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    Act RulesIncome Tax
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    Act RulesIncome Tax
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    Charge of tax on firms: statutory source choice alters which central enactment prescribes the applicable rate for a year.
    Both texts charge tax on a firm's total income but differ in the statutory source for the applicable rate: the Bill points to the annual tax statute as the operative source, while the Act uses a broader reference to any Central Act for the relevant year, potentially expanding the range of enactments that may prescribe the rate and introducing additional interpretive and administrative considerations.
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    Director liability: personal joint and several responsibility for unrecoverable company tax, unless director disproves gross neglect or misfeasance.
    Section 323 imposes joint and several liability on persons who were directors of a private company during the relevant tax year where tax due (including penalty, interest and fees) cannot be recovered, operating irrespective of the Companies Act, 2013. A director is exempt only if he proves the non-recovery cannot be attributed to gross neglect, misfeasance or breach of duty. The Act omits a narrow conversion-to-public-company saving that appeared in the original Bill, thereby broadening potential director exposure.
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    Taxation of AOPs/BOIs: unknown member shares trigger top personal rates on aggregate income; known shares require apportioned taxation.
    Where members' shares in an AOP/BOI are indeterminate or unknown, the entity's total income is taxed at the maximum marginal rate or at any higher rate applicable to a member's total income; where shares are determinate, each member's other income is tested against the Finance Act's non taxable threshold and portions attributable to higher rate members are taxed at those rates while the balance is taxed at the maximum marginal rate, with a deeming rule treating indeterminacy at formation or thereafter as sufficient.
    Act RulesIncome Tax
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    Oral trust taxation: trustee receipts are taxed at the maximum marginal rate, shifting compliance and liability to trustees.
    Tax on income connected to an oral trust is charged at the maximum marginal rate when a trustee receives or is entitled to receive income on behalf of or for the benefit of any person under an oral trust (per section 303(3)), irrespective of other provisions; the Bill had instead charged the income of the person appointed under an oral trust.
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    Tax on unallocated trust income risks top marginal taxation unless beneficiaries and shares are expressly stated and ascertainable.
    Representative assesses holding income for beneficiaries with unspecified or indeterminate shares are taxable at the maximum marginal rate unless a court order, trust instrument or wakf deed expressly identifies beneficiaries and their ascertainable shares on the relevant date; limited exceptions allow taxation at association of persons rates where beneficiaries lack other significant income, where the trust is a sole testamentary trust, where a bona fide historical non testamentary trust for dependants exists, or for bona fide employee benefit funds, and business profits are normally subject to the top rate unless the narrow will trust exception applies.
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    Representative assessee recovery rights secure retention via Assessing Officer certificate limiting recoverability at final settlement.
    A representative assessee who pays any sum under the Act may recover it from the principal or retain an equivalent amount in his representative capacity; a person who apprehends such assessment may retain estimated liability from monies payable to the principal; on dispute the Assessing Officer may issue a certificate authorising retention pending final settlement; recoverability is capped by the certificate amount, except where the representative holds additional assets of the principal, and the enacted text ties that cap to the time of final settlement.
    Act RulesIncome Tax
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    Representative assessee liability: treated as beneficial owner for assessment, with revenue able to reach beneficiaries directly.
    Section 304 treats a representative assessee as if the income were beneficially his for duties, liabilities and assessment; it places assessment liability on the representative in his own name, contains an exclusivity rule preventing assessment of the same income under other provisions, preserves the Assessing Officer's power to assess or recover tax directly from the beneficial owner, prescribes a pro rata formula for beneficiaries' share of a chargeable trust income, and grants the revenue equivalent remedies against property under the representative's control.
    Act RulesIncome Tax
