Honoring the Honest – Transparent yet faceless system

Recently, the Prime Minister of India launched the ‘Transparent Taxation – Honoring the Honest’ platform to honour the honest taxpayers of the country. The key highlights of the Transparent Taxation Platform are faceless assessment, faceless appeal and taxpayer charter.

The aim of a faceless system is to eliminate bribery and corruption so that the justice be available to all taxpayers equitably, whether rich or poor, influential or not. That is, the taxpayers would not be required to meet with the income tax officer directly or stand in queues while visiting the crowded revenue office. Under the faceless system, the appeals would be randomly allotted to any officer in the country and the identity of the officer deciding appeal would remain unknown. Also, to provide a strong foundation for implementation of the faceless system, a charter outlining the rights and responsibilities of both the taxpayer and the tax officer is issued by the government. 

We feel that there could not be a better time to launch the faceless scheme. It is commendable on part of the government to keep-up with its upgradation for achieving a better system integrated with technology. This has enabled Indian judiciary to work without Covid disruption. Hats off, as the faceless scheme serves dual purpose in the current corona virus crisis scenario by removing human interface viz. (1) no corruption and (2) safety from getting the super contagious killer virus!!

Important Statutory developments

1. CBDT has issued circular advising banks to immediately refund the charges collected, if any, on or after 1^st January 2020 on transactions carried out using the electronic modes prescribed u/s 269SU of the Act.
2. Pension funds to be eligible for exemption u.s. 10(23FE) on satisfaction of certain conditions.
3. Faceless Assessment Scheme, 2019 implementation guidelines issued.
4. Income tax department officers are required to make communications and conduct proceedings digitally (electronically) in strict adherence to social distancing norms. 
5. The scope of E-assessment / Faceless Assessment extended to cover best judgment assessments.
6. CBDT has directed that the officers posted in Directorates of Investigation (Investigation Wing) and Commissionerates of TDS shall act, only and exclusively, as Income-tax Authority for the purpose of survey under section 133A
7. All Assessment Orders to be passed by NeAC under Faceless Assessment Scheme except for cases assigned to Central Charges & International Tax Charges.
8. CBDT issues Mutual Agreement Procedure (MAP) Guidance following OECD recommendations.

Important Judicial Precedents

1. Capital gains arising out of land acquisition compensation is taxable in year of award of compensation and not date of notification for acquisition [Supreme Court – Raj Pal Singh]
2. Mere non-disclosure of exempt income in ITR wouldn’t amount to escaped income. [Supreme Court – Swastic Safe Deposit and Investments Ltd]
3. Cash deposits to be treated as income if assessee didn’t produce material regarding source of deposits [Delhi HC- Ravinder Kumar]
4. When assessee gets shares of amalgamated company in lieu of shares of amalgamating company, a ‘transfer’ does take place within meaning of section 2(47) [Delhi HC- Nalwa Investment Ltd.]
5. AO can’t withhold refund by issuing scrutiny notice without recording justifiable reasons [Delhi HC – Cooner Institute of Health Care & Research Centre (P.) Ltd.]
6. In absence of a statutory provision, a duty cannot be cast upon legal heir to intimate death of assessee to department [Delhi HC – Savita Kapila]
7. Loss on redemption of debentures couldn’t be disallowed if it was proved that borrowing was utilized for business [Delhi ITAT- Shivsagar Builders (P.) Ltd.]
8. Scheme of business arrangement to acquire shares of another Co. can’t be termed as business of dealing in securities [Delhi ITAT- Quippo Telecom Infrastructure (P.) Ltd.]
9. Expenditure incurred by assessee on implementation of software for smooth functioning of business, was to be allowed as deduction under section 37(1) [Delhi ITAT- Triveni Engineering & Industries Ltd]
10. No requirement of withholding tax while making payment of reimbursement of exp. incurred by AE outside India [Delhi ITAT- Exxon Mobil Lubricants (P.) Ltd.]
11. Where assessee was beneficial owner of deposits in foreign bank accounts and declined to sign consent waiver so as to enable Income-tax Department to obtain all necessary details from said account, additions in respect of assessee’s foreign bank account was justified. [Mum ITAT- Renu T Tharani]
12. No capital gains if possession of land wasn’t transferred due to termination of agreement to sell [Mum ITAT – Futura Polyster Ltd.]
13. In order to claim benefit of set-off of losses under section 72A, condition of filing Form No. 62 is only directory and non-compliance thereof would not disentitle assessee to claim carry forward losses to be set off against profits of company [Madras HC – Lotte India Corporation Ltd].
14. Invoking Section 50C provisions without referring matter to valuation officer not justified [Ahmd ITAT – Ramesh Govindbhai Patel]
15. Where assessee developed software technology park, rental income earned by assessee from leased out properties in park was liable to tax as ‘business income’. [Madras HC – Khivraj Motors (P.) Ltd].
16. Process of sieving carried out to separate dust particles from raw material amounts to ‘manufacturing’, eligible u/s 10AA. [Madras HC – Vetrivel Minerals]
17. Where assessee received certain amount from subsidiary company as advance towards security for providing corporate guarantee, it could not be brought to tax as deemed dividend under section 2(22)(e) [Madras HC – Acel Ltd].
18. Unexplained cash receipts cannot be set off with unaccounted cash payments in absence of any co-relation. [Guj HC- Manojbhai Bhupatrai Vadodaria]