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Newsletter no. 76 dated 19.03.2023
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This website contains information about recent changes mainly in GST laws. It also contains Articles on various topic in GST. Please visit the website and read more.
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Index
- Recent update
- Press Release
- Case Laws
- GST Article
- GST/Income Tax in Media
- GST Notes
- Book by CMA
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List of GSTIN generating IRN -
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Source: E-invoicing portal
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E-invoicing threshold limit
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Press release no. 2300883 dated 18.08.2026
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Top Tax Officials Deliberate on Key Issues Concerning the Income Tax Department at Conclave
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The two-day conclave of Principal Chief Commissioners of Income Tax and Principal Directors General of Income Tax, organized by the Income Tax Department, concluded today, August 18, in Jaipur. The conclave was chaired by Shri Ravi Agrawal, Chairman, Central Board of Direct Taxes (CBDT).
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The event was attended by Members of the CBDT—Shri Pankaj Kumar Mishra, Shri Sanjay Bahadur, Shri Prasenjit Singh, Ms. G. Aparna Rao, Ms. Pallavi Agrawal and Shri Sunil Kumar Singh—along with Principal Chief Commissioners, Principal Directors General, Commissioners of Income Tax (Administration) and other senior officers from across the country.
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The conclave witnessed extensive deliberations on key issues concerning the Income Tax Department, including e-HRMS, service matters, litigation, reservation policy, taxpayer services, future projects, the Systems Directorate, capacity building, infrastructure, expenditure budget, TDS administration and inter-agency coordination. Senior officers also shared their views and suggestions on the challenges and future priorities of the Department. A documentary produced by the Media Cell of the CBDT was also screened during the programme.
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Shri Ravi Agrawal, Chairman, CBDT, held open and interactive discussions with senior officers on the future direction and functioning of the Department and emphasized the need for an actionable roadmap based on the suggestions received. Detailed discussions were also held on infrastructure requirements and essential facilities for Income Tax offices across the country.
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The programme was organized under the guidance of Shri Ravi Agrawal, Chairman, CBDT, and under the leadership of Shri Sumeet Kumar, Principal Chief Commissioner of Income Tax, Rajasthan. Shri Anil Kumar Bhardwaj, Commissioner of Income Tax (Administration & TPS), Jaipur; Shri Gautam Singh Chaudhary, Additional Commissioner of Income Tax (Administration); Shri Surendra Yadav, Deputy Commissioner of Income Tax (Headquarters); and other officers and staff made significant contributions towards the successful conduct of the conclave.
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At the conclusion of the programme, Ms. G. Aparna Rao, Member (TPS&R), CBDT, delivered the valedictory address. Shri Anil Kumar Bhardwaj, Commissioner of Income Tax (Administration & TPS), Jaipur, thereafter extended a vote of thanks to the Chairman, CBDT, Members of the Board, senior officers and all officers and staff associated with the successful organization of the conclave.
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The conclave concluded on a positive and forward-looking note, with a shared commitment to translating the deliberations and suggestions into concrete action towards strengthening the Department and enhancing taxpayer services.
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Press release dated 18.08.26
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Based on ground intelligence and analysis of data on outward foreign remittances, the Income Tax Department has identified several suspicious entities that remitted large amounts of foreign exchange over the last three years. A nationwide network of entities engaged in remitting funds abroad was uncovered during a search operation conducted on a group of fictitious charitable trusts involved in providing accommodation entries against bogus donations/contributions. Preliminary ground verification revealed that the entities making these remittances were either non-filers or were filing income-tax returns showing very small turnovers. The turnovers had no apparent correlation with the large amounts of money being remitted abroad. They also did not appear to match the stated purpose of the remittances, such as payment for freight, import of software, or import of consulting services. Further ground-level intelligence revealed that these entities were not actually operating from the addresses declared by them.
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Further analysis of the data also revealed that a large number of Form 15CB certificates were issued by a relatively small group of professionals. The remitted funds were also received by a clustered group of entities. Form 15CB, read with Rule 37BB of the Income-tax Rules, 1962 (corresponding to Form 146 read with Rule 220 of the Income-tax Rules, 2026), requires the Accountant certifying a foreign remittance to verify its taxability with reference to the books of account and other relevant documents. However, the findings raise concerns about whether adequate due diligence was carried out by the Accountants before issuing these certificates.
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On 18.08.2026, the Department launched a nationwide detailed verification exercise to verify these foreign remittances, focussing on shell entities, the persons behind them, and the professionals who have issued Form 15CB certificates. Entities located in districts along the country’s land borders and remitting significant amounts of money abroad have also been covered in the exercise. The exercise has covered approximately 394 entities (including 117 entities located in land-border States), and 36 professionals.
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The Department emphasises that Accountants issuing certificates in Form 15CB/Form 146 are expected to exercise due care, diligence and professional judgment. They should properly examine the underlying transactions and relevant facts before certifying the remittances, as these certifications play an important role in maintaining trust in the system.
