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Circulated By EmailVolume - VIII | September 2020

Vadodara Branch of Western India Regional Council ofThe Institute of Chartered Accountants of India

The Institute of Chartered Accountants of India(Setup by an Act of Parliament)

Editorial Team

CA. Krunal Brahmbhatt 78748 11551Chairman

CA. Vinod Pahilwani 98980 78176Vice-Chairman

CA. Manoj Sahu 90990 94500Secretary

CA. Rikin Patel 88667 09509Treasurer

CA. Vishal Doshi 98240 59901Ex-officio

CA. Hitesh Agrawal 99980 28737IP - Chairman

CA. Rahul Agrawal 97233 10418Committee Member

CA. Dhruvik Parikh 99795 39966Committee Member

CA. Krunal Brahmbhatt CA. Dhruvik Parikh

CA. Nayan Kothari CA. Rahul Parikh

CA. Hitesh Thakkar CA. Rachit Sheth

CA. Chinmay Naik CA. Janki Gohil

CA. Sakshi Somani CA. Neel Shah

CA. Sahil Rao

Managing Committee

Contents

Dear All

Obstacles don’t have to stop you. If you run into a wall, don’t turn around andgive up. Figure out how to climb it, go through it, or work around it that’s theway of life.

This is the month of September and all our professional brothers getinvolved in completion of auditing though not at a pace where we used tobecause of extension of due dates .

What I believe this year 2020 is abnormal for all business and profession butthis is new normal where we learn many ways to deal with unique situation.

We have scheduled workshop of Excel training by CA Amit Jain as 4 dayseries, requesting all members to take benefit of this session and along withthat we have plan session on professional opportunity for members onGujarat industrial policy and NSE on 12th September.

ICAI Updates:

1] Research Committee: It has launched the following initiatives for themembers and students at large to avail the benefits of such schemes:

1. I C A I D o c t o r a l S c h o l a r s h i p S c h e m e – F o r d e t a i l shttps://www.icai.org/new_post.html?post_id=16491

2. I C A I R e s e a r c h P r o j e c t S c h e m e - F o r d e t a i l shttps://resource.cdn.icai.org/59494research48411project.pdf

3. I C A I I n t e r n a t i o n a l R e s e a r c h A w a r d - F o r d e t a i l shttps://resource.cdn.icai.org/59392research48349awards.pdf

4. ICAI Awards for Excellence in Financial Reporting – For detailshttps://www.icai.org/new_post.html?post_id=16508

2] EMPANELMENT OF MEMBERS TO ACT AS OBSERVERS AT THEEXAMINATION CENTRES FOR THE CHARTERED ACCOUNTANTSEXAMINATIONS: A member who fulfills the above mentioned eligibilitycriteria, desirous of empanelling himself for the assignment, may do so,online at on or before 20.09.2020.http://observers.icaiexam.icai.org

3] The IASB publication of IFRS comprising IFRS Part B (IllustrativeExamples and Implementation Guidance) and IFRS Part C (Bases forConclusions) that accompany the IFRS Standards is also placed on theICAI website for guidance in application of the Ind AS. The above e-version of updated Ind AS and related guidance material are availableat: https://www.icai.org/new_post.html?post_id=15361

4] ICAI Cares - Medical Financial Assistance to the Members and theirdependents suffering from CORONA. The Detailed Notification can beaccessed on https://www.icai.org/post/covid19cabf.

Regards,

CA. Krunal Brahmbhatt

Chairman

Chairman Communication Forthcoming Events 2Pg 0

Judicial Decisions on Indirect Taxes Pg 02

Financial Instruments Part-5 Pg 03

SC Leaping to Facts than Law Pg 07

Direct Tax Updates Pg 08

Due Date Calendar Pg 10

Photo Gallery Pg 11

Vadodara Branch of WIRC of ICAI

Volume - VIII September 2020

02

Branch Events

Timing : 04:00 pm to 06:00 pm

Fees : Rs. 500/- + 18% GST

Webinar on Excel Training

Topic Faculty

Basic Excel Features : Basic Idea about excel, CA. Amit JainBasic common formula and functions used inexcel i.e. filter, countif, sumif, Dropdown list,min, max, LEN, rank, sorting and many more.

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Day & Date : Friday, 28.08.2020

shall fall within the meaning of the term apparatus,

equipment and machinery and therefore, shall be

eligible for claim of ITC. Further. It was ruled that

ITC was eligible of GST on Steel & Civil Structure on

which the water slides are installed.

