TIOL-DDT 1851 · the untouched capture
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<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14276"><img src="http://www.taxindiaonline.com/RC2/image/ddt/ddt_1794.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></font><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 1851 </font><font size="3" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
07.05.2012 <br>
Monday </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income
Tax Department's Internal Audit Needs Improvement: CAG </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Department introduced a new Internal Audit System with effect from June 2007 to have an effective and objective set up of Internal Audit wherein the Assessment functions and Audit functions were assigned to separate specialized wings. Under each CIT (Audit), there shall be one Additional Commissioner, CIT who would be responsible for internal audit of high value cases and supervision of the audit work of Special Audit Party (SAP) headed by Dy./Asstt. CsIT and the Internal Audit Party (IAP) headed by ITOs. The minimum number of cases to be audited by each Addl. CIT, SAP and IAP in a year shall be 50,300 and 1,300 (600 corporate cases & 700 non-corporate cases) respectively. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Internal Audit wing had planned 2,62,000 cases for audit during 2010-11 based on the working strength of wing. Out of which, 1,73,040 cases were completed thereby achieving 66 per cent of the target. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Internal Audit had raised 13,494 observations in the audited assessments with money value of Rs.5,466.9 crore during the year 2010-11. Based on the reply from assessment units, the Internal Audit had settled 7,996 cases with money value of Rs.921.9 crore. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, CAG detected numerous observations in the assessments previously audited by Internal Audit. CAG noticed that Internal Audit had audited 2,999 assessments in 2010-11, where CAG pointed out the mistakes but the same were not detected by them. This, says the CAG, indicates a need for improvement in the quality of Internal Audit. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Out of 464 draft paragraphs included in the CAG's latest report, only 29 cases (6.3 per cent) were seen by internal audit and no mistakes were detected by them, which indicates need for improvement in quality of Internal Audit. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Departmental response to Internal Audit also needs improvement. Only 1905 cases (14.9 per cent) having tax effect of Rs. 904.6 crore out of 12,792 cases having tax effect of Rs.9,335.1 crore of the major findings raised by internal audit were acted upon by the assessing officers in 2010-11. The total pendency increased from 6,688 cases having tax effect of Rs.412.9 crore in 2006-07 to 34,940 cases having tax effect of Rs.8,516.4 crore in 2010-11. </font></p>
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<td valign="top" colspan="5"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sanctioned and working strength of officers in Income Tax Department </font></strong></p></td>
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<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Post </font></strong></p></td>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sanctioned strength </font></strong></p></td>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Working strength </font></strong></p></td>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Short fall </font></strong></p></td>
<td valign="top"><p><strong><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Shortfall as a % of Sanctioned Strength </font></strong></p></td>
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<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CCIT/DGIT </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">116 </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">104 </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12 </font></p></td>
<td valign="top"><p align="right"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">10.3 </font></p></td>
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<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CIT/DIT </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">729 </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">693 </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">36 </font></p></td>
<td valign="top"><p align="right"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">4.9 </font></p></td>
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<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ADDL CIT/JCIT </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1,253 </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">893 </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">360 </font></p></td>
<td valign="top"><p align="right"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">28.7 </font></p></td>
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<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ACIT/DCIT </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2,092 </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1,397 </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">695 </font></p></td>
<td valign="top"><p align="right"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">33.2 </font></p></td>
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<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ITOs </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4,448 </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4,247 </font></p></td>
<td valign="top"><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">201 </font></p></td>
<td valign="top"><p align="right"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">4.5 </font></p></td>
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<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Total </font></strong></p></td>
<td valign="top"><p align="right"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8,638 </font></strong></p></td>
<td valign="top"><p align="right"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7,334 </font></strong></p></td>
