Income Tax Department conducts searches in Delhi, Gujarat and Dadra (Ministry of Finance Press Release dated 02 Sept 2021)

The Income Tax Department carried out a search and seizure operation on 01.09.2021 on a manufacturer and distributor of synthetic yarns and polyester chips having corporate office in Delhi and factories at Dadra & Nagar Haveli and Dahej.

During the course of the search, many incriminating documents, loose sheets, digital evidences etc. have been found indicating involvement of the group in unaccounted transactions. Substantial evidence of transactions outside the regular books of accounts, cash purchases, suppression of sales and booking of sales to bogus parties have also been found.

The group has routed its own unaccounted funds to the tune of Rs. 380 crore in its books in the form of bogus unsecured loans, through paper entities, over the past few years. Besides, an amount of Rs. 40 crore has also been introduced in its books through shell entities in the form of share premium. The directors and auditors of the shell entities, have, in their statement, admitted that these entities were essentially used to provide accommodation entries.

Substantial evidence of cash purchase and documents revealing movement of cash through “angadias” has been recovered. Evidence of booking bogus purchases of Rs. 154 crore has also been detected. During the search, unaccounted jewellery has been found and 11 lockers have been placed under restraint. 

The search operation is still continuing and further investigations are in progress.

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CBDT notifies RULE 9D for calculation of taxable interest relating to contribution in a PF or RPF exceeding specified limit vide CBDT Notification No. 95/2021-Income Tax dated 31st August, 2021.

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)

Notification No. 95/2021-Income Tax Dated:  31st August, 2021

G.S.R. 604(E).—In exercise of the powers conferred by the first proviso to clause (11) of section 10 and the first proviso to clause (12) of section 10 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. Short title and commencement. (1) These rules may be called the Income-tax (25th Amendment) Rules, 2021.

(2)    They shall come into force on 1st day of April, 2022.

2. In the Income-tax Rules, 1962, after the rule 9C, the following rule shall be inserted, namely: ‒

“9D. Calculation of taxable interest relating to contribution in a provident fund or recognised provided fund, exceeding specified limit.-

(1)For the purposes of the first and second provisos to clauses (11) and (12) of section 10 , income by way of interest accrued during the previous year which is not exempt from inclusion in the total income of a person under the said clauses (hereinafter in this rule referred to as the taxable interest), shall be computed as the interest accrued during the previous year in the taxable contribution account.

(2) For the purpose of calculation of taxable interest under sub-rule (1), separate accounts within the provident fund account shall be maintained during the previous year 2021-2022 and all subsequent previous years for taxable contribution and non-taxable contribution made by a person.

Explanation: For the purposes of this rule,-

(a) Non-taxable contribution account shall be the aggregate of the following, namely:-

(i) closing balance in the account as on 31st day of March 2021;

(ii) any contribution made by the person in the account during the previous year 2021-2022 and subsequent previous years, which is not included in the taxable contribution account; and

(iii) interest accrued on sub- clause (i) and sub- clause (ii),

as reduced by the withdrawal, if any, from such account;

(b) Taxable contribution account shall be the aggregate of the following, namely:-

(i) contribution made by the person in a previous year in the account during the previous year 2021-2022 and subsequent previous years, which is in excess of the threshold limit; and

(ii) interest accrued on sub- clause (i),

as reduced by the withdrawal, if any, from such account; and

(c) The threshold limit shall mean:

(i) five lakh rupees, if the second proviso to clause (11) or clause (12) of section 10 is applicable; and

(ii) two lakh and fifty thousand rupees in other cases.”.

[Notification No. 95/2021/ F. No. 370142/36/2021-TPL]

NEHA SAHAY, Under Secy. (Tax Policy and Legislation Division)

CBDT extends due dates for electronic filing of various Forms under the Income-tax Act, 1961 (CBDT Circular No. 16/2021 in F.No.225/49/2021/ITA-II dated 29.08.2021 )

   On consideration of difficulties reported by the taxpayers and other stakeholders in electronic filing of certain Forms under the provisions of the Income-tax Act,1961 read with Income-tax Rules,1962 (Rules), Central Board of Direct Taxes (CBDT) has decided to further extend the due dates for electronic filing of such Forms. The further details are as under:

  1. The application for registration or intimation or approval under Section 10(23C), 12A, 35(1)(ii)/(iia)/(iii) or 80G of the Act in Form No. 10A required to be filed on or before 30th June, 2021, as extended to 31st August, 2021 vide Circular No.12 of 2021 dated 25.06.2021, may be filed on or before 31st March, 2022;
  2. The application for registration or approval under Section 10(23C), 12A or 80G of the Act in Form No.10AB, for which the last date for filing falls on or before 28th February, 2022 may be filed on or before 31st March, 2022;
  3. The Equalization Levy Statement in Form No.1 for the Financial Year 2020- 21, which was required to be filed on or before 30th June, 2021, as extended to 31st August, 2021 vide Circular No.15 of 2021 dated 03.08.2021, may be filed on or before 31st December, 2021;
  4. The Quarterly statement in Form No. 15CC to be furnished by authorized dealer in respect of remittances made for the quarter ending on 30th June, 2021, required to be furnished on or before 15th July, 2021 under Rule 37BB of the Rules, as extended to 31st August, 2021 vide Circular No.15 of 2021 dated 03.08.2021, may be furnished on or before 30th November, 2021;
  5. The Quarterly statement in Form No. 15CC to be furnished by authorized dealer in respect of remittances made for the quarter ending on 30th September, 2021, required to be furnished on or before 15th October, 2021 under Rule 37BB of the Rules, may be furnished on or before 31st December, 2021;
  6. Uploading of the declarations received from recipients in Form No. 15G/15H during the quarter ending 30th June, 2021, which was originally required to be uploaded on or before 15th July, 2021, and subsequently by 31st August, 2021, as per Circular No.12 of 2021 dated 25.06.2021, may be uploaded on or before 30th November, 2021;
  7. Uploading of the declarations received from recipients in Form No. 15G/15H during the quarter ending 30th September, 2021, which is required to be uploaded on or before 15th October, 2021, may be uploaded on or before 31st December, 2021;
  8. Intimation to be made by Sovereign Wealth Fund in respect of investments made by it in India in Form II SWF for the quarter ending on 30th June, 2021, required to be made on or before 31st July, 2021 as per Circular No.15 of 2020 dated 22.07.2020, as extended to 30th September, 2021 vide Circular No.15 of 2021 dated 03.08.2021, may be made on or before 30th November, 2021;
  9. Intimation to be made by Sovereign Wealth Fund in respect of investments made by it in India in Form II SWF for the quarter ending on 30th September, 2021, required to be made on or before 31st October, 2021 as per Circular No.15 of 2020 dated 22.07.2020, may be made on or before 31st December, 2021;
  10. Intimation to be made by a Pension Fund in respect of each investment made by it in India in Form No. 10BBB for the quarter ending on 30th June, 2021, required to be made on or before 31st July, 2021 under Rule 2DB of the Rules, as extended to 30th September, 2021 vide Circular No. 15 of 2021 dated 03.08.2021, may be made on or before 30th November, 2021;
  11. Intimation to be made by a Pension Fund in respect of each investment made by it in India in Form No. 10BBB for the quarter ending on 30th September, 2021, required to be made on or before 31st October, 2021 under Rule 2DB of the Rules, may be made on or before 31st December, 2021;
  12. Intimation by a constituent entity, resident in India, of an international group, the parent entity of which is not resident in India, for the purposes of sub-section (1) of section 286 of the Act, in Form No.3CEAC, required to be made on or before 30th November, 2021 under Rule 10DB of the Rules, may be made on or before 31st December, 2021;
  13. Report by a parent entity or an alternate reporting entity or any other constituent entity, resident in India, for the purposes of sub-section (2) or sub-section (4) of section 286 of the Act, in Form No. 3CEAD, required to be furnished on or before 30th November, 2021 under Rule 10DB of the Rules, may be furnished on or before 31st December, 2021;
  14. Intimation on behalf of an international group for the purposes of the proviso to sub-section (4) of section 286 of the Act in Form No. 3CEAE, required to be made on or before 30th November, 2021 under Rule 10DB of the Rules, may be made on or before 31st December, 2021.

CBDT Circular No. 16/2021 in F.No.225/49/2021/ITA-II dated 29.08.2021 issued. The said Circular will be available on www.incometaxindia.gov.in.

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CBDT extends date under section 3 of the Vivad se Vishwas Act (Ministry of Finance Press Release dated 29th Aug 2021)

Under The Direct Tax Vivad se Vishwas Act 2020 (hereinafter referred to as “Vivad se Vishwas Act”), the amount payable by the declarant is stated in the table under section 3 of the Vivad se Vishwas Act.

As per the latest notification dated 25th June 2021, the last date of payment of the amount (without any additional amount) has been notified as 31st August 2021. Further the last date for payment of the amount (with additional amount) under Vivad se Vishwas Act has been notified as 31st October, 2021.

