The onus cast on the assessee stands discharged where the assessee is able to establish the three ingredients of section 68 i.e., (a) the identity of the creditor, (b) the genuineness of the transaction, and (c) creditworthiness of the creditor.
In case the TPO/AO proposes to make adjustments to the income of the assessee by revising the arm’s length price computed by him, he needs to give a notice to the assessee, conveying the grounds on which the adjustment is proposed to be made, followed by an opportunity to reply to that notice and produce evidence to controvert the grounds, on which the adjustment is proposed.
If the rate of gross profit declared by the assessee in a particular period is lower as compared to the gross profit declared by him in the preceding year, that may alert the Assessing Officer and serve as a warning to him, to look into the accounts more carefully and to look for some material which could lead to the conclusion that the accounts maintained by the assessee were not correct.
If the remuneration demanded by the person proposed to be appointed as Special Auditor is not acceptable to the Chief Commissioner or the Commissioner, as the case may be, he may not assign the work to him; but, it would be difficult to accept that the special audit can be assigned to a person without fixing either the remuneration or the norms on which the remuneration is to be calculated after the work is completed and conveying the same to him.
If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271(1)(c).
The decision of the High Court would bring some relief to NBFCs. However, given the fact that this is a debatable issue and unless affirmed by the SC, the tax authorities may continue to dispute the issue. This debate arises primarily due to the fact that under the Act, there is a specific provisions under Section 43D of the Income tax Act, 1961 dealing with interest on NPA with respect to specified financial institutions (including banks) which does not include NBFCs.
Brief:- The DRP, being an authority created under a statute and conferred with the powers, has the obligation to act as a body living to the expectations which the law mandates. The DRP has to afford adequate opportunity for personal hearing and deal with the issues urged by a speaking order which would reflect cogent reasons. This is apt to say so that no assessee can have any kind of apprehension that the approach to the DRP is perfunctory.
Brief: High Court held that It is not possible to carry on educational activity in such a way that the expenditure exactly balances the income and there is no resultant profit, for, to achieve this, would not only be difficult of practical realization but would reflect unsound principles of management. The assumption that for exemption there should not be any surplus and if it is otherwise the institution society exists for profit and not charity is not justified.
When there is no specific provision in the Income Tax Act for protective assessment, power lies with the AO to make such an assessment on protective basis under certain circumstances. When there is such a power to make the protective assessment while carrying out the normal assessment proceedings even in the absence of specific provision, we fail to understand how the absence of provision should be a ground to preclude the AO for making protective assessment in block assessment proceedings under Section 158BC/BD of the Act. Principle of law laid down by the Supreme Court holding that the AO has power to make protective assessment even when there is no specific provision under the Act would equally apply to the block assessment also.
As the department had examined the fundamental nature of the transaction in the earlier years and its nature remained unchanged, the department could not have changed its view as regards the nature of the transaction by dubbing it as erroneous.