<td valign="top"><p align="right"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1,304 </font></strong></p></td>
<td valign="top"><p align="right"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>15.1 </strong></font></p></td>
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<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Registration Certificates for Export of Cotton - Revived </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue of Registration Certificates for export of cotton was suspended on 12.03.2012. This suspension is withdrawn with immediate effect. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The registration will be subject to the following conditions: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Registration Certificates (RCs) will be issued by the 7 designated Regional Authorities of DGFT at Ahmedabad, Bengaluru, Chennai, CLA New Delhi, Hyderabad, Kolkata and Mumbai. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Procedure of obtaining Registration Certificate (RC) as stipulated in Notification No. 63(RE-2010)/2009-14 dated 04.08.2011 and modified by Notification No. 74(RE-2010)/2009-14 dated 12.09.2011 will continue to apply. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) An exporter can apply for one RC at a time for a maximum quantity of 10,000 bales (1 bale=170kg) or actual quantity exported in the current cotton season, <u> <strong>whichever is less</strong></u>. Exporters who have exported upto 1500 bales during current cotton season and new comers (a new comer is an exporter who has not exported cotton in the current cotton season) can apply “upto 1500 bales”. Eligibility to apply for a subsequent RC will be on completion of at least 50% of the exports against the RC obtained now under this notification (exporters would be required to submit the documentary proof of such exports to the concerned RAs alongwith the application for issue of new RC). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) For ease of calculation, RC holders are encouraged to apply in next higher multiples of 10. (For example, an exporter who has exported 1387 bales during current cotton season is encouraged to apply for 1390 bales). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) The revalidation of Registration Certificates will not be permitted as mentioned in para 3 of Public Notice No. 102 of 16th March 2012. </font></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2010/dgft10not113.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No. 113 (RE-2010)/2009-14 , Dated: May 04, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Permission to Cotton Corporation of India Ltd. for export of cotton </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Central Government has decided to allow export of cotton by the Cotton Corporation of India Ltd., a Public Sector Undertaking under Ministry of Textiles, during the current cotton season 2011-12 under Tariff Item HS code 5201 & 5203 [Sl. Nos. 197 & 199 of ITC(HS) Classification of Export & Import Items]. Certain conditions regarding export of cotton have been relaxed for the Cotton Corporation of India. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2010/dgft10not114.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No. 114 (RE-2010)/2009-14 , Dated: May 04, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">High Court Displeasure at the Way Income Tax Department handled case </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>a Revenue Appeal against an ITAT Order before the High Court, it was pointed out to Revenue that the impugned judgment of the Tribunal was based on its own decision, rendered on the same issue, for Assessment Year 1994-1995; which was in favour of the assesse. The Court wanted the Counsel to find out whether the Revenue had preferred an appeal against the said decision. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For more than three years, Revenue was not able to furnish this simple information. After more than three years, Revenue informed the Court that it was not able to obtain a certified copy of the judgment of the Tribunal! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court stated, “What amazes us is that the revenue did not deem it fit to file an appeal (if it otherwise was of the view that the judgment of the Tribunal raised substantial questions of law which deserved the attention of this court) by taking recourse to an application, seeking exemption from filing the certified copy of the judgment.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court directed that the Chairman, CBDT to conduct an enquiry into the delay caused in obtaining the judgment of the Tribunal. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What happened then?</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No Delay by ITAT : The ITAT informed the High Court that the orders were sent by speed post on 19.04.2007. The ITAT was again approached vide an application dated 09.09.2010, received in the office on 13.09.2010, which was replied to by the letter dated 12.10.2010. Thereafter, once again a letter emanated from the office of the CIT dated 24.11.2011 requesting for issuance of a certified copy of the order, which was sent by speed post. This was followed by yet another request for issuance of a certified copy of the order vide letter dated 16.01.2012. Once again, ITAT dispatched a copy of the order on 18.01.2012. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Counsel for Revenue informed the Court that the explanation of the ITO was called for and matter has been referred to the Chief Commissioner, Income Tax-I, who is the Cadre Controlling Authority. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Court directed the Chief Commissioner to inform the court his decision by 20.04.2012 and the Chief Commissioner informed the Court that the delinquent officer is a Group A officer and the administrative action in case of such officers has to be taken by the Board, for which the documents have been sent to the CBDT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Court directed the CBDT to inform the court its decision by 03.08.2012. