Due date for 'filing belated, revised' ITRs for AY20 extended to Nov 30

 The deadline for filing "belated, revised' Income Tax returns has been extended from September 30 to November 30, said the government on Wednesday.

The date is being extended for the "genuine difficulties" taxpayers face in the Covid-19 pandemic, said the Central Board of Direct Taxes on Twitter.

The last date for filing tax returns for AY 2019-20 is being extended for the fourth time for the pandemic. The date was first revised till June 30, then July 31, and then till September 30.

The Income Tax department on Wednesday said it has issued refunds worth over Rs 1.18 lakh crore to over 33 lakh taxpayers in 6 months till September 29, said news agency PTI.

This include personal income tax (PIT) refunds amounting to Rs 32,230 crore issued to 31.75 lakh taxpayers, and corporate tax refunds amounting to Rs 86,094 crore to over 1.78 lakh taxpayers during this period.

"CBDT issues refunds of over Rs 1,18,324 crore to more than 33.54 lakh taxpayers between 1st April, 2020 to 29th September,2020. Income tax refunds of Rs 32,230 crore have been issued in 31,75,358 cases & corporate tax refunds of Rs 86,094 crore have been issued in 1,78,540 cases," the Central Board of Direct Taxes (CBDT) tweeted.

The government has emphasised on providing tax-related services to the taxpayers without any hassles during the pandemic and to that end has been clearing up pending tax refunds.

(With inputs from PTI.)

Tax Dept allows joint property owners to file returns using simple forms

Rolling back its week old order, the Income Tax Department on Thursday allowed joint owners of single house property to file income tax return using simple Form-1 (Sahaj) or Form-4 (Sugam).
On January 3, it had debarred individual taxpayers owning house property in joint ownership and those who paid Rs 100,000 in electricity bills in a year or incurred Rs 200,000 expense on foreign travel from filing their annual income return using the simple return forms.

"After the notification, concerns have been raised that the changes are likely to cause hardship in the case of individual taxpayers," the Central Board of Direct Taxes (CBDT) said in a statement.
According to the statement, the issue was examined and "it has been decided to allow a person, who jointly owns a single house property, to file his/her return of income in ITR-1 or ITR-4 Form, as may be applicable, if he/she meets the other conditions".
"It has also been decided to allow a person, who is required to file return due to fulfilment of one or more conditions specified in the seventh proviso to section 139 (1) of the Act, to file his/her return in ITR-1 Form," it added.
The government, which usually notifies forms for filing income tax returns by individuals in April every year, on January 3 notified tax return forms for assessment year 2020-21 (income earning year April 1, 2019 to March 31, 2020).
Returns in ITR-1 Sahaj can be filed by an ordinary resident individual whose total income does not exceed Rs 50 lakh, while Form ITR-4 Sugam is meant for resident individuals, HUFs and firms (other than LLP) having a total income of up to Rs 50 lakh and having presumptive income from business and profession.
The January 3 notification effected two major changes in the ITR forms -- first, an individual taxpayer cannot file return either in ITR-1 or ITR4 if he is a joint-owner in house property. Second, ITR-1 form is not valid for those individuals who have deposited more than Rs 1 crore in bank account or have incurred Rs 200,000 or Rs 100,000 on foreign travel or electricity respectively, it said.
Such taxpayers were to use different forms, which would have been notified in due course.
The CBDT said to ensure that the e-filing utility for filing of return for assessment year (AY) 2020-21 is available as on April 1, 2020, the Income-tax Return (ITR) Forms ITR-1 (Sahaj) and ITR-4 (Sugam) were notified on January 3.
"In the notified returns, the eligibility conditions for filing of ITR-1 and ITR-4 Forms were modified with an intent to keep these forms short and simple with bare minimum number of Schedules. Therefore, a person who owns a property in joint ownership was not made eligible to file the ITR-1 or ITR-4 Forms.
"For the same reason, a person who is otherwise not required to file return but is required to file return due to fulfilment of one or more conditions in the seventh proviso to section 139 (1) of the Income-tax Act, 1961 (the Act), was also not made eligible to file ITR-1 Form," it said.
After the notification, concerns were raised that the changes are likely to cause hardship in the case of individual taxpayers.
"The taxpayers with jointly owned property have expressed concern that they will now need to file a detailed ITR Form instead of a simple ITR-1 and ITR-4. Similarly, persons who are required to file return as per the seventh proviso to section 139(1) of the Act, and are otherwise eligible to file ITR-1, have also expressed concern that they will not be able to opt for a simpler ITR-1 Form," it said.
Usually, the Income Tax Department notifies the ITR forms in the first week of April of the relevant assessment year. However, in contrast to the old practice, it has notified two ITR forms ITR-1 and ITR-4 for the assessment year 2020-21 in the first week of January.

I-T dept issues tax refunds of Rs 1.57 trillion, up by 27.2% in 2019

The Income Tax Department has issued as much as Rs 1.57 trillion of income tax refunds in the first eight-and-a-half-months of the current fiscal compared to Rs 1.23 trillion in full 2018-19 fiscal, Revenue Secretary Ajay Bhushan Pandey said Friday.
At a press conference called to disclose impact of steps taken to boost consumption in the economy so as to uplift growth from a six-year low, Pandey said tax refund cases have gone up by 17 per cent to 2.16 crore.

In money terms, the income tax refunds have gone up by 27.2 per cent.
Also, Integrated-GST refund of Rs 38,988 crore has been released so far this fiscal as compared to Rs 56,057 crore in full 2018-19 financial year, he said.

