Sh. Mukesh Nanubhai Desai vs ACIT
[ITA No. 781/SRT/2018]
Facts of the case
Assessee has earned exempt income of Rs. 8,67,79,658/- on account of Long term capital gain on which STT was paid exempt u/s 10(38) of Rs. 8,66,13,252/- and profit share from firm of Rs. 1,66,406/- exempt u/s 10(2A).
Assessee submitted that the transactions were genuine and that
all the details were furnished to the assessing officer such as books of
accounts of assessee and details of various scrips of shares with their date of purchase and
its sales.
The Assessing Officer also stated that out of the directors
of the companies “Nimbus Industries Ltd’ and Regency Trust Ltd in which
assessee has invested were banned from trading by SEBI.
CIT (A) directed the Assessing Officer to furnish a factual
report confirming if the aforesaid details were filed or not. Assessing Officer
in his remand report admitted before the Ld. CIT (A) that the transactions were genuine.
The Ld. CIT (A) was of the view that although the basis of making the addition did not survive, there existed a prearranged scheme to bring unaccounted income back into the books by claiming exempt Long term capital gain.
Assessee’s Contention
The Ld. AR of assessee contented that Assessing Officer made addition on account of the transactions not being genuine but later the assessing officer admitted by way of his remand report that the transactions were genuine.
Ld. CIT (A) cannot confirm addition merely on the basis of
probability, surmises, suspicion or conjectures that the Assessing
Officer didn’t conduct any verification of the documents.
The director who was banned was only one of the common
directors and price rigging (the reason for which the director was banned) didn’t
take place in Nimbus Industries (the company in which assessee has invested. Both
the companies in which assessee transacted were not
alleged to be involved in price rigging or manipulation.
Additions in this
case is not
based on investigation report
of either income tax department or other authority or
on the statement of
entry provider. Further, SEBI has not taken any action against
alleged two companies
or their directors or concern brokers for any manipulation of
prices prevailing in the stock exchange.
Once the department accepts the purchases, the sales
of similar shares cannot be doubted.
Crux of the case
When the assessee furnishes complete details of purchase and sales of the shares were provided to the assessing officer and these details are able to prove the genuineness of transaction, the addition cannot be made by a higher authority merely on the basis of probability, surmises, suspicion or conjectures.
The genuineness of the transactions was proved and also admitted by the Assessing officer in his Remand report and Also, since addition in this case was not based on any investigation report of either income tax department or other authority or on the statement of entry provider, the addition cannot sustain.
Reliance placed on:
CIT Vs Mahesh Chandra G. Vakil [220 Taxman
166 (Gujarat HC)]
CIT
Vs Himani M. Vakil [10 taxmann.com 326 (Guj HC)]
PCIT
Vs Dhwani M.
Shah [Tax Appeal
No. 674 of
2017 ] (Gujarat HC )
ITAT ruled in favour of assesse.
Download full judgment at https://www.itatorders.in/appeal/ita-781-srt-2018-14-shri-mukesh-nanubhai-desai-surat-the-assistant-commissioner-of-income-tax-circle-1-1-2-surat
Nilkanth Developers vs PCIT – 3 [ITA No.95/ SRT/2020]
Facts of the case
Assessment order u/s. 143(3) was passed
26.03.2013 for A.Y.2010-11 disallowing
deduction claimed u/s. 80IB(10) of Rs.1,25,78,872/-. The same was confirmed by
CIT(A) but on further appeal before ITAT, the same was allowed in favour of
assessee.
Notice u/s. 148 was issued and
order u/s. 143(3) r.w.s 147 was passed on 22.09.2017 for A.Y. 2010-11 proposing
to reduce the deduction claimed by the amount of interest and remuneration
payable to partners on notional basis.
PCIT passed order u/s. 263 on
16.03.2020 revising the assessment made u/s. 147 on 22.09.2017 disallowing the deduction
claimed u/s.80IB(10).
Assessee’s Contention
The subject matter of revision
u/s.263 being unconnected with the issues which were subject matter of the
assessment under 143(3) r.w.s 147, the order passed by the Ld. PCIT was
proposing to revise the original assessment made u/s. 143(3) for which the
action has become time barred.
Crux of the case
Revision cannot be made on a issue which was not part of the Order to be revised.
No order under section 263(1) after the expiry of 2 years from the end of the financial year in which the order sought to be revised was passed.
We have audited the accompanying Financial Statements
of ABC PRIVATE LIMITED (“the Company”), which comprises the Balance Sheet as
at March 31, 2021, the
Statement of Profit and Loss, the Statement of changes in Equity and the Statement
of Cash Flows for the year ended
on that date and a summary of significant accounting policies and other
explanatory information.