Considering the difficulties being faced in issuing and amending Form no 3, which is a prerequisite for making payment by the declarant under Vivad se Vishwas Act, it has been decided to extend the last date of payment of the amount (without any additional amount) to 30th September, 2021. Necessary notification to this effect shall be issued shortly.

It is, however, clarified that there is no proposal to change the last date for payment of the amount (with additional amount) under Vivad se Vishwas Act, which remains as 31st October, 2021.

Income Tax Department conducts searches in Maharashtra and Goa

Ministry of Finance Press Release dated 28 Aug 2021

The Income Tax Department carried out a search and seizure operation on 25.08.2021 on a group based in Maharashtra and Goa. The group is a prominent steel manufacturer and trader of Pune, Nashik, Ahmednagar and Goa. More than 44 premises were covered in the search operation.

During the course of the search and seizure operation, many incriminating documents, loose papers and digital evidences were seized.

Evidence detected during the search revealed that the group was engaged in fraudulent practice of booking bogus purchases of scrap and sponge iron from various ‘fake invoice issuers’. Premises of fake invoice issuers were also covered during the search. Such invoice issuers have admitted that they supplied only bills but no materials and also generated fake e-way bills to show it as genuine purchases and to claim GST input credit. With the active support of GST Authorities, Pune, “Vehicle movement tracking app” was used to identify fake e-way bills. Total bogus purchases identified from these parties, so far, is about Rs.160 crore. The verification is still in progress and quantum of bogus purchases is likely to increase substantially.

Further, shortage of goods to the tune of Rs.3.5 crore and excess stocks of Rs. 4 crore was also found from the premises and the same has been admitted by the assessees. Unaccounted investment in property was also unearthed. Unaccounted cash of Rs. 3 crore and jewellery amounting to Rs. 5.20 crore has been seized from different premises. Unaccounted silver articles of 194 Kg valued at about Rs. 1.34 crore have been found during the search and have been accepted and declared as additional income by the assessee.

So far, a total of Rs.175.5 crore of unaccounted income has been unearthed including unaccounted cash and jewellery, shortage and excess of stock and bogus purchases.

The search operation is still continuing and investigations are in progress.

Framing of rules for the amendments made by the Taxation Laws (Amendment) Act, 2021 (Ministry of Finance Press Release dated 28 Aug 2021)

The Taxation Laws (Amendment) Act, 2021 (2021 Act), which received the assent of the President on the 13th August, 2021, has, inter-alia, amended the Income-tax Act, 1961 (Income-tax Act ) so as to provide that no tax demand shall be raised in future on the basis of the  amendment to section 9 of the Income-tax Act made vide Finance Act, 2012 for any offshore indirect transfer of Indian assets if the transaction was undertaken before 28th May, 2012 (i.e., the date on which the Finance Bill, 2012 received the assent of the President).

The amendment made by 2021 Act also provides that the demand raised for offshore indirect transfer of Indian assets made before 28th May, 2012 (including the validation of demand provided under Section 119 of the Finance Act 2012) shall be nullified on fulfillment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interest, etc. shall be filed and such other conditions are fulfilled as may be prescribed. The amount paid/collected in these cases shall be refunded, without any interest, on fulfillment of the said conditions.

The aim of the amendment made by the 2021 Act is to bring tax certainty and ensure that once specified conditions are fulfilled, the pending Income-tax proceedings  shall be withdrawn, demand, if any, raised shall be nullified, and amount, if any, collected shall be refunded to the taxpayer without any interest. To implement the amendment made by 2021 Act, draft rules have been prepared to amend the Income-tax Rules, 1962 which specify the conditions to be fulfilled and the process to be followed to give effect to the amendment made by the 2021 Act.

The draft notification containing the proposed rules is placed in public domain and can be accessed at www.incometaxindia.gov.in.

Suggestions/comments on the draft notification are invited from all stakeholders and the public and can be furnished electronically at the email address ustpl1@nic.in latest by 4th September, 2021.

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Income Tax Department conducts searches in Visakhapatnam (Ministry of Finance Press Release dated 27 Aug 2021)

Release

Ministry of Finance

Income Tax Department conducts searches in Visakhapatnam

Posted Date:- Aug 27, 2021

The Income Tax Department carried out search and seizure operation on 25.08.2021 on a group based in Visakhapatnam at 17 different premises across Andhra Pradesh, Chhattisgarh, Nagpur and Kolkata. The group entities are engaged in extraction of vegetable oils, mining of manganese ore, and manufacturing of ferro alloys.

During the course of the search operation, hand written diaries/documents, loose sheets depicting undisclosed cash transactions were seized. The group is inflating expenditure, indulging in cash sales of oil and under invoicing of slag. Transactions in the form of suppression of sales and inflation of expenditure were unearthed.

