Income Tax Refund for AY 2012-13 – CPC issues directives

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Action to be taken on E-filed ITRs of A.Y. 2012-13 pending for processing at CPC having refund greater than or equal to Rs. 10 Lakhs

Letter [F.NO.DIT(S)-III/CPC/2012-13/Demand Management], dated 30-1-2013

Kind attention is drawn to the above mentioned subject. For the A.Y. 2012-13 e-filed returns cases till 22nd Jan. 2013, where refund is likely to be > = Rs. 10 lakhs are 28,444 in number, which are currently pending for processing at CPC. These ITRs are categorized as under :

(a) Cases where there are refunds likely to be > = Rs. 10 Lakhs.

(b) Cases where there are likely refunds > = Rs. 10 Lakhs as well as demands have been uploaded as per CPC-FAS.

2. The above data can be accessed on i-Taxnet on the following path :

RESOURCES → DOWNLOADS → DIT_SYSTEMS → REFUND_ERETURN_PROCESSING_CPC_A.Y. 2012_13

3. The Assessing Officers are required to take action as under :

♦ for the cases falling at (a) above, i.e. where there is refund without demand as per the CPC-FAS, to kindly get it checked whether any demand remains outstanding in those cases. If yes, the AOs may upload these demands on CPC-FAS.

♦ Regarding cases at (b) above, i.e. where there is refund with demand, they may reconfirm or update the demands, so that during processing refunds can be adjusted with updated demands outstanding as per CPC-FAS.

4. Each CCIT may, therefore, monitor the above action to be taken by the AOs and certify within a period of 21 days. A compliance report may also be sent to respective Zonal Members, CBDT with a copy to CIT(CPC), Bangaluru, at his e-mail id cit.cpc.bangalore@incometaxindia.gov.in and DIT(S)-III on e-mail id dmc.dits@gmail.com. In case no response is received, the e-returns shall be processed at CPC, Bangaluru.

S. 40A(3) Cash Payment allowable if necessary to ensure smooth functioning of business

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HIGH COURT OF DELHI

R.C. Goel

v.

Commissioner of Income-tax

IT APPEAL NO. 636 OF 2012

DECEMBER 4, 2012

 

The assessee engages itself in executing catering contracts for Railways in respect of two trains. In those trains, its personnel are deployed for sale of small articles of daily necessity and use to the passengers. Per force, the payments received by them are necessarily in cash. These amounts are collected and in turn handed over to the assessee.The assessee in terms of its contract is bound to maintain constant supplies in the trains and ensure that at no point in time can the passengers be deprived of these articles (which are food articles, soft drinks and other items necessary for travel). In the course of such transactions, it sources these articles from ‘S’. Apparently, that concern is also a small time one and insists on cash payments for ensuring continuity and timely supplies. Whilst, the Court is conscious and does not in any manner wish to comment adversely on the larger public interest element embedded in section 40A and the underlying principle, at the same time, the Court also notes that the proviso seeks to relieve to a certain extent, the measure of hardship which might be imposed upon small businesses and professionals who are engaged in activities and are dependent entirely on timely cash flow. It is in such cases that rule 6DD – which was formulated as a proviso to section 40A(3) – steps into aid such assessees and concerns. In this context, the statutory mandate in rule 6DD(k), at least in the circumstances of the case, has to be so construed as to mean that but for the cash payment, the assessee would have been deprived of the benefit of supplies itself. The High Court clarifies that the interpretation of the expression ‘who is required to make payment in cash’ having regard to the circumstances of the case is fact dependent, at least in the present case. The consequence of instances of payment through account payee cheques in small business which are dependent on such supplies would be to completely stifle, if not stop, the business activities. It is in that sense that the expression ‘required’ would have to be construed. [Para 9]

In view of the above discussion, the High Court is of the opinion that having regard to the peculiar facts and circumstances, the Tribunal and the lower authorities adopted an unduly narrow and technical interpretation of rule 6DD(k), the benefit of which the assessee clearly was entitled to. The question of law is accordingly answered in favour of the assessee and against the revenue.