[Atriwal Amusement Park – AAR – Madhya

Pradesh]

1.2 The Appellate AAR ruled that when it has been

established that money, transported by the

Appellant in the cash -carry vans, can be

considered as goods, ITC in respect of the cash

carry vans used for the transportation of cash will

be available to the Appellant in accordance with

provisions of section 17 (5) (a)(ii) of the CGST Act,

2017.

[CMS Info Systems Ltd – Appellate AAR –

Maharashtra]

II. INTERMEDIARY

The Petitioner is an association comprising of

recycling industry engaged in manufacture of

metals and casting etc. The members of the

petitioner also facilitate sale of recycled scrap

goods for their foreign principals in India and other

countries.

Thus, the members of the petitioner association

not only deal with goods sold by foreign principals

to customers in India but also facilitate sale of

goods by foreign principals in non-taxable territory

to their customers, who are also located in non-

taxable territories. According to the petitioner,

member of the petitioner association receives only

the commission upon receipt of sale proceeds by

its foreign client in convertible foreign exchange.

Thus, according to the petitioner, the transaction

entered into by the members of the petitioner

association is one of export of service from India

and earning valuable convertible foreign exchange

for the same. According to the petitioner, IGST

cannot be levied on the members of the petitioner

association, who are engaged in the transaction of

export of service as stated above as the petitioner

members’ export of services is covered by the

Section 16(1) of the IGST Act, 2017 which provides

for “zero rated supply”.

The Petitioner had approached the Honourable

High Court to determine the issue as to whether the

provisions of Section 13(8)(b) rws 2(13) and 8(1) of

HrsCPE 8

(Subject to Confirmation)

Day & Date : Saturday, 29.08.2020

Day & Date : Friday, 04.09.2020

Day & Date : Saturday, 05.09.2020


Announces Webinar on

Top 6 Opportunitiesof

NSE Platforms - for CA’s

Date

12 September, 2020th

Time

04.00 pm to 05.30 pm

Time

05.30 pm to 07.00 pm

Gujarat New IndustrialPolicy - 2020 & Professional

Opportunity for CA’s

CA. Ashish Goyal, VP NSE CA. G. B. Modi

CPE : 3 Hrs. Fees : Rs. 300 + GST

Contributed by : CA Anirudh Sonpal.can be reached at [email protected]

Judicial Decisionson Indirect Taxes

I. INPUTTAX CREDIT

1.1 With reference to water slides installed in an

amusement park, the AAR rules that Water Slides



03

t h e I G S T A c t , 2 0 1 7 a re u l t ra v i re s a n d

unconstitutional or not?

The Honourable High Court observed that ‘the

basic logic or inception of Section 13(8)(b) of the

IGST Act considering the place of supply in case of

intermediary to be the location of supply of service

is in order to levy CGST and SGST and such

intermediary service therefore, would be out of the

purview of IGST. There is no distinction between the

intermediary services provided by a person in India

or outside India. Only because, the invoices are

raised on the person outside India with regard to the

commission and foreign exchange is received in

India, it would not qualify to be export of services,

more particularly when the legislature has thought

it fit to consider the place of supply of services as

place of person who provides such service in India.

There is no deeming provision as tried to be

canvassed by the petitioner, but there is stipulation

by the Act legislated by the parliament to consider

the location of the service provider of intermediary

to be place of supply. Similar situation was also

existing in service tax regime w.e.f. 1st October

2014 and as such same situation is continued in

GST regime also. Therefore, this being a consistent

stand of the respondents to tax the service provided

by intermediary in India, the same cannot be treated

as “export of services” under the IGST Act and

therefore, rightly included in Section 13(8)(b) of the

IGST Act to consider the location of supplier of

service as place of supply so as to attract CGST and

SGST.’

The Honourable High Court held that it cannot be

said that the provision of Section 13(8)(b) rws 2(13)

o f t h e I G S T A c t , 2 0 1 7 a re u l t ra v i re s o r

unconstitutional in any manner.

[Material Recycling Association of India vs UoI –

Gujarat HC]

III. REFUND – INVERTED DUTY STRUCTURE

The Honourable High Court allowed the claim of the

refund made by the petitioners considering the

unutilised input tax credit of “input services” as part

of the “net input tax credit”(Net ITC) for the purpose

of calculation of the refund of the claim as per Rule

89(5) of the CGST Rules,2017 for claiming refund

under Sub-section 3 of Section 54 CGST Act,2017.

