1.  COMMISSIONER OF INCOME TAX Vs M/s SAS PHARMACEUTICALS, ITA No.1058 of 2009, Dated: April 8, 2011, HIGH COURT OF DELHI

Whether penalty can be levied u/s 271(1)(c) on the amount surrendered by the assessee during survey though the amount was declared by the assessee in the return filed by it after survey but before the due date of filing of return.

That the contention of the revenue that even during survey when it was found that the assessee had concealed the particular of his income, it would amount concealment in the course of 'any proceedings', is not acceptable as the words 'in the course of any proceedings under this Act' are prefaced by the satisfaction of the AO or the Commissioner of Income Tax (Appeals). When the survey is conducted by a survey team, the question of satisfaction of AO or the Commissioner (Appeals) or the Commissioner does not arise. It is the AO who initiated the penalty proceedings and directed the payment of penalty. He had not recorded any satisfaction during the course of survey. Decision to initiate penalty proceedings was taken while making assessment order.

It is, thus, obvious that the expression 'in the course of any proceedings under this Act' cannot have the reference to survey proceedings, in this case. That no doubt, the discrepancies were found during the survey. This has yielded income from the assessee in the form of amount surrendered by the assessee. The assessment of income is not concerned here, but the moot question is to whether this would attract penalty upon the assessee under the provisions of Section 271(1) (c) of the Act. Obviously, no penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be, it would have not disclosed the income but for the said survey. However, there cannot be any penalty only on surmises, conjectures and possibilities. Section 271 (1) (c) of the Act has to be construed strictly. That unless it is found that there is actually a concealment or non-disclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the income tax return and offered the surrendered amount for the purposes of tax.

(Please click here for judgment)

2.  COMMISSIONER OF INCOME TAX  Vs ANKITECH PVT LTD, ITA No.462 of 2009, Dated: May 11, 2011, HIGH COURT OF DELHI

Whether loan and advances received by the assessee company cannot be treated as deemed dividend in the hands of the assessee as it was not a shareholder of the lender company in which the shareholders having substantial interest in the assessee company were also having 10% of the voting power.

That the intention behind the provisions of Section 2(22)(e) of the Act is to tax dividend in the hands of shareholders. The deeming provisions as it applies to the case of loans or advances by a company to a concern in which its shareholder has substantial interest, is based on the presumption that the loans or advances would ultimately be made available to the shareholders of the company giving the loan or advance. It is an admitted case that under normal circumstances, such a loan or advance given to the shareholders or to a concern, would not qualify as dividend. It has been made so by legal fiction created under Section 2(22)(e) of the Act. This legal provision relates to 'dividend'. Thus, by a deeming provision, it is the definition of dividend which is enlarged. Legal fiction does not extend to 'shareholder'. When we keep in mind this aspect, the conclusion would be obvious, viz., loan or advance given under the conditions specified under Section 2(22)(e) of the Act would also be treated as dividend.

The fiction has to stop here and is not to be extended further for broadening the concept of shareholders by way of legal fiction. That the second category specified under Section 2(22)(e) of the Act, viz., a concern (like the assessee herein), which is given the loan or advance is admittedly not a shareholder/member of the payer company. Therefore, under no circumstance, it could be treated as shareholder/member receiving dividend. If the intention of the Legislature was to tax such loan or advance as deemed dividend at the hands of deeming shareholder?, then the Legislature would have inserted deeming provision in respect of shareholder as well, that has not happened.

(Please click here for judgment)

3.  [Contribution by  CA. Vijay Kumar Gupta, author is available at Mobile : 9999328958 / email-id: vijayguptaca104@yahoo.com ]

A Presentation on Stock Transfer under CST Act, 1956

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4.  [Contribution by  Mr Rajesh Goyal (Cost Accountant) and author is available at Mobile : 9818049777 / email-id: goyal_icwa@yahoo.co.in ]

An Article on Industry Specific Cost Audit

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What's New

1. Press Note No. 1(2011 Series) - Review of the policy on Foreign Direct Investment- Allowing FDI in Limited Liability Partnership firms  (Click for detail)

2. New Initiatives of MCA for Corporate Governance  (Click for detail)

3. RBI Circular No. 62 - All cash transactions of the value of more than Rupees ten lakh or its equivalent in foreign currency  (Click for detail) 
    

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