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Further investigations are currently underway.
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The ITAT, New Delhi, in Mohammad Saleem v. ITO, Ward 63(3), New Delhi 110002 held that delay of 191 days in filing appeal before the ITAT due to the lack of access to e-mail resulting in non-communication of dismissal of appeal by CIT(A) is a sufficient cause to condonation of delay for filling appeal.
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Mohammad Saleem (“the Appellant”) has limited education, earning income from running a government-run ration shop or food grains shop. The Appellant filled an appeal on January 03, 2023 against the order dated April 27, 2022 (“the Impugned Order”) passed by the Commissioners of Income-Tax (Appeals) (“CIT(A)”) for the Assessment Year 2011-12.
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The Appellant was required to file the Appeal on or before June 26, 2022. However, the Appellant was unaware of the dismissal of the appeal by the Ld. CIT(A). This lack of awareness was due to communication of the Impugned Order solely through email. Unfortunately, the Appellant did not have access to email due to limited financial resources and a lack of knowledge in utilizing such technology.
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The Appellant became aware of the dismissal of the first appeal upon receiving a penalty notice on October 18, 2022. Subsequently, recognizing the need to take action, the Appellant filed the appeal on January 3, 2023, with a delay of 191 days.
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Whether delay of 191 days can be condoned on the ground that the Appellant has no access to E-mail?
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The ITAT, New Delhi, in ITA No.28/Del/2023 held as under:
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- Noted that, where the Appellant, due to limited resources and lack of knowledge, did not have access to electronic communication, the delay of 191 days in discovering the dismissal of the appeal by the ld. CIT(A) can be considered a valid reason justifying the delay.
- Held that, the delay is condoned and the appeal is admitted for hearing.
DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.
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The ITAT, New Delhi in The ACIT, Circle-47(1), New Delhi v. Ashish Bansal dismissed the Appeal of the Revenue Department and held that the Commissioner has correctly deleted the addition made by the Assessing Officer who merely by comparing industry gross margin and assessee’s gross margin added the differential margin to the income of the assessee without analysing business strategy of the assessee.
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Ashish Bansal (“the Respondent”) is engaged in the business of wholesale trading of gold and silver bullion, manufacturing and selling gold and gold made ornaments. For the Assessment Year 2015-16 the gross profit rate (“GP Rate”) of Respondent reduced to 0.41% as compared to GP Rate of 8.59% in the Assessment Year2014-15, while the turnover has increased from INR 8.23 crores to INR 292 crores in Assessment year 2015-16 when compared to Assessment year 2014-15. The Assessing Officer (“the AO”) issued a Show Cause Notice (“SCN”) ordering to provide separate working of Gross Profit, Net Profit of silver, gold bullion and manufacture of gold ornaments.
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The Respondent in its reply inter alia stated that the reason for steep fall in his GP rate was due to change in business strategy by decreasing Gross margin which resulted in higher turnover.
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The AO was not satisfied with the GP Rate declared by the Respondent and made addition of INR 1,72,35,965/- by taking GP Rate as 1% instead of 0.41%, adjusting it with the industry Gross margin.
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Aggrieved by addition made by the AO, the Respondent filed an appeal before the Commissioner of Income Tax (Appeal) (“CITA”) who vide Order dated August 30, 2018 ("the Impugned Order”) deleted the addition made by the AO, without doubting the correctness, completeness and fairness of the books of the Respondent.
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Aggrieved by the Impugned Order the Revenue Department filed an appeal before the ITAT.
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Whether the AO has power to make addition in income of the Respondent by best judgment method without understanding the business strategy of the Respondent?
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The ITAT, New Delhi in ITA No.7427/Del/2018 held as under:
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- Stated that, the AO has not pointed out any defects or discrepancies in the audited books of accounts and has only on the basis of the reduction in GP rate made addition of INR 1,72,35,965/- in income of the Respondent.
- Observed that, it is well accepted principle of tax jurisprudence that the AO cannot sit on the armchair of the businessman to replace his business strategy by his own whims and fancies.
- Noted that, it was the Respondent’s business decision to reduce the GP rate with an intention to fetch high turnover resulting into increase in the total net profit.
- Held that, the CIT(A) vide the Impugned Order has correctly deleted the addition made by the AO of INR 1,72,35,965/- to the income of the Respondent.
- Dismissed the Appeal of the Revenue.
DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.
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The document to claim ITC on RCM is Self Invoice and not the invoice issued by the vendor. Self invoice is raised in the month of payment of GST under RCM. And the timeline for taking credit begins from the date of self invoice.
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If the vendor invoice is dated March 2026 but the RCM at that expense is paid in September 2026 then the self invoice would be raised in September 2026 after making GST payment and ITC time limit would be counted from September 2026.
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The above has been clarified by the CBIC vide Press release dated 03.07.2019.
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The condition of payment to the vendor within 180 days is not applicable to RCM as the tax is paid by the recipient himself.