In our opinion and to the best
of our information and according to the explanations given to us, the aforesaid
financial statements give the information required by the Companies Act, 2013 (“the
Act”) in the manner so required and give a true and fair view in conformity
with the Accounting Standards prescribe under section 133 of the Act read with
the Companies (Accounting Standards) Rules, 2015, as amended, (“AS”) and other
accounting principles generally accepted in India, of the state of affairs of
the Company as at March 31, 2021, the profit, changes in equity and its cash flows
for the year ended on that date.
Basis for Opinion:
We conducted our audit of the Financial
Statements in accordance with the Standards on Auditing specified under section
143(10) of the Act. Our responsibilities under those Standards are further
described in the Auditor’s
Responsibility for the Audit of the Financial Statements section
of our report. We are independent of the Company in accordance with the Code of
Ethics issued by the Institute of Chartered Accountants of India (ICAI)
together with the ethical requirements that are relevant to our audit of the
financial statements under the provision of the Act and Rules made there under,
and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the ICAI’s Code of Ethics. We believe that the audit
evidence obtained by us is sufficient and appropriate to provide a basis for
our audit opinion on the financial statements.
Key Audit Matters:
Key audit matters are those
matters that, in our professional judgement, were of most significant in our
audit of the Financial Statements of the current period. These matters were
addressed in the context of our audit of the financial statement as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. In the audit of the current period, we does not have observed any
key audit matters required to be reported separately.
Other Matters:
The
continuous spreading of COVID -19 across India has resulted in restriction on
physical visit to the client locations and the need for carrying out
alternative audit procedures as per the Standards on Auditing prescribed by the
Institute of Chartered Accountants of India (ICAI). As a result of the above,
the entire audit was carried out based on remote access of the data as provided
by the management of the Company. This has been carried out based on the
advisory on “Specific Considerations while conducting Distance Audit/ Remote
Audit/ Online Audit under current Covid-19 situation” issued by the Auditing
and Assurance Standards Board of ICAI. We have been represented by the management
of the Company that the data provided for our audit purposes is correct,
complete, reliable and are directly generated by the accounting system of the
Company without any further manual modifications.
We
bring to the attention of the users that the audit of the financial statements
has been performed in the aforesaid conditions.
Our
audit opinion is not modified in respect of the above.
Information Other than the Financial Statements and
Auditor’s Report Thereon:
The Company’s Board of
Directors is responsible for the preparation of the other information. The
other information comprises the information included in the Management
Discussion and Analysis, Board’s Report including Annexure to Board’s Report,
Business Responsibility Report, Corporate Governance and Shareholder’s
Information, but does not include the Financial Statements and our auditor’s
report thereon.
Our opinion on the Financial Statements
does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit
of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained
during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have
performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in
this regard.
Management’s Responsibility for the
Financial Statements:
The Company’s Board of Directors is responsible for
the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”)
with respect to the preparation of these financial statements that give a true
and fair view of the financial position, financial performance, changes in
equity and cash flows of the Company in accordance with the accounting
principles generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the Companies
(Accounts) Rules, 2014 and the Companies (Accounting Standards) Rules, 2015, as
amended.
This responsibility also includes the maintenance of
adequate accounting records in accordance with the provision of the Act for
safeguarding of the assets of the Company and for preventing and detecting the
frauds and other irregularities; selection and application of appropriate
accounting policies; making judgments and estimates that are reasonable and
prudent; and design, implementation and maintenance of adequate internal financial
control, that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view and are
free from material misstatement, whether due to fraud or error.
In preparing the financial statement , management is
responsible for assessing the Company’s ability to continue as a going concern,
disclosing ,as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the
Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing
the Company’s financial reporting process.
Auditor’s
Responsibility for the Audit of the Financial Statement:
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with SAs will
always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we
exercise professional judgment and maintain professional scepticism throughout
the audit. We also:
-Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
-Obtain an understanding of internal financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
-Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.
-Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
-Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the
financial statements that, individually or in aggregate, makes it probable that
the economic decisions of a reasonably knowledgeable user of the financial
statements may be influenced. We consider quantitative materiality and
qualitative factors in (i) planning the scope of our audit work and in
evaluating the results of our work; and (ii) to evaluate the effect of any
identified misstatements in the financial statements.
We communicate with those charged with governance
regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those
charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most significance in the
audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law
or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such
communication.
Report on Other Legal and Regulatory
Requirements:
1.As required by section 143(3) of the Act, based on our audit, we report that:
-We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.a)In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;
-The Balance Sheet, the Statement of Profit and Loss, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of account.
-In our opinion, the aforesaid Financial Statements comply with the AS specified under Section 133 of the Act.
-On the basis of written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021, from being appointed as a director in terms of section 164(2) of the Act.
