Legal Corner

Order Sheets: In the order sheet there is recording about notices issued to assessee/ taxpayer or other concerned parties, communication to and between assessee/ parties, details of hearings and other matters with which the assessee / concerned party  is directly concerned. Even a departmental communication between two or more authorities, in connection with assessment, penalty , appeal, revision , audit and any other proceedings against the assessee/ concerned party  are relevant to assessee. The order sheet is a very vital part of assessment records/ or record of other proceedings and it is also a very vital evidence concerning proceedings taken in relation to assessment, penalty, appeals, revision, refunds, rectification etc. The evidence in form of order sheet can be used by the A.O. as well as the assessee in any proceedings up to the stage of CBDT and Supreme Court. Circular of the Board: The circular of the Board dt. 28.06.1965 No. 17 (XL-36), provides for inspe...

In the Income Tax Act, 1961 (the Act), there is provision to make only ‘regular assessment’. As per section 2(40) of the Act, ‘regular assessment’ means the assessment made under section 143(3) or section 144. Again as per section 2(8) of the Act, ‘assessment’ includes reassessment; therefore, assessment made under section 143(3)/144/147 is also a ‘regular assessment’. Protective assessment is said to those assessments which are made to ‘protect’ the interest of the revenue. Now the question is whether there is any provision of ‘protective assessment’ in the Act. The answer is that there is no such provision in the Act. Then how can an Assessing Officer (AO) make such assessment and how is it tenable in the law? The AO is not to execute the Act alone; he is required to execute the Income tax law in its entirety. Income tax law includes i) the Act, ii) the Income tax Rules, 1962, iii) the circulars issued by the CBDT or other competent authority, iv) the instructions issued by the CBD...

Introduction 1.  There are different classes of professionals in India: Lawyers, Chartered Accountants, Company Secretaries, Cost and Works Accountant etc. etc. Each one of them is registered, regulated and monitored by their own professional body. However, with the passing of Insolvency and Bankruptcy Code, 2016, a new class of professionals has come into existence who will be called as 'Insolvency Professionals'. To understand the registration, role, position and responsibilities of Insolvency Professionals, we should first understand the main objectives and processes under The Insolvency and Bankruptcy Code, 2016 (hereinafter referred as 'Code'). The Code is a landmark legislation which subsumes various legislations dealing with corporate and non-corporate (individuals and partnerships) insolvency 1 . The Code received Presidential Assent on 28 May 2016 and is drafted on the recommendations of Bankruptcy Reforms Law Committee. The code has three-fold objective...

Income Tax Vs. Bank Transaction Tax There are excellent arguments in favour of abolishing the income tax in India. Given the chaos that surrounds the system currently, the leakage, it doesn't even pass the usual equity desires of making sure that the richer people carry a larger part of the tax burden and as we all should know an income tax is an inefficient method of taxation to boot. So, the start of this idea is just fine, that perhaps India should cut through the Gordian Knot by just abolishing that income tax system altogether. However, there is then the question of where to gain that necessary revenue from in the absence of that taxation system. And that's where this idea fails and fails horribly. A bank transaction tax--any transaction tax in fact--would be far worse than even the current income tax system. Plus, of course, a bank transactions tax would push everyone back into the cash and black money economy we've all just spent so much time and effort tr...

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The Supreme Court today observed that it is nearly impossible to define privacy, which is not absolute and the state cannot be prevented from imposing reasonable restrictions on citizens, according to a report by The Hindu. The nine-judge bench of the apex court, which is looking into the limited matter of right to privacy, attached to the Aadhaar case, also observed that any attempt to define privacy may cause more harm than good. The hearing in the privacy matter will continue on the second day tomorrow. The petitioners today put forth a statement by Finance Minister  Arun Jaitley , which he had given in the parliament while moving the Aadhaar Bill. “The present bill presupposes and is based on a premise, and it’s too late in the day to contest that privacy is not a fundamental right. Privacy is not an absolute right, which is subjected to a restriction established by law on a fair and just procedure,” Jaitley had said. In past , the Apex court has held that right to privacy ...

The Hon'ble Gujarat High Court today rebuked the Reserve Bank of India for asking the National Company Law Tribunal in its June 13 directive to give priority to the insolvency proceedings against companies with huge debts. It also questioned the functioning of the central bank. The bench of Justice S G Shah came down heavily on the RBI for stating in its press release dated June 13, 2017 that the Insolvency and Bankruptcy Code (IBC) proceedings against companies with outstanding dues of more than Rs 5,000 crore “will be accorded priority by NCLT.” Essar Steel had moved the high court challenging the RBI order to banks. The court also questioned the “functioning” of the RBI for its decision to issue the press release in which it had directed banks to initiate insolvency proceedings against defaulting companies. “The RBI has to be careful while issuing press releases, it must be in consonance with the Constitutional mandates, based upon sound principles of law, but in any...

In this edition, we have analysed few orders. A very brief catch note of the related section of The Income Tax Act, 1961, indicates the contents of the order. For reading the whole order, click on the hyperlink attached with the name of the order. S.221(1). Penalty u/s 221(1) cannot be levied on the interest component charged on “tax”. [CIT vs. M/s. Oryx Finance and Investment Pvt. Ltd. – Income Tax Appeal No. 1 of  2015 – Dt. 01/07/2017 – High Court of Bombay 221(1) – Penalty u/s 221(1) cannot exceed the amount of “Tax in arrears” [CIT vs. M/s. Oryx Finance and Investment Pvt. Ltd.–  Income Tax Appeal No. 1 of  2015 – Dt. 01/07/2017 – Bombay High Court] S.37(1). Predevelopment expenses which are directly identifiable with the operations and maintenance of existing business shall be treated as revenue expenses, irrespective of treatment given in the books of accounts. [CIT VS...

Under the provisions of Prohibition of Benami Property Transactions Act, 1988, the attachments are made as per the provisions of Section 24 by an Initiating Officer.  Who are Initiating Officers ? As per Section 2(19) of Prohibition of Benami Property Transactions Act, 1988, initiating officer means an Assistant Commissioner or Deputy Commissioner as defined in clause (9A) and (19A) respectively of section 2 of the Income Tax Act, 1961. As per Section 2(9A) of the Income Tax Act, 1961 , "Assistant Commissioner" means a person appointed to be an Assistant Commissioner of Income-tax  [or a Deputy Commissioner of Income-tax] under sub-section (1) of  section 117 ;] And As per Section 2(19A) of The Income Tax Act, 1961, "Deputy Commissioner" means a person appointed to be a Deputy Commissioner of Income-tax under sub-section (1) of  section 117 ; Accordingly, proceedings under The Prohibition of Benami Property Act, 1988 as amended by the present Modi ...