CIT v Volpak Securities Ltd. (Gujrat High Court)- With respect to the portion of penalty, which the CIT [A] confirmed, the same was deleted by the Tribunal observing that the assessee was liable to make payment of Rs. 1,53,000/ on 23rd June 1997 in respect of mark-to-market settlement for which purpose Rs. 1,50,000/ was accepted from Shri Ashok Patel, Director in cash. However, since some funds were available in the books on that date, only Rs. 75,000/ was deposited in the Bank on 23rd June 1997 and the balance, after meeting certain other payments, was returned to the Director.
CIT v Gujarat Safai Kamdar Vikas Nigam (High Court of Gujarat at Ahmedabad) – It was a scheme envisaged for implementation of certain Government programmes in particular, to uplift the living condition of manual scavengers and other Safai Kamdars involved in similar activities. Though exact words may not have been used that the funds made available are directed to form the corpus of the Corporation and to be used for such purpose, the entire purport of the scheme has to be gathered from the reading of the scheme as a whole. If so done, it leaves no doubt in our mind that the funds were made available to the Corporation for implementing the scheme in a particular manner. The assessee Corporation was not th sole trustee. The Scheduled Caste Development Board was also liable for implementation of the scheme to be supervised by a Committee headed by the Deputy Minister which included other Government officials. To our mind, the Tribunal committed no error in holding that the grant in question fulfills the requirement of section 11(d)(1) read with section 12(1) of the Act. In the result, tax appeal is dismissed.
Shayama Sanjay Shah v CIT (Gujrat High Court) – Though it is true that powers under section 273A of the Act are discretionary powers, it is equally true that powers conferred under a statute are required to be exercised in consonance with the provisions of the said statute. In the present case, as discussed hereinabove, the Commissioner instead of recording satisfaction or otherwise in respect of the grounds prescribed under section 273A of the Act, has rejected the petition on irrelevant grounds, firstly, on the ground that there was no reasonable cause for failure in filing the return of income belatedly, and secondly, on the ground that the petitioner had already paid the tax payable in consequence of the order of penalty, which ground in view of the provisions of section 273A of the Act should have, in fact, weighed in favour of the petitioner. Thus, the Commissioner has not exercised discretion as required under section 273A of the Act and as such the impugned order suffers from the vice of non application of mind to the relevant factors and as such cannot be sustained.
Aayojan Developers vs ITO (Ahemdabad High Court) -Merely because of the fact that the assessee had asserted that it is a developer in the returns filed by him, it cannot be said that there is any failure on the part of the petitioner to disclose fully and truly all material facts. At best, the petitioner has made a claim along with supporting documents, namely, development agreements for construction of housing projects, etc. and based upon the said documents, the Assessing Officer had formed an opinion and granted deduction under section 80-IB(10) of the Act. As to whether in a given set of facts, the assessee is a developer or a works contractor is a matter of inference. Hence, the assertion that the petitioner is a developer, without anything more cannot be said to be an incorrect disclosure of facts, as is sought to be contended on behalf of the revenue. In the circumstances, in the absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment year under consideration, the assumption of jurisdiction under section 147 of the Act after the expiry of four years from the end of the relevant assessment year is illegal and invalid. The proceedings under section 147 of the Act which have been initiated by issuance of the impugned notice under section 148 of the Act, therefore, cannot be sustained.
Provision under which the penalty was levied by the original adjudicating officer permits benefit of reduction in the penalty; subject to party paying the entire amount of tax determined interest and 25% of the penalty within 30 days of the communication of the order. As provision appears to be pari materia to Section 11AC and the order of Gujarat High Court in the case of Akash Fashion Prints (P) Ltd. followed by the Tribunal, in case of provision of Section 11AC of Central Excise Act, there is no infirmity in view adopted by the Tribunal. Revenue Appeal dismissed.
Penalty under s 271FA – Failure to file annual information return — The penalty under s 271FA is leviable if the assessee fails to respond to the notice for failure of filing annual information return — as held by Gujrat High Court in Patan Nagrik Sahakari Bank Ltd v DIT(CIB); Special Civil Application No. 14675 of 2010, 22 April 2011
Kalpesh Ratilal Kalathia v CIT- Following the course of action adopted by the Supreme Court in the aforesaid decision, having held that the petitioner is not entitled to the benefit of the Scheme since the payment was not made in terms of the Scheme, the respondent authority is directed to either refund or adjust the amount of Rs.4,74,584/- already deposited by the assessee in purported compliance of the provisions of the Scheme, in accordance with law.
CIT vs. Gujarat Power Corporation Ltd (Gujarat High Court) – Assessee is fully justified in arranging its affairs in such a manner where his tax liability is reduced provided the assessee does not resort to any illegal means or enter into a sham transaction for the said purpose. It is the prerogative of the assessee to use its own fund in the manner in which it considers proper. The Revenue cannot dictate the assessee that how the assessee should use its own fund. Thus in our considered opinion the A.O.’s approach in the instant case was not justified. The nexus between the interest bearing fund and interest free investment as claimed by the A.O. was not correct when it is not in dispute that the own funds were utilized for making tax free investment.
Merely because the shares had been purchased from borrowed funds obtained on high rate of interest would not change the nature of the transaction from investment to one in the nature of an “adventure in the nature of trade.
In the light of the concurrent findings recorded by Commissioner (Appeals) as well as the Tribunal, it is apparent that the assessee had bona fide made a claim for deduction under section 80IA of the Act, which came to be rectified by filing a revised return withdrawing the claim and that as such there was no concealment or furnishing of inaccurate particulars of income on the part of the assessee. Moreover, the notice under section 154 of the Act issued by the Assessing Officer also does not remotely indicate anything to that effect. In the circumstances, Commissioner (Appeals) was justified in setting aside the penalty imposed under section 271(1) (c) of the Act.