-With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure A”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting.
-With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rule 2014, as amended in our opinion and to the best of our information and according to the explanation given to us
a)The Company does not have any pending litigation which would impact its Financial position;
b)The Company did not have any long-term contracts including derivative contracts for which they were any material foreseeable losses under the applicable law or accounting standards.
c)There has been no delay in transferring amounts if applicable, required to be transferred, to the Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the “Annexure B”, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
FOR XYZ & ASSOCIATES. CHARTERED ACCOUNTANTS
NAME OF AUDITOR
(PARTNER /
PROPREEITOR)
M. No.: 000000 FRN: XXXXXXXX Place: XXXXX Date: XXXXX UDIN:
Annexure – A to the Independent
Auditors’ Report
(Referred to in paragraph 1 (f) under ‘Report on Other
Legal and Regulatory Requirements’ section of our report to the Members of ABC
PRIVATE LIMITED of even date)
Report on the Internal Financial
Controls over financial reporting under Clause (i) of Sub-section 3 of Section
143 of the Companies Act, 2013 (“the Act”)
We
have audited the internal financial controls over financial reporting of ABC PRIVATE LIMITED (“the Company”) as
of March 31, 2021 in conjunction with our audit of the financial statements of
the Company for the year ended on that date.
Management’s Responsibility for Internal
Financial Controls
The
Company’s management is responsible for establishing and maintaining internal
financial controls based on the internal control over financial reporting
criteria established by the Company considering the essential components of
internal control stated in the Guidance Note on Audit of Internal Financial
Controls over Financial Reporting issued by the Institute of Chartered
Accountants of India (‘ICAI’). These responsibilities include the design,
implementation and maintenance of adequate internal financial controls that
were operating effectively for ensuring the orderly and efficient conduct of
its business, including adherence to Company’s policies, the safeguarding of
its assets, the prevention and detection of frauds and errors, the accuracy and
completeness of the accounting records, and the timely preparation of reliable
financial information, as required under the Companies Act, 2013.
Auditors’ Responsibility
Our
responsibility is to express an opinion on the Company’s internal financial
controls over financial reporting based on our audit. We conducted our audit in
accordance with the Guidance Note on Audit of Internal Financial Controls over
Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued
by ICAI and deemed to be prescribed under section 143(10) of the Companies Act,
2013, to the extent applicable to an audit of internal financial controls, both
applicable to an audit of Internal Financial Controls and, both issued by the
Institute of Chartered Accountants of India. Those Standards and the Guidance
Note require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether adequate internal financial
controls over financial reporting was established and maintained and if such
controls operated effectively in all material respects.
Our
audit involves performing procedures to obtain audit evidence about the
adequacy of the internal financial controls system over financial reporting and
their operating effectiveness. Our audit of internal financial controls over
financial reporting included obtaining an understanding of internal financial
controls over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. The procedures selected depend on
the auditor’s judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error.
We
believe that the audit evidence we have obtained, is sufficient and appropriate
to provide a basis for our audit opinion on the Company’s internal financial
controls system over financial reporting of the Company.
Meaning
of Internal Financial Controls over Financial Reporting
A
Company’s internal financial control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A Company’s internal
financial control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company’s assets that could have a
material effect on the financial statements.
Inherent Limitations of Internal
Financial Controls over Financial Reporting
Because
of the inherent limitations of internal financial controls over financial
reporting, including the possibility of collusion or improper management override
of controls, material misstatements due to error or fraud may occur and not be
detected. Also, projections of any evaluation of the internal financial
controls over financial reporting to future periods are subject to the risk
that the internal financial control over financial reporting may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Opinion
In
our opinion, to the best of our information and according to the explanations
given to us, the Company has, in all material respects, an adequate internal
financial controls system over financial reporting and such internal financial
controls over financial reporting were operating effectively as at March 31,
2021 based on the internal control over financial reporting criteria
established by the Company considering the essential components of internal
control stated in the Guidance Note on Audit of Internal Financial Controls
Over Financial Reporting issued by the Institute of Chartered Accountants of
India (ICAI).
FOR XYZ & ASSOCIATES CHARTERED ACCOUNTANTS
NAME OF AUDITOR
(PARTNER /
PROPRETOR)
M. No.: 000000 FRN: XXXXXXX
Place: XXXXXX Date: XXXXXX UDIN:
Annexure
– B to the Independent Auditor’s Report:
The
Annexure referred to in Independent Auditor’s Report to the members of the
Company on the financial statements of the Company for the year ended March 31,
2021, we report that:
(i) (a) The Company does
not have any fixed assets during the year, therefore, provision regarding
thereto are not applicable.