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Payment to Air transporter, bus service provider through as an agent
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I am taking this point again to touch upon the payment condition of 180 days to the Indigo , Akasa, Spicejet, Red bus , the actual service provider. Normally the agent Thomas Cook or other local agents book tickets for the passenger. They raise their invoice for service rendered. And another invoice is raised to claim the reimbursement of ticket cost. Now the provision u/s 16(2) of CGST Act requires a recipient to make payment to service provider within180 days. This condition is not fulfilled as the payment is not made to airlines or bus operators. The payment is in fact made to Thomas Cook. And they pay to the airline.
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Also, there is no ledger or account in the books of the recipient for Indigo, Akasa or Red bus.
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In this case, a correlation of payment made on reimbursement invoice to Thomas Cook needs to be done with the airline ticket invoice details given as a support to that reimbursement invoice. Also, the airline invoices populate in GSTR 2B. The same can also be compared with invoice listings given by agents to match and claim the credit.
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ISD credit is populated in table 4(A)(3) of GSTR 3B of the recipient on the filing of GSTR 6 by the Input Service Distributor (ISD).
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The credit so distributed is supported by an invoice issued by ISD. The ISD is an office of the same company in a different state or in the same state. It may be a Head office or branch office which receive common services I.e. services received for all the branches including the same branch. Classic example is Tax audit, GST audit services.
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The credit allocation to respective branches is done on the basis of turnover. It may be the previous month or the previous year. Previous year turnover is generally considered for allocation as the financials are audited.
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The recipient of the ISD credit need not go into the working of ISD distribution. It may rely upon the ISD invoice for taking ITC. The responsibility of correct allocation lies on the ISD.
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The timeline to claim credit on the ISD invoice does not hit by section 16(4). This is because the credit is first claimed by ISD following the condition prescribed in section 16 and distribution is a subsequent activity of just distributing the credit.
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The basis for claiming ITC on import of goods is the 'Bill of Entry ' (BOE). This document prepared by the importer is verified by the customs officer and the basis of the same customs duty is paid.
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The Customs portal (ICEGATE) automatically transmits the BOE details to the GST Portal , more specific to table 4(A)(1) of 3B.
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The timeline of section 16(4) does not apply to BOE ITC. But there is another view that BOE is equivalent to Invoice and therefore the timeline of section 16 (4) applies to BOE as well.
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BOE ITC also appears in GSTR 2B. There are notices when the importer claims ITC basis BOE copy when the details are not populated into 2B. On submission of BOE copy officers do accept the same and waive off the notice.
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However, to pull the details to 2B from icegate you may go to Services > User Services > Search BoE.
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Office rent or godown rent is generally paid on the basis of an agreement. The owner does not raise a monthly invoice. However, he files GSTR 1 regularly. The details also populate into 2B of the recipient. Whether the absence of invoice fulfils the condition of section 16(2)(a) of CGST Act? The answer is No.
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An education to the owner is required on the importance of actually issuing an invoice. Till then the ITC can be taken on the basis of 2B.
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The Hon’ble Supreme Court in GVK Jaipur Expressway Pvt. Ltd. v. Deputy Commissioner of State Tax & Ors. issued notice in the Special Leave Petition filed by the Assessee challenging the judgment of the Hon’ble Rajasthan High Court, which had dismissed its writ petition against a total GST demand of Rs. 14,06,54,640/-, wherein the Assessee contended that neither the Show Cause Notice (“SCN”) nor the adjudication order was duly served upon it and that the service was allegedly effected by merely uploading the same on the GST Common Portal. Taking note of the submission that the Hon’ble Madras High Court and the Hon’ble Delhi High Court have viewed such portal-upload as incomplete service, particularly where the relevant notices/orders may be referable to two separate tabs, namely “View Additional Notices/Orders” and “View Notices and Orders”, the Hon’ble Supreme Court issued notice, returnable in four weeks.
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GVK Jaipur Expressway Pvt. Ltd. (“the Petitioner”) was issued an order in FORM GST DRC-07 dated February 29, 2024, raising a demand of Rs. 3.39 crores, wherein it was specifically found that the Petitioner did not discharge its due GST liability through FORM GST DRC-13 for the FY 2018-19 and accordingly, the demand along with interest and penalty was imposed under Section 74 of the Rajasthan Goods and Services Tax Act, 2017 (“the RGST Act”)/ the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
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The said order was not challenged by the Petitioner in appeal. Consequently, vide order dated December 19, 2025, the bank account of the Petitioner was attached against the total demand, including tax and interest, of Rs. 14,06,54,640/-.
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Aggrieved, the Petitioner filed a writ petition before the Hon’ble Rajasthan High Court contending that it did not come to know about the orders passed by the GST Authorities and that the SCN as well as the order in FORM GST DRC-07 were not properly communicated and placed on the GST Portal. The Petitioner further relied upon the judgment of the Hon’ble Rajasthan High Court in Eagle Trans Shipping and Logistics India Private Ltd. v. Union of India & Ors. , wherein the assessee therein was allowed to file an appeal on the ground that a person cannot be left remediless, if the time period for filing of appeal has expired and there are valid reasons for the delay in filing of the appeal.
