{"id":9654,"date":"2020-05-29T14:36:32","date_gmt":"2020-05-29T09:06:32","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=9654"},"modified":"2024-07-25T15:10:14","modified_gmt":"2024-07-25T09:40:14","slug":"itat-orders-absence-before-cit-disallowance-income-tax-2020","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/itat-orders-absence-before-cit-disallowance-income-tax-2020\/","title":{"rendered":"ITAT: On Excused Absence, Plea U\/s 12AA &#038; Reflex Disallowance: Income Tax &#8211; May, 2020"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Reliefs have not been declined merely on support of technicalities or payment that has been discharged in cash in the governing conditions, which may vary from case to case. In addition to light of the probable reasonability, the conditions attributable to such payment have been considered on resting the honest faith for taxpayers in the tax administration of the country. In this blog, you will get the entire up-to-date scenario depicting few technicalities involved under <a href=\"https:\/\/corpbiz.io\/learning\/capital-gains-of-charitable-institution-section-11-1a-of-it-act\/\"><strong>Charitable Institutions<\/strong><\/a> and its administrations upon Income Tax Departments Latest by May 25, 2020.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/itat-orders-absence-before-cit-disallowance-income-tax-2020\/#Absence_before_CIT_An_immune_for_Senior_Citizen_and_Computer_Ignorant_Assessee\" >Absence before CIT: An immune for Senior Citizen and Computer Ignorant Assessee<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/itat-orders-absence-before-cit-disallowance-income-tax-2020\/#Rejecting_Registration_to_Educational_Institution_with_no_Confirmations_on_doubtful_notions_A_Blunder\" >Rejecting Registration to Educational\nInstitution, with no Confirmations on doubtful notions: A Blunder<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/itat-orders-absence-before-cit-disallowance-income-tax-2020\/#Current_Status_of_Repudiation_or_disallowance_Us_40A_3\" >Current Status of Repudiation or disallowance\nU\/s 40A (3)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/itat-orders-absence-before-cit-disallowance-income-tax-2020\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Absence_before_CIT_An_immune_for_Senior_Citizen_and_Computer_Ignorant_Assessee\"><\/span>Absence before CIT: An immune for Senior Citizen and Computer Ignorant Assessee<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"599\" height=\"268\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-151.png\" alt=\"Absence before CIT: An immune for Senior Citizen and Computer Ignorant Assessee\" class=\"wp-image-9655\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-151.png 599w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-151-300x134.png 300w\" sizes=\"(max-width: 599px) 100vw, 599px\" \/><\/figure><\/div>\n\n\n<p><strong>Held<\/strong><\/p>\n\n\n\n<p>On the ground of notices\nfor appearances before CIT sent through e-mail, being a <strong>senior citizen<\/strong> and <strong>computer ignorant<\/strong>,\nthe assessee could not act consequently. Therefore, the Delhi bench of the\nIncome Tax Appellate Tribunal (ITAT) has recently invalidated an ex-parte order\ndelivered by the CIT (A).&nbsp;<\/p>\n\n\n\n<p><strong>Facts<\/strong><\/p>\n\n\n\n<p>Karta is the proprietor\nof \u2018<strong>M\/s. Chunnu Fashions\u2019<\/strong> and the\nassessee is a <strong>Hindu Undivided Family<\/strong>.\nMoreover, without disposing of the case on its merits, the assessee was\naggrieved by an ex-order passed by the first appellate authority for need of\nappearance before CIT. Afterward; the assessee has opposed the notice which was\nreceived over e-mail. He says that he cannot receive the same as he considers\nhimself as <strong>a senior citizen<\/strong> as well\nas <strong>a computer literate<\/strong>.<\/p>\n\n\n\n<p><strong>Interpretation<\/strong><\/p>\n\n\n\n<p>After due discussions, deliberations, arguments, and evidence, the Tribunal demonstrated the fact that CIT(A) has <strong>sent three announcements\/notices<\/strong> to the assessee through e-mail. However, the appeal of the assessee was dismissed for <strong>non-prosecution<\/strong>, which has not complied with and thereafter.<\/p>\n\n\n\n<p><strong>Apart from the genuine order of the Tribunal, they have also observed that<\/strong>;<\/p>\n\n\n\n<ul>\n<li>The assessment order has <strong>never been enclosed on the right persons<\/strong> in the total proceedings.<\/li>\n\n\n\n<li>It should have made in the name some other name, but has been delivered in the name of M\/s. Chunnu Fashions\u2019.<\/li>\n\n\n\n<li>Mr. BM Sarin, Karta of the HUF, is <strong>more than 70 years<\/strong> old and has fastened up his business.&nbsp;<\/li>\n\n\n\n<li>There is a genuine cause for not appearing before the CIT(A), as the notices were directed through emails but the assessee being a senior citizen <strong>could not express in the direction<\/strong> of those emails.