved the above said sum from her previous saving, given by her husband, son, relatives for the purposes of her and family future. The case of the assessee was selected for scrutiny assessment for the reason that the cash was deposited in the bank after the demonetization scheme, announced by the revenue. During the course of assessment proceedings, the appellant was asked to explain the cash deposits of Rs. 2,11,500/- in the bank.

The assessing officer made the addition of Rupees 2,11,500/- to the income of the assessee treating the amount deposited in the bank as unexplained money under section 69A read with 115BBE of the Income Tax Act 1961. The Commissioner (Appeals) dismissed her appeal and she is before the Tribunal.

The CBDT had issued Instruction No. 03/2017 Dated 21st of February, 2017 which stipulated that

In case of an individual (other than minors) not having any business income, no further verification is required to be made if total cash deposit is up to 2.5 lakh. In case of taxpayers above 70 years of age, the limit is Rs. 5.0 Iakh per person. The source of such amount can be either household savings/ savings from past income or amounts claimed to have been received from any of the sources mentioned in Paras 2 to 6 below. Amounts above this cut-off may require verification to ascertain whether the same is explained or not. The basis for verification can be income earned during past years and its source, filing of ROI and income shown therein, cash withdrawals made from accounts etc.

The Tribunal observed,

In our opinion assessee had duly explained the source of deposit i.e. previous years saving and we have no hesitation to accept the same, as it would been presumed that this small amount of Rs 2,21, 000/ would have been accumulated or saved by her from various activities undertaken by her for and on behalf of family in last many years. Therefore, no additions can be made by lower authority.

This is one more case where the assessing authorities have shown utter lack of respect for the law and the instructions of a superior statutory authority like the Board, just to prove their loyalty more than the king.

National Remote Sensing Agency is not an evader :

National Remote Sensing Agency, now known as National Remote Sensing Centre (NRSC), is a part of ISRO, the great Indian Space Mission. There was a remote chance which came within the antenna of the Service Tax Department that this fully government organisation might be evading service tax. Investigations followed with the usual summons and statements, show cause notice and hearing and finally the adjudication condemning the revered remote sensing agency for offences like suppression, evasion etc., The Revenue argued that but for the investigations conducted by the department, the activities of the Remote sensing Agency owned by the Government of India would not have come to light. Revenue engaged a Special Counsel, a retired Board Member to argue its case before the Tribunal.

The Tribunal observed, 2020-TIOL-1126-CESTAT-HYD

We find that the assessee in this case is an autonomous organisation under the department of Space, Government of India. It is not a private business entity. They have, of course, undertaken several research projects for a price and that is part of their revenue model. They generate funds from these projects which are used for running the organisation. For these projects, they get paid by other Governmental and non-Governmental organisations under various heads. If the assessee was clearly aware that they had to pay service tax, they could have billed their clients for the Service Tax as well. By not paying the service tax, the assessee is not gaining anything. It is a Governmental organisation run by bureaucrats and scientists, none of whom have any personal interest in evading service tax. In fact, by evading service tax nothing would be gained either by anyone individually or by their organisation. Revenue's argument is that the assessee had not come forward to disclose all their activities and therefore, they have suppressed the fact which is sufficient to invoke extended period of limitation. We do not agree with this contention. The assessee could have genuinely believed that they were not liable to pay service tax and not disclosed facts to the department or sought any advice or guidance from the department regarding taxability of their services. In this factual matrix, by no stretch of imagination can we hold that the assessee has committed fraud or collusion or wilful misstatement or suppression of facts with an intent to evade payment of service tax. Under these circumstances, we find the extended period of limitation cannot be invoked in this case. The demand, if any, within the normal period of limitation can only survive.

The Tribunal waived all the penalties and restricted the demand to the normal period of limitation. Government was aggrieved and took the matter to the High Court. Now, who was the government that was aggrieved? Service Tax or Remote Sensing - both are as much government as government can be. Both run on the same source, the Consolidated Fund of India. If Remote Sensing Centre had to pay a penalty, it had to be drawn from the same Consolidated Fund of India to which it will be credited through the Revenue Department. -In fact, the appeal should have been 'Union of India represented by its Secretary, Revenue' vs 'Union of India represented by its Secretary, Department of Space'

Anyway, the High Court was not exactly excited about the Revenue's anxious appeal. 2021-TIOL-1343-HC-TELANGANA-ST

The High Court observed,

Thus, there is no incentive for the respondent-NRSA to resort to evasion of tax which could result either in the profits soaring higher or any individual being benefited. On the other hand, if there existed a liability, the respondent could have factored the same in its budget proposals and sought for release of more funds from the Government to discharge its liability. Thus, it is only flow of funds from one pocket to the other pocket of the Government and would not result in any gain either to the organization or to any individual. In this view of the matter, it is absurd to even suggest that the respondent had suppressed facts with an intent to evade payment of tax, and mulct it with payment of service tax by invoking the extended period of limitation.

It also needs to be noted that organizations like respondent- NRSA are run by Scientists, Academicians and Administrators. Even if there has been any non-payment of service tax, the same cannot be alleged to be by fraud, collusion or willful misstatement or suppression of facts. Attributing fraud, collusion, suppression or willful mis-statement to the Scientists and Academicians, will have a demoralizing effect, would not be in public interest. On the contrary, it could contribute to Brain drain from the country.

The focus of the organizations like the respondent-NRSA is definitely not on either resorting to tax evasion or tax planning which would benefit the establishment, but is focused in its core activity of research and assisting the other agencies of Government in various projects. The said fact was completely lost sight by the appellant-Revenue while passing the Order-in-Original, which however, has been rightly taken note by the Tribunal.

This court also records its displeasure in the manner in which the approval was accorded by the authority for filing this appeal, without due consideration of the fact that the activity of the respondent-NRSA involves Nation's Safety and Security and that it is not a private commercial concern.

Accordingly, the appeal of the Revenue is dismissed at the stage of admission with Costs. The appellants shall pay costs of Rs. 10,000/- to Telangana High Court Legal Services Committee within six weeks.

In their anxiety to collect more revenue even by hasty unwanted undesirable acts, the Revenue officers not only ruin the cause of revenue but also destroy the very basis of fair and legal tax collection.

Citizens should not be made to rue the day they decided to be taxpayers.

Until Next Week.