Virtual CFO (or vCFO for short) stands for virtual Chief financial officer. A virtual CFO is an outsourced service provider offering high skill assistance in financial requirements of an organization, just like a chief financial officer does for large organizations. A virtual CFO may be a single person or an entity.
But instead of delivering those services in person, as a full-time employee, the virtual CFO works remotely, on a contractual,part-time schedule.
Why does one need a Virtual CFO?
If you’re launching a startup, there are a number of roles that you need to fill straight away such as CEO and marketing manager. Many startups choose to leave the job of hiring a Chief Financial Officer, or CFO, until later.
This is where hiring a virtual CFO could make a lot of sense for small companies.
Growing your company’s revenue is a beautiful thing. There’s no feeling quite like the one that comes with hitting a financial goal that’s long been on your horizon. But reaching new revenue levels also comes with growing pains.
If you’ve hit that point, now the business needs a financial executive. But at this stage it’s also highly unlikely you can afford to hire a full-time CFO.This is where there is a Role of Virtual CFO services where you can balance out the cost and at the same time enjoy the benefits of professional consultation.
If you’ve got a full-time CFO then you’re already in safe hands. A virtual CFO isn’t going to offer anything you don’t already have. If you’re lacking a CFO, however, then hiring a virtual CFO comes with a number of benefits.
Some Nuts and bolts of Virtual CFO includes:-
Broad Expertise
Greater gain Access to Their Contacts
Better return on your investment
Customized service based on your needs and budget
Someone to grow with you
Deep industry knowledge, diverse financial expertise
Technology and resource recommendations
Rebuilding balance sheet
Enhance financial processes
Virtual CFO services are provided to the businesses who have not appointed an in-house CFO (Chief Financial Officer). In the present scenario, many challenges are being faced by the organizations in terms of growth, financial aspects, accounting as well as management. For this a designated position is required to be appointed who can be primarily entrusted with managing the financial risks, company valuation and reviewing the various KPIs relevant to the Startup or SMEs.
Thus a virtual CFO shall be there to meet the challenges effectively by providing the financial and professional advice, analysis and support to the management.
As a young, growing business ourselves, we understand what you’re going through. We have the experience and the tools to help you stay in control of your finances, improve your cashflow and keep investors happy.
So, if your foggy understanding of your business’s financials inhibits and your ability to make decisions, working with a virtual CFO may be a good idea.
To take the first step in exploring a virtual CFO relationship, schedule your virtual CFO consultation with us!
Taking another step towards the goal of increasing “Ease of doing business” in India and providing relief to small taxpayers; the GST Council in their 42nd Meet on 5th October 2020 proposed a quarterly return filing system for small taxpayers to be implemented w.e.f. 1st January 2021 for the 4th Quarter.
QRMP or Quarterly Return Monthly Payment Schemeis an optional scheme that CBIC has rolled out for small-scale businesses having aggregate turnover up to 5 crore rupees to furnish returns on a quarterly basis along with monthly payment of tax.
Thus, the small taxpayers would only need to file 8 returns (4 GSTR 1 and 4 GSTR 3B) in a year as compared to 16 returns a year at present.
Eligibilityfor QRMP
A registered Taxable Person whose Aggregate turnover (PAN wise) does not exceed ₹5 Crores in the preceding Financial Year, is eligible for the QRMP Scheme.
Further, in case the Aggregate Turnover exceeds ₹5 Crores during any Quarter in the current Financial Year, the registered person shall not be eligible for the scheme from the next Quarter.
Time Limit to opt for QRMP scheme
Sr. No.
Period – Quarter
Timeline
1.
April – June
1st Feb 2021 to 30th April 2021
2.
July – Sept
1st May 2021 to 31st July 2021
3.
Oct-Dec
1st August 2021 to 31st Oct 2021
4.
Jan – March
1st Nov 2021 to 31st Jan 2022
Monthly Payment of Taxunder QRMP
Registered Persons under the QRMP Scheme need to pay the tax due in each of the first two months by 25th of the following month of the Quarter by depositing the due amount in FORM GST PMT-06, by selecting Monthly Payment for the Quarterly Taxpayer as the reason for generating Challan.
How can Taxpayers pay their tax liability under QRMP?
Fixed Sum Method
The Taxpayer must pay an amount of tax mentioned in a pre-filled Challan in form GST PMT-06 for an amount equal to 35% of the tax paid in cash in the previous Quarter or 100% of the tax paid in the previous month (in case GSTR-3B was previously filed Monthly during the last Quarter).
Self-Assessment Method
Manual Computation of taxes to be paid in cash where the tax liability is equal to the liability on outward supplies plus tax under RCM on inward supplies net Eligible ITC.
If the cash balance is available in the Electronic Cash Ledger, then only a balance deposit would be sufficient.
Invoice Furnishing Facility (IFF)
The registered persons opting for the Scheme would be required to furnish the details of an outward supply in FORM GSTR-1 quarterly as per rule 59 of the CGST Rule.
For each of the first and second months of a quarter, such a registered person will have the IFF to furnish the details of such outward supplies to a registered person, as he may consider necessary, between the 1st day of the succeeding month till the 13th day of the succeeding month.
The said details of outward supplies shall, however, not exceed the Rs. 50 Lakhs in each month. It may be noted that after the 13th of the month, this facility for furnishing IFF for a previous month would not be available.
As a facilitation measure, a feature of continuous upload of invoices would also be provided for the registered persons wherein they can save the invoices in IFF from the 1st day of the month till the 13th day of the succeeding month.
The facility of furnishing details of invoices in IFF has been provided so as to allow details of such supplies to be duly reflected in the FORM GSTR-2A and FORM GSTR-2B of the concerned recipient.
The said facility is not mandatory and is only an optional facility made available to the registered persons under the QRMP Scheme.
The details of invoices furnished using the said facility in the first two months are not required to be furnished again in FORM GSTR-1.
Accordingly, the details of outward supplies made by such a registered person during a quarter shall consist of details of invoices furnished using IFF for each of the first two months and the details of invoices furnished in FORM GSTR-1 for the quarter.
At their option, a registered person may choose to furnish the details of outward supplies made during a quarter in FORM GSTR-1 only, without using the IFF.
Quarterly GSTR-3B Return
Such registered persons would be required to furnish FORM GSTR-3B, for each quarter, on or before the 22nd or 24th day of the month succeeding such a quarter.
In FORM GSTR-3B, they shall declare the supplies made during the quarter, ITC availed during the quarter, and all other details required to be furnished therein.
The amount deposited by the registered person in the first two months shall be debited solely for the purposes of offsetting the liability furnished in that quarter’s FORM GSTR-3B.
However, any amount left after the filing of that quarter’s FORM GSTR-3B may either be claimed as a refund or may be used for any other purpose in subsequent quarters.