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=38&filename=legal/hc/2012/2012-TIOL-337-HC-DEL-IT.htm" target="_blank">click here</a> for the judgement</font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise Officer Booked by CBI for Fake Raid </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Central Bureau of Investigation has registered a case against a Sr. Scientific Officer (SSO), CFSL, New Delhi; an official posted in the Deptt. of Revenue, Ministry of Finance; another official of Central Excise Department; private persons and other unknown persons for entering into a criminal conspiracy among themselves for obtaining illegal gratification. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is alleged that a conspiracy was hatched by the SSO to conduct an illegal and unauthorised search at the premises of some businessman in order to obtain illegal gratification. An employee of Department of Revenue, Ministry of Finance; an official of Central Excise and private persons introduced themselves as public servants with powers to carry out search operations, and conducted illegal & unauthorised searches. They demanded an illegal gratification to abate the search proceedings and allegedly received huge amount as illegal gratification. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBI conducted searches at several places including Delhi & Karnal (Haryana). Several incriminating documents/records have been seized during the searches. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Commissioner and Superintendent are already in jail for similar adventures. Some people just don't learn!</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Memory Cards Worth Rs. 1.3 Crores Seized in Delhi Airport </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DELHI'S IGI</strong> Customs Officers yesterday seized smuggled memory cards valued at over Rs.1.3 Crores. A Delhi resident who arrived from Hong Kong was nabbed as he was walking through the Green Channel and they found him carrying 74,250 memory cards in a cloth zipper worn around his chest and thighs. Following his interrogation, the Customs officers found another passenger waiting outside with 33900 memory cards, who was also nabbed, according to Arun Kumar, Additional Commissioner of Customs IGI Airport. This, according to Customs officers, is the biggest seizure of memory cards in recent times. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us hope the Customs will sell these memory cards to the Public or their officers before they are spoiled in the Customs warehouses. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You can see a video here of the modus operandi of the smuggling. </font></p>
<p align="center"><iframe width="420" height="315" src="https://www.youtube-nocookie.com/embed/gFoKhX_gQMQ" frameborder="0" allowfullscreen></iframe></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> – Tuesday's cases</font></strong></font></strong></font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left">Central Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit - Capital goods used in captive power plant - since capital goods not used 'exclusively' for manufacture of 'exempted' electricity, prima facie strong case in favour - pre-deposit waived and Stay granted: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CREDIT</strong> has been availed on the capital goods, which are used in the captive power plant, and the electricity so generated in the power plant is used in or in relation to the manufacture of finished goods and certain quantity of electricity so generated sold outside factory. The Revenue has relied upon Rule 6(4) of the CENVAT Credit Rules </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether provisions of Sec 292B can cure only error in notice and cannot validate when Sec 148 notice itself is void - ruled in favour of Revenue: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A </strong> notice u/s 148 of the Act was issued to the assessee on 12/8/1991, in response to which the assessee filed his statement on 05/9/1991 stating that he had already filed return on 17/5/1991, which might be treated in compliance to the notice. Assessment order was passed by the AO on 16/11/1993, completing the assessment on total income of 1,56,040/-. The CIT(A) dismissed the appeal of the assessee. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the appeal filed before the Tribunal no ground was taken challenging the validity of the notice issued u/s 148 of the Act. However, the assessee raised additional ground that the order passed u/s 148 in the status of URF was illegal and without jurisdiction. The assessee submitted that there being no valid notice issued u/s 148 of the Act, the entire proceedings were vitiated and void ab initio . The Tribunal considered the aforesaid additional ground and held that notice u/s 148 of the Act was bad in law, hence the assessment framed was bad and void - <em>ab initio</em>. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">If a communication from Assistant Commissioner in substance contains determination of a question by application of objective standards as per legal rules and it declares right or imposes an obligation, such communication would become an appealable order - CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TO</strong> make a decision or an act judicial, the following criteria must be satisfied: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) It is in substance a determination upon investigation of a question by the application of objective standards to facts found in the light of pre-existing legal rules; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) It declares right or imposes upon parties obligations affecting their civil rights; and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) That the investigation is subject to certain procedural attributes contemplating an opportunity of presenting its case to a party, ascertainment of facts by means of evidence if a dispute be on question of law on the presentation of legal argument, and a decision resulting in the disposal of the matter on findings based on those questions of law and fact. </font></p>
</blockquote>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more<strong> DDT</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day </font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></strong></font></p>
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