Unaccounted cash of Rs. 3.0 crore has been seized so far. In total, the searches have resulted in detecting incriminating evidence relating to undisclosed financial transactions of about Rs. 40 crore.

Further investigations are in progress.

Income Tax Department conducts searches in Rajkot (Ministry of Finance Press Release dated 27 Aug 2021)

The Income Tax Department carried out a search and seizure operation on 24.08.2021 on a group based in Rajkot. The group is among Gujarat’s prominent real estate builders & developers and is actively engaged in real estate, construction and land trading businesses in and around Rajkot. More than 40 premises were covered in the operation. 

During the course of search and seizure operation many incriminating documents, loose sheets, digital evidences etc. were seized indicating involvement of the group in unaccounted transactions. Substantial evidence of transactions outside the regular books of accounts, unaccounted cash expenses, cash advances received and interest paid in cash, has been found. Evidence of on-money payments in real estate projects-flats, shops and land deals has also been found. Total unaccounted cash receipts in various projects of approximately Rs. 350 crore have been unearthed alongwith corroborative evidences. Further, evidence related to land purchase of approximately Rs. 154 crore has also been found, out of which, Rs. 144 crore was purportedly paid in cash.

Overall, the search and seizure operation has resulted in detection of concealment of income in excess of Rs. 300 crore spread over various assessment years, which is likely to go up. Unaccounted cash of more than Rs. 6.40 crore and jewellery amounting to Rs. 1.70 crore has been seized from different premises. Furthermore, promissory notes to the tune of Rs. 4 crore have also been found and seized. 25 lockers have been found during the course of the search operation which have been put under prohibitory orders. The search operation is still continuing. 

Further investigations are in progress.

Amendment in Section 9 of Income Tax Act, 1961- THE TAXATION LAWS (AMENDMENT) ACT, 2021 -13 Aug 2021 II Final law to end retro tax II


 THE TAXATION LAWS (AMENDMENT) ACT, 2021

MINISTRY OF LAW AND JUSTICE

(Legislative Department)

New Delhi, the 13th August, 2021/ Sravana 22, 1943 (Saka)

The following Act of Parliament received the assent of the President on the 13th August, 2021, and is hereby published for general information:—

THE TAXATION LAWS (AMENDMENT) ACT, 2021
NO. 34 OF 2021

43 of 1961.

[13th August, 2021.]

An Act further to amend the Income-tax Act, 1961 and the Finance Act, 2012.

BE it enacted by Parliament in the Seventy-second Year of the Republic of India as follows:—

CHAPTER I
PRELIMINARY

1. Short title.

This Act may be called the Taxation Laws (Amendment) Act, 2021.

Income deemed to accrue or arise in India.

9.(1) The following incomes shall be deemed to accrue or arise in India :— (i)all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situate in India.

…………………………………………………………………………

Explanation 5.—For the removal of doubts, it is hereby clarified that an asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets located in India:

In section 9 of the Income-tax Act, 1961, in sub-section (1), in clause (i), in Explanation 5, after the third proviso, the following provisos shall be inserted, namely:—

“Provided also that nothing contained in this Explanation shall apply to—

(i) an assessment or reassessment to be made under section 143, section 144, section 147 or section 153A or section 153C; or

(ii) an order to be passed enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154; or

(iii) an order to be passed deeming a person to be an assessee in default under sub-section (1) of section 201,

in respect of income accruing or arising through or from the transfer of an asset or a capital asset situate in India in consequence of the transfer of a share or interest in a company or entity registered or incorporated outside India made before the 28th day of May , 2012:

Provided also that where—

(i) an assessment or reassessment has been made under section 143, section 144, section 147 or section 153A or section 153C; or

(ii) an order has been passed enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154; or

(iii) an order has been passed deeming a person to be an assessee in default under sub-section (1) of section 201; or

(iv) an order has been passed imposing a penalty under Chapter XXI or under section 221,

in respect of income accruing or arising through or from the transfer of an asset or a capital asset situate in India in consequence of the transfer of a share or interest in a company or entity registered or incorporated outside India made before the 28th day of May, 2012 and the person in whose case such assessment or reassessment or order has been passed or made, as the case may be, fulfils the specified conditions, then, such assessment or reassessment or order, to the extent it relates to the said income, shall be deemed never to have been passed or made, as the case may be:

Provided also that where any amount becomes refundable to the person referred to in fifth proviso as a consequence of him fulfilling the specified conditions, then, such amount shall be refunded to him, but no interest under section 244A shall be paid on that amount.