In case of cancellation of registration of such person during any of the first two months of the quarter, he is still required to furnish the return in FORM GSTR-3B for the relevant tax period.
Return Filing Due-Dates w.e.f 1st Jan 2021
Category of Taxpayers
GSTR-1
Invoice Filing Facility
PMT- 06 for M 1
PMT-06 for M 2
GSTR-3B
Taxpayers who are required to file monthly returns: (whose ATO TO is more than 5 Cr. Or who have not opted from QRMP Scheme)
11th of the following month
NA
NA
NA
20th of the following month
Taxpayers who have opted for QRMP Scheme
13th day of the month following the quarter
1st to 13th day in M 1 and M 2
25th day of the month following M 1
25th day of the month following M 2
22nd or 24th day of the month following the quarter
Applicability of Late Fee
The late fee will be applicable on the delay in furnishing the quarterly GSTR-3B and GSTR 1 within the due date, i.e., Rs. 25 per day (CGST/SGST) subject to a maximum late fee of ₹5,000(CGST/SGST)
However, it is clarified that no late fee is applicable for delay in payment of tax in the first two months of the quarter in form GST PMT-06.
That’s is it for the 42nd meet of the GST council. With the onset of Covid-19, the GST council discussed in their 43rd meet regarding exemption on goods and service taxes. Check out the full 43rd GST Council Meeting Updates and Relaxations here.
Tax Deducted at Source, also known as TDS, is a system of taxation where the person/entity responsible for making specific payments deducts the applicable tax before the payment is credited to the receiver if it exceeds threshold limit specified in particular section.
There are various sections in Income Tax Law, which specify different TDS rates, nature of payment & its threshold limits for TDS and the same have been summarized in this article.
Section No.
Nature of Payment
Threshold
TDS Rate
192
Salaries
As per Slab
Normal Slab Rate (or) New Tax Regime Slab Rate as opted by employee
192A
Premature withdrawal from EPF
50,000
10%
193
Interest on Securities
2,500
10%
194
Dividends
5,000
10%
194A
Interest (Banks)
50,000(Senior Citizen) 40,000(Others)
10%
194A
Interest (Others)
5,000
10%
194B
Winning from Lotteries
10,000
30%
194BB
Winnings from Horse Race
10,000
30%
194C
Contractor – Single Transaction
30,000
1%(Ind/HUF) 2%(Others)
194C
Contractor – During the F.Y.
1 Lakh
1%(Individual/HUF) 2%(Others)
194C
Transporter (44AE) declaration with PAN
–
–
194D
Insurance Commission (15G-15H allowed)
15,000
5%(Individual) 10%(Company)
194DA
Life insurance Policy
1 Lakh
5%
194E
Non-Resident Sportsmen or Sports Association
–
20%
194EE
NSS
2,500
10%
194F
Repurchase Units by MFs
–
20%
194G
Commission – Lottery
15,000
5%
194H
Commission / Brokerage
15,000
5%
194I(a)
Rent of Plant / Machinery / Equipment
2.40 Lakh
2%
194I(b)
Rent of Land Building & Furniture
2.40 Lakh
10%
194IA
Transfer of certain immovable property other than agriculture land
50 Lakh
1%
194IB
Rent by Individual / HUF not liable to tax audit
50,000/PM
5%
194IC
Payment of monentary consideration under Joint Development agreement
–
10%
194J
Fees for technical services, call center, royalty for sale etc.
30,000
2%
194J
Fee for professional service or royalty etc.
30,000
10%
194K
Payment of income in respect of units payable to resident person
–
10%
194LA
Compensation on transfer of certain immovable property
2.50Lakh
10%
194LB
Income by way of interest from infrastructure debt fund(non-resident)
–
5%
194LBA
Business trust shall deduct tax while distributing, any interest received or receivable by it from a SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders.
–
10%
194LBB
Income in respect of investment of investment fund
–
10%
194LBC
Income in respect of investment in securitization trust
–
30%(Others) 25%(Individual & HUF)
194M
Payment to commission( not being insurance commission), brokerage etc. by individual & HUF who are not liable to deduct TDS under section 194C, 194H, or 194J.
50 Lakh
5%
194N
Cash withdrawal in excess of 1 crore during the previous year from 1 or more account with a bank or co-operative society
1 Cr
2%
194N
Cash withdrawal in excess of 20 Lakhs during the previous year if assessee has not furnished return for last 3 assessment years
20 Lakh
2%
194N
Cash withdrawal in excess of 1 Cr during the previous year if assessee has not furnished return for last 3 assessment years
1 Cr
5%
194O
TDS on e-commerce participants
5 Lakh
1%
194Q
Purchase of goods (applicable w.e.f 01.07.2021)
50 Lakh
0.10%
195
Payment of any other sum to a Non-resident(The rate of TDS shall be increased by applicable surcharge and Health & Education cess):-
a) Income in respect of investment made by a Non-resident Indian Citizen
–
20%
b) Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen
–
10%
c) Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-Section (1) of Section 112
–
10%
d) Income by way of long-term capital gains as referred to in Section 112A
–
10%
e) Income by way of short-term capital gains referred to in Section 111A
–
15%
f) Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses 10(33), 10(36) and 112A
–
20%
g) Income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC)
–
20%
h) Any other Income
–
30%
194P
TDS on Senior Citizen above 75 Years
Refer Note 1
Refer Note 1
206AB
TDS on non-filers of ITR at higher rates (applicable w.e.f 01.07.2021)
Refer Note 2
Refer Note 2
Note 1:-
A senior citizen of the age of 75 year or above is not required to file the return of income, if the following conditions are satisfied –
The senior citizen is resident in India and of the age of 75 or more during the previous year,
He has only pension income and may also have interest income from the same bank (specified bank – to be notified by the CG) in which he is receiving his pension income,
He shall be required to furnish a declaration to the specified bank. The declaration shall be containing such particulars, in such form and verified in such manner, as may be prescribed.
Note 2:-
The TDS on non -filers of ITR at higher rates This section shall not apply where the tax is required to be deducted under sections 192, 192A, 194B, 194BB, 194LBC or 194N of the Act. The Resident Indian are liable to pay twice the rate specified in the relevant provision of the Act; or twice the rate or rates in force; or the rate of 5%.
The Central Board for Direct Taxes (CBDT) vide Notification No. 3 of 2021 dated January 12, 2021, has notified the “Faceless Penalty Scheme” for conducting penalty proceedings under the Income-tax Act, 1961 (Act) in a faceless manner.
The said scheme is aligned with the Faceless Assessment Scheme and the Faceless Appeal Scheme. It lays down the procedure for virtually conducting penalty proceedings without any physical interaction between the taxpayer and the Income-tax Department.
The said Scheme leverages technology developments and aims to live up to the Honourable Prime Minister’s vision of improving transparency, efficiency, and accountability in tax administration.