(b) As the Company does not have any
fixed assets as specified in Paragraph (i)(a), reporting under Clause (i)(b)
and (i)(c) of Companies (Auditor’s Report) Order, 2016 is not applicable.
(ii) (a) According to information and
explanations give to us, the management of the
Company has conducted physical verification at reasonable intervals of
inventories during the period and no material discrepancies have been noticed
during such verification.
(iii) (a)
In our opinion and according to the information and explanation given to us,
the Company has not granted any loan secured or unsecured to the companies,
firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013.
(b) As the Company has not granted
any loan as specified in Paragraph (iii)(a), reporting under Clause (iii)(b)
and (iii)(c) of Companies (Auditor’s Report) Order, 2016 is not applicable.
(iv) In
our opinion and according to the information and explanations given to us, the
company has neither given any loan nor made any investment during the year,
therefore provisions of section 185 and 186 of the Act regarding thereto are
not applicable.
(v) The Company has not accepted deposits during the year
and does not have any unclaimed deposits as at March 31, 2021 and therefore,
the provisions of the Clause 3 (v) of the Order are not applicable to the
Company.
(vi) To
the best of our knowledge and explanation given to us, the provisions of
maintenance of cost records under sub section (1) of Section 148 of the Act are
not applicable to Company for the financial year 2020-21. Accordingly, Clause (vi) of Order is not applicable.
(vii) According to the information and explanations given to
us, there is no undisputed amounts payable for a period of more than six months
from the date they became payable.
(viii) The Company does not have any loans or borrowings from any
financial institution, banks, government or debenture holders during the year.
Accordingly, Clause (viii) of the Order is not applicable.
(ix) The Company did not raise any money by
way of initial public offer or further public offer (including debt
instruments) and term loans during the year. Accordingly, Clause (ix) of Order
is not applicable.
(x) According to the information and
explanation given to us, no material fraud by the Company or on the Company by
its officers or employees has been noticed or reported during the course of our
audit.
(xi) According to the information and
explanations given to us, and based on our examination of the records of the
Company, the Company has not paid/provided for any managerial remuneration.
Accordingly, Clause (xi) of Order is not applicable.
(xii) In our opinion and according to the
information and explanation given to us, the Company is not a Nidhi Company in
terms of section 406 of the Companies Act, 2013. Accordingly, Clause (xii) of
the order is not applicable.
(xiii) According to the information and
explanations given to us and based on our examination of the records of the
Company, transactions with the related parties are in compliance with sections
177 and 188 of The Companies Act, 2013 where applicable and details of such
transactions have been disclosed in the financial statements as required by the
applicable Accounting Standards.
(xiv) According to the information and
explanations give to us and based on our
examination of the records of the Company, the Company has not made any
preferential allotment or private placement of shares or fully or partly
convertible debentures during the year.
(xv) According to the information and
explanations given to us and based on our examination of the records of the
Company, the Company has not entered into non-cash transactions with directors
or persons connected with him. Accordingly, Clause (xv) of the Order is not
applicable.
(xvi) According to the information and
explanations given to us the Company is not required to be registered under
section 45-IA of the Reserve Bank of India Act, 1934.
Ashish N. Vashi vs ITO [ITA No.2744, 1403/ AHD/2015][2219/ AHD/2016]
Facts of the case The assessee is an insurance agent, he used to collect cash from various parties and deposit them into his bank account and out of the same payment was made to insurance companies. The said cash deposited was added back to his income u/s. 69A as unexplained cash deposits into the bank.
Assessee’s Contention
The ld. Counsel for the assessee contended that the assessee was merely an employee and in pursuance to providing core services also provided additional services to accommodate the policyholder for making payment of premium and there is no responsibility of the Assessee to keep track of the investors.
Crux of the case
The assessee has submitted a plethora of documents to prove the genuineness of the transactions. The assessee is a salaried employee and he can’t maintain accounts department for his small business and clients. The corroborative evidence was suggestive of the fact that the assessee had simply acted as a facilitator to make payment on behalf of the policyholders and where each entry was traceable and identifiable the addition should not be made in the hands of the assessee. This way, the assessee had fully discharged his onus of explaining the source of deposits in the bank account particularly with evidence, hence there was no reason for the assessing officer to make addition under section 69A of the Act. The assessee was never found to be the owner of the impugned deposits in the said bank accounts particularly because all the said deposits were immediately transferred to the insurance company by way of insurance premium in the names of the respective insurers and hence there was no question of not recording such investment in the books of accounts of the assessee in as much as there was no investment of the assessee himself.
The Income Tax Department will launch a new income tax filing portal on June 7.
What new income tax makeover aims at?