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However, the Hon’ble Rajasthan High Court in GVK Jaipur Expressway Pvt. Ltd. v. Deputy Commissioner of State Tax & Ors. dismissed the writ petition, holding that a deliberate ignorance had been shown towards the SCN and the order, since it is not possible for a company to remain unaware of an order passed under Section 74, more so, when it continues to hold its GST registration and would, therefore, be filing regular monthly and annual returns. The Court further noted that neither an appeal was filed nor any attempt was made to file an appeal, and instead, the Petitioner had merely moved a rectification application seeking rectification of the order. Holding that equity does not lie in favour of the Petitioner and distinguishing the judgment in Eagle Trans Shipping (supra), the writ petition was dismissed.
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Aggrieved by the dismissal of the writ petition, the Petitioner filed the present Special Leave Petition before the Hon’ble Supreme Court.
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Whether service of the SCN and the adjudication order by merely uploading the same on the GST Common Portal constitutes valid service, particularly where the relevant notices/orders may be referable to two separate tabs, namely “View Additional Notices/Orders” and “View Notices and Orders”?
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The Hon’ble Supreme Court in SLP(C) No. 25965 of 2026 held as under:
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- Noted that, the Petitioner had raised the issue of non-service of the notice as well as the order, and that the notice was allegedly served by uploading it on the Common Portal.
- Observed that, as per the Petitioner, the Hon’ble Madras High Court as well as the Hon’ble Delhi High Court have viewed service of notice by uploading on the portal as incomplete, particularly where the relevant information may be referable to two tabs, namely, “View Additional Notices/Orders” and “View Notices and Orders”, and that the Petitioner’s case is squarely covered by the said decisions.
- Accordingly, issued notice in the SLP, returnable in four weeks.
- The case is tentatively listed on September 11, 2026 (computer generated date).
Section 169 of the CGST Act prescribes the modes of service of any decision, order, summons, notice or other communication, namely: (a) by giving or tendering it directly or by a messenger/courier; (b) by registered post, speed post or courier with acknowledgement due; (c) by e-mail; (d) by making it available on the common portal; (e) by publication in a newspaper; or (f) by affixation. Further, Section 169(2) of the CGST Act provides that every such communication shall be deemed to have been served on the date on which it is tendered, published or affixed, as the case may be.
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The moot question, which has divided the High Courts, is whether mere uploading of the SCN/order on the Common Portal under Section 169(1)(d) of the CGST Act, by itself, constitutes valid and effective service, especially in cases where such notices/orders were housed under the “View Additional Notices/Orders” tab, which was not readily visible to taxpayers, as against the regular “View Notices and Orders” tab. Notably, taking cognizance of this anomaly, the GSTN re-designed the portal in January 2024 to merge both the tabs under a single window, which itself is a tacit acknowledgment of the confusion caused by the twin-tab architecture.
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A consistent line of decisions has favoured the taxpayer on this issue. The Hon’ble Madras High Court in East Coast Constructions and Industries Ltd. v. Assistant Commissioner (ST) and in Sabari Infra Pvt. Ltd. v. Assistant Commissioner (ST) set aside ex parte orders where the notices/orders were merely uploaded under the “View Additional Notices and Orders” tab without any effective communication to the taxpayer. Similarly, the Hon’ble Delhi High Court in Anhad Impex v. Assistant Commissioner held that uploading of the SCN under the “Additional Notices” tab did not amount to sufficient communication and remanded the matter for fresh adjudication. The Hon’ble Allahabad High Court in Ola Fleet Technologies Pvt. Ltd. v. State of U.P. also extended the benefit of doubt to the taxpayer where the order was reflected under the “Additional Notices and Orders” tab. Further, the Madurai Bench of the Hon’ble Madras High Court in Mrs. K. Balakrishnan, Balu Cables v. O/o. the Assistant Commissioner of GST (2024) went a step ahead to hold that where no response is forthcoming from the taxpayer to the notices uploaded on the portal, the Department ought to explore other effective modes of service prescribed under Section 169 of the CGST Act, such as RPAD, instead of mechanically completing the formality by portal upload.
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Per contra, a contrary line of decisions, including that of the Hon’ble Madras High Court in Poomika Infra Developers v. State Tax Officer (January 2025), has taken the view that making a notice/order available on the Common Portal is itself a statutorily prescribed and independent mode of service under Section 169(1)(d) of the CGST Act, that the modes prescribed thereunder are alternative and not sequential, and hence, service stands complete upon such upload. The Hon’ble Rajasthan High Court, in the impugned judgment, has adopted a similar approach, albeit resting primarily on the conduct of the taxpayer in exhibiting “deliberate ignorance”.