Explanation.—For the purposes of fifth and sixth provisos, the specified conditions shall be as provided hereunder:—

(i) where the said person has filed any appeal before an appellate forum or any writ petition before the High Court or the Supreme Court against any order in respect of said income, he shall either withdraw or submit an undertaking to withdraw such appeal or writ petition, in such form and manner as may be prescribed;

(ii) where the said person has initiated any proceeding for arbitration, conciliation or mediation, or has given any notice thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise, he shall either withdraw or shall submit an undertaking to withdraw the claim, if any, in such proceedings or notice, in such form and manner as may be prescribed;

(iii) the said person shall furnish an undertaking, in such form and manner as may be prescribed, waiving his right, whether direct or indirect, to seek or pursue any remedy or any claim in relation to the said income which may otherwise be available to him under any law for the time being in force, in equity, under any statute or under any agreement entered into by India with any country or territory outside India, whether for protection of investment or otherwise; and

(iv) such other conditions as may be prescribed.”.

CHAPTER III

AMENDMENT TO THE FINANCE ACT, 2012

3. Amendment of section 119.

In the Finance Act, 2012, in section 119, the following provisos shall be inserted, namely:—

“Provided that this section shall cease to apply to the person who fulfils the following conditions, namely:—

(i) where such person has filed any appeal before an appellate forum or a writ petition before the High Court or the Supreme Court against any order in respect of said income, he shall, either withdraw or submit an undertaking to withdraw such appeal or writ petition, in such form and manner as may be prescribed;

(ii) where such person has initiated any proceeding for arbitration, conciliation or mediation, or has given any notice thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise, he shall either withdraw or submit an undertaking to withdraw the claim, if any, in such proceedings or notice, in such form and manner as may be prescribed;

(iii) such person shall furnish an undertaking, in such form and manner as may be prescribed, waiving his right, whether direct or indirect, to seek or pursue any remedy or any claim in relation to the said income which may otherwise be available to him under any law for the time being in force, in equity, under any statute or under any agreement entered into by India with any country or territory outside India, whether for protection of investment or otherwise; and

(iv) such other conditions as may be prescribed:

Provided further that if any amount becomes refundable under the Income-tax Act, 1961 to the person referred to in first proviso as a consequence of him fulfilling said conditions, such amount shall be refunded to him, but no interest under Section 244A of the Income-tax Act, 1961 shall be paid on that amount.”.

Refer YouTube link

New Rule 12AA, 51B in Income Tax Law (CBDT Notification No. 93/2021- Income Tax dated 18th August, 2021)

CBDT Notification No. 93/2021- Income Tax dated 18th August, 2021

New Rule

Rule 12AA. Prescribed person for the purposes of clause (c) and clause (cd) of section 140

Rule 51B. Appearance by Authorised Representative in certain cases.

Refer YouTube video link:

Refer extract of notification:

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
New Delhi

Notification No. 93/2021- Income Tax | Dated: 18th August, 2021

G.S.R. 578(E).—In exercise of the powers conferred by clause (c) and clause (cd) of section 140 and clause (viii) of sub-section (2) of section 288 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend Income-tax Rules, 1962, namely:-

  1. Short title. – These rules may be called the Income-tax (24th Amendment) Rules, 2021.
  2. In the Income-tax Rules, 1962 (hereinafter referred to as principal rules), after rule 12A, the following rule shall be inserted, namely:–
    “12AA. Prescribed person for the purposes of clause (c) and clause (cd) of section 140.- For the purpose of clause (c) or clause (cd), as the case may be, of section 140, any other person shall be the person, appointed by the Adjudicating Authority for discharging the duties and functions of an interim resolution professional, a resolution professional, or a liquidator, as the case may be, under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) and the rules and regulations made thereunder.
    Explanation.–– For the purposes of this rule, “Adjudicating Authority” shall have the same meaning as assigned to it in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016).”.
  3. In the principal rules, after rule 51A, the following rule shall be inserted, namely:–
    “51B. Appearance by Authorised Representative in certain cases.- For the purposes of clause (viii) of sub-section (2) of section 288, any other person, in respect of a company or a limited liability partnership, as the case may be, shall be the person appointed by the Adjudicating Authority for discharging the duties and functions of an interim resolution professional, a resolution professional, or a liquidator, as the case may be, under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) and the rules and regulations made thereunder.

Explanation.–– For the purposes of this rule “Adjudicating Authority” shall have the same meaning as assigned to it in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016).”.
[Notification No. 93/2021/F.No. 370142/34/2021-TPL(Part III)]
SHEFALI SINGH, Under Secy., Tax Policy and Legislation