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    Block period definition governs temporal scope for assessing undisclosed income, including virtual digital assets and documents.
    Clause 301 defines the block period as the six tax years preceding the tax year of a search or requisition plus the portion of that tax year to the date of the last authorisation, and deems the last authorisation executed on the conclusion recorded in the last panchnama for searches or on actual receipt for requisitions. It defines undisclosed income in two limbs: tangible and intangible items or entries representing undisclosed income (including virtual digital assets), and expenses/exemptions/deductions/allowances claimed under the Act that are found incorrect, and it lists books, documents and valuables as requisitioned or seized items.
    Act RulesIncome Tax
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    Levy of interest and penalty in search cases: interest accrues and an administrative penalty may attach to undisclosed income when returns are not furnished.
    Where a return required by a search notice is not filed, the provision charges interest on tax determined in the search assessment for the period from the day after the notice deadline until assessment completion, and permits an administrative penalty measured by reference to the tax leviable on undisclosed income determined in that assessment. A conditional bar prevents penalty for the block period if the return is filed, tax is paid with evidence, and no appeal is filed against the returned portion; any undisclosed income in excess of declared amounts remains penalizable. Procedural safeguards include a hearing, higher level approval for large penalties, and specified limitation and exclusion rules.
    Act RulesIncome Tax
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    Time-limit for completion of block assessment: statutory period anchored to quarter-end with specified exclusions and minimum remaining period.
    Time-limit for completion of block assessment fixes a statutory period for passing orders under the special search/block assessment procedure, anchors computation to a calendar endpoint, prescribes enumerated excluded periods (including custody of seized items, court stays, information exchange references, audit and valuation processes, references to valuation or appellate authorities, penalty and avoidance arrangement references, and Advance Rulings proceedings), provides a minimum remaining period protection after exclusions, and includes month end rounding; the enacted text shifts the anchor from month end to quarter end and refines exclusion wording and cross references.
    Act RulesIncome Tax
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    Undisclosed income transfer to other person's AO triggers block assessment and fixes abatement reference to receipt date.
    When an Assessing Officer is satisfied that seized money, assets, books, documents or any information therein pertain to a person other than the person searched, those materials must be handed to the Assessing Officer having jurisdiction over that other person, who shall proceed under section 294 and apply the block assessment provisions; for abatement under section 292 the reference date for the other person is the date the receiving AO obtains the seized materials or information.
    Act RulesIncome Tax
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    Block assessment procedure: time limited compelled return after search, limits revision rights and prescribes applicable procedural and penalty provisions.
    Section 294 compels a time limited special return of undisclosed income following a search or requisition, treats that return as within a specified return regime, precludes revised returns, prescribes which procedural and penalty provisions shall apply or be excluded, and requires prior approval by senior officers before issuing the notice.
    Act RulesIncome Tax
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    Total undisclosed income: rules for block-period computation, exclusions for short-period transfer-pricing transactions and loss restrictions.
    Computation of the total undisclosed income of the block period aggregates undisclosed income declared under the statutory declaration mechanism and undisclosed income determined by the Assessing Officer from seized material, survey or requisition results, and other material coming to the AO's notice; it prescribes temporal windows for book-based computation, excludes certain international and specified domestic transactions in the short inter-authorisation period from block computation to be assessed separately, and restricts set-off of brought-forward losses and unabsorbed depreciation against undisclosed block income while allowing carry-forward post-block period.
    Act RulesIncome Tax
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    Block assessment procedure centralises search-related assessments, abating parallel year-wise proceedings where initiated and enabling revival on annulment.