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The issuance of notice by the Hon’ble Supreme Court in the present SLP is, therefore, a significant development, as the verdict would authoritatively settle the divergence amongst the High Courts on the validity and sufficiency of portal-based service under Section 169 of the CGST Act. The outcome would have a direct bearing on a large number of ex parte adjudications, consequential recovery/attachment proceedings, and appeals barred by limitation under Section 107 of the CGST Act, where the taxpayers’ primary grievance is want of effective service. Until the issue is settled, taxpayers would be well-advised to regularly monitor all the tabs on the Common Portal and keep their e-mail and contact details updated, while the Department, on its part, should adopt supplementary modes of service where no response is received, so that adjudication does not get reduced to an empty formality in breach of the principles of natural justice.
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Let us see some scenario where Input tax credit claim need critical thinking -
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Short quantity / damaged quantity
Sometime the goods are received in short quantity due to loss in transit. Or sometime some unit of goods get damaged while unloading of the goods from the vehicle. So, the quantity as mentioned in the invoice is not equal to the quantity actually received by the buyer. In this case, there are two methods of accounting the receipt of the goods. First one is accounting of the net quantity received . Second , account the full quantity mentioned on the invoice and then raise credit note for the short or damaged quantity.
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The second method seems helpful in performing reconciliation of the purchases with GSTR-2B. As in 2B the invoice and credit note details are captured separately. Thus, the total quantity in books matches with the total quantity on invoice and the credit note in books will match with credit note sheet in GSTR-2B .
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A question may arise as to why would a buyer account full quantity when he had received a lesser quantity and then account for the short quantity with a credit note? He would simply account the net quantity received.
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But the method of accounting invoice and credit note separately would certainly give a clarity to the buyer and also to the department officer. It is easier to explain the match of the ITC in books with ITC in invoice sheet in 2B and credit note in books with the Credit note sheet in 2B.
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Retention money
This concept is common in construction sector where the service receiver holds some part of the amount in every RA bill till the entire civil project gets completed. Once the project is completed may be in 6 months or 1 year or may be 1.5 years' time the money on hold may be released thereafter.
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A civil work may include construction of new factory building or admin building or major expansion to the existing building. RA - Running Account means the tracking of a project milestone and raising invoice according to the completion of the project.
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There is a condition u/s 16(2) of CGST Act, 2017 to claim ITC. The section requires the buyer to make full payment (basic value + GST) to the vendor. Since the payment is on hold the proportionate credit to the extend on hold payment the ITC need to be reversed.
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There exist different view that payment of agreed value should be considered for payment instead of considering the invoice value. The quantum of payment is agreed by both the parties and statutory law should not insist on making payment of invoice value.
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Free samples
Some quantity of goods are generally given to the distributor free of cost to boost sales. This is required to create market for new product. The free quantity eligibility depends upon the turnover of the distributor. For instance, if you buy 10 quantity you will get 2 quantity free. Similarly, on 100 quantity purchase, 20 quantity would be given as free. This is not a "buy one get one free concept" but it is a commitment of selling a targeted quantity of goods to the buyer and free goods are reward for that.
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The movement of goods are taken place through a Delivery Challan mentioning value of goods and GST. The value of goods is generally MRP or market value of similar product. Such nominal value also required for e-way bill purpose.
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Buy one get one free
'Buy one and get another one free' is one of the marketing techniques. The free product is given through invoice. It is shown on the face of the invoice.
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It appears that one quantity is given free when another quantity is purchased. But the recent Circular clarifies that even though one quantity appears to be free but in practice the cost of another product is embedded in the cost of the first product purchased by paying cost. Accordingly, there is no need for reversal of ITC on goods given as free on face of invoice.
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Annual Maintenance Contract (AMC) Service
The classic example of AMC contract is Air conditioner (AC) service. The service provider charges AMC for services to be given in next 12 months at the beginning of the year itself and raise tax invoice with GST. But since the service receipt is scattered over a period of 12 months , the question arises whether full GST credit is eligible at first month itself or wait till 12 months to become eligible to claim credit?
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The invoice copy is received, the invoice appears in 2B , tax is paid by supplier, etc. and it is recorded in books by the recipient also. In practice the ITC is taken on receiving the invoice and matching the details with 2B.
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GSTIN cancellation
It may happen that GSTIN of the supplier was active at the time of issuing invoice but later-on their GSTIN got cancelled. The ITC may be rejected by the officer because of cancelled GSTIN of the supplier. If the ITC is negligible then reversal the ITC. Otherwise, wait for the auditor to point it out and then justify with the case law that 'Lex Non Cogit ad Impossibilia' and other valid justifications.
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5. GST/Income Tax in Media
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The Preventive Wing of the Central Goods and Services Tax (CGST) Commissionerate, Shimla, has uncovered an alleged GST fraud involving input tax credit of around ₹5.55 crore in the Kala Amb industrial area of Sirmaur district. The investigation has also led to the arrest of Gaurav Jain, managing director of M/s Samay Pharma India Private Limited, Trilokpur.