The new e-filing portal (www.incometax.gov.in) is aimed at providing taxpayer convenience and a modern, seamless experience to taxpayers by:-
-New taxpayer friendly portal integrated with immediate processing of Income Tax Returns(ITRs) to issue quick refunds to taxpayers;
-All interactions and uploads or pending actions will be displayed on a single dashboard for follow-up action by taxpayer;
-Free of cost ITR preparation software available online and offline with interactive questions to help taxpayers fill ITR even without any tax knowledge, with pre- filling, for minimizing data entry effort;
-New call center for taxpayer assistance for immediate answers to taxpayer queries with FAQs, Tutorials, Videos and chatbot/live agent;
-All key portal functions on desktop will be available on Mobile App which will be enabled subsequently for full anytime access on mobile network;
-New online tax payment system on new portal will be enabled subsequently with multiple new payment options using netbanking, UPI, Credit Card and RTGS/NEFT from any account of taxpayer in any bank, for easy payment of taxes.
Therefore, the existing portal will remain suspended for 6 days from June 1 to June 6,” said a circular by the Income tax Department.
As per the circular, officers including AOs, CIT(A) etc access the information for taxpayers from the portal.
Likewise, taxpayers also use extensive use of the portal for filing their ITR, checking refund and raising grievance among others. Due to unavailability of the system for six days, officers have also been advised to not fix anything for compliance during these 6 days.
The Department has directed that any hearing or compliance is to be fixed only from June 10 such that taxpayers are given ample time to respond via the new system.
As per the official circular, the officers in the field including AOS, CIT (A), PCIT interact with taxpayers through E-proceedings over the E-filing portal directly or through the NeAC/NFAC for issuance of notices, sCNs and getting a response to various e-proceedings, conducting of video conference or adjournments, issuing questionnaires, summons, letters.
In preparation for the transition to the new system, the existing E-filing portal will not be available to both taxpayers as well as Departmental Officers for a period of 6 days from 1″ June to 6th June 2021.
“Hence, it is requested that all officers may be immediately informed about this so that they may not fix any compliance dates during this period. All Officers may be directed to fix any hearing or compliances only from June 10 onwards to give taxpayers time to respond on the new system. If they have already scheduled any hearing or compliance which requires submissions online during this period, they may prepone or adjourn the hearing and reschedule the work items after this period, etc”, the circular said.
“They may also view/download any submissions in E-proceedings prior to June 1″ and the PDF of any ITRS and non-ITR forms that may be needed by them in advance so that they can continue to work in the ITBA system including completion of assessment proceedings where no further interaction with the taxpayer is necessary. It is clarified that the ITBA system and the CPC systems will continue to function for assessment-related functions. All Orders, notices issued during this period, however, will be made visible to the taxpayer only after the new portal goes live on June 7th, 2021,” the circular said.
It would also encourage all Officers/professionals to complete all their urgent tasks involving interactions with taxpayers prior to June 1 to avoid the blackout period during the launch of new website.
Sh. Haresh P. Shah, Legal Heir, Late Manjula P. Shah Vs ITO [ITA No.894/ AHD/2016]
Facts of the case
Notice for
reassessment proceedings u/s 147/148 was issued to dead person by the
department. Death certificate was furnished by the legal heir of the assesse.
Assessee’s Contention
The Ld. AR of the
legal heir of assesse contented that despite pointing out by her legal heirs
that assesse had expired long back, the assessing officer continued reassessment
proceedings against her, which is not valid, therefore reassessment proceedings
initiated against her by the assessing officer under section 147/148 of the Act
should be quashed.
Crux of the case
Notice u/s 148 was
issued in the name of dead person which is invalid in the eyes of law.
Reliance placed on
Rasid Lala vs. ITO,
[2017] 77 taxmann.com 39 (HC- Gujarat)
Rupa Shyamsundar Dhumatkar vs. ACIT & Ors., in Writ Petition No. 404 of 2019 (HC- Bombay)
Section 80G of the Income Tax Act, 1961 provides deduction in respect of donations to specified funds, charitable institutions, trusts etc. which are approved u/s 80G. So, trusts and charitable institutions willing to receive donations which can be deductible in the hands of the donor have to get registered u/s 80G of the Act.
Applicability of 80G on Charitable trusts and Societies.