The Honourable High Court opined that Explanation

(a) to Rule 89(5) which denies the refund of

Impairment of Financial Assets – Expected Credit Loss

(ECL) model

Introduction

The Impairment requirements of Ind AS 109 are based

on ECL model. This will result in earlier recognition of

impairment loss as compared to the incurred loss model

prescribed under Accounting Standards (“AS”).

Applicability

ECL model under Ind AS 109 applies to following

financial instruments:

• Financial assets that are debt instruments which

are measured at Amortised cost (e.g. loans, debt

securities, deposits and bank balance) or at

FVTOCI meeting both, business model test and

contractual cashflow test;

• Loan Commitments which are not measured at

FVTPL;

• Financial guarantee contracts issued which are not

measured at FVTPL;

• Lease receivables under Ind As 116; and

• Trade Receivables or any contractual right to

receive cash or other financial asset under Ind AS

115.

The impairment model does not apply to

• The equity insturments - measured at FVTPL or

Contributed by : CA Bijal Mehta.can be reached at

[email protected]

Financial InstrumentsPart-5

“unutilised input tax” paid on “input services” as part

of “input tax credit” accumulated on account of

inverted duty structure is ultra vires the provision of

Section 54(3) of the CGST Act, 2017 and read down

the Explanation (a) to the Rule 89(5) to the extent

that Explanation (a) which defines “Net Input Tax

Credit’ means “input tax credit” only and held the

said explanation to be contrary to the provisions of

Section 54(3) of the CGST Act; in fact the Net ITC

should mean “input tax credit” availed on “inputs”

and “input services” as defined under the Act.

[VKC Footsteps India Pvt Ltd vs UoI – Gujarat HC]



04

FVTOCI; and

• Any financial instrument which is measured at

FVTPL.

Credit Loss Allowance

• For financial assets, a credit loss is the present

value of the difference (i.e. cash short falls)

between :

i. the contractual cash flows that are due to an

entity under the contract; and

ii. the cash flows that the entity expects to

receive, discounted at original effective interest

rate (or credit adjusted effective interest rate, as

applicable).

• An entity shall estimate cash flows by considering

all contractual terms of the financial instrument

through the expected life of the financial

instrument.

Measurement of ECL

• An entity shall measure ECL of a financial

instrument in a way that reflects :

(a) an unbiased and probability-weighted amount

that is determined by evaluating a range of

possible outcomes;

(b) the time value of money; and

(c) reasonable and suportable information that is

available without undue cost or effort at the

reporting date about past events, current

conditions and forecasts of future economic

conditions.

When measuring ECL, an entity need not

necessarily identify every possible scenario.

However, it shall consider the risk or probability that

a credit loss occurs by reflecting the possibility that

a credit loss occurs (even if the possibility of a

credit loss occurring is very low) and the possibility

that no credit loss occurs.

Decision Tree to determine Measurement Approach :

Measurement Approaches

Ind AS 109 prescribes two approaches to measure ECL.

We will briefly discuss them in this article:

a) The General Approach

The general approach requires an entity to recognise, at

each reporting date, an impairment loss allowance

using either 12- month ECL or lifetime ECL.

12-month ECL typically results in lower impairment

since it focuses only on probability of default (PoD)

within next 12 months period as against PoD over the life

of an instrument. The determination of ECL depends on

whether there has been a significant increase in credit

risk on the instrument since its initial recognition. A 12-

month ECL is the portion of Lifetime ECL.

The standard outlines a “three-stage model” (“general

model”) for impairment which is based on changes in

credit quality since initial recognition :

Changes in credit quality since initial recognition

b) Simplified Approach

The simplified approach does not require an entity to

track changes in credit risk. Each entity recognises

impairment loss allowance based on lifetime ECL at

each reporting date, right from its initial recognition.

This approach is to be applied only to:

a. trade receivables without a significant

financing component;

b. any contractual right to receive cash or another

financial asset that result from transactions

that are within the scope of Ind AS 115; and

c. lease receivables under Ind AS 116.

c) Purchased or originated credit impaired (POCI)

financial assets approach



05

This approach is relevant only for purchased or

originated financial assets that are ”credit impaired” at

initial recognition generally measured at fair value

/purchase price and hence no allowance is recognised

at initial recognition.