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How Was the Alleged GST Fraud Carried Out?
CGST officials alleged that Samay Pharma and M/s Dual Healthcare claimed input tax credit using fake invoices issued by several firms that either did not exist or were found to be non-genuine.
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The investigation found that ITC worth around ₹5.55 crore was allegedly claimed through invoices linked to 10 such firms. Officials examined the transactions to determine whether the supplies mentioned in these invoices had actually taken place.
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What Did Officials Find About the Goods?
Officials said the invoices showed the purchase of goods, but there was no evidence confirming that those goods were actually transported.
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E-way bills and toll-plaza records also did not support the movement of goods mentioned in the invoices, raising questions about whether the transactions reflected genuine supplies.
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How Were GST Refund Claims Allegedly Involved?
Officials further alleged that the fake input tax credit was later included in GST refund claims.
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The suspected credit was allegedly used in an attempt to obtain money back from the government through the GST refund mechanism.
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What Other Irregularities Were Found?
During the investigation, officials found several suspicious transactions, fake firms and invoices without actual movement of goods.
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They also alleged that shell entities were being used to manipulate the GST credit and refund system.
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What Evidence Did Investigators Examine?
The CGST team recorded statements from several people during the investigation and examined digital evidence.
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The inquiry also looked at invoices, the firms connected to them and records relating to the alleged movement of goods.
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Why Was the Managing Director Arrested?
Based on the evidence collected during the investigation, Gaurav Jain, managing director of M/s Samay Pharma India Private Limited, was arrested.
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The arrest was made under Section 69(1) of the Central Goods and Services Tax Act, 2017.
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Follow for daily updates on cybercrime, corporate fraud, DFIR, hacking, investigations, and digital forensics
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GST officers have arrested a partner of a firm engaged in trading of iron and steel goods for fraudulently availing input tax credit of over Rs 15.78 crore.
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Investigations by the Central Goods & Services Tax (CGST), Delhi South Commissionerate's anti-evasion branch revealed that the firm had availed inadmissible ITC on the basis of invoices issued by multiple firms, several of which were found to be non-existent, non-functional, suspended or cancelled.
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Field verification also established that certain suppliers had no genuine business activity at their declared places of business.
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In a statement, the Finance Ministry said, "CGST Delhi South Commissionerate have arrested a partner of the firm engaged in trading of iron and steel goods in a case involving fraudulent availment, utilisation and passing on of inadmissible ITC aggregating to over Rs 15.78 crore through bogus invoices of approximately Rs 87.67 crore."
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Further inquiry established that ITC was availed without actual receipt of goods and was also passed on to various recipients through invoices issued without corresponding supply of goods.
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Based on the evidence gathered during the investigation and statements recorded under Section 70 of the CGST Act, 2017, the accused was arrested on September 14 and produced before the Patiala House Court, which remanded him to judicial custody for 14 days.
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The September 30, 2026 deadline for filing tax audit reports for assessment year (AY) 2026-27 is fast approaching, but the government has not announced any extension so far. Several Chartered Accountant (CA) associations have sought more time, citing the workload involved in completing audits, reconciliation issues and delays in getting audit-related information and utilities.
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For taxpayers whose accounts are subject to audit, September 30 remains the applicable deadline unless the Central Board of Direct Taxes (CBDT) announces a change. Experts say taxpayers should continue working towards the existing deadline rather than wait for an extension.
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CA associations seek more time
The demand for an extension has gained momentum as professional bodies have raised concerns over the time available to complete tax audits. The Chartered Accountants Association, Jalandhar has sought an extension of the tax audit deadline to October 31, while the Punjab Accountants Association and Rajasthan Consultants Association has also made a similar representation.
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The associations have cited the delayed release of ITR forms and utilities, increased compliance requirements and the overlap between the August 31 non-audit ITR deadline and the September 30 tax audit deadline. They have argued that extending the audit deadline would provide CAs with more time for proper reconciliation and verification.
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The request comes against the backdrop of a tax audit process that requires detailed reporting and verification across several financial and tax records.
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Mohit Gupta, partner – direct & international taxation, PNAM & Co. LLP, said taxpayers and professionals should continue to work on the assumption that September 30 is the deadline unless the CBDT formally announces an extension.
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“At present, taxpayers and professionals should proceed on the basis that September 30, 2026 remains the applicable deadline unless the CBDT issues a formal extension notification,” Gupta said.
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He said the demand for additional time is not merely about getting more time to file the report. Auditors need to reconcile books of account with GST records, TDS/TCS data, AIS/TIS and other information before finalising the report.
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“The demand for additional time is therefore primarily about ensuring quality and accuracy of compliance rather than merely seeking additional time for filing,” he said.
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What are the biggest challenges?
