Mazars Tax Update | Edition 30.20

DIRECT TAX NEWS

CBDT lifted restriction imposed on issuing adverse communication to the assessees

Central Board of Direct Taxes (“CBDT”) on 18^th September 2020, removed the restriction earlier imposed in the wake of COVID-19 on issuing adverse communication to assesses.  The said communication is result of dip in tax collection due to outbreak of COVID-19 pandemic.

 
The I.T. department is sending notices based on Suspicious Transactions Report (STR’s) received from banks and other financial institutions. Further, investigation wing of I.T. department is also sending summons to assessee’s who made huge cash deposits with banks during demonetisation period. 

I-T bill passed in Lok Sabha aims to provide relief to taxpayers

Lok Sabha passed the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020 (“the bill”) which aims to provide provide compliance-related relief to taxpayers due to outbreak of Covid-19 pandemic. The legislation includes extension of time limits for return filing, linking of PAN and Aadhar, payment of taxes under the Direct Tax Vivad se Vishwas Scheme, date for making various investment/payment for claiming deduction under Chapter VI of the Act, etc. The donation to PM Cares Fund has been made eligible for 100% deduction u/s 80G of the Act.
 
Eight processes under the IT Act, including assessment, collection and recovery of tax, appeals, revisions, gathering of information, transfer pricing assessments and litigation, and dispute resolution panel have been brought under the faceless scheme.

Taxpayers will have to disclose all the details of share sold during F.Y. 2019-20 in their Income Tax Returns

As part of the income tax department’s goal of raising the level of disclosures, the ITR  e-filing forms for the AY 2020-21 has added schedules for reporting scrip-wise details and does not offer the option to submit summary of capital gains/losses. As a result, the tax payers will have to give all the details of shares sold by them during previous year 2019-20. The details will include share name, ISIN, quantity, sale and purchase price as well as fair market value at the end of January 2018.

CBDT issued guidelines for compulsory selection of returns for complete Scrutiny

F.No.225/126/2020/ITA-11, dated:17^th September 2020

CBDT issued guidelines for compulsory selection of returns for complete scrutiny during the financial year 2020-21 and conduct of assessment proceedings in such cases. The said guidelines also specify the cases which will be handled under Faceless assessment scheme.

CBDT made modification in order u/s 119 of the I.T. Act for the purpose of exercising power of Survey

F.No. 187/3/2020-ITA-I, dated 18^th September 2020

CBDT has made a partial modification in the order u/s 119 of the I.T. Act issued on 13th August 2020. The said order prescribes the I.T. Authorities who can conduct survey action u/s 133A of the I.T. Act.
Vide above stated modification, CBDT directed that verification surveys by various I.T. wings namely International Taxation, Tax Deducted at Source and Central Charges, can only be conducted after prior approval of CCIT/Pr. CCIT/DGIT of respective wing.

JUDICIAL PRONOUNCEMENTS

Mumbai Bench of ITAT held that imposition of penalty u/s 271(1)(c) of the Act without specifying the specific limb under which the penalty is imposed is not tenable

M/s Balaji Telefilms Limited v/s DCIT ITA Nos. 5580,7645-7650/Mum/2016 dated 18 September 2020

In the above stated case, the income of the assessee for the AY 2007-08 was assessed at Rs. 114.74 Crores during assessment proceedings u/s 143(3) of the Act. Search action was conducted by the department on 30/04/2013 and based on information captured during search operations, the case of the assessee was reopened u/s 148. In response, the assessee filed return of income on declaring additional income of Rs. 2.79 Crores at Rs. 117.53 Crores.

The AO imposed penalty u/s 271(1)(c) of the Act without specifying whether the penalty is levied for concealment of income or furnishing of inaccurate particulars.
It was held that failure to frame specific charge against the assessee during the penalty proceedings is fatal to penalty proceedings itself. Not specifying the specific charge shows non-application of mind and is not sustainable in law.