Jurispruden tiol – Tomorrow ' s cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Income Tax

The words "no action" are wide enough to include in its sweep "assuming jurisdiction by formation of belief as well as to complete the reassessment; Proviso to section 147 does not have the effect of curtailing the limitation period for passing the order u/s 147 as prescribed u/s 153(2); Loss arising from the purchase and sale of shares is speculation loss; Mere rejection of assessee's claim would not be sufficient to hold the assessee to be guilty of concealment. – ITAT Special Bench

For making an assessment for escaped income, there are various stages. Initially an opinion is to be formed vis-a-vis Explanation 2, then a notice for reopening the assessment is to be issued u/s 148, and a time limit is to be seen as provided in section 149 for issuing the notice, section 150 deals with "provisions for cases where assessment is in pursuance of an order of the appeals etc.", section 151 'deals with "sanction for issue of notice", section 152 deals with rates of tax to be charged on escaped the assessment and certain other specific provisions and lastly, the assessment is to be made within time limit provided under section 153 for completion of assessment or reassessment.

Speculative loss: The assessee being a company its loss as relates to purchase and sale of shares would be on speculation account because of the specific provision of Expl. to Section 73 of the Act unless it falls in the exception provided in the Explanation to section 73 of the Act. The loss arising from the purchase and sale of shares was therefore rightly held to be speculation loss.

Penalty: It is a trite law that concealment proceedings are penal in character and under the substantive provisions of section 271(1)(c), it is for the department to prove that the assessee had concealed the particulars of his income or furnished inaccurate particulars thereof to bring the case of the assessee within the mischief of the main provisions of section 271(1)(c) of the Act.

Penalty cannot be levied by AO on a new ground discovered by CIT(A): penalty proceedings u/s.271 are to be initiated in the course of any proceedings under the Act, either by Assessing Officer or CIT(A) or the CIT. Here in the present case they were initiated by the Assessing Officer and were initiated in the cause of reassessment proceedings for the disallowance of loss as capital loss. That ground of disallowance was not accepted by the CIT(A) as correct and therefore the entire edifice crumbles and falls down. The penalty initiated on that ground cannot fructify and, therefore, cannot also be levied.

Central Excise

Valuation of physician samples matter goes to larger bench in view of bringing the medicaments under the provisions of Section 4A

VALUATION of Physician samples seems to be a subject matter of never ending dispute. Since there is no sale involved and the samples are distributed free, the transaction value under Section 4(1)(a) is not applicable. Therefore the value has to be arrived as per the provisions of the Central Excise Valuation (Determination of the Price of Excisable goods) Rules 2000. Even under the valuation rules, there was a dispute whether the value has to be arrived on the basis of cost of production or as per the provisions of Rule 4 of the valuation rules.

Central Excise

Law does not countenance a situation where the person is rendered remediless – Matter remanded, to Commissioner(A) for passing fresh order on merits in accordance with law, by Tribunal.

The best part of this order is where the Tribunal asks the Departmental Representative as to what would be the remedy available to the appellant in the present case. Needless to mention, he remained tightlipped.

The case goes thus – Intending to set up another plant, the appellant approached the jurisdictional Commissioner seeking permission to shift the plant/equipments involving modvat/cenvat credit on capital goods to the tune of Rs 16,51,800/- as well as for transfer of accumulated cenvat credit lying in the excise records. Correspondence took place between the appellant and the authorities and, finally, the impugned communication was made in terms of which the appellant was advised by the lower authorities that they can remove the capital goods only on payment of cenvat credit taken on the said capital goods.

The assessee was not pleased with this communication went in appeal before the Commissioner(A) who dismissed the same as being non maintainable by holding that the communication was advisory in nature and no direction had been issued to the appellant.

See our columns tomorrow for the judgements