Section 274 of the Income Tax Act provides for the procedure, for imposing a penalty (for underreporting or misreporting of income u/s 270A) under Chapter XXI of the Act.
In response to a showcase notice issued by the Assessing Officer (AO), the assessee or his authorised representative was still required to visit the office of the Assessing Officer.
With the advent of the Faceless Assessment Scheme, 2019, to ensure that the reforms initiated by the Department to eliminate human interface from the system reached the next level, it was imperative to launch a Faceless Penalty Scheme on the lines of Faceless Assessment Scheme, 2019.
Therefore, the Finance Act 2020 has inserted an enabling provision in the form of a new sub-section (2A) in section 274 of the Act to provide that the Central Government may notify an e-scheme for imposing a penalty to impart greater efficiency, transparency and accountability.
The new faceless penalty proceedings to be conducted under the Faceless Penalty Scheme, 2021:
Sr No.
Particulars
Faceless Penalty Proceedings under Faceless Penalty Scheme, 2021
1.
Applicability
All pending and new Penalty Proceedings w.e.f. 12.1.2021.
2.
Penalty Adjudicating Authority
Dynamic Jurisdiction comprised in any Penalty Unit in Regional Faceless Penalty Centre (RFPC) under the overall monitoring and supervision of National Faceless Penalty Centre (NFPC).
3.
Penalty Notice Issuing Authority
National Faceless Penalty Centre (NFPC)
4.
Assignment of Penalty Proceedings
The NFPC assigns the Penalty Proceedings to any Penalty Unit located in any one Regional Faceless Penalty Centre through an automated random allocation system.
5.
Inquiries/Adjudication during the course of penalty proceedings
The NFPC may issue appropriate notice or requisition u/s 274 read with 270A, to the assessee or NFAC/AO, for obtaining any further information, documents or evidence, as required by the Penalty Unit in the Regional Faceless Penalty Centre, to which the penalty proceedings have been assigned by the NFPC.
6.
Provision of Draft Penalty Order
Draft Penalty Order is to be passed by the Penalty unit in the Regional Faceless Penalty Centre, to which the penalty proceedings have been assigned by NFPC.
This Draft Penalty Order shall be examined by NFPC based on Risk Management Parameters and this draft Penalty Order may be sent by NFPC for Review to a Penalty Review Unit.
7.
Action on Draft Penalty Order
The penalty review unit shall review the proposal of penalty unit, whereupon it may concur with, or suggest a modification to, such proposal, for reasons to be recorded in writing, and intimate the National Faceless Penalty Centre.
Where the penalty review unit concurs with the proposal of the penalty unit, the National Faceless Penalty Centre shall pass the Final Penalty Order.
Where the penalty review unit suggests a modification, the National Faceless Penalty Centre shall assign the case to a specific penalty unit, other than the original penalty unit in any one of the Regional Faceless Penalty Centres through an automated allocation system.
8.
Final Penalty Order
Where the case is assigned by NFPC to a new penalty unit, such penalty unit, after considering the material on record including suggestions for modification and reasons recorded by the penalty review unit,
(a) in a case where the modifications suggested by the penalty review unit are prejudicial to the interest of assessee, as compared to the draft penalty order of the original penalty, shall follow the same procedure as laid down in point no.7 above and prepare a revised draft order for imposition of penalty;
or(b) in a case where the modification is not prejudicial to the interest of assessee, shall prepare a revised draft order for imposition of penalty;
or(c) may propose non-imposition of penalty, for reasons to be recorded in writing, and send such order or reasons to the National Faceless Penalty Centre;
Upon receipt of revised draft order from the penalty unit, the National Faceless Penalty Centre shall pass the penalty order as per such draft and serve a copy thereof upon the assessee or not impose penalty under intimation to the assessee.
Where in a case, as referred to in sub-clause (a) or (b) of clause (i), the National Faceless Penalty Centre has passed a penalty order, or not initiated or imposed penalty, as the case may be, it shall send a copy of such order or reasons for not initiating or imposing a penalty to the jurisdictional AO or the National Faceless Assessment Centre, as the case may be, for such action as may be required under the Act.
9.
Mode of Interface between the Assessee and the Penalty Adjudicating Authority
All the communication between the assessee and the NFPC is to be done exclusively through Electronic Mode via the ‘proceedings functionality in the ITBA Module.
As the case may be, the assessee or his authorised representative may request for a personal hearing to make his oral submissions or present his case before the penalty unit under this Scheme.
The Chief Commissioner or the Director-General, in charge of the Regional Faceless Penalty Centre, under which the concerned appeal unit is set up, may approve the request for personal hearing, if he is of the opinion that the request is covered by the circumstances as may be notified by CBDT.
Where the request for personal hearing has been approved by the Chief Commissioner or the Director-General, in charge of the Regional Faceless Penalty Centre, such hearing shall be conducted exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, in accordance with the procedure laid down by the Board.
Steps taken by CBDT to implement Faceless Penalty Scheme:
National Faceless Penalty Centre
These centres are made to facilitate the conduct of faceless penalty proceedings in a centralised manner and vest it with the jurisdiction to impose penalties in accordance with the provisions of this Scheme
Regional Faceless Penalty Centres
As it may deem necessary, to facilitate the conduct of faceless penalty proceedings, which shall be vested with the jurisdiction to impose penalty in accordance with the provisions of this Scheme
Penalty Units
As it may deem necessary, to facilitate the conduct of faceless penalty proceedings, to perform the function of drafting penalty orders, which includes
Identification of points or issues for the imposition of penalty under the Act
Seeking information or clarification on points or issues so identified
Providing the opportunity of being heard to the assessee or any other person
Analysis of the material furnished by the assessee or any other person
Such other functions as may be required for imposing a penalty
Penalty Review Units
As it may deem necessary, to facilitate the conduct of faceless penalty proceedings, to perform the functions of review of draft penalty order, which includes
Checking whether the relevant material evidence has been brought on record
Whether the relevant points of fact and law have been duly incorporated in the draft order
Whether the issues on which penalty is to be imposed have been in the draft order
Whether the applicable judicial decisions have been considered & dealt with in the draft order
Checking arithmetical correctness of computation of penalty if any
Such other functions as may be required for review
The board may specify their respective jurisdiction.
Will the National Faceless Penalty Scheme help to boost transparency? Will objectivity in the penalty proceedings may smoothen the experience of taxpayers? Will it help in achieving better compliance in the long term?
Well only time, taxpayers and government authority will decide that!
The new section – Section 115BAA has been inserted in the Income Tax Act,1961 to give the benefit of a reduced corporate tax rate for domestic companies.
Section 115BAA states that domestic companies have the option to pay tax at a rate of 22% from the FY 2019-20 (AY 2020-21) onwards if such domestic companies adhere to certain conditions specified.