I-T Dept disputes Siddhartha's letter to CCD board alleging tax harassment

The Income Tax Department on Tuesday denied charges of harassment during their probe against Café Coffee Day promoter V G Siddhartha and official sources pointed out that the signatures of the entrepreneur available with them were different from those on a letter being widely published on the social media.
They said the businessman had admitted holding stash income after raids were conducted against him and his concerns.
ALSO READ: Coffee Day Enterprises tanks 20% as co-founder VG Siddhartha goes missing
In the unverified letter, Siddhartha, who has gone missing on his way to Mangaluru from Bengaluru in Karnataka, said there was a lot of harassment from the previous DG of the Income Tax Department in the form of attaching "our shares on two separate occasions to block our Mindtree deal and then taking position of our Coffee Day shares, although revised returns have been filed by us (sic)".
"This was very unfair and has led to a serious liquidity crunch," the letter, bearing a purported signature of Siddhartha, said.
ALSO READ: With founder Siddhartha missing, will Cafe Coffee Day get sold to PE firms?
Refuting the charges, the official sources said the the provisional attachment of shares was made by the department to protect the "interests of revenue" in cases of large tax evasion and the action was based on "credible evidence" gathered in the search or raid action that was undertaken against the Bengaluru-based group in 2017.
"The department has acted as per provisions of the Income Tax Act," one of sources told PTI.
The authenticity of the note circulating on the social media cannot be vouched for as Siddhartha's signature "does not tally" with what is available with the department in the form of annual reports of the company, the source said quoting official records.
They said Siddhartha fetched Rs 3,200 crore from the sale of Mindtree shares, but has paid only Rs 46 crore out of the total Rs 300 crore minimum alternate tax (MAT) payable on the deal.
The raids against the group were carried out as a result of a similar action against a prominent Karnataka politician and sources said Siddhartha, in a sworn statement, "admitted" unaccounted income of Rs 362.11 crore and Rs 118.02 crore in his hands and that of Coffee Day Enterprises Ltd respectively.
They alleged that tax sleuths recovered numerous messages from his mobile phone that indicated his "active involvement in cross-border hawala transactions."

A Singaporean citizen was searched in this case and he was found with unaccounted cash of Rs 1.2 crore and the person told tax officials that it belonged to Siddhartha, they claimed.
They alleged that the CCD promoter filed his IT returns but "did not" mention the undisclosed income, as admitted in the sworn statement, in both the cases except an amount of around Rs 35 crore in his individual case.
"Even on this admitted sum, Siddhartha did not pay the self-assessment tax of Rs 14.5 crore as quantified by him as on date. Coffee Day Enterprises Ltd did not offer the admitted income in its part," the source said.
They said the department got to know through media reports in January this year that Siddhartha was planning to sell the equity shares of Mindtree Ltd, held by him and his company, on an immediate basis.
Tax officials found that Siddhartha and Coffee Day Enterprises Ltd together held nearly 21 per cent of shareholding in Mindtree Ltd and it was also found that the deal for sale of shares was set to be finalised within that month, they said.
As the tax revenue ramification in this case was worth crores and the assessee had not taken permission from the I-T authorities for selling these shares, they were attached as per the norm, they said.
Mindtree Ltd's 74,90,000 shares were attached and such an action is a normal requirement to protect the interests of revenue in big cases of tax evasion, they said.
They said Siddhartha then filed a request letter to release these shares and offered other shares of Coffee Day Enterprises Ltd as security against the expected demand.
The department accepted this request and the attachment of Mindtree shares were revoked on February 13 this year, they said.
However, a specific condition was put by the department that the sale proceeds will be utilised only for repayment of loans availed against the Mindtree Ltd shares by opening escrow account and the remaining balance will be provided for attachment to the department against the tax liability to arise.
"The alternate attachment of 46,01,869 unencumbered shares and 2,04,43,055 encumbered shares of Coffee Day Enterprises Ltd was made on February 13-14," they said.
The assessee (Siddhartha) had transferred the Mindtree Ltd shares to L&T Infotech Ltd on April 28 and received around Rs 3,200 core, they said.
Out of this consideration, they said, Siddhartha and his company repaid loan of around Rs 3,000 crore and paid expenses related to transfer of Rs 154 crore and the balance of Rs 46 crore was paid towards first instalment of advance tax of estimated MAT liability of around Rs 300 crore in the case of shares of Coffee Day Enterprises Ltd.
The CCD promoter is the son-in-law of former Karnataka chief minister and BJP leader S M Krishna and was last seen near a bridge on Netravati river in Kotepura area in Dakshina Kannada district on Monday night.
Authorities have launched a massive search for him.

File your I-T return on time or you may end up in jail like this jeweller

If you have received a notice for not filing income tax returns within due date, you might want to pay heed to it. In what could probably be the first such instance, a director of Mumbai-based firm Ms Shah Time and Jewels was sentenced to jail for three months on Wednesday for not filing income tax returns within the due date for the assessment year 2014-15, according to The Times of India.
When repeated notices sent to the firm and its director Paresh C Shah did not elicit any response, the deputy commissioner of Income Tax on November 22, 2017, filed a show cause notice seeking an explanation as to why sanction for their provision should not be given under the Income Tax Act. After that also went unanswered, a complaint was filed against Shah and the firm.

The Ballard Pier magistrate court rejected Shah's defence of 'lack of knowledge' and held him and the firm guilty of deliberate non-compliance. The court observed that imprisonment under the Income Tax Act was an exceptional and extreme move and was given only when it established deliberate failure to file returns.
"In the present case, the accused received the notice, but no explanation was given despite repeatedly serving the notices," additional chief metropolitan magistrate R S Sarkale told TOI. He further said that the explanation given by the director was "not at all acceptable."
The maximum sentence over failure to file I-T returns is two years imprisonment. However, since Ms Shah Time and Jewels did not have a poor history in filing returns, Shah was given a minimum jail-term of three months.
Filing Income Tax returns
It is mandatory for all registered taxpayers to file income tax returns every year, except for those who are over 80 years of age and do not have any source of income from a business or profession.
For the year assessment year 2019-20, the last date of filing returns is July 31. You can pay it online as well uploading your Form 16.
New ITR forms decoded: Know the changes and how to file returns with ease
The revenue department earlier this month asked officials to check for mismatch in turnover towards services between income tax returns and service tax returns by businesses during 2015-16 and 2016-17.

Tax evasion? I-T searches 50 locations of people linked to MP CM Kamal Nath

The Income Tax Department launched pre-dawn searches Sunday on at least 50 locations in Delhi and Madhya Pradesh against people linked to state chief minister Kamal Nath on charges of alleged tax evasion, officials said.
They said locations in Indore, Bhopal and Delhi (Green Park) are being raided and those being searched include Nath's former OSD Pravin Kakkar, former advisor Rajendra Miglani and executives linked to his brother-in-law's firm Moser Bayer and his nephew Ratul Puri's company.