Salary to wife cannot be allowed for mere possession of knowledge if the same is not been applied

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HIGH COURT OF HIMACHAL PRADESH

Yashwant Chhajta

v.

Deputy Commissioner of Income-tax

IT Appeal Nos. 66 & 67 of 2008

December 28, 2012

 

In the instant case, as noticed hereinabove, the assessee’s wife though was in possession of technical qualification but the assessee was required to prove conclusively that his wife Smt. Nanda Chhajta was in fact looking after plans for execution work and was taking administrative decisions. The assessee cannot be given benefit merely on the ground that the deduction has been allowed to the assessment years 2001-2002 and 2002-2003. The order passed by the Income Tax Appellate Tribunal is reasoned and the proviso to section 64(1)(ii) have been correctly appreciated.

Expenditure incurred on garden to control pollution is deductible

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HIGH COURT OF GUJARAT

Commissioner of Income-tax-IV

v.

Torrent Pharmaceuticals Ltd.

TAX APPEAL NO. 1011 OF 2011

AUGUST 30, 2012

 

The garden expenditure was for the purpose of maintaining garden to control the pollution. The company had put up an affluent treatment plant and pollution used to generate because of release of pollutants. The maintaining a garden helped in controlling pollution arising from the pollutants. It cannot be gainsaid that the expenses for garden had nexus with business activity.  

RBI suggests charge for cash withdrawal & deposit through cheques

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RBI has suggested that banks should charge for cash withdrawal and deposit through cheques while the government agencies should do away with convenience charges for online payment of utility bills.

As per the discussion paper floated by RBI, high cash withdrawals and deposits of cash by individuals may also be charged in order to avoid increased dependence to cash-based transactions.
The other major suggestions include restriction on number of free cheque books, high fee on cheque books, mandatory online payment of credit card bills and ban on post-dated cheques. It also suggested that the government should discourage cheque collection boxes at public places.
The suggestions, on which the RBI has invited comments from public by February 28, seek to encourage greater adoption of electronic mode of payment.

Search Assessment without JCIT’s Approval is invalid

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HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

INCOME TAX APPEAL (L) NO.1416 OF 2012

WITH

INCOME TAX APPEAL (L) NO. 1417 OF 2012

WITH

INCOME TAX APPEAL (L) NO. 1418 OF 2012

WITH

INCOME TAX APPEAL (L) NO. 1419 OF 2012

 

On perusal of the provisions laid down under section 153C, it is apparent that after issuance of notice under section 153C, the Assessing Officer having jurisdiction over such other person (against which incriminating material has been found during the course of search conducted on a person) assess or re-assess income of such other person in accordance with the provisions of section 153A. Section 153B talks about time limit for completion of assessment under section 153A, whereas section 153D talks about necessity of prior approval for framing assessment in case of search or requisition. Thus the provisions laid down under section 153D are very much applicable in case of assessment of income of any other person (i.e., the person other than the person searched). Now the issue for adjudication is as to whether in absence of obtaining prior approval under section 153D of Joint Commissioner, assessment made under section 153C will be void or voidable/curable. The provisions under section 153D have been laid down under the heading ‘prior approval necessary for assessment in cases of search or requisition’. This heading itself suggests that obtaining prior approval for assessment in cases of search or requisition is necessary. Further the provisions under section 153D start with a negative wording ‘no order of assessment or re-assessment’ supported by the further wording ‘shall’ make the intention of the legislature clear that compliance of section 153D requirement is mandatory.