The audit process has become increasingly data-intensive, with auditors required to examine information from multiple sources. Any mismatch between the books and tax records may need further investigation before the report can be finalised.
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Dinesh K. Jain, managing partner, Dinesh Aarjav & Associates, said the pressure is coming from several issues at the same time.
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“Three things are stacking up: a compressed working window, recurring portal issues — login failures, OTP delays, DSC errors, and glitches pulling AIS/TIS/Form 26AS data; and reconciliation friction,” Jain said.
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Taxpayers may have to reconcile turnover with GST returns, verify TDS/TCS details, check AIS and TIS entries and match bank transactions with the books. Pending information from taxpayers can further delay the process.
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Gupta said bank statements, fixed-asset details, loan schedules, related-party information, expense details and other supporting documents need to be available with the auditor before the report can be completed.
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Another factor this year is the transition to the Income-tax Act, 2025. However, the tax audit relating to FY 2025-26 and AY 2026-27 continues under the Income-tax Act, 1961.
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Will the government extend the deadline?
There is a precedent for extending the tax audit deadline. For FY 2024-25, the CBDT had extended the deadline for filing tax audit reports from September 30, 2025 to October 31, 2025.
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However, last year's extension does not mean that the government will necessarily take a similar decision this year.
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What should taxpayers do now?
With the deadline approaching, taxpayers whose accounts are subject to audit should start closing any pending gaps rather than wait for a government announcement.
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The immediate priority should be to provide CAs with all outstanding documents and complete key reconciliations. This includes GST turnover, AIS/TIS and Form 26AS, bank and loan accounts, fixed assets, statutory dues, related-party transactions and expenses that may require tax-disallowance analysis.
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Experts say taxpayers should work backwards from the deadline and ensure that their reports are not left for the final day.
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“Work backward from September 30, not toward it,” Jain said.
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Taxpayers should also remember that uploading the audit report is not the end of the process. The CA files the report electronically, after which the taxpayer has to approve it through their income-tax e-filing account.
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Therefore, taxpayers should keep sufficient time for the approval step as well.
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For now, September 30 remains the tax audit deadline for AY 2026-27. Unless the CBDT formally announces an extension, taxpayers and CAs should proceed on the basis that the existing deadline will apply.
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The Union government has moved the Supreme Court against a Punjab and Haryana High Court ruling that declared Section 147A of the Income Tax Act unconstitutional, a decision that has raised questions over the validity of reassessment proceedings conducted by jurisdictional tax officers.
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Additional Solicitor General N Venkataraman, appearing for the Centre, on Wednesday sought an urgent hearing of the Centre’s special leave petition (SLP) before Chief Justice of India Surya Kant. The CJI agreed to have the matter listed on an urgent basis.
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Seeking an early hearing, Venkataraman told the court that the High Court ruling had created a “huge vacuum” in the law and that the issue was being closely followed by taxpayers.
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The challenge concerns the statutory framework governing reassessment proceedings under Sections 148 and 148A of the Income Tax Act, particularly the respective roles of the jurisdictional assessing officer (JAO) and the National Faceless Assessment Centre (NFAC).
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The dispute gained prominence after the introduction of the faceless assessment regime. A key question before the courts was whether jurisdictional officers retained the authority to independently issue reassessment notices under Section 148 and pass orders under Section 148A, or whether such functions were required to be routed through the faceless assessment mechanism.
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The Punjab and Haryana High Court, in Income Tax Officer, Ward 2(1), Chandigarh v Tej Partap Singh, was among the courts that invalidated reassessment proceedings initiated by jurisdictional officers where the prescribed faceless procedure had not been followed. Some other High Courts, however, adopted a different interpretation of the statutory scheme.
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Against this backdrop, Parliament retrospectively introduced Section 147A with effect from April 1, 2021. The provision stipulated that references to the “Assessing Officer” in Sections 148 and 148A would mean an assessing officer other than the National Faceless Assessment Centre.
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The amendment effectively sought to preserve the jurisdiction of jurisdictional officers to undertake reassessment-related functions, notwithstanding the earlier judicial rulings concerning the faceless mechanism.
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The Punjab and Haryana High Court subsequently examined the constitutional validity of Section 147A and struck it down. The court held that legislation could not retrospectively alter the legal position merely by declaring that a position contrary to earlier judicial findings was valid.
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The High Court found that the provision attempted to overcome the effect of judicial decisions holding the earlier reassessment procedure legally defective rather than curing the underlying legal infirmity. It consequently held the retrospective legislative intervention to be impermissible.
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The Centre’s challenge before the Supreme Court will now bring the validity and effect of Section 147A into focus, including the extent to which Parliament can retrospectively alter the statutory basis of reassessment proceedings following judicial pronouncements on the issue.
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Source: Business Standard
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Tax officer imposed a 200% penalty of Rs. 4.85 lakh, but ITAT cut it to Rs. 1.21 lakh.
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You file your income tax return but end up under-reporting your income. But, the income tax department treats it as mis-reporting of income and imposes a heavy penalty on you. What happens then?