Under POCI, impairment is always measured on basis of

lifetime expected loss and the changes in lifetime ECL is

recognised as loss allowance (Incremental/Reversal) in

statement of profit and loss.

Illustrations on ECL

a. 12-months ECL – probability of default approach

Entity A originates a single 10 year loan for INR 10

million. The loan’s coupon and EIR is 10%. Entity A

uses reasonable and supportable information that is

available without undue cost or effort taking into

consideration the expections for instruments with

similar credit risk, credit risk of the borrower, and the

economic outlook for the next 12 months.

Entity A estimates that the loan at initial recognition

has a probability of default (PoD) of 0.5% over next 12

months. It determines that changes in the 12-month

PoD are a reasonable approximation of the changes

in the lifetime PoD for determining whether there has

been significant increase in credir risk since initial

recognition. Entity determines that 25% of gross

carrying amount is likely to be lost if the loan defaults

(i.e Loss given default (LGD)) of the balance

outstanding .

Solution : At Reporting date, there is no change in 12-

month PoD and entity assesses that there is no

significant increase in credit risk since initial

recognition – therefore lifetime ECL is not required to

be recognised.

Particulars Details

Loan Amount Rs. 100,00,000 (A)

LGD 25% (B)

PoD – 12 months 0.5% ( C)

Loss Allowance Rs. 12,500

(For 12-months ECL) (A*B*C)

b. Lifetime ECL – provision matrix for trade

receivables

Entity B, a manufacturer has a portfolio of trade

receivables of INR 90 Million in 2019 and operates in

one geographical region only. The customer base of

the entity consists of large number of small clients

and trade receivables are categorised by common

risk characteristics that are reflection of customer’s

ability to pay all amounts due as per the contractual

terms. The trade receivables do not have a significant

financing component as prescribed under Ind AS 115.

In accordance with Para 5.5.15 of Ind AS 109, the loss

allowance for such trade receivables is always

measured at an amount equal to lifetime expected

credit losses.

The information for outstanding trade receivables

and default rates for making provision are as under :

Days past due Gross Carrying Amount Default Rate(A) (B) (C )

Current/not due 45,000,000 0.3%

1-30 days 22,500,000 1.6%

31-60 days 12,000,000 3.6%

61-90 days 7,500,000 6.6%

More than 90 days 3,000,000 10.6%

TOTAL 90,000,000

Solution :

At every reporting date the historical observed default

rates over the expected life of the trade receivables

are updated and is adjusted for forward-looking

estimates for provision matrix. In this case the

economic condition seems to deteriorate over the

next year.

Days past due Gross Carrying Lifetime ECL

Amount allowance (B X C)

Current/not due 45,000,000 135,000

1-30 days 22,500,000 360,000

31-60 days 12,000,000 432,000

61-90 days 7,500,000 495,000

More than 90 days 3,000,000 318,000

TOTAL 90,000,000 1,740,000

Assessment of significant increase in credit risk

In determining whether the credit risk on an instrument

has increased significantly, management should

compare the risk of default prevailing as at reporting

date with default existing as at initial recognition,

considering reasonable and supportable best

information available without undue cost or effort. This

information should include actual and expected

changes in external market indicators, internal factors

and borrower-specific information.

The standard requires both forward-looking and

historical information to be used in order to determine



06

whether a significant increase in credit risk has

occurred.

Presentation

Statement of Profit and loss

ECL impairment loss allowance (including reversals of

impairment losses or impairment gains) recognised

during the period is disclosed as income/expense in

statement of profit and loss as a separate line item.

Balance Sheet

• Financial assets measured at amortised cost,

trade receivables, contractual revenue receivables

and lease receivables: The ECL is presented as an

allowance and reduces the Gross carrying amount

of assets in the Balance sheet. This is not the case

If the asset meets write-off criteria.

• Loan commitments and financial guarantee

contracts: An entity should recognise ECL in the

statement of financial position as a provision (i.e.

as liability) .

• ForDebt Instruments measured at FVTOCI:

financial assets that are mandatorily measured at

FVTOCI, the accumulated impairment amount is

not separately presented in the statement of

financial position. However, an entity should

disclose the loss allowance in the notes to the

financial statements.