Conditions specified under eligibility criteria of section 115BAA
All domestic companies shall have an option to pay income tax at the rate of 22% (plus applicable surcharge and cess), provided the following conditions are complied with:
Such companies should not avail any
exemptions/incentives under different provisions of income tax. Therefore, the
total income of such company shall be computed without:
1
Section – 10AA
Special provisions in respect of newly established Units in Special Economic Zones
2
Section – 32(1)(iia)
Additional Depreciation (it is pertinent to note that this restriction is only on additional depreciation and regular depreciation is permitted to be reduced from the total income of the assessee so long as it does not pertain to other deductions enumerated in this table)
3
Section 32AD
Investment-Linked Deduction
4
Section – 33AB
Tea development account, coffee development account and rubber development account
5
Section – 33ABA
Site Restoration Fund
6
Section 35
Expenditure on Scientific Research
7
Section 35 AD
Deduction in respect of expenditure on specified business
8
Section – 35CCC
Expenditure on the agricultural extension project
9
Section – 35CCD
Expenditure on a skill development project
10
Chapter VI A
No deductions under Chapter VI A can be made while computing the total income for Section 115BAA, subject to the following exceptions:
a. Section – 80JJAA: Deduction in respect of employment of new employees. While all other deductions like 80C, 80G, etc cannot be availed while computing total income for section 115BAA, there is no such restriction on section 80JJAA deduction.
b. Section 80LA: Persons having eligible units in the International Financial Services Centre referred to in section 80LA(1A) shall be allowed to claim deduction u/s. 80LA while computing total income for section 115BAA.
c. Section 80M: Deductions in respect of inter-corporate dividends. Inserted vide Finance Bill, 2020, this deduction can be availed w.e.f. AY 2021-2022 while computing total income for section 115BAA.
Claiming a set-off of any loss
carried forward or depreciation from earlier years, if such losses were
incurred in respect of the aforementioned deductions
A claim by an amalgamated company for set-off of carried forward loss or unabsorbed depreciation belonging to an amalgamating company if such loss or unabsorbed depreciation is on account of the above deductions; claiming a deduction for additional/accelerated depreciation. The normal depreciation can however be claimed.
The above losses shall be deemed to have been allowed and shall not be eligible for carrying forward and set off in subsequent years this means that if the company opts for 115BAA then the opportunity for claiming set-off is lost forever.
Such companies will have to exercise this option to be taxed under section 115BAA on or before the due date of filing income tax returns. Once the company opts for section 115BAA in a particular financial year, it cannot be withdrawn subsequently.
The option should be in Form 10-IC, as notified by the CBDT. The form should be submitted online under a digital signature or an electronic verification code.
The new effective tax rate, which will apply to domestic companies availing the benefit of section 115BAA is 25.168%. The break up such tax rate is as follows:
Base tax rate
Surcharge applicable
Cess
Effective tax rate
22%
10%
4%
22*1.1*1.04 = 25.168%
Such companies will not be required to pay Minimum Alternate Tax (MAT) under section 115JB of the act.
Comparison of Effective
Tax Rate (inclusive of surcharge and cess) where company opts for Section
115BAA or not:
Total Income
Effective Tax Rate (inclusive of surcharge and cess)
Effective Tax Rate (inclusive of surcharge and cess)
Co. opts section 115BBA
Co. doesn’t opts section 115BBA
Up to Rs. 1 crore
25.17%
26%
More than Rs. 1 crore but up to Rs. 10 crore
25.17%
27.82%
More than Rs. 10 crore
25.17%
29.12%
Let us now understand the Section 115BBAwith the help of an example:-
ABC Ltd. was incorporated in years 2000-01, purchased a new plant and machinery of Rs. 10 lakhs on 01-04-2020.
Its turnover for the previous year 2017-18 was less than Rs. 400 crore and, therefore, it would be chargeable to tax at the rate of 25% for the Assessment Year 2020- 21.
The total income of the company for Assessment
Year 2021-22 before allowing for additional depreciation in respect of new
plant and machinery is Rs. 20 lakh.
For the Assessment Year 2021-22, the company
shall have only 2 options – opt for section 115BAA or pay tax as usual at the
rate of 25%.
The total income of the company and tax thereon in both the cases shall be computed as follows:
Particulars
If co. opts for Section 115BAA
If Co. doesn’t opt for Section 115BAA
Total Income before allowing additional depreciation
20,00,000
20,00,000
Less: Additional depreciation available as per section 32(1)(iia) [Rs.10 lakh * 20%]
NA
2,00,000
Total Income (a)
20,00,000
18,00,000
Applicable tax rate (b)
22%
25%
Tax on total income (c=a*b)
4,40,000
4,50,000
Add: Surcharge (d)
44000
Nil
Tax After Surcharge (e= c + d)
4,84,000
4,50,000
Add: 4% Health and education cess (f= e*4%)
19,360
18,000
Total Tax liability (g= e + f)
5,03,360
4,68,000
Extra Tax payable under Section 115BAA
35,360
–
If in above example, the company has not purchased any new plant and machinery during the year 2020-21 even in that case the amount of tax saving will not be much if company opts for section 115BAA
Particulars
If co. opts for Section 115BAA
If Co. doesn’t opt for Section 115BAA
Total Income (a)
20,00,000
20,00,000
Applicable Tax rate (b)
22%
25%
Tax on total income (c=a *b)
4,40,000
5,00,000
Add : Surcharge (d)
44000
Nil
Tax after surcharge (e= c+d)
4,84,000
5,00,000
Add : 4% Heath and education cess (f = e* 4 %)
19,360
20,000
Total Tax Liability (g= e+f)
5,03,360
5,20,000
Tax savings if co. opts 115BAA
16,640
Can a company opt out of this section?
The domestic companies who do not wish to avail of this concessional rate immediately can opt for the same after the expiry of their tax holiday period or exemptions/incentives as mentioned in point 2 earlier.
However, once such a company opts for the concessional tax rate under section 115BAA of the Income Tax Act,1961, it cannot be subsequently withdrawn.
All the business structures registered in India i.e. Private Limited Company, Public Limited Company, One Person Company, Limited Liability Partnership etc. need to file certain forms every year with the Registrar of Companies. All the Companies and LLPs registered in India are required to comply with ROC Annual Filing under the Companies Act, 2013 and Limited Liability Partnership Act, 2008 respectively.
The ROC compliance calendar for regular and annual filings during the year 2021 is provided below:
Description
Form
*Due date
Period
An annual statement for submitting details of the business of the LLP and its partners. All registered LLPs should file the form within 60 days from the close of the end of the financial year.
Form 11 (Annual returns of an LLP)
30 May 2021
FY 2020-21
Director KYC submission for DIN holders as of 31 March 2021. Every person who has a DIN allotted and the status of the DIN is ‘Approved’.
