Cash Deposits During Demonetisation Not 'Unexplained Money' If Traceable To Previous Year's Balance: Chhattisgarh High Court

The Chhattisgarh High Court held that cash deposits during demonetisation are not unexplained money if traceable to previous year's balance. Section 69 of the Income Tax Act, 1961 requires the assessee to provide proof of income and provide a proper explanation of the source of such unexplained income. Justices Sanjay K. Agrawal and Deepak Kumar Tiwari stated that the factum of liquidation/refund of short-term loans and advances and its consequential accumulation as cash-in-hand...

Income Tax | Interest On Fixed Deposits, TDS Refund Linked To Business Qualifies For S. 80IA Deduction: Bombay High Court

The Bombay High Court held that interest on fixed deposits, TDS refund linked to business qualifies for deduction under Section 80IA of the Income Tax Act. Section 80IA of the Income Tax Act, 1961 provides tax incentives for businesses operating in certain sectors such as infrastructure, power, and telecommunications. Justices B.P. Colabawalla and Firdosh P. Pooniwalla stated that the placement of fixed deposits was imperative for the purpose of carrying on the eligible business of...

S.263 Income Tax Act | Commissioner Cannot Revise Assessment Merely Because Detailed Reasoning Was Not Given: Madras High Court

The Madras High Court stated that the Income Tax commissioner cannot revise an assessment merely because detailed reasoning was not given in the order. Section 263 of the Income Tax Act, 1961, empowers the Commissioner of Income Tax to revise any order passed under the Income-tax Act, 1961, “the Act” which is erroneous insofar as it is prejudicial to the interest of the revenue. Chief Justice Manindra Mohan Shrivastava and Justice Sunder Mohan stated that, "an order cannot be...

Income Tax | Sale Proceeds Of Vintage Cars Taxable Unless Assessee Proves That Car Was Used As Personal Asset: Bombay High Court

The Bombay High Court held that sale proceeds of vintage car taxable unless the assessee proves that the car was used as a personal asset. Chief Justice Alok Aradhe and Justice Sandeep V. Marne stated that the capability of a car for personal use would not ipso facto lead to automatic presumption that every car would be personal effects for being excluded from capital assets of the Assessee. In this case, the Assessee had purchased a vintage car for a consideration of Rs.20,000/-....

Income Tax | Interest Earned On Surplus Lending Funds Is Attributable To Banking Business, Qualifies For 80P Deduction: Calcutta High Court

The Calcutta High Court stated that interest earned on surplus lending funds is attributable to banking business, qualifies for 80P deduction under Income Tax Act. Section 80P of the Income Tax Act, 1961 provides 100% tax deductions to cooperative societies for income from specified activities. These activities commonly include marketing agricultural produce, purchasing agricultural supplies, processing products without power, offering banking services, and more. Chief Justice T.S....

Income Tax Act | Criminal Complaint For Tax Evasion Filed During Pendency Of Reassessment Proceedings Not Premature: Delhi High Court

The Delhi High Court recently dismissed a plea for quashing a criminal complaint lodged under Income Tax Act 1961 for alleged tax evasion, moved on the ground that reassessment action was pending and hence the complaint was premature.The bench of Justice Neena Bansal Krishna cited P. Jayappan vs. S.K. Perumal, First Income Tax Officer [1984] where it was held that pendency of re-assessment proceedings cannot act as a bar to the institution of criminal prosecution for the offences under Section...

Income Tax | S.194C & S.194LA Would Not Apply When TDR Certificates Are Issued In Lieu Of Compensation: Bombay High Court

The Bombay High Court held that Section 194C and Section 194LA of the Income Tax Act would not apply when TDR Certificates are issued in lieu of compensation. Justices B.P. Colabawalla and Firdosh P. Pooniwalla agreed with the assessee that the words “or by any other mode” appearing in Section 194C would have to be read ejusdem generis to the words “payment thereof in cash or by issue of a cheque or draft”. Similarly, in Section 194LA, the words “or by any other mode” would have to...

Stock Exchange & Banking Channels Cannot Mask Sham Transactions Carried Out Through Bogus Capital Loss Claim Companies: Calcutta High Court

The Calcutta High Court held that stock exchange and banking channels cannot mask sham transactions carried out through bogus capital loss claim companies. Justices T.S. Sivagnanam and Chaitali Chatterjee (Das) observed that “the entire information contained in the investigation report was apprised to the assessee by the assessing officer and thereafter the show cause notices was issued for which the assessee' submitted their reply and in the reply they did not raise any issue that...

Mere Incorporation Of Investing Companies Under Companies Act Not Enough To Prove Genuineness Of Share Transactions: Calcutta High Court

The Calcutta High Court held that mere incorporation of investing companies under the Companies Act is not enough to prove the genuineness of share transactions. The bench opined that, admittedly, the shares were by way of a private placement. Though the investing companies might have been incorporated under the provisions of the Company's Act, that by itself will not validate the transaction. Justices T.S. Sivagnanam and Chaitali Chatterjee (Das) stated that “though it can be...

Income Tax | Sale Proceeds Of One House Used For Purchasing Multiple Residential Houses Qualifies For Exemption U/S 54(1): Bombay High Court

The Bombay High Court held that sale proceeds of one residential house, used for purchase of multiple residential houses, would qualify for exemption under Section 54(1) of the Income Tax Act. The issue before the bench was whether Section 54(1) of the Income Tax Act allows the Assessee to set off the purchase cost of more than one residential units against the capital gains earned from sale of a single residential house. Chief Justice Alok Aradhe and Justice Sandeep V. Marne stated...

Burden To Prove That Best Assessment By Income Tax Authorities Is Perverse Is On Assesee: Allahabad High Court

The Allahabad High Court has held that the burden to prove that the findings of best assessment done by the authorities is perverse is on the assesee. The bench of Justice Shekhar B. Saraf and Justice Praveen Kumar Giri held that “when a best assessment is done, it is for the assessee to bring on record the facts that may reveal that the findings are perverse in nature.” Appellant filed the Income Tax Appeal against the order of the Income Tax Appellate Tribunal who upheld the...

Unauthenticated Documents From Foreign Govt Regarding Swiss Bank Account Of Assessee Can't Form Basis For Criminal Action: Delhi HC

The Delhi High Court has quashed the criminal proceedings initiated against an assessee under Section 276C, 276D and 277 of the Income Tax Act 1961 merely on the basis of some unauthorised documents alleging existence of an undisclosed Swiss Bank account in his name.In doing so, Justice Neena Bansal Krishna observed,“Merely on some unauthenticated information received from a third Country with no material evidence, is not sufficient to make out a prima facie case and there cannot be a...