Both Kakkar and Miglani had resigned from their posts just before the Lok Sabha polls were declared.
In Indore, the raids were conducted by a team of officials, who arrived from Delhi, at Kakkad's residence in Vijay Nagar area and other places associated with him, sources in the I-T department said.
They said documents seized during the searches were being scrutinised in detail.
Kakkad, a former Madhya Pradesh police officer, was appointed OSD to Nath after the Congress-led government came to power in the state last year.
He had earlier served as OSD to former Union minister Kantilal Bhuria during the UPA regime.
Kakkad's family is associated with a number of businesses, including hospitality.
The raids are also being conducted against Kolkata-based businessman Paras Mal Lodha, they said.
A team of about 200 I-T department and police officers swooped on these premises at around 3 am and some undisclosed cash has been recovered till now, they said.
The searches are linked to suspected movement of hawala money during the ongoing polls season and tax evasion, they said.
Ratul Puri was last week grilled by theEnforcement Directorate in Delhi in connection with the Rs 3,6000 AgustaWestland helicopters purchase probe.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Last day to file delayed income tax return for FY18: A step-by-step guide

If you are yet to file your income tax returns for the financial year 2017-2018, you still have few hours left as the deadline ends on March 31. If you fail to file your tax return, the government reserves the right to take legal action against you.
Though the last date for filing Income tax ended on August 31, 2018, the I-T department later allowed people to file their income tax returns till March 31, 2019, provided they also submit a late fee of Rs 10,000.

"Taxpayers can still file their Income Tax Return for the assessment year 2018-19 (the financial year 2017-18) by March 31, 2019, with a late fee," the I-T department wrote on Twitter.
You can still file your Income Tax Return for A. Y. 2018-19 ( F. Y. 2017-18 ) by 31st March, 2019 with late fee if you have not filed yet. pic.twitter.com/3ug7yCc76B
— Income Tax India (@IncomeTaxIndia) March 29, 2019
Despite being a Sunday, income tax offices are open today to facilitate the filing of tax returns by the taxpayers.
Taxpayers can use the I-T department's online portal to file their returns from the comfort of their home.
ALSO READ: Not filing your income tax returns on time? You could be prosecuted
Before you sit down to file your income tax returns, here are some important documents that you need to keep handy with you:
1. PAN card, valid email account, valid mobile number, Aadhaar number
2. Form 16/16A: These forms will help you provide proof of tax deduction on the payments you have made.
3. Investment proof: Proof of tax-saving investments made, medical cover taken, donations made, etc, are all required for helping you claim deductions under Section 80C, 80D and 80G respectively.
4. Bank details: Even if you know that you don’t have a refund this year, you should provide all your bank account details along with the IFSC code in your income-tax return.
Is it mandatory to file I-T return?
Filing income tax return is mandatory for -
1. Individuals and HUFs having income more than Rs 2.5 lakh (Rs 3 lakh for senior citizens aged 60-80 years and Rs 5 lakh for those above 80)
2. All companies, firms, LLPs
3.
Trusts, associations, political parties (whose income prior to the claim of exemptions exceed the minimum chargeable to tax)
You can follow these steps to file your returns through I-T department's official website:
Step 1: Go to e-filing website - http://www.incometaxindiaefiling.gov.in
Step 2: Users not registered on the website need to register on the website. Those already having an account can login.
Step 3: Go to e-File and select Income Tax Returns
Step 4: Select assessment year, ITR form, submission and verification mode
Step 5: Fill the form using details from Form-16
Step 6: Preview and submit
Another way to file income tax return is through the online portal of ClearTax. Here's a step-by-step guide:
Income tax returns Fill in your personal details along with your address in the first step
Income tax returns If you have other means of income, click on the other boxes shown beside the section 'salary'
Income tax returns You can claim a deduction of up to Rs 150,000 by providing the details shown below. In case you have further deductions, click on the bar 'More deductions' or 'Other deductions'
Income tax returns Provide details of your TDS (tax deducted at source) between April 1, 2017 and March 31, 2018.
Income tax returns This is the last step of filing your income tax return. Provide your bank account number — this is where you will receive your refund, if applicable.
Income tax returns Congratulations! You have now completed all the steps in filing your income tax return. Just review all the information filled out and you are good to go
First Published: Sun, March 31 2019. 12:07 IST
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I-T department, other tax agencies can initiate insolvency: NCLAT

The Income Tax department of the central government, the sales tax department of the state government and other local authorities “who are entitled for dues arising out of the existing law” can now initiate corporate insolvency resolution process against such companies who owe them the dues, the National Company Law Appellate Tribunal (NCLAT) has held.
These tax departments will be considered as operational creditors of the debtor companies and all statutory dues including income tax, value added tax and others will come within the meaning of operational debt, a two-member Bench headed by Justice S J Mukhopadhaya said on Wednesday. The NCLAT’s judgment came on various appeals moved by the income tax and other services tax departments of the various states against decision of various benches of National Company Law Tribunals (NCLT).
In one such case, the sales tax department Maharashtra had challenged the decision of the Resolution Professional of Raj Oil Mills Limited to not call the tax agency to the meeting of the Committee of Creditors (CoC). It had also claimed that the dues owed to the tax department did not come under operational debt, and hence it should not be considered as an operational creditor.
ALSO READ: How insolvency is reshaping steel
In its judgement of Wednesday, the NCLAT however, held that since operational debt in normal course meant a due arising during the operation of the company, all statutory dues owed to the income tax department, along with others would be operational debt.
“As the income tax’, value added tax and other statutory dues arising out of the existing law arises when the company is operational, we hold such statutory dues has direct nexus with operation of the Company. For the said reason also, we hold that all statutory dues including ‘income tax’, ‘value added tax’ come within the meaning of operational debt,” the NCLAT said.

ALSO READ: Insolvency & Bankruptcy code: Govt looking at ways to avoid frivolous bids
In another case, the Principal Director General of Income Tax of Mumbai had challenged a ruling of NCLT Mumbai alleging that it had approved a resolution plan for Raj Oil Mills Limited which gave a maximum of Rs 2.58 crore to the department against the total claim of Rs 338 crore.
This settlement for 1% of the ‘crystallized demand’ was against the mandate of Income Tax Act of 1961, the department had claimed. However, as the successful resolution applicant had proposed to repay the all the Rs 338 crore dues of the tax department over the next three years, the plea was been disposed-off by the NCLAT.