    Assessing Officers must assess or reassess the total undisclosed income of the block period under the Part, with those proceedings taking priority over ordinary year wise assessments; pending assessments for years in the block period abate (and may be deemed to have abated on the date certain notices were issued), non undisclosed income of the year of last authorisation is assessed separately, multiple searches are sequenced with timing extensions where needed, and abated proceedings may be revived if Part proceedings or specified orders are annulled.
    Act RulesIncome Tax
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    Intimation of loss: mandatory written notification to assessee when loss is established and eligible for carry forward and set-off.
    Section 291 requires the Assessing Officer to notify the assessee by an order in writing the amount of loss as computed by him when (a) a loss is established in assessment and (b) the assessee is entitled to carry forward and set off that loss for the purposes of the listed statutory provisions. The duty is mandatory and procedural, linking the notification obligation to both the establishment of loss in assessment and the assessee's statutory entitlement to carry forward and set-off.
    Act RulesIncome Tax
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    Recomputation of assessments tied to triggering events allows targeted amendments within specified limitation periods.
    Clause 288 permits an Assessing Officer to amend or recompute completed assessments in a limited set of scenarios triggered by downstream events-such as reassessment or recomputation orders, valuation or compensation revisions, patent revocation, settlement of foreign tax disputes, or validated transfer pricing determinations-with timelines generally governed by a four year limitation reckoned from the end of the relevant financial year or specified event, and subject to procedural safeguards and cross references to amendment and limitation provisions.
    Act RulesIncome Tax
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    Rectification of mistake: tax authorities may amend orders and intimations, with notice and hearing before raising liability.
    Section 287 authorises specified income tax authorities to amend orders and intimations to rectify mistakes apparent from the record, excluding matters considered and decided in appeal or revision. Amendments that increase liability require notice of intention and a reasonable opportunity of being heard; reductions in liability require refund by the Assessing Officer and increases require service of a notice of demand. A four year outer limitation from the end of the financial year of the original order or intimation applies, subject to section 288, and taxpayer applications must be disposed within six months of the relevant month end.
    Act RulesIncome Tax
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    Time limits for tax assessments impose short limitation windows, with tolling for procedural delays and transfer pricing processes.
    Section 286 prescribes specific limitation periods for assessments, reassessments and recomputations linked to dates in a statutory table, generally imposing one year windows with limited shorter periods; it provides a 12 month extension where a Transfer Pricing Officer reference is made, enumerates discrete exclusion/tolling events (including hearings, stays, audit and valuation references, advance ruling applications, exchange of information references, declarations under anti avoidance provisions and search/requisition periods), and supplies minimum residual time and remedial extension rules to ensure Assessing Officers retain a baseline time to conclude proceedings.
    Act RulesIncome Tax
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    Mandatory cessation of reassessment proceedings when taxpayer demonstrates assessed amount meets correct liability, limiting assessing officer discretion.
    Section 285 fixes tax in section 279 proceedings at rates as if escaped income were included, conditions mandatory cessation of those proceedings on two cumulative showings by the assessee (assessment not lower than correct liability or properly made assessment/computation, and absence of any impugnment under specified challenge provisions), and renders final that cessation by barring reopening of matters concluded by listed orders; procedural modalities and evidentiary standards are not specified.
    Act RulesIncome Tax
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    Assessment notices to implement appellate orders may be issued at any time, subject to existing time-bar exceptions.
    Clause 283 permits issuance of a section 280 notice at any time to make assessments, reassessments or recomputations to give effect to appellate orders or Approving Panel directions, but it does not apply where, at the time the triggering order or reference occurred, other statutory time-limiting provisions already precluded assessment for the tax year concerned; the enacted text narrows the express override language compared with the Bill, potentially limiting displacement of constraints within the omitted procedural provision.