The wordings and language used in section 153D and the heading ‘prior approval necessary for assessment in cases of search or requisition’ do not leave an iota of doubt about the very intention of the legislature to make the compliance under section 153D a mandatory. There is no dispute that if a provision is mandatory, an act done in breach thereof will be invalid, but if it is directory the act will be valid although non-compliance may give rise to some other penalty if provided by the Statute. The general rule that non-compliance of mandatory requirements results in nullification of the Act is subject at least to one exception. If contain requirements or conditions are provided by a statute in the interest of a particular person, the requirements or conditions although mandatory may be waived by him if no public interest is involved and in such case, the act done still be valid even if the requirement or condition has not been performed. The instant case is not a case where consent of assessee will waive the condition of obtaining prior approval under section 153D of the Joint Commissioner by the Assessing Officer for framing assessment under section 153C/153A. Condition of prior approval of Joint Commissioner under section 153D has been put in public interest and not in the interest of a particular person. Thus it cannot be waived by particular person. The use of word ‘shall’ raises a presumption that a particular provision is imperative but this prima facie inference may be reverted by other consideration such as object and scope of the enactment and consequence flowing from such construction. The revenue has not been able to rebut the above inference by pointing out other consideration like object and scope of the enactment and the consequence flowing from such construction. Clause 9 of Manual of Office Procedure, Volume II (Technical) February, 2003 issued by Directorate of Income-tax also provides that an assessment order under Chapter XIV-B can be passed only with the previous approval of the range Joint Commissioner of Income-tax/Additional Commissioner of Income-tax. Chapter XIV-B also deals with assessment of search cases. Sections 153A, 153B and 153C have been introduced to Chapter XIV ‘procedure for assessment’ with effect from 1-6-2003 by the Finance Act, 2003, whereas section 153D has been inserted to the Chapter with effect from 1-6-2007 by the Finance Act, 2007. These provisions, thus, also deal with the assessment in case of search or requisition and when the assessment orders in the instant case were passed the provisions laid down under section 153D were very much in operation.

Therefore, assessment orders impugned framed in absence of obtaining prior approval of the Joint Commissioner for the assessment years under consideration were invalid as null and void.

Govt to raise income tax exemption limit to Rs 3 lakh in revised DTC

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The government will come up with a modified Direct Taxes Code (DTC) Bill after incorporating the suggestions of the Standing Committee on Finance, which among things had suggested raising annual income tax exemption limit to Rs 3 lakh.

“Will come out with modified DTC (Bill) in response to Standing Committee suggestions,” said Advisor to the Finance Minister Parthasarathi Shome at a FICCI event here.

He said the Finance Ministry is looking at the Bill and working on tax structures as suggested by the Parliamentary committee.

The Parliamentary panel headed by senior BJP leader Yashwant Sinha in its report (March 2012) had suggested raising the annual income exemption tax limit to Rs 3 lakh as against Rs 2 lakh proposed in the original DTC Bill. Current tax exemption limit is Rs 1.8 lakh.

It has also suggested that subsequent tax slabs be adjusted accordingly to provide relief to people reeling under the impact of inflation. The DTC will eventually replace the over five decades old Income Tax Act.

“We are trying to see what could be the best in terms of transparency so that issues that are hurting industry could be covered adequately,” Shome said.

He further said the Finance Ministry is also addressing the issue of expenditure control and that remains a major challenge.

“We are looking into expenditure efficiency. We should do more in terms of efficiency. Issues on expenditure side is being addressed. Expenditure control is a major challenge and is being addressed by the Finance Minister,” he said.

The DTC Bill, tabled in August 2010, was referred to the Standing Committee for scrutiny.

Shome also said there has been some improvement on the government’s non-plan expenditure side since the time of financial crisis in 2008.

Finance Minister P Chidambaram had in November 2012 announced a fiscal consolidation road map wherein he plans to restrict fiscal deficit at 5.3 per cent of GDP in the current fiscal and bring it down to 3 per cent by 2016-17.

Shome further said that the government is showing its intention to bring in clarity in tax laws and reforms in tax administration.

“We have to increasingly do so (tax reforms). That is going to be a vehicle and we won’t put it on back burner,” Shome said.

He also said the Ministry has asked National Institute of Public Finance and Policy (NIPFP) to calculate the impact of the proposed Goods and Services Tax (GST) on the GDP