Disclsoures

Detailed disclsoures are required to identify and explain

the amounts in the financial statements that arise from

ECL and effect of improvement and deterioration in

credit risk including the impact of COVID-19 on various

credit related aspects such as methods, assumptions

and information used in estimating ECL, policies and

procedures for valuing collaterals etc.

Key quantitative and qualitative disclosure requirements

includes :

Quantitative:

i. Reconciliation of opening to closing amounts of

loss allowance , gross carrying amounts showing

key drivers of change.

ii. Write offs, recoveries and modifications.

Qualitative:

i. Inputs, assumptions and estimation techniques to

determine significant increase in credit risk ,

impaired assets, etc.

ii. Inputs, assumptions and estimation techniques for

estimating ECL.

iii. Write-off policies, modification policies and details

of collaterals, etc.

Impact of Coronavirus on ECL

The widespread contraction in economic activity across

the globe due to the rapid spread of COVID-19 is likely to

have an impact on financial reporting and auditors

consideration. ICAI has developed and issued advisory

in this aspect including impact on the quantificaton of

ECL and classificaton of financial assets into 3 buckets

for recogniton and measurement of impairment losses

which have been summarised below:

The important/critical factors to be considered by the

preparers of the financial statements:

• Recognition of 12 months ECL versus Lifetme ECL

is based on segregation of credit exposures for

financial assets into 3 buckets where,

Stage 1- no significant increase in credit risk,

Stage 2 - significant increase in credit risk and

Stage 3- Credit impaired.

(The above segregation is not required for the

financial assets for which simplified approach is

permitted and the same is applied).

• Measurement of ECL- Adverse impact on the

business of borrowers or debtors may impact the

following credit risk parameters:

i. Risk of default (probability of default) i.e.

significant increase of default by borrower due

to reduced economic activity;

ii. Estimated amount of the loss itself in the event

of default (loss given default). Contraction in

economic act iv i ty and its impact on

consumers affect collaterals and business

cash flows adversely affecting the expected

amount of loss;

iii. borrowers may tend to fully utilise undrawn

limits and loan commitments, which in turn

would impact another credit risk parameter i.e.

exposure at default.

• the measurement of ECL is determined based on

current as well as forecasted macro-economic

conditions and more than one scenario need to be



07

Contributed by : CA. Prashant Upadhyayacan be reached at

[email protected]

SC Leaping toFacts than Law

Section 56 of the Income Tax Act, 1961 is a section

covering residuary head of income wherein any income

not covered by any other Heads of Income are Taxed as

Income from Other Sources. Such income from other

sources is taxed at normal rate of tax applicable to the

Tax Payer who has earned such income. However, in

practice, if the Tax Payer has not offered a particular

income in his return or if a Tax Payer does not offer

proper explanation of a particular receipt, then such

receipt or credit are taxed under Section 68 of the

Income Tax Act by the Department. This practice is age

old primitive practice and has gathered more

incentivisation after increase in effective tax rate under

Section 115BBE of the Income Tax Act. Even in certain

cases where returns are filed showing Income from

Other Source without any heading, then CPC is treating

such income under Section 115BBE of the Act. Hence, in

the current scenario, the importance of Section 68 and

other sections covered by Section 115BBE has

increased by leaps and bounds.

There are quite substantial number of cases which are

subject to litigation on account of issues covered by

Section 68 of the Act. Commonly, in any order of Section

68, there is always one age old judgement of Sumati

Dayal v. CIT (1995) 80 Taxman 89 (SC) which is quoted

without exception by the Income Tax Department in

Bold, Underline and Italics. Although the department has

habit of silver lining Sumati Dayal decision under section

68, the real fact is that the decision is heavily reliant on

human probabilities and series of events having

significance of dates of events rather than acid testing

technicalities of Section 68.

In the said case, the Tax Payer had claimed that she had

won huge price money in Horse Race. The department

contended that she had not participated in horse race

but had shown her undisclosed income as winning from

horse race. In the case, the Settlement Commission by

its majority order upheld assessment order holding that

it was reasonable to infer, on facts, that assessee did not

participate in races but purchased winning tickets after

events with unaccounted money. The Apex court held

that matter in question had to be considered in light of

human probabilities and held that having record to

conduct of assessee as disclosed by her in sworn

affidavit as well as other material on record, an inference

could reasonably be drawn that winning tickets were

purchased by her after the race event. Hence, the crux

and main area on focus of Sumati Dayal was never

Identity, Genuineness and Credit Worthiness under

Section 68 but whether she had actually participated in

the Race. Another aspect considered by the Apex court

was the purchase of ticket from undisclosed income. If

the source of purchase of ticket was from undisclosed

sources, then the addition can be made under section 69

or 69A or 69B or 69C of the Act. Considering the same, as

far as question of Section 68 is concerned, the weight

cannot be assigned to this judgement at all. Despite of

these adjustments (Human Probability & Source of

purchase of Ticket) in direct applicability of Sumati

Dayal’s decision, the department has always quite

confidently quoted this decision under all litigations

relating to Section 68 of the Act.

