Income Tax Dept warns public against cash dealings of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty. CBDT further extends the time for Linking PAN with Aadhaar from 31st December 2017 to 31st March 2018.

Sum received by partner on retirement by surrendering her right in firm couldn't be taxed: ITAT

Where assessee received amount on time of her retirement from partnership firm after surrendering her right, title and interest, same was said to be received for consideration and, thus, same could not be taxable in hands of assessee under section 56(2)(vi)

Refer:[2018] 89 95 (Pune - Trib.)
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India sends tax notices to cryptocurrency investors as trading hits $3.5 billion

India has sent tax notices to tens of thousands of people dealing in cryptocurrency after a nationwide survey showed more than $3.5 billion worth of transactions have been conducted over a 17-month period, the income tax department said.

Tech-savvy young investors, real estate players and jewellers are among those invested in bitcoin and other virtual currencies, tax officials told Reuters after gathering data from nine exchanges in Mumbai, Delhi, Bengaluru and Pune.

Governments around the world are grappling with how to regulate cryptocurrency trading, and policymakers are expected to discuss the matter at a G20 summit in Argentina in March.

The Indian government has issued repeated warnings against digital currency investments, saying these were like "Ponzi schemes" that offer unusually high returns to early investors.

But it has not so far imposed curbs on an industry estimated to be adding 200,000 users in India every month.

B.R. Balakrishnan, a director general of investigations at the income tax department in the southern state of Karnataka, said notices were sent following the survey to assess the penetration and patterns of virtual currency trade.

"We cannot turn a blind eye. It would have been disastrous to wait until the final verdict was out on its legality," he told Reuters.

The tax department has asked people dealing in bitcoin and other virtual currencies such as ethereum and ripple to pay tax on capital gains. They have also asked for details about their total holdings and the source of funds in the tax notice seen by Reuters.

"We found that investors were not reflecting it on their tax returns and in many cases, the investment was not accounted for," Balakrishnan said.

Bitcoin, the world's biggest cryptocurrency, soared more than 1,700 percent last year, hitting a record high just shy of $20,000 as institutional and retail investors around the world snapped up the virtual currency.

Its huge gains have attracted the attention of global regulators tasked with protecting investors from fraud.

In recent weeks, Japan and China have made noises about a regulatory crackdown, while South Korean policymakers said they were considering shutting down domestic virtual currency exchanges.


An Indian finance ministry official said a committee was looking into the possibility of imposing restrictions on virtual currencies and that eventually parliament would have to legislate a regulatory regime.

Officials at Zebpay, India's leading bitcoin exchange, said the industry was adding near 200,000 users every month with an estimated trade volume of about 20 billion Indian rupees ($315 million).

"Many of our customers are treating digital currency like gold," said Zebpay co-founder Saurabh Agarwal.

Aman Kalra, marketing head of Coinsecure, a bitcoin exchange in New Delhi, said more than 150 bitcoins were changing hands every week through its platform. The company has 100,000 registered users and is now launching a platform to sell ethereum and other digital currencies.

"I don't think anyone in the government should label our business as a 'Ponzi scheme', we are not doing anything illegal," said Kalra.

Tax inspectors said they sought help from experts in blockchain, the technology that underpins bitcoin, to conduct the survey.

In some cases, tax officials themselves participated in the trade to identify loopholes after they found investors had poured in billions of dollars through unregulated exchanges.

The biggest worry for New Delhi, the finance ministry official said, was how to protect investors trading on offshore exchanges.

Already hundreds of investors have gone to the police and courts with complaints of transactions in virtual currencies that turned out to be fraudulent, said Pavan Duggal, a Supreme Court lawyer specialising in cybercrimes.

"Considering cryptocurrencies are here to stay, the government must consider granting limited legality while ensuring that these are not used for crypto crimes," he said.

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Land deemed belonging to assessee if exp. incurred for making it suitable for sale was duly supported by doc.

Where assessee a real estate developer claimed expenditure incurred for making land suitable for sale and expenditure was supported by documents seized at time of search, benefit of presumption under section 132(4A) would be available to assessee and there would be no need for further proof under section 37, since Assessing Officer did not endeavour to carry out investigation into genuineness of expenditure made

Refer:[2018] 89 70 (Kerala)

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GSTR 3B to continue as return filing simplification deferred, GST rates for 29 goods & 53 services cut

At the 25th meeting of the GST Council on Thursday, Finance Minster Arun Jaitley said there was a general consensus on simplifying the return filing process where GSTR 3B will continue, but a final decision would be taken in the next Council meet.

