TIOL-DDT 1900 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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">TIOL-DDT 1900 </font><br>
13.07.2012 <br>
FRIDAY </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Big B Wins - 'It is a settled position of law that review under garb of reassessment is not permissible': HC</font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Respondent in this interesting case is Amitabh Bachchan. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 13 October 2002, he had filed his return of income declaring his income at Rs.14.99 crores for the Assessment Year 2002-03. Thereafter, on 31st March, 2002, the assessee filed a revised return of income declaring his total income for the assessment year 2002-03 wherein he claimed expenses at 30% adhoc amounting to Rs.6.31 crores and determining his income at Rs. 8.11 crores. However, before the assessment for the Assessment Year 2002-03 could be completed, the assessee by a letter dated 13th March 2004 withdrew the revised return along with his claim of deduction of 30% adhoc expenses from his total income. On 29th March 2005, the Assessing Officer completed the assessment for the Assessment Year 2002-03 determining the respondent's income at Rs.56.41 crores. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 5th April 2006, a notice under Section 148 of the Act was issued to the respondent assessee seeking to reopen the assessment proceedings for the Assessment Year 2002-03. Consequent to the above notice by an order dated 31st December 2007 the respondent was assessed to a total income of Rs.20.05 crores. This was arrived at after adding an amount of Rs.6.31 crores as unexplained expenses under Section 69C of the said Act for which notice under Section 148 of the said Act had been issued. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By an order dated 4th March, 2009 the Commissioner of Income Tax (Appeal) set aside the reassessment order dated 31st December 2007 by holding that the Assessing officer has wrongly assumed jurisdiction under Section 147 of the said Act. The material based on which the assessment was sought to be reopened was always available during the time of the original proceeding leading to the assessment order dated 29th March, 2005. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Being aggrieved, the appellant revenue filed an appeal to the Tribunal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tribunal
held that the reasons recorded for initiating reassessment proceeding under
Section 147 of the said Act clearly indicates that there was no new material
which had come to the notice of the Assessing Officer so as to lead to a
reasonable belief that income assessable to tax has escaped assessment. The
adhoc expenses of 30% from the receipts was the subject matter of consideration
of the Assessing officer when he passed the assessment order on 29th March,2005
under Section 143(3) of the said Act. Consequently, there was no fresh tangible
material for the Assessing Officer to initiate reassessment proceeding under
Section 147 of the said Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Aggrieved Revenue took the matter in appeal to the High Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The High Court observed,</strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Both the Commissioner of Income Tax (Appeal) and the Tribunal have correctly come to the conclusion that there was no fresh tangible material before the Assessing Officer to reach a reasonable belief that the income liable to tax has escaped assessment. The order passed originally on 29th March 2005 under Section 143(3) of the said Act was passed after the respondent had made adhoc claim for expenditure at 30% of the professional receipts in the revised return of income which was later withdrawn. In fact the reasons for reopening the assessment for the year 2002-03 itself records that the claim of 30% adhoc expenses was withdrawn when the respondent assessee was asked to substantiate the claim. Therefore, the same material was a subject matter of consideration during the proceedings for assessment leading to order dated 29th March, 2005. In the circumstances, there could be no basis for the Assessing Officers to form a belief that income has escaped assessment. <strong>It is a settled position of law that review under the garb of reassessment is not permissible.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court found no substantial question of Law and so dismissed the Revenue Appeal.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The End - Like in all his movies, ultimately good survives over evil and the hero Amitabh always wins! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=38&filename=legal/hc/2012/2012-TIOL-497-HC-MUM-IT.htm" target="_blank">Click Here</a></strong> for the full text of the High Court Order. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Notwithstanding
provisions of RTI Act, State is not under obligation to provide
grounds of detention to a detenu prior to arrest and detention: SC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ARTICLE </strong>22 of the Constitution provides for protection against arrest and detention in certain cases. Clauses (1) and (2) of Article 22 set out the manner in which a person arrested is to be dealt with and clause (1) makes it clear that no person who is arrested is to be detained in custody without being informed, as soon as may be, of the grounds for such arrest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clause (2) provides that such a person who is arrested and detained in custody has to be produced before a Magistrate within a period of 24 hours of such arrest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, an exception is made by clause (3), which provides that nothing in clauses (1) and (2) shall apply, amongst others, to any person who is arrested or detained under any law providing for preventive detention. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clause (4) thereafter sets out that no law providing for preventive detention shall authorize such detention for more than three months without following the procedure subsequently set out. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clause (5) of Article 22 reads as: - "(5). When any person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall, as soon as may be, communicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order."</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It may be noticed from the opening words of clause (5) that the grounds on which the person is detained is to be communicated to him when the person has actually been detained. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If one were to read clauses (1) to (6) of Article 22 as a whole, it is more than obvious that the scheme envisaged therein provides for the protection of a person arrested in connection with an offence by providing for his production before the Magistrate within 24 hours of his arrest and also to avail the services of a lawyer, but an exception has been carved out in relation to detention effected under preventive detention laws. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A detenu is not required to be treated in the same manner as a person arrested in connection with the commission of an alleged offence. On the other hand, preventive detention laws provide for the detention of a person with the intention of preventing him from committing similar offences in the future, at least for a period of one year. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 3 of the R.T.I. Act, 2005, provides that subject to the provisions of the Act, all citizens would have the right to information. Section 8, however, makes an exemption from disclosure of information. While setting out the instances in which there would be no obligation to give any citizen information in the situations enumerated in Sub-Section (1), Sub-Section (2) provides that notwithstanding anything in the Official Secrets Act, 1923, nor any of the exemptions permissible in accordance with Sub-Section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the question is, "will the RTI Act prevail over the Constitution of India?"