Welcome to FY 2021-22

• Date for issue of notice under section 148 of Income Tax Act, 1961, Passing of Consequential order for direction issued by the Dispute Resolution Panel (DRP) & Processing of Equalization Levy statements also extended to 30^th April 2021.
  
• Central Government extends the last date for linking of Aadhaar number with Pan from 31^st March, 2021 to 30^th June, 2021.

Some of the key amendments to Finance Bill 2021 have been summarized below:

• The Amended Finance Bill 2021 has modified the definition of expression ‘liable to tax’ as was originally proposed in Finance Bill 2021. As per the new definition, a person shall be considered as ‘liable to tax’ in a country, if there is an income-tax liability on such person under the law of that country for the time being in force and shall also include a person who has subsequently been exempted from such liability under the law of that country.
• The amended Finance Bill 2021 clarifies that equalization levy will not be charged on consideration for sale of goods / services which are owned / provided by a resident in India or effectively connected with permanent establishment in India.
• As per the provisions of Finance Bill 2021, interest accruing in Employee Provident Fund on employee contributions exceeding INR 250,000 per annum is made taxable from April 1, 2021. The amended Finance Bill 2021 has increased this limit to INR 500,000 in cases where no amount is contributed by the employer to the provident fund.
• LLP and HUF ineligible for presumptive taxation for professionals
• The time limit for issuance of reassessment notice under the new procedure is reduced to three years, unless income amounting to more than INR 5 million represented by assets have escaped/ likely to escape assessment; in which case, the time limit is extended to ten years. The Amended Finance Bill 2021 defines the term ‘asset’ to include immovable property, being land or building or both, shares and securities, loans and advances and deposits in bank accounts.

  Important Judicial Precedents

• Sajan Kumar Jain vs. DCIT (ITAT Delhi) ITA No. 6793/DEL/2018.

A notice issued u/s 142(1) requiring the assessee to furnish a return of income when the assessee had already earlier filed a return is not valid. Once a valid return of income was available on record, which was already processed issuing notice u/s 142(1) of the Act asking the assessee to furnish fresh notice in itself is invalid making subsequently proceedings void ab initio. The assessment order has to be quashed for want of jurisdiction.

• PCIT (Central) – 3 vs. Anand Kumar Jain (HUF) (Delhi High Court)

S. 153A, 153C search assessments: (i) A statement recorded u/s 132(4) has evidentiary value but cannot justify the additions in the absence of corroborative material. (ii) The statement also cannot, on a standalone basis, constitute ‘incriminating material’ so as to empower the AO to frame a block assessment u/s 153A (iii) If the statement was recorded in the course of search conducted in the case of a third party, and assuming the statement is construed as ‘incriminating material belonging to or pertaining to a person other than person searched’, the only legal recourse available to the department is to proceed in terms of S. 153C of the Act by handing over the same to the AO who has jurisdiction over such person. An assessment framed u/s 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act) is not valid. The assesse also had no opportunity to cross-examine the said witness.

• HDA Buildcon Pvt. Ltd. Versus The C.I.T. [A] -35 New Delhi ITA No. 5617/DEL/2017

HELD THAT:- A perusal of the computation of taxable income as per provisions of section 115JB of the Act show that tax payable comes to ₹ 16,18,097/- under the provisions of MAT whereas tax computed on the assessed income comes to ₹ 15,53,355/-, which means that the appellant has paid taxes as per the provisions of section 115JB of the Act. As per the CBDT Circular No. 25/2015 dated 31.12.2015, no penalty can be levied on an income which has been computed u/s. 115JB of the Act and penalty has been levied on the additions/disallowances made under normal provisions of the Act.