"Nandan Nilekani made a detailed presentation on the option available to simplify the return filing process. The direction was that return filing under GSTR 3B will continue and the sellers and suppliers should load their invoices, after which details of supply made can be furnished. It is given that the 3B return between buyer and supplier will reflect the supplies made. If there is any difference between the two, at a later stage they can be asked to explain," said Jaitley.

Jailtely added that merely supply invoice should be loaded and on that basis tax deposits should be made. "Since there were three presentation, I can say that the direction is that initially there will be a 3B return and there will be a suppler invoice. This we think will be adequate and a simple system," said Jaitley.

The FM added that there is a need to discuss this further and formalize it and once that is done a note will be circulated among ministers. "We will take it up in the 26th meeting on video conference to try and approve this alternative system. Today, it was discussed but not finally approved,"said Jaitley.

There was a recommendation to cut rates on 29 goods, 53 categories of services and 40 handicraft items, which were excepted and the new rates will be effective from January 25.

Abhishek Jain, Tax Partner, EY, said in a statement "Though the GST Council did not finalise the simplification of the GST Return filing process; from the press briefing of the Union Finance Minister, it seems that the GST Council may in their next meeting decide requirement of filing only two returns i.e. GSTR 3B and GSTR 1 and may do away with GSTR 2 and GSTR 3. GSTR 1 will provide the Government all the invoice level details of the suppliers basis which the government can verify the credit availed by the purchasing tax payer. If implemented, this may simplify the GST return filing process, but at the same time keep any possible revenue evasion in check."

Composition scheme
The composition scheme was discussed at length. Jaitley added that collection in the matter of Composition scheme was a matter of concern. "Out of the 17 lakh dealers who have registered themselves under the scheme at 1% rate, the collection for the first quarter has only been around Rs 307 crore. The scheme has not been enthusiastically responded to," said Jaitley.

Jaitley added that in fact most of the people who have opted for composition are below Rs 20 lakh in turnover and it seems there are cases of under-declaration under the scheme. "This will be factored in when the CGST, SGST and IGST Acts are amended, because after seeing the Acts function, there are minor changes required. The amendment in legislative shape will be circulated before next meeting and one of the suggestions has been to consider the re-introduction of Reverse Charge Mechanism (RCM) under Section 9(4) only for those who opt for Composition Scheme," said Jaitey.

GST Council, in its 22nd meeting dated October 6. 2017, has recommended that RCM shall remain deferred/ suspended till March 31, 2018 and will be reviewed by a committee of experts.

E-way Bill
On a trial basis the E-way bill has begun and Jaitley said on February 1, inter-state bills would be necessary. "15 states have said that they will also start on the same day the intra-state E-way bill. Therefore, trade and transport industry is expected to comply with the E-way bill system," he said.

The FM said the Council also reviewed the GST collection and there was an opinion that so far they have been relying on the unilateral declaration of trade itself, but there a need to build in anti-evasion measure and the E-way bill would be an important provision.

"With an object of generating employment and ease of doing business, certain key decisions have been made. As a corollary, rates were amended for 29 goods and 53 services. This is indeed a populist move including decision of 40 handicraft items," said Abhishek A Rastogi, Partner, Khaitan & Co in a statement.
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AO was bound not to levy tax if assessee wrongly paid tax on acquisition of exempted land

Assessee received compensation on acquisition of land - He paid tax after working out capital gains reckoning fair market value (FMV) as on 1-4-1981 at Rs. 50,000 per cent - Assessing Officer issued scrutiny notice under section 143(2) holding FMV at Rs. 1,400 per cent - In meantime, High Court in view of section 96 of Right to Fair Compensation Act, 2013 held that such compensation is exempted from tax - Petitioner did not file revised return as he was made to understand that he had no liability to pay tax on capital gains resulting from acquisition of land - Whether since capital gains on impugned transaction was exempted from payment of tax, Assessing Officer had a duty to refrain from levying tax on said capital gains and he could not refuse to grant relief under section 143 to assessee merely on technical plea that assessee had not filed a revised return - Held, yes [Para 11][In favour of assessee]

Refer:[2018] 89 212 (Kerala)
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No sec. 68 additions as amount introduced as capital by partner was duly reflected in his books of account

Where AO made addition to assessee-firm's income under sec. 68 in respect capital introduced by one partner of firm, in view of fact that amount received by assessee-firm had been duly reflected in books of account maintained by concerned partner and he had also confirmed such contribution, impugned addition was to be set aside

Refer:[2018] 89 80 (Gujarat)
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Direct tax mop-up jumps 19% to Rs 6.89 lakh cr this fiscal

Direct tax collections during the first nine-and-a-half months of the current fiscal have risen by 18.7 per cent to Rs 6.89 lakh crore, the tax department said today.

