Mazars Tax Update | Edition 27.20

Direct Tax News

Offline Excel and java utilities are now available for e-filing of Income Tax Return

The Income Tax Department has made available the java and excel utilities on its website for e- filing of Income Tax Return for the A.Y. 2020-21. The utilities are presently available for filing ITR- 1, 2, 3, 4 & 5. The utilities will compute the Interest u/s 234A, 234B & 234C giving effect to the time limits extended due to Covid19 outbreak.

Ongoing scrutiny cases along with reassessment proceedings u/s 148 of the I.T. Act will be handled under faceless assessment mechanism.

In a webinar organised by industry body PHDCCI, an Additional Commissioner of I-T said that the I.T. department will soon be sending intimations to the assesses facing scrutiny assessment, that their cases would now be handled under faceless assessment mechanism. The domestic transfer pricing cases and pending cases u/s 148 of I-T Act i.e. income escaping assessment would also be covered under this scheme.

Income Tax Department raided 3 Jammu & Kashmir based businessmen involved in suspended cross border trades with Pakistan

The Income-tax department conducted raids on 02/09/2020 on three prominent businessmen based in Srinagar and Kupwara districts of Jammu and Kashmir, on charge of tax evasion linked to the cross-border commerce with Pakistan that was suspended by India last year.  The Central Board of Direct Taxes said “These operations have, prima facie, led to the detection of huge amount of undisclosed income, seizure of unaccounted assets and incriminating evidence and involvement in benami transactions by these three groups.”

Bank have been instructed to refund the charges received on or after 01/01/2020 for compliance to section 269SU of the Income Tax Act

CBDT Circular No. 16/2020 dated 30th August 2020

CBDT clarifies that no bank and/or service provider can impose any levy charges on transactions made through Debit Card, BHIM UPI & BHIM UPI QR CODE on or after 01/01/2020 and any such charges if recovered are advised to be  immediately refunded and not to impose charges on any future transactions carried through the said prescribed modes under section 269SU of the IT Act. Section 10A of the PSS Act provides that banks should not impose any charge on a payer making a payment or a beneficiary receiving payment through electronic modes prescribed under Section 269SU of IT Act.

Income Tax Department can now share information collected by it with Scheduled Commercial Banks

CBDT notification no. 71/2020 dated 31st August 2020

The CBDT has notified that the Income Tax Authorities can share information with scheduled commercial banks. This will ease the burden of scheduled commercial banks for deciding TDS deductibility on various payments to its customers and for validating Forms 15G and 15H submitted by the customers.

Judicial Pronouncements

Mumbai tribunal deleted the addition made u/s 68 of the I.T. Act - bank passbook cannot be considered as books of account

Shri. Palimar Gopal Shetty, ... vs Ito 26 (2)(4), 26 August, 2020, ITA No.7335/MUM/2019

The brief facts of the case are that the assessee has sources of income from salary and other sources and he didn’t file his return for the A.Y. 2011-12. The ITD systems revealed that the assessee has made cash deposit of Rs. 20,90,000/- and assessment was framed u/s 147 by making addition of Rs. 9,69,565/- u/s 68 of the I.T. Act.

It was observed by the Tribunal that under the provisions embodied in section 68 of the said Act, it is only when any amount is found credited in the books of account, the amount so credited may be charged to tax as the income of that previous year, if the assessee offers no explanation or the explanation offered by him is not satisfactory. The Tribunal pointed out, that it is fairly well settled that when moneys are deposited in a bank, the relationship that is constituted between the banker and the customer is one of debtor and creditor and not of trustee and beneficiary. Applying this principle, the pass book supplied by the bank to its constituent is only a copy of the constituent's account in the books maintained by the bank. In view of this, the Tribunal said that the pass book supplied by the bank to the assessee could not be regarded as a book of the assessee hence the addition u/s 68 cannot be made.

ITAT Delhi held that the claim of lease equalisation reserve in view of ICAI GN cannot be denied

IFCI Limited vs DCIT; ITA No 2120/Del/2005 dated 31st August 202035.

ITAT Delhi held that the purpose of the ICAI’s guidance note on leases was to calculate the real income by providing the permissible amount of depreciation, and it is well-settled law that method provided by the ICAI for accounting purposes are to be followed under the income tax act. The method followed by the assessee cannot be discarded in view of guidance note issued by ICAI and decision of the Hon’ble Supreme Court in CIT versus Virtual soft Systems Ltd (2018) 404 ITR 409.