&nbsp;<\/li>\n\n\n\n<li>Moreover, it is likewise distressing that the assessment orders have been conveyed on a \u2018<strong>non-existent party\u2019<\/strong> i.e. \u2018M\/s. Chunnu Fashions\u2019 does not even <strong>exist (<\/strong>Business was locked down due to heavy loss, 5 yrs. Ago). This fact also earns its desires to be looked into that the assessment orders and the appellate orders, that must have been in the name of BM Sarin HUF.\u201d<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Rejecting_Registration_to_Educational_Institution_with_no_Confirmations_on_doubtful_notions_A_Blunder\"><\/span>Rejecting Registration to Educational\nInstitution, with no Confirmations on doubtful notions: A Blunder<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" width=\"630\" height=\"365\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-152.png\" alt=\"Rejecting Registration to Educational Institution\" class=\"wp-image-9657\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-152.png 630w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-152-300x174.png 300w\" sizes=\"(max-width: 630px) 100vw, 630px\" \/><\/figure>\n\n\n\n<p><strong>Held<\/strong><\/p>\n\n\n\n<ul>\n<li>Delhi bench of\nthe <strong>Income Tax Appellate Tribunal <\/strong>(ITAT)\nhas overruled the judgment\/order of the <strong>Commissioner\nof Income Tax (Exemptions)<\/strong>. <\/li>\n\n\n\n<li>It says that Assessing\nOfficer cannot discard the plea for registration under section 12AA of the\nIncome Tax Act, 1961. Moreover, it was based on mere doubt that the <strong>cash from undisclosed sources<\/strong> is being\nintroduced in the society in the form of school fees. Rendering to the Tribunal\u2019s\nnote, such suspicion with <strong>no substantial\nconfirmation<\/strong> can\u2019t be a reason to deny registration. <\/li>\n<\/ul>\n\n\n\n<p><strong>Facts<\/strong><\/p>\n\n\n\n<ul>\n<li>Educational society\nis running a school, which was recognized under the <strong>Department of Education, Government of Haryana<\/strong>. On grounds of doubt\/suspicion\nthat cash from undisclosed sources is being introduced in the society in the kind\nof school fees, the <strong>CIT (E) rejected the\nregistration<\/strong> under section 12AA of the Act. <\/li>\n<\/ul>\n\n\n\n<p><strong>Contentions<\/strong><\/p>\n\n\n\n<ul>\n<li>The school was\nbeing operated from premises that comprised of <strong>one hall and eight rooms situated in a street\/Gali<\/strong>, observed by the\nLd. In addition, it has also been observed surprisingly that the receipts of\nincome was around <strong>Rs. 1 crore<\/strong> &#8211; produced\nfrom such small premises, which was incredibly <strong>unbelievable to accept. <\/strong><\/li>\n\n\n\n<li>Moreover, it has\nbeen additionally contended by the assessee before the Tribunal, regarding the <strong>genuineness of the activities<\/strong> of the\nschool. The Ld. CIT (E) has doubted that the activities of the assessee were\nnot genuine <strong>and running a business and school\nside by side<\/strong>.<\/li>\n<\/ul>\n\n\n\n<p><strong>Interpretation\n<\/strong><\/p>\n\n\n\n<ul>\n<li>Accommodating all the contentions of the assessee, the Tribunal held that it was <strong>not accurate<\/strong> on the part of the Ld. CIT for <strong>refusing the grant of registration<\/strong> \u2018<strong>immediately\u2019<\/strong>.<\/li>\n\n\n\n<li>In fact, Ld. CIT (Exemptions) was having doubts concerning the genuineness of the actions of the school, but he decides on to <strong>straightway refuse the grant of registration<\/strong>, instead of having the same <strong>proved<\/strong>.<\/li>\n\n\n\n<li>Conditionally, if the Ld. CIT was consuming any sorts of doubts, he should have got it <strong>equally proved<\/strong>. For that reason, this is how the <strong>generality of the fair trial<\/strong> has been hampered and needs a relook and re-examination by the Ld. CIT (Exemptions). <\/li>\n<\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/file-the-rectification-of-the-itr-filing-online\/\">How to rectify ITR Filing online?\n<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Current_Status_of_Repudiation_or_disallowance_Us_40A_3\"><\/span>Current Status of Repudiation or disallowance\nU\/s 40A (3) <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Overview:- <\/strong><\/p>\n\n\n\n<ul>\n<li>Section 40A of\nthe Income Tax Act, 1961 delivers provisions for <strong>disallowance\/repudiation of expenses<\/strong> or payments not deductible in definite\ncircumstances. It computes the whole of income under the head \u2018<strong>Profit &amp; Gains\u2019 of Profession or Business<\/strong>.\nIt was introduced by <strong>the Finance Act,\n1968<\/strong> with effect from April 1<sup>st<\/sup>, 1968. <\/li>\n\n\n\n<li>Other than \u2018cheque\ndrawn\u2019 on a \u2018bank\u2019 or account payee \u2018<strong>bank\ndraft<\/strong>\u2019 or \u2018<strong>electronic clearing\u2019<\/strong>\nsystem, it prohibits any payment &#8211; expenditure in terms of which payment or collections\nof payments ended to a person in a day, which is <strong>more than<\/strong> the limit of <strong>10k.