Extension of Due Date!

Extension of time limits of certain compliances to provide relief to taxpayers in view of the serve pandemic.

Compliance	Original Due Date	Revised Due Date
TDS Return for quarter ending March 2021	31st May 2021	30th June 2021
Issuance of TDS Certificate in Form 16	15th June 2021	15th July 2021
Filing of Return of Income for FY 2020-21(Non audit Case)	31st July 2021	30th September 2021
Tax Audit for FY 2020-21	30th September 2021	31st October 2021
Filing of Return of Income for FY 2020-21 (Tax Audit Case)	31st October 2021	30th November 2021
Belated/Revised Return	31st December 2021	31st January 2022

The government introduced a new section 194Q of the Act vide the Finance Act 2021 and effective from 1 July 2021.

• The provisions of the newly inserted section194Q mandates the person responsible i.e. the buyer responsible for paying any sum to any resident being a seller for purchase of goods to deduct tax at source (TDS) at rate of 0.1% of sales consideration exceeding INR 50 lakh in the previous year.
• The section also provides that the tax is required to be withheld by only those buyer’s whose total sales, gross receipts or turnover from the business exceeds INR 10 crore during the financial year immediately preceding the financial year in which the purchase of goods has been carried out.
• However, section 206AA was also amended to provide that the tax would be required to be deducted at a higher rate of 5%, if the seller does not hold Permanent Account Number (PAN).

Higher rate of TDS – Section 206AB

The Finance Act 2021 also introduced a new section wherein the payer is required to deduct TDS at higher rate, if the recipient has not filed his return of income for two assessment years prior to the year in which tax is required to be deducted. Further, the time limit provided under section 139(1) should have been elapsed. The higher TDS rate shall be computed as follows:

• at twice the rate specified in the relevant provision of the Act; or
• at twice the rate or rates in force; or
• at the rate of five per cent

Other Judicial Updates

• ITAT: Draft assessment order u/s 144C(1) unwarranted if no variation proposed in returned income-[TS-415-ITAT-2021(DEL)]

ITAT Delhi allows Assessee’s appeal, holds draft assessment order u/s 144C(1) not required where the Revenue does not propose any variation in the returned income/loss; Assessee-Company, for AY 2014-15, was assessed by Revenue u/s 143(3) r.w. 144C(13) by assessment order dt. Sep 7, 2018 and was denied the beneficial tax rate of 10% under India-Cyprus DTAA over the rate of 20% u/s 115A on its interest income of Rs.24.82 Cr. from CCDs; ITAT accepts Assessee’s plea that the assessment order was barred by limitation and no draft assessment order was required to be passed by the Revenue in this case; ITAT notes the provisions of Sec. 144C(1) and remarks, “the Assessing Officer shall forward the draft of the proposed order if he proposes to make any variation in the income or loss returned”; ITAT holds that in the draft assessment order no variation in the Assessee’s income was proposed and thus, assessment should have been passed as per Sec. 153 r.w. 143(3).:ITAT DEL

• HC: Sets aside faceless assessment order passed without SCN; Grants liberty for fresh assessment[TS-401-HC-2021(DEL)]

Delhi HC sets aside the faceless assessment order passed, demand notice u/s 156 and penalty notice u/s 274 r.w.s 270A issued without following the mandate of Sec. 144B; Assessee-Company, AY 2018-19, was subjected to an addition of Rs. 90.25 Lacs and was assessed u/s 115BBE; HC rejects Revenue’s submission that before passing the assessment order, several opportunities were given and observes that submission, “flies in the face of the schematic design of the statute”; Refers to provisions of Sec. 144B(1), particularly sub-clauses (xiv), (xv), (xvi)(b) and (xxii) and states that the statute provides for issuance of a show-cause notice-cum-draft assessment order, and an opportunity to the assessee to respond to the same, where income of the assessee is varied by the Revenue; Observes that in the present case, income was varied to its prejudice with the addition of Rs. 90.25 Lacs, remarks “…had the show cause notice cum draft assessment been served on the petitioner, its authorised representative could have requested for a personal hearing in the matter”; Opines “The respondent/ revenue, to our minds, could not have side-stepped such safeguards put in place by the legislature”; Accordingly, sets aside the order/notices, however, grants liberty to Revenue to pass a fresh assessment order as per law after granting a personal hearing to the assessee.:HC DEL

• Conversion of limited scrutiny to complete scrutiny without credible material or information is invalid [ITA No. 982/CHD/2019]

Tribunal referred to CBDT Instruction No. 5/2016 dated 14-07-2016 and observed that to convert the limited scrutiny into complete scrutiny, the Assessing Officer should form a reasonable view that there is possibility of under statement of income and the view should be on credible material or information available on record and such a view should not be based on mere suspicion, conjecture or unreliable resources and there should be a direct nexus between available material and formation of view.[Ropar Properties and Builders Pvt. Ltd vs. ITO-Chandigarh ITAT]

• The assessment is based upon the documents found during the course of serach of third party premises, but that can be made only under section 153C of the Act,[ ACIT Vs. M/s K.S. Chawla& Sons (HUF), ITA. 2724/DEL/2015]

That where provision of section 153C is applicable which excludes the application of section 147 and 148 of the Act. The ITAT held that the notice issued under section 148 and proceedings under section 147 as illegal and void ab initio.

• When two views possible- AO made proper enquiry and adopted plausible view-CIT does not have jurisdiction under section 263[BardoliVibhag Gram Vikas Co. Op. Crediit society Ltd Vs. PCIT-Surat [ITA No. 283/SRT/2019]

Held that merely because commissioner held a different belief that would not permit him to take the order in revision when Assessing Officer made full enquiry. It is also held that when two views are possible on an issue and it is not the case of the commissioner that the view taken by Assessing Officer is not permissible in law, Commissioner cannot invoke his jurisdiction under section 263 of the ACT.