DIR-3 KYC
30 September 2021
FY 2020-21
To be filed in less than 15 days from the conclusion of AGM. Every company should intimate the ROC about the appointment of an auditor.
Form ADT-1 (Appointment of auditor)
14 October 2021
FY 2020-21
The form should be filed annually with the ROC. It is also known as the statement of accounts and solvency. Every LLP should submit the data of its profit or loss and balance sheet.
Form 8 (Financial Reports of an LLP)
30 October 2021
FY 2020-21
To be filed 30 days from the conclusion of AGM. Specified companies should file the financial statements with the ROC.
Form AOC-4 (Filing of annual accounts)
30 October 2021
FY 2020-21
To be filed within 60 days from the conclusion of AGM. Every company should file an annual return, furnishing details about the company.
MGT-7 (Filing of annual returns)
29 November 2021
FY 2020-21
Filing of resolutions with the ROC regarding Board Report and Annual Accounts. The details of the resolutions passed should be filed.
MGT-14 (Filing of resolution with MCA)
Within 30 days of the board meeting
Within 30 days of the board meeting
All MSMEs should file a half-yearly return with the registrar for outstanding payments to Micro or Small Enterprises.
Form MSME (outstanding payments to MSME’s)
30 April 2021 and 31 October 2021
30 April 2021 (For the period of October’20 – March’21) 31 October 2021 (For the period of April’21 – September’21)
The due dates mentioned are subject to change as and when notified by the concerned department.
Note: Measure taken to provide relief during COVID-19 for FY 2020-21:
The Companies (Auditor’s Report) Order, 2020 will be applicable from FY 2020-21 instead of FY 2019-20. Hence, CARO 2020 has to be followed for audits commencing April 2021.
It is very important to file all your ROC Compliance forms within the time limit prescribed by the MCA. Non-filing of annual returns entail hefty penalties. These are over and above normal fees charged by MCA and there is no way to reduce the penalties.
If that’s the question on your mind, you are at the right place. In this article, we will see how to file an RTI application with ease.
A lot of Indians have heard about RTI but are not very clear on what is RTI and what exactly is the meaning of RTI.
It is not a very complex topic but due to lack of awareness, we get overwhelmed by the mention of it.
RTI’s meaning is quite clear when you try to understand how to use it. In simple words, RTI means that any citizen of India can ask for any information which is supposed to be public knowledge.
Right to Information Act has been implemented by the Government of India to provide a right to its citizens to ask the relevant questions to the Government and various public utility service providers, in a practical manner.
This was done to replace the earlier Freedom of information Act of 2002. The primary objective was also to help citizens get faster service from government agencies, as they can now ask why is a certain application or a process being delayed; and mainly to fulfill the aim of a corruption-free India.
What is the RTI act?
Under the RTI Act, any citizen can seek information from any public or government authority (however, it should not pertain to national security and defense or some personal information) and the authority is liable to respond within a period of 30 days to the application.
Now, information disclosure in India is restricted by the Official Secrets Act of 1923 and various other special laws, but many of these have been relaxed in light of the RTI act.
The RTI act also requires all public authorities to have their records computerized for the widespread relay, such that requests for information by the citizens are processed faster because of information categorization.
What Information can one seek under the RTI Act?
The RTI act allows any Indian citizen to seek answers from any Government authority. This could be even for things like a delayed IT refund, passport or a driving license, or details of an infrastructure or repairs project going on or completed.
Even knowing the status of an FIR or the funds allocated to various government schemes, MP, MLA, PM relief fund, etc. Students can even seek copies of answer sheets from their Universities with this act.
The power of RTI and its applications are limitless. The idea is to ask the Right Questions!
How to file an RTI Application?
1. For submitting an RTI application, visit the online RTI Portal and click on submit request option.
2. On clicking on submit request option ‘Guidelines for use of RTI ONLINE PORTAL’ screen will be displayed. This screen contains various guidelines for using RTI online portal. The citizen has to click on the checkbox ‘I have read and understood the above guidelines and then click on submit button.
3. Then Online RTI Request Form screen will be displayed. Ministry or Department for which the applicant wants to file an RTI can be selected from Select Ministry/Department/Apex body dropdown.
4. Applicant will receive SMS alerts in case he/she provides a mobile number. The fields marked * are mandatory while the others are optional.
5. If a citizen belongs to the BPL category, he has to select the option ‘Yes’ in the ‘Is the applicant below poverty line?’ field and has to upload a BPL card certificate in the supporting document field. (No RTI fee is required to be paid by any citizen who is below the poverty line as per RTI Rules, 2012)
6. On submission of the application, a unique registration number would be issued, which may be referred by the applicant for any references in the future.
7. If a citizen belongs to the Non-BPL category, he has to select the option ‘No’ in the ‘Is the applicant below poverty line?’ field and has to make a payment of Rs 10 as prescribed in the RTI Rules, 2012.
8. ‘Text for RTI request application’ should be up to 3000 characters. If the text is more than 3000 characters, then the application can be uploaded in the supporting document field.
9. After filling in all the details in the form, click on the ‘make payment’ option.
10. On clicking the option, the Online Request Payment form will be displayed. The payment mode can be selected in this form, which can be; internet banking, ATM-cum-debit card, or credit card.
11. After clicking on the ‘Pay’ button, the applicant will be directed to the SBI payment gateway for payment. After completing the payment process, the applicant will be redirected back to RTI Online Portal.
12. The applicant will get an email and SMS alert on the submission of the application.
Note: Only alphabets A-Z a-z number 0-9 and special characters , . – _ ( ) / @ : & \ % are allowed in text for RTI request application.
The application filed through this web portal would reach electronically to the nodal officer of the concerned Ministry/Department, who would transmit the RTI application electronically to the concerned CPIO.
What do to if your RTI request is rejected?
There is a fundamental difference between RTI Request and RTI Appeal.
RTI Request is applying for the first time. The request is made by the citizen to one person (i.e. PIO) to provide information. This means that it involves only the citizen and PIO.
RTI Appeal is an appeal before a senior officer against the decision of the PIO. This means that here, a third person (i.e. Appellate Authority) comes between the citizen and the PIO.
An appeal is only filed when the citizen is not satisfied with the reply of PIO or PIO rejects the citizen’s request for information.
This means RTI request is application process while RTI appeal is appellate procedure against the decision on RTI application.
Steps for filing RTI Application First Appeal
1. For submitting the First appeal application, click on the ‘submit first appeal’ option. Upon clicking, the ‘guidelines for use of RTI online portal’ screen will be displayed. This screen contains various guidelines for using RTI online portal.
2. Citizen has to click on the checkbox ‘I have read and understood the above guidelines and then click on submit button.
3. Online RTI first appeal form screen will be displayed. The applicant has to enter the registration number, email ID, and security code in the form.