Section 80G(5) applies to donations to fund or institutions established in India for Charitable purpose and it fulfils the following conditions:
where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 or clause (23AA) or clause (23C) of section 10. Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11 shall not apply in relation to such income, if—
the institution or fund maintains separate books of account in respect of such business;
the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and
the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business.
the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose;
the institution or fund is not expressed to be for the benefit of any particular religious community or caste;
the institution or fund maintains regular accounts of its receipts and expenditure;
the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India or under section 8 of the Companies Act, 2013 , or is a University established by law, or is any other educational institution recognized by the Government or by a University established by law, or affiliated to any University established by law, or is an institution financed wholly or in part by the Government or a local authority;
in relation to donations made after the 31st day of March, 1992, the institution or fund is for the time being approved by the Commissioner in accordance with the rules made in this behalf;
where any institution or fund had been approved under clause (vi) for the previous year beginning on the 1st day of April, 2007 and ending on the 31st day of March, 2008, such institution or fund shall, for the purposes of this section and notwithstanding anything contained in the proviso to clause (15) of section 2, be deemed to have been,—
established for charitable purposes for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009; and
approved under the said clause (vi) for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009;
The institution or fund prepares such statement for such period as may be prescribed and deliver or cause to be delivered to the prescribed income-tax authority or the person authorized by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed: Provided that the institution or fund may also deliver to the said prescribed authority, (a) correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be prescribed; and
the institution or fund furnishes to the donor, a certificate specifying the amount of donation in such manner, containing such particulars and within such time from the date of receipt of donation, as may be prescribed.(* applicable from 1.04.2021)
Application
for Grant of approval u/s 80G
The institution or trust shall make an application in the prescribed form and manner to the PCIT or CIT, for grant of approval:
where the institution or trust is approved under clause (vi) (as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020), within three months from the 1st day of April, 2021;
where the institution or trust is approved and the period of such approval is due to expire, at least six months prior to expiry of the said period;
where the institution or trust has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier;
in any other case, at least one month prior to commencement of the previous year relevant to the assessment year from which the said approval is sought.
How to apply for Grant of approval u/s 80G?
An application for approval under section 80G(5) , the institution or fund (hereinafter referred to as ‘the applicant’) shall be made in the following Form, namely:-
Form No. 10A in case of application under clause (i) or clause (iv) of first proviso to subsection (5) of section 80G to the PCIT or CIT authorized by the Board; or
Form No. 10AB in case of application under clause (ii) or clause (ii) of first proviso to subsection (5) of section 80G to the PCIT or CIT authorized under the said proviso.
The application shall be accompanied by the following documents, as required by Form Nos. 10A or 10AB, as the case may be, namely:—
where the applicant is created, or established, under an instrument, self-certified copy of the instrument.
where the applicant is created, or established, otherwise than under an instrument, self-certified copy of the document evidencing the creation or establishment of the applicant.
self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be.
self-certified copy of registration under Foreign Contribution (Regulation) Act, 2010, if the applicant is registered under such Act.
self-certified copy of existing order granting registration under section 80G(5);
self-certified copy of order of rejection of application for grant of approval under section 80G(5), if any.
where the applicant has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of the applicant relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up.
Note on the activities of the applicant.
Form Nos. 10A or 10AB, as the case may be, shall be furnished electronically,
under digital signature, if the return of income is required to be furnished under digital signature;
through electronic verification code in a case not covered under above point.
Form Nos. 10A or 10AB, as the case may be, shall be verified by the person who is authorized to verify the return of income under section 140, as applicable to the applicant.
Recent Important Update:
The CBDT (Central Board of Direct Tax) has issued Notification No. 19/2021 dated 26th March, 2021 prescribing the procedure for Registration including re-approval / revalidation of existing Tax Exemption Registrations of Trust or Institutions. All the existing Trusts or Institution registered u/s. 10(23C) / 12A / 80G have to Re-Register with the Income Tax Department. The new Rules and Forms will be applicable from 1stApril, 2021 and all charitable Trusts and Institutions already registered u/s. 12A or 12AA or 10(23C) and having 80G certificate must apply for re-approval/revalidation of their registration before 30thJune, 2021.
How RSA Consultants can help?
We are team of experienced Chartered Accountants, Company Secretaries and Business Consultants and having experience of working with many Trusts and NGO’s and understands the needs of such organization. We will fill out the 80G application and submit it on your behalf as well as Income Tax Department and will give you absolute clarity on the process to set realistic expectations. You may explore more at
The world of startups is filled with new terminology and not being able to understand the can leave a bad impression and limit your network growth. Therefore, we have created this list of 9 Must-Know Startup acronyms that you need to add to your vocabulary today!
1. MoM or WoW or YoY
Month-over-month (MoM)
MoM growth shows the change in the value of a specific metric as a percentage of the previous month’s value.
Month-over-month growth is often used to measure the growth rate of monthly revenue, active users, number of subscriptions, or other key metrics.
Year-Over-Year(YOY)
YoY growth calculation compares a statistic for one period to the same period the previous year. The year-over-year growth rate calculates the percentage change during the past twelve months.
To calculate month-over-month growth for a single month, simply take the difference between this month’s total number of users and last month’s total number of users, and then divide that by last month’s total.