The collections till January 15, 2018 represent over 70 per cent of the Rs 9.8 lakh crore revenue target from direct taxes, the Central Board of Direct Taxes (CBDT) said in a statement.

"The provisional figures of direct tax collections up to January 15, 2018, show that net collections are at Rs 6.89 lakh crore which is 18.7 per cent higher than the net collections for the corresponding period last year," it said.

Gross collections (before adjusting for refunds) have increased by 13.5 per cent to Rs 8.11 lakh crore during April, 2017 to January 15, 2018.

Refunds amounting to Rs 1.22 lakh crore have been issued during this period.

Stating that there has been "consistent and significant" improvement in the position of direct tax collections during the current fiscal, the CBDT said the growth rate of total gross collections has improved from 10 per cent in Q1, to 10.3 per cent in Q2, to 12.6 per cent in Q3 and to 13.5 per cent as on January 15, 2018.

Similarly, the growth rate of total net direct tax collections has climbed up from 14.8 per cent in Q1, to 15.8 per cent in Q2, to 18.2 per cent in Q3 and to 18.7 per cent as on January 15, 2018.

The growth in corporate tax collections has risen from 4.8 per cent in first quarter of current fiscal to 10.1 per cent in Q3 and 11.4 per cent as on January 15, 2018.

Similarly, the growth rate of net corporate tax collections increased from 10.8 per cent in Q2 to 17.4 per cent in Q3 and to 18.2 per cent as on January 15, 2018.

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CIT can't make section 263 revision merely because he wasn’t satisfied with the view taken by AO

Where before completing assessment under section 143(3) an enquiry is conducted by Assessing Officer and he is satisfied with a reply given on a query raised, then Commissioner cannot intervene through revision for coming to a conclusion that assessment order passed by Assessing Officer was erroneous and prejudicial to interests of revenue for lack of or inadequate enquiry.

Refer:[2018] 89 171 (Kolkata - Trib.)
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Delay in filing of ITR condoned as assessee was searching his brother swept away while crossing flooded river

Car by which assessee's elder brother was crossing a flooded bridge, was swept away in river due to force of flood water a month before date of for filing return - Case of assessee was that for months, he was repeatedly visiting site of accident for conducting searches for tracing his brother -Thus, audit under section 44AB was delayed and, ultimately, it could be completed only on 20-2-2008 and return was filed - Whether state of mind of petitioner due to tragic event had to be appreciated by Board (CBDT) and mere fact that business income of petitioner grew during relevant year would be no ground at all to deny relief to petitioner - Held, yes - Whether since circumstances were beyond control of assessee, his application to CBDT seeking relief under section 119(2) for condonation of delay in filing return of income, was to be reconsidered - Held, yes [Para 9] [In favour of assessee]

Refer:[2018] 89 158 (Bombay)
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Face recognition for Aadhaar authentication from July 1: UIDAI

The Unique Identification Authority of India has decided to enable face authentication from July 1 this year.

An official statement said that face authentication will be enabled in ‘fusion mode’ on registered devices so that people facing difficulty in other biometric authentication (fingerprint and Iris) could easily authenticate.

According to the statement, face authentication provides additional option for all residents to have inclusive authentication. It shall be allowed only in fusion mode along with one more authentication factor combined with either fingerprint or Iris or one time password to be able to successfully authenticate an Aadhaar number holder. Face authentication shall also be allowed on a need basis.

This facility is going to help in inclusive authentication of those who are not able to biometrically authenticate due to their worn out fingerprints, old age or hard work conditions, the statement added.

Currently UIDAI provides two modes of biometric authentication i.e. fingerprint authentication and iris authentication. While most of the residents are able to authenticate using fingerprint or iris authentication, some residents face difficulty in successfully using biometric authentication using one of the modalities.

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