Tax dept bars V G Siddhartha from selling Mindtree stake, attaches shares

The Income Tax department has imposed restrictions on the transfer of shares by V G Siddhartha and his holding company Coffee Day Enterprises in Mindtree for a period of six months, citing possible future tax demand on him.
The order has come at a time when Siddhartha is in talks with several suitors, including private equity firms and technology companies, to offload his 21 per cent stake in Mindtree.
"Provisional attachment (of shares) has been imposed on the following shareholders of the company- Coffee Day Enterprises and V G Siddhartha- for likely tax demand by the Income Tax department," Mindtree said in an exchange filing.
ALSO READ: I-T dept takes steps to prevent refund claims based on bogus investments
According to the regulatory filing, a total of 7.49 million shares held by Siddhartha and Coffee Day Enterprises will face this prohibitory order for next six months starting from January 25, 2019. While the number of shares on which restriction has been imposed constitutes 4.56 per cent of Mindtree's total share base, it is valued at Rs 665 crore at the closing price on Friday last week.
Siddhartha-owned Cafe Coffee Day retail chain had previously faced income tax raids on its premises in September 2017 and reports suggested that documents showing Rs 650 crore of concealed income were seized during the search operations.
While the nature of future tax demand could not be immediately ascertained, analysts said that such restrictions could delay or even potentially derail Siddhartha’s stake sale plans. Investors might sense contingent risk from future litigations, analysts added.
However, Siddhartha and his holding company could challenge the order of Income Tax department in appellate tribunal, pleading against such prohibition.

ALSO READ: Govt orders cadre review, restructuring of I-T dept; 12-member panel formed
Currently, Siddhartha is in talks with various PE investors and technology firms to sell his 21 per cent stake in Mindtree, triggering concerns of management change or a hostile takeover as founders are not willing to shed their stakes.
An acquisition of the founders’ stakes- currently at 13.32 per cent- assumes significance as the acquirer needs to hold more than 25 per cent to have board representation and to reach the trigger point for an open offer.
Analysts said the stake sale plans of Siddhartha is likely to receive a setback now as he will only have around 16.5 per cent stake to offload post this prohibitory order.

I-T dept attaches shares held by V G Siddhartha, Coffee Day in Mindtree

The Income Tax Department has attached a portion of shares held by V G Siddhartha and Coffee Day Enterprises Ltd in IT firm Mindtree over a potential tax demand -- a development that could impact the potential stake sale by the Cafe Coffee Day founder in the Bengaluru-based company.
Siddhartha, who owns about 21 per cent stake in Mindtree, is said to be in advanced discussions with various entities to sell his shares in the IT company.

In a BSE filing on Saturday, Mindtree informed that the I-T department in Bengaluru has issued a "provisional attachment u/s 281B of Income Tax or prohibitory orders Act, 1961 for tax demand likely to be raised by the I-T Department on...shareholders of the company - Coffee Day Enterprises Ltd and V G Siddhartha".
It added that the attachment also "prohibited for transfer or charge" of 22.2 lakh equity shares of Coffee Day Enterprises Ltd, and 52.7 lakh shares held by Siddhartha.
The order would be applicable for six months from the date of the order i.e. January 25, 2019, it said.
At the end of December 2018 quarter, Siddhartha held 54.69 lakh shares (3.3 per cent stake) in Mindtree, while Coffee Day Enterprises Ltd had more than 1.74 crore shares (10.63 per cent stake). Another entity, Coffee Day Trading Ltd holds over 1.05 crore shares (6.45 per cent holding).
Mindtree's promoters, which include Subroto Bagchi, Krishnakumar Natarajan, NS Parthasarathy, and Rostow Ravanan, together hold roughly 13 per cent stake in the company.
According to reports, Siddhartha is in advanced talks with L&T Infotech (LTI) and private equity firm KKR to sell his stake in the mid-sized IT services company. Also, there have also been speculations that such a sale by Sidhhartha could trigger a hostile takeover at the company, even as the founders are said to be making all-out efforts to counter any such developments.
Both Siddhartha and Mindtree founders have not made any specific comments on the issue so far.
During the Q3 earnings call recently, the management skirted questions on the speculations saying it remains committed to delivering growth for the company.
"...this is something that is not in our control. Shareholders make their own decisions on when they want to buy, how much they want to buy, when they want to sell etc. It is outside our purview in that sense," Ravanan, who is also the CEO and managing director, had said.
Ravanan had further said: "We can make sure that things go right at Mindtree, we take care of people, customers and continue to deliver industry leading growth, so the stake sale is not something that we have a view on or would like to make a comment".
Mindtree, in the December 2018 quarter, had posted 35.1 per cent rise in consolidated net profit, and 29.7 per cent jump in revenues at Rs 1,787.2 crore over the year-ago period. It had also exuded confidence that its January-March numbers will be better than the just-concluded quarter.

I-T dept sells Cairn shares to recover part of Rs 102-bn retrospective tax

Weeks before an international arbitration tribunal rules on retrospective tax levied by India, the Income Tax Department has sold almost all of Cairn Energy Plc's attached shares to recover a part of the Rs 102.47 billion retrospective tax demand, regulatory filings showed.
While the Indian government had used a 2012 legislation to tax certain past income of at least half a dozen foreign companies such as Vodafone plc, Cairn Energy of the UK remains the only company against whom the demand has been enforced and it remains to be seen if an arbitration award against it will be honoured.
Cairn Energy held 4.95 per cent stake in mining major Vedanta Ltd which the Income Tax Department had attached after issuing a Rs 102.47 billion tax demand in 2014 on alleged capital gains the British firm made on a decade-old reorganisation of its India business.
The Income Tax Department in May and June sold about 2 per cent stake held by Cairn in Vedanta.
Vedanta in its March quarter filing of shareholding pattern to stock exchanges showed 184.1 million (4.95 per cent) shares being held by Tax Recovery Officer (International taxation)-I. This in the June quarter filing dropped to 119.6 million shares (3.22 per cent).
In its filing for the September quarter, Vedanta did not list the Income Tax Department as holding any shares (greater than 1 per cent).
As per statutory requirement, a company is obliged to list all entities holding more than 1 per cent stake.