</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court (Larger Bench) in a judgement delivered three days ago observed, </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Not much discourse is required with regard to the primacy of the provisions of the Constitution, vis-à-vis the enactments of the legislature. It is also not necessary to emphasise the fact that the provisions of the Constitution will prevail over any enactment of the legislature, which itself is a creature of the Constitution. Since clause (5) of Article 22 provides that the grounds for detention are to be served on a detenu <strong>after</strong> his detention, the provisions of Section 3 of the R.T.I. Act, 2005, cannot be applied to cases relating to preventive detention at the pre-execution stage. In other words, Section 3 of the R.T.I. Act has to give way to the provisions of Clause (5) of Article 22 of the Constitution. Even the provisions relating to production of an arrested or detained person, contained in clauses (1) and (2) of Article 22 of the Constitution, have in their application been excluded in respect of a person detained under any preventive detention law."</font></em></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2012/2012-TIOL-50-SC-RTI-LB.htm" target="_blank">Click Here</a></strong> for the full text of the Supreme Court Judgement. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Austerity - Don't Host Foreign Delegates without Approval </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Department of Expenditure has decided that Ministries/Departments holding international conferences/seminars should not make any commitment for bearing the travel/accommodation cost of participants without the prior approval of the Expenditure Secretary/Cabinet Secretary, irrespective of the expenditure to be incurred on the seminar/conference. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/oms/office_memorandum_19_2012.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dept of Expenditure, MoF No. 19(9)/E.Coord/2012., Dated: July 12, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs and Central Excise Superintendents get promotion</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GB </strong>Panda is a Superintendent of Central Excise. He must have become Superintendent in 1992, a good twenty years ago. He is to retire this month end. Yesterday the Department promoted him on in situ basis - he will continue to sit where he was and retire as an Assistant Commissioner without having any of the powers of Assistant Commissioner being wasted on him! Panda is lucky for he is retiring as an Assistant Commissioner. His good friend who was senior to him retired last month as a Superintendent because the Department could not issue the promotion order last month. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even when there are clear vacancies and qualified officers readily available, the Department is not able to promote them - and that is HRD in the Department. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">How long can you run an organisation with a huge highly talented and totally dissatisfied workforce? </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT is 1900 - Going 2000 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is the 1900th edition of<strong> DDT</strong>. Inching towards the magical number of 2000. </font></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"> - Monday's cases</font></strong></font></strong></font></p>
<p><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">Customs </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the goods under export have been proved to be basmati rice, as revealed on basis of RTI application filed by appellant with AGMARK authority, charge of mis-declaration of export goods is completely disproved - violation of Regulation 12 & 13 of CHALR is not established - order of Commissioner revoking CHA licence does not stand any legal scrutiny and is perverse and bad in law - Appeal allowed with consequential relief: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant, a Custom House Agent holding CHA licence, filed four shipping bills on behalf of M/s. Chawla Trading Co., Nagpur, by declaring the goods as “basmati rice” as per the export documents such as invoices, packing list and original certificate issued by Agricultural and Processed Food Products Export Development Authority (APEDA) provided by the exporter. The goods were received by the appellant at Navkar CFS, Panvel, directly from the suppliers of the exporter. After completion of the carting procedure, the shipping bills were presented before the Superintendent of Customs for inspection of goods for issuance of Let Export Order (LEO). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Representative samples were drawn from the consignments for further inspection and the Custom Officers made endorsements to the effect that the samples should be forwarded to AGMARK for testing and shipment may be allowed, if otherwise, in order. </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 CA's expert advice can be cited as bona fide reason for claiming false deduction, and thus no penalty is leviable - NO: ITAT Third Member </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE issues before the Third Member are - Whether expert advice by the assessee's CA can be cited as bona fide reasons for claiming false deduction and hence penalty cannot be levied in such circumstances and Whether Third Member can sit in judgment over dissenting member's view. And the answer goes against the assessee. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Credit of Service Tax for three years was taken by making one entry after lapse of time - said amount of CENVAT credit was not mentioned as receivable in books of accounts - it is necessary to ensure that eligible service received under various invoices have actually gone into manufacture of exported goods and not utilized for other purposes - pre-deposit ordered: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong> applicant filed a refund claim under Rule 5 of the CCR, 2004 in respect of accumulated Cenvat Credit of duty paid on inputs/input services used in or in relation to the manufacture of exported goods on the ground that the applicants were unable to utilize the same. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The adjudicating authority allowed the refund and the applicant received the amount of refund. Revenue filed an appeal before the Commissioner (Appeals) and the appellate authority set aside the adjudication order and directed the applicants to deposit the erroneously sanctioned refund along with interest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The facts leading to the refund claim are - the applicants are engaged in the manufacture of socks classifiable under heading 61 of the Central Excise Tariff, and the applicants had availed credit in respect of the duty paid/service tax paid on the inputs/input services used in or in relation to the manufacture of goods which were exported under bond. On 27.2.2007 applicant availed credit in respect of the service tax paid on the taxable services for the period 2004, 2005 and 2006 and filed a refund claim u/r 5 of CCR, 2004 in March 2007 for the quarter January 2007 to March 2007 claiming that they are unable to utilize the same. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements</font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice weekend </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"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p>
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