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This is the case of a 57-year old non-resident Indian (NRI) woman who ended up under-reporting her income when she filed here Income tax return, and the gap was huge.
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What the case is about
The NRI woman declared an income of Rs. 43,796/- for the assessment year 2020-21. But the Income tax department tracked an interest income of Rs. 14,46,321 that was not disclosed in here return and imposed a 200% penalty on her.
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The assessing officer treated the omission as misreporting and imposed a penalty of Rs. 4.85 lakh, equivalent to 200% of the tax payable on the under-reported income.
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The additional interest income was brought to tax during reassessment because it had not been disclosed in the original return. The tax officer classified the omission as misreporting, which attracts a penalty of 200% under Section 270A, rather than the 50% penalty applicable to ordinary under-reporting.
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The woman denied deliberately concealing income. In here appeal, she said she had consistently filed her returns on time and had never intentionally under-reported her income.
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The CIT(A) upheld the penalty, observing that interest income of Rs. 14,02,525/- had been completely omitted from the return.
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The CIT(A) found that the interest income of Rs. 14,02,525/- had been entirely left out of the return. It also noted that the taxpayer had not voluntarily disclosed the income or provided an explanation and supporting documents despite receiving several notices.
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The taxpayer then approached the Income tax Appellate Tribunal (ITAT), Mumbai, which upheld the penalty for under-reporting but reduced the applicable penalty rate from 200% to 50%.
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How did she explain the mismatch?
Her advocate said the woman was living abroad, had limited technological knowledge and had handed over her tax compliance to an accountant. She therefore remained unaware of the electronic notices issued by the department. After learning about the discrepancy, she paid the additional tax and interest.
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"She was only informed about the additional tax liability of Rs. 2,42,589/- plus interest amounting to Rs. 3,06,821/- totaling to Rs. 5,49,410, which was paid on 23.01.2025, as the said tax plus interest liability had arisen due to the accountant's mistake."
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The taxpayer argued that the case involved under-reporting rather than misreporting and that the penalty should therefore have been 50% of the tax liability, or Rs. 1,21,295/-.
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The woman maintained that she was an NRI during the relevant period and remained so until 01.04.2025. She attributed the omission to the accountant handling her tax compliance and her lack of awareness of the electronic notices.
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What did ITAT Mumbai say?
The Tribunal found that omission of income cannot automatically be classified as misreporting. It considered the taxpayer's circumstances and the fact that she paid around Rs. 5 lakh in tax and interest after becoming aware of the discrepancy.
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"In our considered view, non-compliance with electronic notices in these peculiar circumstances cannot by itself establish that the original omission of interest income represented deliberate misreporting warranting penalty at 200%," it said.
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The tribunal also stressed that the law makes a distinction between ordinary under-reporting , which attracts a 50% penalty, and under-reporting resulting from mis-reporting, which attracts 200%.
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"The higher rate cannot be applied merely because the department detected the omitted income or because the assessee did not respond to notices."
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ITAT Mumbai therefore sustained the penalty under Section 270A for under-reporting , but directed the Assessing Officer to apply the 50% rate instead of 200%.
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Anuj Dave, Practice Head (Ahmedabad & Mumbai) at Clavius Legal told ET that several circumstances taken together supported the taxpayer's case. "She was a non-resident living abroad, had entrusted her compliance to an accountant, claimed limited technological knowledge and to have been unaware of the electronic notices, and paid tax and interest of Rs. 5,49,410 on becoming aware of the liability."
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It is important to note that the Rs. 5,49,410 already paid towards tax and interst does not cancel the separate penalty liability.
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The payment of tax and interest was considered in the taxpayer's favour, but did not serve as a defence against the penalty.
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The original penalty was Rs. 4,85,178/- at the 200% rate. That rate has now been reduced to 50%, but the taxpayer will still have an additional penalty liability, Mathews said.
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What's important to note is that an addition to income during assessment or reassessment does not, by itself, establish misreporting . The Revenue must show that the facts fall within one of the specified categories.
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Similarly, failure to respond to statutory notices can be relevant, bud does not by itself prove deliberate misreporting.
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Source: The Times of India
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6. GST Notes by CMA Anil Sharma
1) Shri CMA Anil Sharma, Shri CMA Gurdev Singh Saini and Smt. CMA Bhawna Sharma posted Chapter-14 containing CGST Act in simple language in PPT format. This is to make dealers, professionals, academicians, students etc. understand the basics of GST laws. Each Chapter in CGST Act, 2017 is explained in the form of Slides as given below for easy understanding of the Act:
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Chapter-14 slides given below:-
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7) Book by CMA Anil Sharma, B.Com (Honrs), M.Com, FCMA co-author of the book
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Handbook on GST Audit by Tax Authorities has authored yet another book
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title Goods & Service Tax – Some Perceptions and Reflections. Buy now at Price Rs.300/-.
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