ALSO READ: I-T dept sells more shares of Cairn Energy to recover Rs 102 bn retro tax
The shareholding pattern at the end of September did not list Income Tax Department as holder of shares in that section, implying that either all of the shares have been sold or that such shareholding has fallen below 1 per cent.
Reached for comments, a Cairn Energy spokesperson said: "The international arbitration case under the India UK Bilateral Investment Treaty is in its final stages."
"In March 2015, Cairn filed a Notice of Dispute under the Treaty in order to protect its legal position and seek restitution of the value effectively seized by the Income Tax Department in and since January 2014."
"Cairn's principal claims are that the assurance of fair and equitable treatment and protections against expropriation afforded by the Treaty have been breached by the actions of the tax department, which is seeking to apply retrospective taxes to historical transactions already closely scrutinised and approved by the Government of India," the spokesperson said.
Cairn said it wants that "the effects of the tax assessment should be nullified and Cairn should receive recompense from India for the loss of value resulting from the 2014 attachment of shares and the withholding of unrelated tax refunds, which together total approximately $1.4 billion."
An international arbitration tribunal has concluded final hearing in The Hague against the imposition of retrospective tax and is expected to give an award in December or January.
ALSO READ: Final hearing in Cairn arbitration against retro tax to begin today
Besides selling shares, the tax department has seized dividends due to Cairn from its shareholding in Vedanta totalling $162 million and offset a tax rebate of $234 million due to Cairn as a result of overpayment of capital gains tax on a separate matter.
The Income Tax Department began selling shares on May 14 -- the day Finance Minister Arun Jaitley underwent a kidney transplant surgery and the charge of his portfolio was given to Piyush Goyal on a temporary basis. Jaitley resumed charge on August 23.
Sources said while there was no share sale when Goyal was in charge, it resumed in August-end.
The firm, which gave the country its biggest on-land oil discovery in Rajasthan, is seeking restoration of monetary value it enjoyed in 2014 before the government levied retrospective tax demand and attached its shares.
The arbitral tribunal awards are binding and internationally-enforceable and there exists no forum for them to be challenged.
The tax department had in January 2014 used a two-year-old retrospective tax law to raise a Rs 102.47 billion demand on alleged capital gains made by Cairn Energy on a decade-old internal reorganisation of its India business.
ALSO READ: Income-tax dept sells Cairn Energy shares in Vedanta for $216 million
This was followed by attaching the company's residual 9.8 per cent shares in its erstwhile subsidiary, Cairn India. Cairn India was subsequently merged with its new parent Vedanta, in which Cairn Energy held about 4.95 per cent stake.
These shares continued to be attached for four years but the tax department had earlier this year got them transferred to it.
The Central Board of Direct Taxes (CBDT) had in April, in response to a PTI query, stated that "there is no legal advice against the sale of the attached shares".

Income tax dept may seek first right on recovery of dues under IBC

The income tax (I-T) department may soon request authorities in the finance ministry to intervene so that I-T dues get a higher priority over dues to unsecured creditors under the insolvency law.
At present, the recovery of tax dues is possible only after payment to financial creditors under the Insolvency and Bankruptcy Code (IBC), which comes under the Ministry of Corporate Affairs.
The tax department has prepared a proposal highlighting issues with the IBC with regard to tax dues. “The entire process of resolution/liquidation under IBC is driven by committee of creditors, and there is no involvement of the I-T department even though we have a lot of stake,” said an I-T official.
Citing the whole process of insolvency, the tax official said that under the IBC, the priority of claims has changed as compared to earlier provisions under the Board for Industrial and Financial Reconstruction (BIFR), the body governing insolvency and corporate bankruptcies earlier.
“The IBC norms considered government dues as 'operational creditors' and their priority for re-payment comes even after unsecured financial creditors,” said the proposal prepared by the department.
IBC Challenges
I-T wants higher priority for tax dues
IBC norms provide priority to creditors, resolution process, employees’ dues
I-T wants more involvement in IBC norms as it has lot of stakes in firms under IBC
Wants centralised database to check fraudulent bids to avoid tax liability
Under section 53 of the IBC, which provides for the priority in which a company’s creditors are paid off in case of bankruptcy, insolvency resolution process costs, liquidation costs, employees’ dues, and unsecured creditors rank higher in priority over tax dues to the government. Besides, the I-T department also wants the applicability of Section 281 of I-T Act which says if there is a change of ownership or transfer of assets, the debtor concerned needs to take approval of the tax department. They have also sought clarity on the status of prosecution in cases of companies undergoing insolvency.
The tax department wants a centralised database to check fraudulent attempts, if a company lands up in the National Company Law Tribunal to avoid tax liability.
The department has also mentioned that sale of assets or change of ownership or settlement of loans will have a significant tax implication for all three — borrowers, lenders and shareholders of the borrowing company. Explaining each of the scenarios, it says non-performing assets (NPA) provision is created immediately after non-payment of interest up to 90 days in case of lenders. The said provision would result in write-back and hence will be taxable under Section 41 of the I-T Act. Also, the interest recovered from the date of NPA is chargeable to tax. Even if the bank converts loan/interest into equity, the difference between fair market value of shares on the date of conversion and consideration paid/adjusted will be treated as deemed income.
Similarly, for defaulting borrowers, if there is a restructuring of loans, change in ownership or one-time settlement there is always a waiver of part of the loan amount and interest. The new owner purchases share which are subject to taxation on the basis of market value. Further, the accumulated losses of the borrower company are allowable subject to some restrictions. Besides, minimum alternative tax also attracts liability on credit of loan/interest amount waived.
Other tax implications involve carry forward of losses of the defaulting borrower.
“Section 79 of the I-T Act does not allow a company to carry forward losses if the majority shareholding in it changes hands. However, in the case of any company under IBC, exception has been made under this section that there is no requirement of ownership of major shareholding. The effect of this amendment is that the borrower can continue forward business losses and unabsorbed depreciation in case of change in ownership beyond 50 per cent also,” the department said.

I-T returns filing up 76%; over 52 mn file returns 5 hrs before deadline

Filing of income tax returns surged 75.98 per cent in the current assessment year, with as many as 52.97 million people filing returns till about five hours before the deadline. The previous year, 30.1 million had filed returns.
The high number, which might still go up, may help the government defend its decision to demonetise Rs 500 and Rs 1,000 in November 8, 2016.
The government had extended the deadline to file return till August 31. For Kerala, affected by floods, it has been extended by another fortnight.
ALSO READ: I-T department extends deadline for filing returns in Kerala due to floods
Unlike previous years, those filing after this deadline would be fined. In March 2014, the number of I-T returns filed was 38 million.