4. Upon clicking the submit button, the online RTI first appeal form will be displayed. The applicant can then select a reason for filing an appeal application from the ‘ground for appeal’ dropdown field.
5. Text for RTI first appeal application should be up to 3000 characters. If the text is more than 3000 characters, then the application can be uploaded in the supporting document field. (As per RTI Act, no fee has to be paid for the first appeal).
6. On submission of the application, a unique registration number would be issued, which may be referred by the applicant for any references in the future.
The application filed through this web portal would reach electronically to the nodal officer of the concerned Ministry/Department, who would transmit the RTI application electronically to the concerned appellate authority.
Income tax payment for individuals and corporate entities is a mandatory requirement as per the Income Tax Act, 1961 if their annual income is above the minimum exemption limit.
However, taxpayers can also avail tax benefits under various sections of the Act. To reap these benefits, one must understand the income tax slab and applicable rates.
What is the Income Tax Slab?
In India, where individuals earn an income within a diverse range, levying a tax on all individuals at a specific rate would not be a fair policy.
The Act, therefore, segregates income ranges and levies tax at different rates as per the segregation. These groups are thus known as tax slabs. The slabs also vary based on age if the taxpayer is an individual and as per the classification of entities.
Income tax slabs are amended and revised each year during the Central Government’s Budget Session.
These amendments and revisions once proposed are approved by the Parliament and implemented as law.
Various Tax rates applicable are as follows:-
Income Tax Slab Rate for AY 2021-22 for Individuals opting for the old tax regime
Individual (resident or non-resident), who is of the age of fewer than 60 years on the last day of the relevant previous year:
Net income range
Income-Tax rate
Up to Rs. 2,50,000
Nil
Rs. 2,50,000- Rs. 5,00,000
5%
Rs. 5,00,000- Rs. 10,00,000
20%
Above Rs. 10,00,000
30%
Resident senior citizen, i.e., every individual, being a resident in India, who is of the age of 60 years or more but less than 80 years at any time during the previous year:
Net income range
Income-Tax rate
Up to Rs. 3,00,000
Nil
Rs. 3,00,000 – Rs. 5,00,000
5%
Rs. 5,00,000- Rs. 10,00,000
20%
Above Rs. 10,00,000
30%
Resident super senior citizen, i.e., every individual, being a resident in India, who is of the age of 80 years or more at any time during the previous year:
Net income range
Income-Tax rate
Up to Rs. 5,00,000
Nil
Rs. 5,00,000- Rs. 10,00,000
20%
Above Rs. 10,00,000
30%
Surcharge: –
10% of income tax where total income exceeds Rs. 50,00,000.
15% of income tax where total income exceeds Rs. 1,00,00,000. 25% of income tax where total income exceeds Rs. 2,00,00,000.
37% of income tax where total income exceeds Rs. 5,00,00,000.
Health and Education cess: – 4% of income tax and surcharge.
Note: A resident individual is entitled to a rebate under section 87A if his total income exceeds Rs. 5,00,000. The amount of rebate shall be 100% of income tax or Rs. 12,500, whichever is less.
Income Tax Rates For HUF/AOP/BOI/Any other Artificial Juridical Person under the old tax regime
Net income range
Income-Tax rate
Up to Rs. 2,50,000
Nil
Rs. 2,50,000- Rs. 5,00,000
5%
Rs. 5,00,000- Rs. 10,00,000
20%
Above Rs. 10,00,000
30%
Surcharge: –
10% of income tax where total income exceeds Rs. 50,00,000.
15% of income tax where total income exceeds Rs. 1,00,00,000.
25% of income tax where total income exceeds Rs. 2,00,00,000.
37% of income tax where total income exceeds Rs. 5,00,00,000.
Health and Education cess: – 4% of income tax and surcharge.
Income tax applicable to Individuals and HUF under new optional tax regime (Section 115BAC)
A new tax regime for individuals and HUF has been proposed by the Finance Bill, 2020 to tax the income of such assessees at lower tax rates if they agree to forego prescribed deductions and exemptions under the Income Tax Act.
Special provision for calculating the income of assessees opting for this section is prescribed under the said section.
Net income range
Any Individual/ HUF
Up to Rs. 2,50,000
Nil
From Rs 2,50,001 to Rs 5,00,000
5%
From Rs 5,00,001 to Rs 7,50,000
10%
From Rs 7,50,001 to Rs 10,00,000
15%
From Rs 10,00,001 to Rs 12,50,000
20%
From Rs 12,50,001 to Rs 15,00,000
25%
Above Rs. 15,00,000
30%
Surcharge: –
10% of income tax where total income exceeds Rs. 50,00,000.
15% of income tax where total income exceeds Rs. 1,00,00,000.
25% of income tax where total income exceeds Rs. 2,00,00,000.
37% of income tax where total income exceeds Rs. 5,00,00,000.
Health and Education cess: – 4% of income tax and surcharge.
Income Tax Rate for Partnership Firm:
A partnership firm (including LLP) is taxable at 30%.
Surcharge:- 12% of tax where total income exceeds Rs. 1 crore.
Health and Education cess: 4% of income tax plus surcharge.
Tax rates for domestic companies:
Particulars
Tax rates
Company opting for section 115BA*
25%
A company having turnover or gross receipt of up to Rs. 400 crore in the previous year 2017-18*
30%
Company opting for section 115BAA**
22%
Company opting for section 115BAB**
15%
Any other company*
30%
MAT***
15%
Tax rates for foreign companies:
The tax rate for foreign companies is 40%.
Company
Net income is between Rs. 1Cr. – 10 Cr.
Net income exceeds Rs. 10Cr.
Domestic company
7%
12%
Foreign company
2%
5%
Health and Education cess: 4% of income tax plus surcharge.
Income Tax Slab Rate for Co-operative Society:
Income tax rates under the old regime: –
Net income range
Income-Tax rate
Up to Rs. 10,000
10%
Rs. 10,000 to Rs. 20,000
20%
Above Rs. 20,000
30%
Surcharge:- 12% of tax where total income exceeds Rs. 1 crore.
Health and Education cess: 4% of income tax plus surcharge.
Income tax applicable to co-operative society under new optional tax regime (Section 115BAC): –
The income of a co-operative society under the new regime is taxable at a flat rate of 22% provided it forgoes specified deductions and exemptions and computes its income according to the provisions of the newly inserted section.
Surcharge:- 10% of income tax.
Health and Education cess: 4% of income tax plus surcharge.
Income Tax Slab Rate for Local Authority:
A local authority is taxable at 30%.
Surcharge:- 12% of tax where total income exceeds Rs. 1 crore.
Health and Education cess: 4% of income tax plus surcharge.
Income tax return filing is mandatory if the income falls under taxable slabs. So, make sure to keep a check on the due dates and file your income tax returns to avoid penalties.