2.GTM
Go to Market. This is a description of strategy – and again this is usually written.
A GTM is usually how a company intends to enter the market, i.e. what marketing strategy is going to lead to which new customers signing up (and paying).
3. CRM
CRM means customer relationship management and is usually followed by software. Like other types of enterprise software (for example, ERP (Enterprise Resource Planning), BI (Business Intelligence), etc.).
CRM software is productivity software that is utilized by companies to keep track of their customer relationships.
Often this software doubles as software that tracks potential customers and people that are in a sales campaign (often called leads).
4. SaaS
SaaS (Software as a Service) – pronounced like “sass”. SaaS software and its brethren (Infrastructure as a Service (IaaS), Platform as a Service (PaaS)) are tools that are usually built online and paid in a recurring fashion (often monthly).
Examples of SaaS platforms include Microsoft Office 365 and most CRM software platforms.
5. VC
VC is tricky because it means a class of people – venture capitalists or an individual within the class of people – an individual venture capitalist – or it could mean the firm that represents this group – as in a VC firm, shortened to just VC.
In many ways this reminds us of LOL which almost always means “laughing out loud” but in rare cases has been shortened by an elder to “lots of love”.
While not generally confusing, VC has a variety of meanings that shift around subtly and so it is important to track all iterations.
6. ARR
Annual recurring revenue and its close cousin MRR – monthly recurring revenue also can be a little tricky but are popular startup acronyms.
The same acronym ARR can mean annual run rate (or in some weird finance instances Annual Rate of Return) – and this is not the same thing as recurring revenue.
Annual recurring revenue means revenue that is signed up to recur every year. So, for example, I might sell a SaaS product to a client that auto-renews a year from now. This would be considered ARR (annual recurring revenue).
Here’s where this gets tricky my run rate is derived from my MRR (monthly recurring revenue) – but it is a forecasted amount based on my current amount today and my projection of that growth continuing.
This is very different – one is based on annual contracts and one is based on forecasts of growth.
7. CAC
Customer Acquisition Costs – pronounced “kak” like “hack” but with a “k” sound. Acquiring customers is critical to any startup, but understanding how (which channels) and at what price (which is what the CAC is used to abbreviate) the customer is being acquired is really important.
This number can be hard for certain types of companies to calculate – but generally, it is total acquisition costs (generally marketing and sales expenses (minus discounts)) divided by the number of new customers.
This allows a firm to understand its unit value.
8. LTV
Lifetime Value – many firms have clients that will pay for a period of time and then leave (called churn in many software industries).
Understanding the length of time that an average customer stays with a firm and what the average customer spends per month (or year) allows the firm to create a lifetime value calculation.
This is very useful for companies that have regular churn levels because it isolates the length of time and the unit metrics for a specific customer.
9. ARPU
Average Revenue Per Unit. This is a critical one and is related to other unit measurements but it essentially measures the average price paid by customers against the number of things that they are buying.
Particularly for companies that are selling products, ARPU is a great way to keep track of customer trends and product-related pieces.
For example, let’s imagine that I run an e-commerce site that sells shoes. I sell a $50 pair and a $100 pair – my revenue is $150, and my ARPU is $75.
Whereas if I sell 50 $1 pairs and 1 $100 pair, my revenue is still $150, but now my ARPU is $2.94.
These are very different businesses. This unit measurement is a great way to understand a firm’s financial tension between commodity and specialized.
This brings us to the end of our list. These startup acronyms are enough to make sense of your startup initially and with your growth, you will find more relevant terms.
When March approaches every year, we tend to focus on few compliances that we never thought of during the whole year and filing your ITR and the confusion of discussing it with professionals or not is the biggest issue we face.
Income Tax Return
filing is the duty of every individual and not only it’s the duty it is the
moral obligation of everyone towards the people and Govt. of this Country to
disclose their earnings and pay taxes as per the applicable slabs.
But what we do is we never thought of it as a duty rather a burden that we all have to go through once in every year and for that, we have to pay certain fees to a Chartered Accountant or some other professional.
Income Tax Department
in its report discloses that 5.95 Crore ITR’s were filed for F.Y. 2019-20 till
January 10 this year, and we live in a country of more than 130 Crore people
and still only 5 % people (Approx.) file their ITR.
All the progress
India is making is because people like you and me file their ITR and pay taxes
to Govt. and Tax payment govt. receives is used for creating all the Public
infrastructure like Schools, Hospitals, Toilets, Community Centres, Parks,
Railway Stations, Roads, Metros, etc.
We all blame Govt.
how they’re not using the public money in the right way, and the same people
who criticize they don’t file their ITR, so they’re not a part of Nation
building instead they’ll use all the facilities for free, This is known
as “Free Rider Problem” where
people who don’t pay for services stills gets to enjoy the services on other’s
payments.