ALSO READ: Beware of I-T refund messages, cyber criminals may trick you with fraud
The surge may be an indication of rise in tax receipts, but that may not be commensurate with returns. This is so because 10 million assessees pay no tax.
The government has been defending demonetisation on the basis of tax numbers, including collection and returns filed, even as critics say it was a failure after a Reserve Bank of India report said that almost all the demonetised money came back to banks.

Income tax collection at record Rs 10.03 trn during 2017-18: CBDT

Income Tax collection in the country stood at a record Rs 10.03 trillion during 2017-18, the Central Board of Direct Taxes (CBDT) on Friday said.
Addressing a two-day conference of Income Tax Administrators of Eastern Zone here, Shabri Bhattasali, Member of CBDT said that during 2017-18, a record number of 69.2 million I-T returns were filed, which was 13.1 million more than 56.1 million returns filed in 2016-17.

The I-T Department added 10.6 million new return filers during 2017-18 and aims to add 12.5 million new filers for the current year. In the North East region, this number was 189,000, she said.
L C Joshi Ranee, Principal Chief Commissioner of Income Tax, North Eastern Region, said that Rs 70.97 billion tax was collected from the region during 2017-18.
This is 16.7 per cent higher than Rs 60.82 billion collected in the preceding year, Ranee said.
He said the target in the region for 2018-19 has been fixed at Rs 83.57 billion, 17.75 per cent more than last years collection.
Stating that the department is committed to meet the target tax collection, increase taxpayer base and deliver superior services, 'Aaykar Seva Kendras' have already been opened in 22 out of 29 stations in NER.
New offices are being opened in far-flung areas to deliver taxpayer services, he added.

CBDT directs Income Tax dept to add 12.5 million fresh filers this year

The CBDT has directed the Income Tax Department to add at least 12.5 million fresh tax filers from across the country -- the highest to be from Punjab, Haryana, Himachal Pradesh and J&K -- in view of increased economic activities.
The directions have been issued also as a part of the government's drive to widen the tax base.

The policy-making body of the department said as a result of its past initiatives in this domain, about 10.6 million new tax filers were added to the income tax net during the 2017-18 financial year.
A new income tax filer is defined as a person who is not included in the tax filing base at the beginning of the year, but who files the return during the year.
A new I-T filer may not be called a fresh taxpayer added to the net as a person may file their income return but may not pay tax as they can claim legitimate exemptions, a senior official explained.
However, once a filer is in the I-T database there is a very bleak chance that such a person's income remains anonymous.
"The Indian economy is growing at a rapid pace. Considering the increased economic activities both in organised as well as unorganised sectors, there is scope for further widening of the direct tax base of the country.
"... The Board (CBDT) has fixed an overall target of adding 12.5 million new return filers during the current financial year," the new central action plan (CAP) for 2018-19 said.
The CAP acts as the policy action vision document for the Income Tax (I-T) Department and is unveiled by the Central Board of Direct Taxes (CBDT) annually. Its latest copy has been accessed by PTI.
As per the target, the northwest region of the tax department (that has jurisdiction over Haryana, Punjab, Himachal Pradesh and Jammu and Kashmir) has been asked to add the maximum new filers at 11,48,489, followed by the Pune region 11,33,950 and Tamil Nadu region 10,36,645.
The Andhra Pradesh and Telangana regions have to get 10,40,218 new filers. Gujarat (9,88,101) and the Karnataka and Goa regions (7,95,626) follow the tally apart from the 12 other I-T regions in the country.
The action plan said "new opportunities" for identification of potential tax payers have opened up due to data mining and data analytics conducted by the various intelligence gathering and investigation wings of the department.
"The effective utilisation of these data by the field officers would result in identification of a large number of potential tax payers.
"In addition to use of disseminated data, local intelligence, inputs from market associations, trade bodies and professional bodies should also be gathered and used to identify non-filers," the CBDT directed taxmen to do so that the taxpayer base of the country increases.
It added that awareness meetings and outreach programmes should be conducted to encourage voluntary compliance, especially in Tier 2 and 3 cities (that are smaller than metropolitan cities but with burgeoning population and economic activity).
The principal chief commissioners (regional chiefs of the department) should "also develop a regional strategy" keeping in view the specific profile of these regions to significantly widen the tax base this year, it said.
"All efforts should be made to achieve these targets, which will be monitored on a quarterly basis," it said.

Angel investors in start-ups get I-T exemption, effective April 11

The tax department on Saturday exempted angel investors from income tax (I-T) on their investments in start-ups with effect from April 11.
The tax concessions are subject to certain conditions laid down by the Department of Industrial Policy and Promotion last month, which said the share capital and share premium of the start-up should not exceed Rs 100 million after such investments.

Also, the angel investor who plans to subscribe the shares in the start-up would have to fulfil prescribed criteria and the start-up would have to procure a report from a merchant banker, specifying the fair market value of the shares in accordance with the income-tax rules. The I-T department, on May 24, issued a notification, superseding its June 2016 notification. “...The central government, hereby notifies that the provisions of clause (viib) of sub-section (2) of section 56 of the said Act shall not apply to consideration received by a company for issue of shares that exceeds the face value of such shares, if the consideration has been received for issue of shares from an investor in accordance with the approval granted by the Inter-Ministerial Board of Certification,” the Central Board of Direct Taxes (CBDT) said.
This notification comes into effect retrospectively from April 11, 2018, it said. The CBDT has also amended Rule 11 UA (2)(b) of the I-T Act, thereby making merchant banker valuation compulsory for the purpose of determining fair market value of unquoted equity shares, and omitted the word ‘accountant’.
Nangia & Co Partner Amit Agarwal said the notification states that ‘angel tax’ shall not be levied, where the business is an approved start-up and has obtained valuation from a merchant banker.
“The notification is a welcome move in allaying fears of start-ups in relation to angel tax and providing the much-needed clarity with respect to non-applicability of angel tax.
“Another key takeaway from the notification is withdrawal of power from chartered accountants to issue valuation reports for purposes of angel tax. This is perhaps designed to bring in more sanctity to issuance of valuation report,” Agarwal said.
The decision to give investors in start-ups exemption from income tax was aimed at addressing a key issue faced by angel investors who put money during early growth stage, and would also provide level-playing field for all investors.
The commerce and industry ministry had on April 11 said a start-up can seek tax concession under Section 56 of the I-T Act. The section 56 provides for taxation of funds received by an entity.
According to the notification, an angel investor with a minimum net worth of Rs 20 million or an average returned income of over Rs 2.5 million in the preceding three financial years would be eligible for 100 per cent tax exemption on investments made into start-ups above fair market value. Several start-ups had raised concerns over taxation of angel funds under Section 56 of the I-T Act, which provides for taxation of funds received by an entity. As many as 18 start-ups had received notices from tax authorities.
This section provided that where a closely held company issues its shares at a price more than its fair market value, the amount received in excess of the fair market value will be charged to tax the company as income from other sources.
Start-ups incorporated before April 2016 can seek exemptions from section 56 of the Income Tax Act.
However, the three-year income tax concession would be available to only those that are incorporated after April 1, 2016, and before April 2021.
Start-ups also enjoy income tax benefit for three out of seven consecutive assessment years under section 80-IAC of the Act. The government has so far extended tax benefits to just 88 start ups out of 8,765 that have been recognised by DIPP since January 2016.
To avail both the concessions (under section 56 and 80 IAC of the Income Tax Act), start-ups would have to approach an eight-member inter-ministerial board of certification. An angel investor is the one who put funds in a start-up when it is taking baby steps to establish itself in the competitive market. Normally about 300-400 start-ups get angel funding in an year. Their investment in a unit ranges between Rs 1.5 million to Rs 40 million.
The government launched the ‘Start-up India’ initiative on January 16, 2016, to build a strong ecosystem for nurturing innovation and entrepreneurship.