<\/strong><\/li>\n<\/ul>\n\n\n\n<p><strong>Amendment:-\n<\/strong><\/p>\n\n\n\n<ul>\n<li>By means of the <strong>Finance Act, 2019<\/strong> with effect from 01st April 2020, Section 40A (3) has further been corrected. It is to deliver another <strong>protection guard<\/strong> i.e. such other \u2018<strong>electronic mode\u2019<\/strong> which may be agreed upon to avoid such repudiation in respect of any expenditure experienced by the assessee. <\/li>\n<\/ul>\n\n\n\n<p><strong>Case Law<\/strong><\/p>\n\n\n\n<p><em>M.K.Agrotech\nPrivate Limited vs. Additional Commissioner of Income Tax (2019) (Kar) 294\/\n(2019) 176 DTR 412 ITR 351<\/em><\/p>\n\n\n\n<p><strong>Recently, in this case, it was challenged with the relevant question:-<\/strong><\/p>\n\n\n\n<div class=\"shadow1\">Issue: &#8211; \u201cIf payments have not been made by account payee bank drafts which were not crossed its limits, does disallowance under section 40A (3) view involve towards the same\u201d?<\/div>\n\n\n\n<p><strong>Bullet\nPoints:- Core beliefs evolved by the said order<\/strong><\/p>\n\n\n\n<ul>\n<li>Under Section 40A\n(3), disallowance is <strong>not instinctive<\/strong>\njust because expenses and payments have not been completed in the manner established\nby the terms of provisions. <\/li>\n\n\n\n<li>In compliance\nwith \u2018<strong>Attar Singh Gurmukh Singh vs.\nIncome Tax Officer<\/strong>\u2019, the assessee will be in light of this declaration of\nthe Hon\u2019ble Supreme Court. <\/li>\n\n\n\n<li>If the payments\nare not genuine\/unaffected and bonafide, the payments will be prompted in the\ncourse of the business. They will be steeped out of the provisions rooted in <strong>section 40A (3<\/strong>), if it is in aggregation\nwith the provisions of \u2018<strong>Rule 6DD\u2019<\/strong>. <\/li>\n\n\n\n<li>Prospective\ndisallowances will be identified under section 40A(3) by the assessing\nofficers, if the assessee is allowed to lead evidence in such cases. For that\nreason, the issues can be tested on the footing of exceptional circumstances given\nunder rule 6DD. <\/li>\n\n\n\n<li>Cash Payments or\nexpenses will attribute towards mitigating circumstances for avoiding any\ndisallowance under section 40A(3), besides such as registered dealer invoices,\nfreight charges, weighted slips of the supplier, stock register maintained by\nthe assessee, bank confirmations, sales tax returns of the parties, etc.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>These evaluations will always inspire our readers to examine the issue in-depth based on the stated case laws and Illustrations given above. Moreover, it has valuable contributions to the tax laws which are continuously changing and extending its scope. With this, we at <a href=\"https:\/\/corpbiz.io\/\"><strong>Corpbiz<\/strong><\/a> have experienced legal specialists to help you manage all your income tax issues and Business investments. Our professional will ensure to mitigate all your interests on finances successfully as well as timely completion of your work.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/\">An overview on Tax Residency Certificate &amp; Double Taxation Avoidance Agreement: How To Get It?<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Reliefs have not been declined merely on support of technicalities or payment that has been discharged in cash in the governing conditions, which may vary from case to case. In addition to light of the probable reasonability, the conditions attributable to such payment have been considered on resting the honest faith for taxpayers in the [&hellip;]<\/p>\n","protected":false},"author":20,"featured_media":9661,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[10],"tags":[11],"acf":{"service_id":"78"},"authorName":"Archita Bhattacharjee","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/WhatsApp-Image-2020-03-18-at-11.26.19-AM-1.jpeg","authorDescription":"Archita Bhattacharjee is working as Legal Analyst (Team Lead, Research &amp; Development) at Corpbiz and has proving experience about 2 years as Corporate Legal Researcher in law firms as well as Rajya Sabha and authors in diverse publications. She has refined her skills by representing India in Paris, France and the University of Leiden over implications of International Humanitarian and Criminal Law being certified member of many Legal Centers.","postViews":4533,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/9654"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=9654"}],"version-history":[{"count":16,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/9654\/revisions"}],"predecessor-version":[{"id":65647,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/9654\/revisions\/65647"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/9661"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=9654"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=9654"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=9654"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}