Disclaimer: This information has been taken from the official site of the income tact department. Tax laws are subject to amendments made thereto from time to time. Please consult a professional tax advisor before acting on the above.
The Startup India initiative of the Government of India envisages building a robust Start-up ecosystem in the country for nurturing innovation and providing opportunities to budding entrepreneurs.
In a move that endeavors to foster growth and development in the startup sector, the Central Government recently notified a sector-agnostic ‘Startup India Seed Fund Scheme’ (“SISFS”).
The SISFS is projected to disseminate approximately INR 945,00,00,000 (Indian Rupees Nine Hundred and Forty-Five Crores) into the startup ecosystem.
What is Startup India Seed Fund Scheme?
Easy availability of capital is essential for entrepreneurs at the early stages of the growth of an enterprise.
Funding from angel investors and venture capital firms becomes available to startups only after the proof of concept has been provided.
Similarly, banks provide loans only to asset-backed applicants. It is essential to provide seed funding to startups with innovative ideas to conduct proof of concept trials.
Department for Promotion of Industry and Internal Trade (DPIIT) has created Startup India Seed Fund Scheme (SISFS) with an outlay of INR 945 Crore to provide financial assistance to startups for Proof of Concept, prototype development, product trials, market-entry, and commercialization. It will support an estimated 3,600 entrepreneurs through 300 incubators in the next 4 years.
The Hon’ble Prime Minister of India announced the scheme in his Grand Plenary address of Prarambh: Startup India International Summit on 16th January 2021. After approval of EFC and Hon’ble Finance Minister, the scheme has been notified on 21.01.2021.
The Seed Fund will be disbursed to eligible startups through eligible incubators across India. Startup incubators are institutions that help entrepreneurs to develop their business, especially in the initial stages.
Minister of Railways, Commerce & Industry, Consumer Affairs, and Food & Public Distribution Shri Piyush Goyal launched the Startup India Seed Fund Scheme (SISFS).
The Fund aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market-entry, and commercialization.
The SISFS was drafted to address the primary obstacle faced by up and coming startups, which is the lack of access to adequate capital particularly at the product trial/ proof of concept stage.
The SISFS is just one in a series of measures being implemented by the government to bolster the startup sector, for instance, the recent union budget extended the eligibility period for startups to March 31, 2022, to avail the tax exemption under Section 80-IAC of the Income Tax Act, 1961.
The implementation of such measures is of utmost importance given the prevailing market scenario where it is difficult for most startups to raise capital particularly in light of the slowdown caused by the pandemic.
Accordingly, the enforcement of the SISFS comes at the most opportune time and we identify some of the key takeaways from the SISFS.
Key takeaways from the Startup India Seed Fund Scheme
Establishment of an Experts Advisory Committee (“EAC”)
The SISFS envisages the establishment of an EAC which will oversee the implementation and management of the SISFS.
The primary responsibility of the EAC will be to assess and select incubators (who fall within the eligibility criteria specified in the SISFS) with the objective of granting seed funds.
After the incubators have been selected, the EAC will supervise the process of dissemination of the seed funds to the selected incubators. The seed fund will be disbursed by the EAC to the incubators on the condition that certain targets relating to the utilization of the funds are met.
In addition, the EAC is also expected to ensure that the incubators are on the right track in relation to achieving the milestone-based objectives as set by the EAC.
Assistance to Incubators
The EAC shall disseminate INR 5,00,00,000 (Indian Rupees Five Crores) to the selected incubators over a series of milestone-based installments (as determined by the EAC).
The installments will only be disbursed to the incubators upon submission of proof to the EAC that the milestones have been accomplished.
In excess of the seed fund, the incubator will also be provided with a management fee (5% of the total commitment granted to the selected incubator) which is to be utilized for the operational expenditure incurred by the incubators in conducting due diligence and shortlisting Startups.
The seed fund grant provided to the incubator is to be used in full, within three years from the date of receipt of the first installment by the incubator.
Incubator Seed Management Committee (“ISMC”)
The selected incubators that are participating in the SISFS will need to establish an ISMC. The ISMC is an organ that will assess and shortlist suitable Startups for the provision of seed support.
The ISMC shall comprise of a nominee from the incubator who will act as chairman; representative from the State Government’s Nodal Team; representative of a venture capital fund or angel network; a domain expert from the industry; a domain expert from academic; two successful entrepreneurs and any other relevant stakeholder as deemed appropriated by the incubator.
Disbursement of Seed Funds to Startups
The incubators may onward disburse the seed fund to the Startups selected by the ISMC in the following manner:
Up to INR 20,00,000 (Indian Rupees Twenty Lakhs) (milestone based payments) as grant for validation of proof of concept, or prototype development, or product trials;
Up to INR 50,00,000 (Indian Rupees Fifty Lakhs) of investment for market entry, commercialization, or scaling up through convertible debentures or debt or debt-linked instruments.
There also seems to be an express prohibition on the Startups to use the seed fund for any purpose for which it has not been granted for.
The amount disbursed by the incubator to the Startup shall not exceed 20% of the total grant provided to the incubator.
Apart from monetary assistance, the incubators shall also equip the Startups with the physical infrastructure and equipment required to develop, research and test product prototypes and offer networking opportunities to the Startups by providing a marketing platform for the Startups to display the products developed to potential investors.
Indicators of Successful Implementation
The parameters for measuring the success of the Startups as assessed by the incubator will include progress of proof of concept; progress of prototype development; progress of product development; progress of field trials; progress of market launch; quantum of loan, angel or venture capital funding raised; jobs created by the Startup; turnover of the Startup and any other parameter as established by the incubator.
The status of progress under each of the above-mentioned parameters will be relayed from the Startup to the incubator and subsequently to the EAC.
Eligibility Criteria of the Scheme
1. A startup, recognized by DPIIT, incorporated not more than 2 years ago at the time of application.
Eligibility Criteria for Startup Recognition:
The Startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership
Turnover should be less than INR 100 Crores in any of the previous financial years
An entity shall be considered as a startup up to 10 years from the date of its incorporation
The Startup should be working towards innovation/ improvement of existing products, services, and processes and should have the potential to generate employment/ create wealth.
An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Startup”.
The startup must have a business idea to develop a product or a service with a market fit, viable commercialization, and scope of scaling.
The startup should be using technology in its core product or service, or business model, or distribution model, or methodology to solve the problem being targeted.
Preference would be given to startups creating innovative solutions in sectors such as social impact, waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defense, space, railways, oil and gas, textiles, etc.
A startup should not have received more than Rs 10 lakh of monetary support under any other Central or State Government scheme. This does not include prize money from competitions and grand challenges, subsidized working space, founder monthly allowance, access to labs, or access to prototyping facility.
Shareholding by Indian promoters in the startup should be at least 51% at the time of application to the incubator for the scheme, as per Companies Act, 2013 and SEBI (ICDR) Regulations, 2018.