CBI, I-T department, ED widen probe into PNB's Rs 114-billion fraud

The central government’s agencies have widened their probe into Punjab National Bank’s (PNB’s) Rs 114-billion fraud, with the income tax (I-T) department launching criminal prosecution against Nirav Modi and also seizing bank accounts of his entities as well as real estate spread across the country on Friday.
Meanwhile, the Central Bureau of Investigation (CBI) filed its second First Information Report (FIR) against three companies — Gitanjali Gems, Gili India, and Nakshatra — owned by Modi’s maternal uncle Mehul Choksi. The Enforcement Directorate (ED) too filed its second FIR against the three companies under the Prevention of Money laundering Act (PMLA).
ALSO READ: Scam-hit PNB will return to normalcy within six months, assures MD
On Friday, the CBI also conducted searches at 20 properties linked to Choksi and his group companies in Mumbai, Pune, Surat, Jaipur, Hyderabad, and Coimbatore. “Searches were conducted at locations belonging to Gitanjali group, other directors of the accused companies and other group factories and plants including offices, factories and residences,” a CBI official said.
I-T officials say it is one of the biggest scams in the country’s banking history, allegedly premeditated by Modi and Choksi, through a clutch of companies they own, in collusion with some PNB officials.
The CBI said PNB officials Gokulnath Shetty and Manoj Kharat, in connivance with the accused companies, defrauded the bank to the tune of Rs 48 billion. This was done by issuing fraudulent and unauthorised letters of undertaking (LoUs) in favour of foreign branches of Indian banks and purportedly issuing letters of credit in favour of foreign suppliers of Nirav Modi’s firms between 2017 and 2018.
ALSO READ: The PNB fraud: A clear cut case of no systemic accountability
Simultaneously, tax authorities on Friday attached Modi’s 103 bank accounts and 40 properties in multiple cities. Further, the I-T department also issued notices against Modi under the black money and imposition of tax Act, 2015, for alleged undisclosed foreign accounts of Rs 2.71 billion in Singapore.
Confirming the development, an I-T official said criminal prosecution was filed in the magistrate court for willful evasion of tax. Under this, Modi would be summoned by the court and the case would be admitted for further hearing, explained the official. If convicted, he would be given a jail term for up to seven years, according to provisions under the Act, he said.
The total amount of seizures couldn’t be ascertained since the taxmen are still in the process of valuing the assets. However, sources said it could be in the order of tens of billions. Continuing its probe, the ED conducted another round of searches on Friday at several properties linked to Modi and Choksi across the country, officials said.
The ED seized Rs 5.49 billion worth of diamonds, jewellery and gold. On Thursday, it had attached diamonds, jewellery and gold worth Rs 51 billion.
ALSO READ: PNB fraud: What India's biggest sham transaction means for banking sector?
Meanwhile, the enforcement agency summoned Modi, Choksi and two other relatives named in the CBI’s FIR. During the search operations, the ED found that the bank’s money was withdrawn from Hong Kong. Apart from these, the ED also received a list of 29 immovable properties belonging to Modi entitites from the Central Board of Direct Taxes. ED sources said the four accused were given a week’s time to be present before the agency for questioning under PMLA. Explaining the modus operandi, a CBI official said the said bank officials deliberately omitted entries, purportedly issued on behalf of accused companies, to avoid detection.
Funds raised through LoUs were meant to be issued for payment of import bills of the accused companies whereas it was dishonestly and fraudulently utilised for discharging the earlier liabilities on account of the buyer's credit facilities allowed by the overseas branches of Indian bank, it was alleged.
While in case of foreign letters of credit (LC), they were opened initially for smaller amounts by creating purported entries in core banking solution system and sending the relevant LC through SWIFT messages.
ALSO READ: Rs 114-bn PNB fraud happened due to failure of internal controls: RBI
The accused bank officials, pursuant to the conspiracy, enhanced the value of the LC manifolds and issued amendments to the said earlier LCs issued through SWIFT messages without recording it in the core banking solution system, explained a CBI official.
According to Reserve Bank of India guidelines, LoUs for diamond and precious stones cannot be longer than 90 days. But these LoUs rolled over for a year in some cases. This raised suspicion among officials of overseas branches of Indian banks. Further, the CBI also approached Interpol with a request for issuing diffusion notice which was aimed at locating individuals. Both the CBI and ED also sent a request to the government seeking revocation of passports of Modi and Choksi.
Read our full coverage on Nirav Modi scam at PNB

