HC:Quashes penalty u/s 271AAA for AO’s failure to seek manner of
earning ‘undisclosed income’
Gujarat HC
upholds ITAT's order, quashes penalty u/s 271AAA [which is levied in
search
cases] for AO’s failure to seek explanation from assessee to substantiate the
method of earning ‘undisclosed income’; Search u/s.132 was conducted in
assessee's premises pursuant to which undisclosed income was revealed and
accordingly AO invoked sec. 271AAA penalty; CIT(A) & ITAT relied on Gujarat
HC case of Mahendra C Shah and deleted the penalty as the recording of
statement u/s 132(4) was sans specifying manner of deriving such income; Notes
that assessee filed disclosure statement u/s 132(4) after search offering
undisclosed income, paid applicable taxes with interest and further disclosed
such income in the return filed u/s 153A; Holds that Sec 271AAA(2) mandates a
pre-condition for authority recording the statement of assessee u/s 132(4) to
elicit a response from assessee to trigger assessee's responsibility to
substantiate the manner of deriving the impugned income; Notes, AO didn’t
question the assessee to state the manner of earning income thus holds that
“When the base requirement itself fails, the question of denying the benefit of
no penalty would not arise”.
[TS-329-HC-2017(GUJ)]
HC : Upholds wealth-tax assessment on amalgamating company;
Notes assessment-completion before amalgamation effective-date
Madras HC affirms
ITAT order imposing wealth-tax on assets held by assessee under the Wealth Tax
Act and confirms assessment despite assessee co. amalgamated with another co.;
For AY 1990-91, assessee claimed that wealth-tax assessment made after its
amalgamation with another company was invalid; Rejecting assessee’s stand, HC
notes that factum of amalgamation was disclosed after the return was filed and
assessment was related to the period prior to the date of amalgamation,
furthermore amalgamation was effected before the date of completion of
assessment; Opines that as per scheme of amalgamation “all actions and legal
proceedings by or against the transferor company pending on the completion of
procedure date shall be continued and be enforced or against the transferee
company as the case may be”
[TS-278-HC-2017(MAD)]
HC : Confirms penalty; Trust's reliance on SC's Surat Art case,
sheer excuse to avoid tax-liability
Bombay HC upholds
ITAT order for AY 1983-84, confirms penalty levy u/s. 273(2)(a) and 140A(A)(3)
by assessee-trust (formed in 1941 and involved in publishing newspaper) for
declaring ‘NIL’ estimate of advance tax and not paying self-assessment tax
while filing return; Prior to AY 1962-63, assessee’s income was exempt under IT
Act 1922, but subsequently under the IT Act 1961 (nearly for forty years), it
was held liable for payment of tax as assessee was not falling in the category
of ‘Charitable Trust’, also takes note of ITAT order in assessee’s own case for
AYs 1962-63 to 1970-71, wherein Sec. 11 exemption was denied; Noting that
despite past orders, assessee filed return claiming exemption u/s 11, HC
remarks that “In the wake of this factual backdrop, the act of the
assessee/Trust in not paying self assessment tax by returning its income and
filing “NIL” estimate of the advance tax cannot be said or termed as bonafide
act.”; Though Revenue did not impose any penalty in past years, HC clarifies
that this cannot be a ground to conclude that assessee had ‘bonafide belief’
that its income was tax exempt; Further HC holds that assessee’s reliance on SC
ruling in Surat Art Silk Cloth Manufacturers Association (which laid down test
to determine whether the Trust is created for charitable purpose) “appears to
be a lame excuse in order to avoid the tax liability and depriving the Revenue
its due share in the taxable income”
[TS-322-HC-2017(BOM)]
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