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II. Direct Taxes Case Laws:
1. Salora
International Ltd. Vs. Commissioner of Income Tax, I.T.A. No. 799/2005,
Date of Pronouncement: 20.02.2018, High Court of Delhi
Issue:
Whether an order passed by ITAT permitting the withdrawal of
Appeal pursuant to application filed by Appellant for withdraw the
appeal would be considered as adjudicatory order for the purpose of
deciding period of limitation under section 275 of the Income Tax Act,
1961”.
Held - No
Brief Facts:
The assessee is a limited company engaged in manufacture and sale of
TV sets and their components. Pursuant to assessment order the ld. AO
issued notice u/s 271(1)(c) of the Act on 12.08.1997 for concealment of
income. The assessee argued that penalty proceedings were barred in view
of Section 275(1)(a) of the Act as a valid penalty could be imposed
only within six months of the end of the month of receipt of order of
Ld. CIT(A) i.e. on or before 31.07.1994. The revenue had contended that
against the order of Ld. CIT(A), second appeal was filed before ITAT,
however the same was withdrawn. The decision was communicated to
assessee through letters dated 29.12.1995 and 04.01.1996. The order of
the Hon’ble ITAT permitting the withdrawal was made on 31.03.1997.
Assessee submitted that neither was the pendency of the appeal to the
Hon’ble ITAT notified nor was the withdrawal order communicated to the
assessee. However, penalty order was passed by the Ld. AO on 25.11.1997.
Ld. CIT(A) accepted the contentions of assessee and deleted the
penalty. The Hon’ble ITAT set aside the order of Ld. CIT on appeal filed
by the revenue. Aggrieved with the same, the assessee has preferred
this appeal before Hon’ble High Court.
Held:
The Hon’ble High Court held that a plain and textual reading of
Section 275 clarifies that the expiry of six months prescribed is to be
reckoned “from the date of completion of proceedings or from the end of
the month in which the order of the CIT(A) or as the case may be the
appellate tribunal is received.” The order as referred in Section 275
mean an adjudicatory order (i.e. an order that determines inter alia the
rights of the parties finally) which shall form the beginning of period
of limitation for penalty proceedings. The period of limitation would
not extend in the eventuality of withdrawal of second appeal by the
Revenue as no adjudicatory order is being passed. As such, it was
incumbent upon the revenue to complete the penalty proceedings and pass
order within the six months period of the receipt of order of CIT(A).
The appeal was held in favour of the assessee and against the revenue.
(Please click here for Judgment)
2. Gyanchand M. Bardia Vs. ITO, I.T.A. No. 1072/2016, Date of Pronouncement: 21.02.2018, ITAT - Ahmedabad
Issue: Whether
the amount received by a member of HUF from HUF will be considered as a
gift exempt u/s 56(2)(vii) of the Income Tax Act, 1961?
Held: No
Brief Facts:
The assessee is a member of HUF and received a sum of money from HUF
during relevant year through banking channel and shown it as a gift. The
ld. AO made an addition of Rs. 1,02,00,000 u/s 68 of the Act. The
assessee claimed the said amount to be a gift without consideration
covered u/s 56(2)(vii) of the Act contending that it is implied when
gift from member to HUF is exempt from tax, same way gift from HUF to
Member is also tax free. The ld. AO rejected the claim of the appellant
assessee and treated the income as income from other sources and the
CIT(A) confirmed the action of ld. AO. Being aggrieved, assessee has
filed an appeal before Hon’ble Tribunal.
Held:
The Hon’ble ITAT explained the definition of ‘relative’ and concluded
that an HUF does not come under the specified category of a relative in
section 56(2)(vii) as applicable w.e.f. 01.10.2009. It is stated that
the legislative intent is very clear that an HUF is not to be taken as a
donor in case of an individual recipient. The assessee’s former plea of
having received a valid gift from his HUF is therefore declined.
Hence, appeal was held against the assessee and in the favour of revenue.
(Please click here for Judgment)
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