I-T notices to cryptocurrency investors on suspicion of tax evasion

The income tax department has sent notices to thousands of cryptocurrency investors across the country, seeking additional details on the money invested in the virtual currency during the government’s demonetisation exercise.
Among 28 questions in total, the income tax department has sought details on “investment or sales of bitcoins and other cryptocurrencies in India and abroad during 8 November-31 December 2016,” said a notice to cryptocurrency investors on December 20. A cryptocurrency, such as bitcoin, is a virtual currency created and stored electronically using the blockchain technology.
“We have issued notices to cryptocurrency investors in cases where their investment in not in line with the income declared in their returns,” a Central Board of Direct Taxes (CBDT) spokesperson confirmed.
Prime Minister Narendra Modi had announced demonetising old currency notes of Rs 500 and Rs 1,000 on November 8 last year in an attempt to curb black money in the economy. The Union government had asked people to deposit old Rs 500 and Rs 1,000 notes in banks till December 30, 2016.
The income tax department sent the notices to investors a week after it conducted survey operations at major cryptocurrency exchanges across the country on suspicion of alleged tax evasion. During this process, the department sought details of cryptocurrency investors from all exchanges, sources said.
The income tax department has asked for bank statements of investors and their family members for 2015-16, 2016-17 and 2017-18, along with “the computation of loss or gain” arising out of investment in cryptocurrency during these financial years.
The department has also inquired whether the users have brought or sold cryptocurrency from websites registered outside the country and if they have paid any advance taxes against the gains arising out of the investments. “Please furnish details of all transactions in bitcoins and cryptocurrencies from the date you started dealing with them,” the notice said. It further asked if the users had shown the “gains made out of sale of cryptocurrencies as income” in annual income tax returns filed for the present fiscal year and the two preceding years.
The finance ministry had last month cautioned investors against trading in cryptocurrencies like bitcoin, and likened such investments to “Ponzi schemes”.
“The VCs [virtual currencies] do not have any intrinsic value and are not backed by any kind of assets. The price of bitcoin and other VCs, therefore, is entirely a matter of mere speculation resulting in spurt and volatility in their prices… Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes,” the finance ministry had said in a statement on December 29.
The income tax department’s survey on cryptocurrency exchanges was aimed at “gathering evidence for establishing the identity of investors and traders, transactions undertaken by them, identity of counterparties, related bank accounts used, among others". The Reserve Bank of India (RBI) has issued three warnings against investing in cryptocurrencies — in December 2013, February 2017, and earlier this month. The department of economic affairs in the finance ministry had also constituted an inter-disciplinary committee to examine the existing global regulatory and legal structures governing bitcoin and other such virtual currencies. The government is examining the committee’s report.
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Income Tax dept attaches 900 benami properties worth over Rs 35 billion

The Income Tax (I-T) Department on Thursday said it has attached more than 900 benami properties including flats, shops, jewellery and vehicles worth over Rs 35 billion.
I-T Department said in a statement that it has stepped up action under the Prohibition of Benami Property Transactions Act, which came into force from November 1, 2016.
The Act provides for provisional attachment and subsequent confiscation of benami properties, whether movable or immovable.
It also allows for prosecution of the beneficial owner, the benamidar and the abettor to benami transactions, which may result in rigorous imprisonment up to 7 years and a fine of up to 25 per cent of fair market value of the property.
The department had set up 24 dedicated Benami Prohibition Units (BPUs) under its Investigation Directorates all over India in May, 2017 to ensure swift action in respect of Benami properties.
"Due to intensive efforts undertaken by the Department, provisional attachment has been made in more than 900 cases of properties under the Act. These include plots of land, flats, shops, jewellery, vehicles, deposits in bank accounts, fixed deposits etc," the statement said.
The value of properties under attachment is more than Rs 35 billion including immovable properties of more than Rs 29 billion, the department said.
Benami literally means 'without a name'. An asset without a legal owner or a fictitious owner is called benami.
ALSO READ: Income-tax department's Benami advertisement leave property owners jittery
The original Benami Act was introduced in 1988 for prevention of black money and was amended in 2016 to prohibit benami transactions and provides for confiscating benami properties.
I-T Department said that in five cases, the provisional attachments of Benami properties, amounting to more than Rs 1.5 billion have been confirmed by the Adjudicating Authority.
In one such case, it was established that a real estate company had acquired about 50 acres of land, valued at more than Rs 1.1 billion, using the names of certain persons of no means as benamidars, it said without naming the firm.
This was corroborated from the sellers of the land as well as the brokers involved.
In another case, post demonetisation, two assessees were found depositing demonetised currency into multiple bank accounts in the names of their employees and associates to be ultimately remitted to their bank accounts.
The total amount attempted to be remitted to the beneficial owners was about Rs 390 million.
In another case, a cash amount of Rs 11.1 million was intercepted from a vehicle with a person who denied the ownership of this cash. Subsequently, no one claimed ownership of this cash and it was held to be benami property by the Adjudicating Authority.
"The Department is committed to continue its concerted drive against black money and action against Benami transactions will continue to be intensified," the statement added.
The Benami Act defines a benami transaction as a transaction where a property is held by or transferred to a person, but has been provided for or paid by another person.
The 2016 Bill amended this definition to add other transactions which qualify as benami. It includes properties where the transaction is made in a fictitious name, or the owner denies knowledge of the ownership of the property, or the person providing the consideration for the property is not traceable.

Keep away from benami transactions or face action, warns I-T dept

The Income Tax Department on Wednesday warned people to "keep away" from benami transactions, cautioning that violations under the newly enacted law invite criminal prosecution and rigorous imprisonment up to seven years.
The department put out its alert in a public advertisement published in leading national dailies.
Titled "Keep Away from Benami Transactions", it described black money as a "crime against humanity" and urged "conscientious citizens to help the government in eradicating it".
"Benamidar (in whose name benami proper is standing), beneficiary (who actually paid consideration) and persons who abet and induce benami transactions are prosecutable and may face rigorous imprisonment up to seven years besides being liable to pay fine upto 25 per cent of fair market value of benami property," the I-T advertisement said.
The tax department attached benami assets worth Rs 18.33 billion across the country, issued 517 notices and made 541 attachments, from November 1, 2016, to October 2017.
The department started initiating action under the new Benami Transactions (Prohibition) Amendment Act, 2016 from November 1, 2016.
The advertisement added that "persons who furnish false information to authorities under Prohibition of Benami Property Transactions Act, 2016, are prosecutable and may be imprisoned up to 5 years besides being liable to pay fine up to 10 per cent of the fair market value of benami property".
It added that benami property "may be attached and confiscated by the government" and that this action will be in addition to prosecution under the Income Tax Act of 1961 for tax evasion charges.
The I-T department is the nodal department to enforce the Benami Act in the country.