Recently, the Department has been awarded another

weapon to contest the litigation under Section 68, which

is the recent judgement of last year from the Honourable

Supreme Court of PCIT v. NRA Iron & Steel (P) Ltd (2019)

412 ITR 161 (SC). The Judgement is relating to share

application money and share premium received from the

shareholders by the company. It is one the rarest land

mark Judgement of Supreme Court, which was in fact,

an ex parte order wherein there was no lawyer or

argument from the Tax Payer in spite of the fact that two

notices were sent to the tax payer by the honourable

Apex Court, due to which, the Judgement was eventually

developed considering the potential impact of

COVID-19.

• when there is evidence that a financial asset is

credit-impaired include observable data. For

example,the lender, for economic or contractual

reasons relating to the borrower’s financial

difficulty granted to the borrower a concession(s)

that the lender(s) would not otherwise consider.

• impact of any Prudential Regulatory actions to

sustain the economy such as loan repayment

holidays, reduction in interest rates etc.

• If the entity is unable to assess the impact of

COVID-19 in estimating the impairment loss due to

the inadequacy of information, the said fact should

be disclosed appropriately.



08

delivered on 05th March 2019. After receipt of the order,

the Tax Payer had filed petition to recall the Judgement

on the ground that the Authorized Representative of Tax

Payer was suffering from Cataract due to which he

overlooked Dasti Notice as ‘Some Income Tax Return

Documents’. The honourable Supreme Court rejected

the recall petition vide order dated 25.10.2019 stating

that Tax Payer was provided sufficient opportunities.

The Tax Payer again filed Review petition which was

disposed off by the honourable Supreme Court vide

order dated 04.02.2020 wherein the honourable

Supreme Court rejected the review petition since it could

not find any substance in the content of Review Petition.

Like Sumati Dayal, the decision of NRA Iron has became

the most commonly used decision to quote by the

Income Tax Department. In almost all the cases

contested under Section 68 before any Tribunal or Court,

the decision of NRA is always quoted by the department.

Obiter Dicta: A decade ago, like Sumati Dayal and NRA

Iron, the department had also occasion to heavily

undertake the bombarding on the Tax Payers after the

land mark Apex Court decision of Union of India v.

Dharmendra Textile Processors [2008] 174 Taxman 571

regarding Section 271(1)(c ). To touch the apparent facts

of the case, the case was relating to penalty under

Section 11AC of the Central Excise Act, 1944 and never

of the penalty under Income Tax Act. However, in the said

decision, the honorable Apex Court had ruled that

penalty under section 11AC of CEA is similar to 271(1)(c )

of IT Act. Taking the basis of ruling, the department

started attacking Tax Payers from all sides although the

ruling was never of Section 271(1)(c ) of the Act.

Similarly, same thing has happened positively for cases

under section 68 of the Act in the recent judgment of the

honourable Apex Court in case of Basir Ahmed Sisodia v.

ITO (2020) 271 Taxman 247 (SC).

Leaping to Facts than Law: The question involved before

the honourable SC was relating to the law laid down

under Section 68 of the Act. Despite being given several

opportunities, the assessee had failed to prove the

authenticity of the entries in question and consequently

the AO added the amounts as 'unexplained cash credits'

u/s 68. Although the question before the honourable SC

was relating to Section 68 of the Act, the honourable

court leaped to the appeal against the penalty

proceedings before lower authorities. In appeal against

the penalty, the CIT(A) had held that the Tax Payer had

not made any concealment of income or furnished

inaccurate particulars of income. The apex court

observes that during the penalty proceedings the Tax

Payer had furnished affidavits & statements of

unregistered dealers which was duly verified and

accepted by the AO without any adverse findings. Court

holds that “the factual basis on which the Officer formed

his opinion in the assessment order ..in regard to

addition of Rs.2,26,000/….stands dispelled by the

affidavits and statements of the concerned unregistered

dealers in penalty proceedings.”, SC opines that in such

situation, “..the addition of amount of Rs.2,26,000/-

cannot be justified, much less, maintained.”