A startup applicant can avail of seed support in the form of grants and debt/convertible debentures each once as per the guidelines of the scheme.
How much seed funding can a startup receive under the scheme?
Seed Fund to an eligible startup by the incubator shall be disbursed as follows:
1. Up to Rs. 20 Lakhs as a grant for validation of Proof of Concept, or prototype development, or product trials. The grant shall be disbursed in milestone-based installments. These milestones can be related to the development of prototypes, product testing, building a product ready for market launch, etc.
2. Up to Rs. 50 Lakhs of investment for market entry, commercialization, or scaling up through convertible debentures or debt or debt-linked instruments
3. A startup applicant can avail of seed support in the form of grants and debt/convertible debentures each once as per the guidelines of the scheme.
Analysis and Conclusion:-
The SISFS has been structured to operate like a well-oiled machine with each component (the EAC, the incubator, and the Startups) playing a pivotal role in the holistic game plan.
The efficiency of the sector-agnostic scheme in attaining its objective of bolstering the startup sector will entirely depend on how well the respective organs function in synchronization.
The primary issue with SISFS is that there exists ambiguity concerning several facets of the implementation of the SISFS.
For instance, one of the eligibility criteria for Startups as established by the SISFS is that the “Startup must have a business idea to develop a product or a service with the market fit, viable commercialization, and scope of scaling.”
However, the SISFS does not establish the thresholds for what is to be considered as “market fit” or “viable commercialization.”
This is indicative of a larger problem with the SISFS which is that a lot of discretionary power is wielded by the EAC and the incubators in shortlisting “suitable” incubators and Startups respectively.
At the moment, the initiatives being ushered in by SISFS should be welcomed, however, the success of the SISFS will depend entirely on the administration and operation of the EAC, the incubator, and the Startups which is yet to be seen.
Pramod Kesharichand Shah Vs. The Principal Commissioner of Income Tax
[ITA No.43/SRT/2018]
Facts of the case
The assessee an individual,
filed his return of income on 31.10.2007, declaring total income to the tune of
Rs.9,14,884/-. The assesses case was re-opened under section 148 of the Income
Tax Act, 1961 and the assessment under section 143(3) was passed on 28/01/2015,
determining total income of Rs.9,14,890/-.
Later on, the ld. PCIT has
exercised his jurisdiction under section 263 of the Income Tax Act 1961 and
observed that assessment order passed by the assessing officer is erroneous as
well as prejudicial to the interest of revenue and therefore, a notice under
section 263 of the Act was issued to the assessee. The relevenat extracts of
the notice are produced below:
“The
AO has erred in accepting the claim made by the assessee that the cash deposits
of Rs.16,00,000/- in the saving bank account no. xxxxxxxxxx2457 maintained with development credit
bank, DCS, Daman Branch came out of land transaction in which the assessee was
a confirming party. The AO has accepted this claim without any verification
which was required to be made in the facts and circumstances of the case before
accepting of the claim. It is further seen that the AO has erred in accepting a
cash flow statement prepared and submitted by the assessee showing a brought
forward/opening balance of Rs. 824009/- and further deposits of Rs. 9,50,000/-
from the land transaction which the AO failed to verify. Almost complete
absence of any inquiry on this issue makes the order erroneous as well as
prejudicial to the interest of revenue.”
In response to the show cause
notice of the Ld. PCIT under section 263 of the Act, The AR of the assessee
attended and filed various documents and took adjournment. However, the ld.
PCIT, after going through assessment records, rejected the contention of the
assessee and held that assessing officer has failed to do proper inquiry in
respect of cash deposit in bank account and it is indirectly and prima facie
established that the assesses claim, as made before the Assessing Officer, is
not correct and cannot be substantiated with help of relevant documents.
AR’s Arguments
The AR of the assessee has
contended that reassessment proceedings initiated by the Assessing Officer
under section 147 of the Act, is itself not valid; therefore the consequential
exercise of the jurisdiction under section 263 of the Act is also going to be
invalid. The AR submitted that during the reassessment proceedings, the
Assessing Officer asked the assessee to furnish the details of cash deposit of
Rs.16,00,000. The assessee submitted reply to AO by giving the entire details and
there is no mistake on the part of the assessee in furnishing the details of
cash deposit. Therefore order passed by the Assessing Officer is neither
erroneous nor prejudicial to the interest of Revenue. Hence, the order passed
by the ld. PCIT under section 263 of the Act should be quashed.
Findings of the Tribunal
The bench held that during the reassessment proceedings, the assessee submitted the details and the explanations of Rs.16,00,000/- cash deposited in the bank account. Just because the Assessing Officer did not bring this assessment order and has passed order in brief, does not mean that assessing officer has not examined the cash deposit. The assessing officer has applied his mind and passed the reassessment order under section 143(3) r.w.s.147 of the Income Tax Act. Hence, order passed by the Assessing Officer should not be erroneous. The assessee also submitted the details of cash deposit in response to notice under section 142(1) of the Act. The assessee also submitted the copy of the cash book before the assessing officer. Thus, the assessee has submitted the details of cash deposit from his side and it was on the Assessing Officer to examine it.
There is difference between
‘Lack of enquiry’ and ‘inadequate enquiry’. It is for the Assessing Officer to
decide the extent of enquiry to be made as it is his satisfaction as what is
required under law.
The hon’ble high court of Delhi in the case of CIT v. Sunbeam Auto Ltd. [(2010) 332 ITR 167], held that if there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass order u/s 263 of the Act, merely because the Commissioner has a different opinion in the matter and that only in cases where there is no enquiry, the power u/s 263 of the Act can be exercised. The ld. PCIT cannot pass the order u/s 263 of the Act on the ground that further/thorough enquiry should have been made by Assessing Officer.
Further, it was settled by honorable Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [(2000) 243 ITR 83 (SC)] wherein it was held that if the A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s. 263 of the Act.
The object of section 263 is to examine whether order passed by the AO is erroneous as well as prejudicial to the interest of revenue. Therefore, based on this factual position, the order passed by the AO under section 143(3) r.w.s.147 of the Act should not be erroneous. We note that Coordinate Bench of I.T.A.T., Kolkata in the case of Plastic Concern vs. ACIT [61 TTJ 87 (Cal)] has held that mere possibility of gathering more material to prove the claim of the assessee wrong would not make the concluded assessment erroneous so long as the ld. A.O. had acted judiciously and conducted enquiries in the course of assessment proceedings. Held, that revisionary jurisdiction exercised by the Ld. Pr. C.I.T. u/s. 263 of the Act was not in tune with the facts and evidences on record duly explained to the Ld. Assessing Officer and verified by him and that being so the order passed u/s. 263 of the Act on such erroneous stand is liable to be quashed.
+91 97234 00220
support@counselvise.com