Now the main
question arises that should you go to a professional like Chartered Accountant
for filing your ITR?
The answer is
simple, What would you do if you have Stomach Ache? You’ll go see a doctor
right? But when it comes to Taxation we become the experts and do what we don’t
know, later on when we get notices from the Income Tax Department we all rush
to Chartered Accountants for their help. That’s an ill mentality we treat the
professionals like last resort instead we should hire them for Tax Planning and
Business and Financial Planning.
Why hire professionals? You trust doctors because they got an MBBS degree from Govt. but you don’t trust a Chartered Accountant’s advice when he is one of the most knowledgeable people in Taxation and Accounting in India. They are certified by a body set up by the Act of parliament and they’re the doctors of your Finances.
Professionals are
there to help you plan your financial future and create strategies as per your
business needs and they’ll share their knowledge which is acceptable by law and
will help you grow your business and help you invest your money in the right
direction. Every professional has a different approach so you can’t judge
people based on their working style rather on their performance and the results
they get you.
The conclusion we
reached is that Filing ITR is our ethical responsibility and consulting a
professional before filing ITR is a remedy we take before any accident. It’s
not a burden on people rather it’s a Nation-building process we all should take
part in and Govt. won’t take your money if you disclose It to the IT
Department.
There’s a saying “No matter how bad a child is, he is still good for a tax deduction”
With the announcement of recent budget, the proposal in respect of introduction of the scheme of Faceless ITAT has been a point of debate since there are mixed opinions regarding the same The Tribunal being a final fact-finding authority, a personal hearing will afford members a better understanding of the perspective of the taxpayer to appreciate the finer nuances of the tax law and its applicability to a case.
However, recently the Hon’ble Supreme Court in their recent judgement of The Chief Election Commissioner of India Vs. M.R Vijayabhaskar & Ors. held that in-camera proceedings in court must only be held in exceptional category cases involving child abuse, matrimonial proceedings etc. All other proceedings must be in open court and should be available in public domain.
This signals inclination of Tribunal hearing to continue in-person rather than shift to faceless since open court proceedings ensure that judicial process is subject to scrutiny and transparency and accountability is maintained. The above mentioned judgement can be summarized as under:
The Chief Election Commissioner of India Vs. M.R Vijayabhaskar & Ors.
Civil Appeal No. 1767 of 2021
Courts must be open both in the physical and metaphorical sense. Save and except for in-camera proceedings in an exceptional category of cases, such as cases involving child sexual abuse or matrimonial proceedings bearing on matters of marital privacy, our legal system is founded on the principle that open access to courts is essential to safeguard valuable constitutional freedoms. The concept of an open court requires that information relating to a court proceeding must be available in the public domain.
Citizens have a right to know about what transpires in the course of judicial proceedings. The dialogue in a court indicates the manner in which a judicial proceeding is structured. Oral arguments are postulated on an open exchange of ideas. It is through such an exchange that legal arguments are tested and analyzed. Arguments addressed before the court, the response of opposing counsel and issues raised by the court are matters on which citizens have a legitimate right to be informed. An open court proceeding ensures that the judicial process is subject to public scrutiny. Public scrutiny is crucial to maintaining transparency and accountability. Transparency in the functioning of democratic institutions is crucial to establish the public‘s faith in them. In Mohammed Shahabuddin vs State of Bihar(2010) 4 SCC 653 , the concurring opinion noted:
“… even if the press is present, if individual members of the public are refused admission, the proceedings cannot be considered to go on in open courts…an ―open court‖ is a court to which general public has a right to be admitted and access to the court is granted to all the persons desirous of entering the court to observe the conduct of the judicial proceedings.”
There are multiple ways in which an open court system contributes to the working of democracy. An open court system ensures that judges act in accordance with law and with probity.
Public scrutiny fosters confidence in the process. Public discussion and criticism may work as a restraint on the conduct of a judge. In his dissenting opinion in Naresh Shridhar Mirajkar vs State of Maharashtra(1966) 3 SCR 744, hereinafter referred to as ―Mirajkar , Justice M Hidayatullah (as the learned Chief Justice was then), observed how an open court paves the way for public evaluation of judicial conduct:
“129. […] Hearing in open court of causes is of the utmost importance for maintaining confidence of the public in the impartial administration of justice: it operates as a wholesome check upon judicial behaviour as well as upon the conduct of the contending parties and their witnesses.”
Hence, while in camera proceedings may be necessary in certain exceptional circumstances to preserve countervailing interests such as the rights to privacy and fair trial, for instance, in a sexual assault case, public scrutiny of the court process remains a vital principle for the functioning of democracy.
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