The above landmark Judgement has following

beneficial implications:

a) The honourable court can not only be pleaded for

substantial question of law, even substantial

question of fact can also be pleaded in appropriate

cases.

b) If the question before the higher authority is

differently dealt by the lower authorities or vice versa,

this decision can be easily quoted or contended.

c) Question of additional evidences where the appellate

authorities have regret to accept can be contested by

quoting above decision.

d) SC has demonstrated landmark principle that truth

can be searched and dig out from any matter

covered with lower authorities.

e) This Judgement is good fight against NRA Iron on

account of fact that in both proceedings, the original

addition was made without supporting and

satisfaction of Section 68 of the Act.

Contributed by : CA. Narendra Hindochacan be reached at [email protected]

Direct Tax Updates

Income-tax

1. Faceless Assessment

The issue that hogs the limelight right now isFaceless Assessment.

In a rare event, the Prime Minister himselfannounced the broad contours of this reformpertaining to Income-tax on 13th August 2020.

In the manner characteristic of the Government, as



09

experienced in the event of Demonetisation andLockdown, the announcement has immediateeffect. However, unlike the earlier announcements,by all indications, this announcement is unlikely tocreate hardships and I expect it to bring goodtimes for most assessees, consultants and theOfficers.

In short, the Assessee will not need to attend theIncome-tax Office in person. In fact he may noteven know who is making assessment. Alsoassessment will not be dependent on one person.The selection of cases will not be by an individualofficer but by what may be considered artificialintelligence. The case be selected at one location,the technical inputs may come from anotherlocation, verification may be done from a differentlocation, assessment may be framed at stilldifferent location and the draft assessment ordermay be reviewed at yet another location. Hard tothink of corruption entering this maze.

I recollect the inconvenience of being present inperson at the time and on the date chosen by someOfficer. Sometimes a number of them chose thesame date and time. In the new dispensation, I canpossibly attend an assessment while holidaying inGoa. Or think of large number of senior officialsliving away from family for long periods due toposting at another location. Days may not be farwhen the same official can live with his family whileattending to official duties.

The announcement was followed by variousnotifications detailing the procedures, creation ofhierarchy of CCITs, PCITs, DCITs, ACITs, AOs, etcand defining their jurisdiction within NationalEassessment Centre and Regional Centres.

In an online programme organised by WIRC on 1stSeptember, 2020, 3 Senior Officials responded tos eve ra l q u e r i e s re l a t i n g to i s s u e s n o tcontemplated in or dealt with in thesenotifications.

In short, it would appear that within, say, Income-tax department in Vadodara, the Officers would bedivided into two categories, one dealing withfaceless assessments and the other dealing withother matters. The former may constitute majorityof about 2/3rd.

Local Officers will continue to hold jurisdiction asregards several issues, including issue of noticesunder section 148 and dealing with objections,stay of demand, recovery, rectifications, penalty,appeal effects, filing second appeals prosecutionetc. Cases relating to search and seizure andInternational taxation may not be covered by

faceless assessments, but assessments undersection 147 will be covered.

There will be issues as to how reference will bemade to valuers, how summons will be issued andwho will do cross examination, how the notices willbe issued under section 133(6) and many otherissues, although such issues may not be arising inall cases.

Assessing Officers will no longer have powers ofSurvey which powers will be now exercised byInvestigation Wing.

Let us wait and watch how this plays out and let uscontribute our share to make it successful.

2. Returns of income for Assessment Year 2019-20

By Notification dated 29th July, 2020, furtherextension upto 30th September, 2020 is grantedfor filing Return or Revised Return for theAssessment Years 2019-20

3. First appeal proceedings

As per announcements, first appeals will becomefaceless from 25th September, 2020. moreWhiledetails may become known by then, instructionsby CBDT Chief by communication dated 9th July,2020 indicates that the appeals are required to bedisposed of through e-appeal proceedings bysending the communication through the e-filingportal and or through emails only. The responsesshould also be through the same method as thiswill also ensure social distancing which is ofparamount importance at these times. Even thesubmissions are to be only electronic and thesame are not to be received in paper form.

What is noteworthy is that while very convenientplatforms are available for video conference, thepresent instructions do not contemplate even thatkind of interaction.

4. Notices for E assessment proceedings

While Covid 19 has created stress for almost all, theRevenue had put a hold on issue of notices forassessment as the notices would further add tothe stress. And now that lot of assessees wouldhave composed themselves, instructions areissued to start the Assessment process whichwas on hold so far. While the notices forassessment are always a bitter pill, now they will besugar coated. The notices will state that it is issuedto help you. If you are wondering how a scrutinynotice will help you, it clarifies that it will help you inputt ing end to uncer tainty of a pendingassessment. So time to dust off your digital orphysical records and be ready.



Due Date CalendarContributed by : CA. Himesh D. Gajjarcan be reached at [email protected]

(1) Vide Notifications issued by the Central Government as on 24th June,2020 & 27th June, 2020 there has been relaxation given inthe Interest Payment and waiver of the Late Fees but it has conditions attached to it. So, here due date for GSTR 3B and GSTR 1given below represents the date till which relaxation in Late Fees and Interest has been granted. (2) Due Date tabulated below is asnotified till 26th August, 2020

DueDates

07-Sep-20

11-Sep-20

12-Sep-20

14-Sep-20

14-Sep-20

15-Sep-20

15-Sep-20

15-Sep-20

20-Sep-20

23-Sep-20

27-Sep-20

30-Sep-20

30-Sep-20

30-Sep-20

30-Sep-20

30-Sep-20

ReportingPeriod

Aug-20

Aug-20

May-20

Jul-20

Jul-20

AY 2021-22

Aug-20

Aug-20

Aug-20

Jun-20

Jul-20

FY 2018-19

FY 2018-19

FY 2018-19

Aug-20

Aug-20

Compliance Details

Deposit of Tax Deducted/TaxColected (TDS/TCS) Under ITAct, 1961

GSTR 1

GSTR 3B

TDS Certificate under section194-IA and 194-IB - Form 16Band Form 16C

TDS Certificate for taxdeducted under section 194M

Second instalment of advancetax

Deposit of Provident Fund

Deposit of ESIC

GSTR 3B

GSTR 3B

GSTR 3B

GSTR 9

GSTR 9A

GSTR 9C

Due date for furnishing ofchallan-cum-statement inrespect of tax deducted undersection 194-IA & IB

Due date for furnishing ofchallan-cum-statement inrespect of tax deducted undersection 194-M

Applicability

All Non Governemnt Deductors/Collectors

GST Registered Taxpayers with Annual Turnover morethan 1.5 crores.

Any Person Registered Under GST having turnoverLess than 5 Cr in Previous Year

As Applicable

As Applicable

As Applicable

Any Person registered with PF Authorities

Any Person registered with ESIC Authorities

Any Person Registered Under GST having turnovermore than 5 Cr in Previous Year

Any Person Registered Under GST having turnoverLess than 5 Cr in Previous Year (For Taxpayerregistered in Gujarat)

Any Person Registered Under GST having turnoverLess than 5 Cr in Previous Year (For Taxpayerregistered in Gujarat)

GST Registered Person having Turover exceeding 2 Crbut less than 5 Cr.

Composite Dealers registered under GST

GST Registered Person having Turover exceeding 5 Cr.

As Applicable

As Applicable

Details to be Furnished

Details relating to transaction of Tax Deducted/TaxColected (TDS/TCS).

Details relating to Outward Supplies made during themonth.

Summary of Supplies Made, RCM Discharged, ITCClaimed and Tax Payment

Deduction of tax at source from payment on renting ofImmovable property

TDS on payment to resident contractors andprofessionals (Individuals and HUFs)

Advance Tax Payment

Employer and Employees Contribution to PFAuthorities along with Admin Charges

Employer and Employees Contribution to ESICAuthorities along with Admin Charges

Summary of Supplies Made, RCM Discharged, ITCClaimed and Tax Payment (Late Fees will be Max Rs.500 Rs if GSTR 3B filled till 30/9/20



Annual Return for Normal Registered Taxable Person

Annual Return for Composition Scheme

Reconcilliation Statement

Payment of tax at source from payment on renting ofImmovable property/Buyer of Immovable Property

TDS on payment to resident contractors andprofessionals (Individuals and HUFs)

10

OB

IT

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CA. Narendra Lalpuria

left for Heavenly Abode on 22.08.2020May the departed Soul rest in peace


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