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      Amendments to the Code of Civil Procedure, 1908 by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002 upheld by the Supreme Court.

      9 June, 2022

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      2002 (10) TMI 796 - Supreme Court

      Amendments  to the Code of Civil Procedure, 1908 by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002 upheld by the Supreme Court.

      Certain writ petitions have been filed seeking to challenge Amendments made to the Code of Civil Procedure, by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002.

      Writ Petition (civil) 496 of 2002 was filed by Salem Advocate Bar Association and after notice was issued the petitioner sought leave of this Court to withdraw the writ petition. The court declined the request to withdraw the writ petition. The petition had been filed in public interest.


      The amendments sought to be made by the above amendment acts (Amendment Act 46 of 1999 and Amendment Act 22 of 2002) have been challenged but the hon'ble apex court refused to strike down the aforesaid amendments on the ground that there was no infirmity in the same.

      Summons to the Defendant within 30 days.

      A clarification was sought on an amendment made to Section 27 dealing with summons to the defendant. It has to be done within 30 days from the date of the institution of the suit. The hon'ble court clarified that object of this section is to avoid long delay in issue of summons for want of steps by the plaintiff. If all that is required to be done by a party is duly performed then compliance has been done by the party and no fault can be attributed to the party. The objective being, if a party concerned has taken steps to file the process fee along with completing the other formalities which are required to enable the court to issue the summons then such a party is not at fault.

      Arbitration, Conciliation, Judicial Settlement and Mediation.

      Section 89 introduced in the Code of civil procedure, 1908:

      It speaks of settlement of disputes outside the court through arbitration,conciliation, judicial settlement including settlement through Lok Adalat and mediation. Held that it being imperative that resort should be had to Alternative Dispute Resolution Mechanism with a view to bring to an end litigation between the parties at an early date. The parties shall follow the procedures as provided by the mechanism and accordingly appropriate rules be framed with regard to mediation.

      The ADR mechanism is successful in most of the countries but if a matter is not settled through conciliation or mediation or judicial settlement despite efforts being made, the case will ultimately go to trial.

      Section 89 is a new provision and even though arbitration or conciliation has been in place as a mode for setting the disputes, this has not really reduced the burden on the courts. Thus the court suggested that certain modalities have to be framed to make this amendment work. It being suggested to form a Committee to ensure that the amendments made become effective and result in quicker dispensation of justice.
      Any creases which require to be ironed out can be identified and apprehensions which may exist in the minds of the litigating public or the lawyer's clarified.

      A model case management formula as well as rules and regulations which should be followed while taking recourse to the ADR (Alternative Dispute Resolution) is referred to in Section 89. The model rules, with or without modification, which are formulated may be adopted by the High Courts concerned for giving effect to Section 89(2)(d).

      Intra Court Appeal.

      Section 100A which deals with intra-court appeals was absolutely fine as opined by the hon'ble court. No prejudice would be caused to the litigants by not providing for intra-court appeal, even where the value involved is large. The High Court by Rules, can provide that the Division Bench will hear the regular first appeal. A further right of appeal where the amount involved is nominal to a Division Bench will be increasing the workload of courts unnecessarily.

      Rejection of the Plaint.

      Order 7 Rule 11 to which Clauses (e) and (f) have been added which enable the court to reject the plaint where it is not filed in duplicate or where the plaintiff fails to comply with the provisions of Rule 9 of Order 7. There may not be an automatic rejection of the plaint at the first instance. The court should give an opportunity to rectify the defect and if the same not being done the court will have the liberty or the right to reject the plaint.

      Examination of Chief of the Witnesses.

      Order 18, Rule 4 has been substituted and Sub-rule (1) provides that in every case examination-in-chief of the witnesses shall be on affidavits and copies thereof shall be supplied to the opposite parties by the party who calls them for evidence.

      It being contended that it may not be possible for the party calling the witness to compel the witness to file an affidavit. It often happens that the witness may not be under the control of the party who wants to rely upon his evidence and that witness may have to be summoned through court.

      Order 16 Rule 1 provides for list of witnesses being filed and summons being issued to them for being present in court for recording their evidence. Rule 1A, on the other hand, refers to production of witnesses without summons where any party to the suit may bring any witness to give any evidence or to produce documents.

      Held by the apex court, reading the provisions of Order 16 and Order 18 together it appears to us that Order 18 Rule 4(1) will necessarily apply to a case contemplated by Order 16 Rule 1A, i.e. where any party to a suit, without applying for summoning under Rule 1 brings any witness to give evidence or produce any document. In such a case, examination-in-chief is not to be recorded in court but shall be in the form of an affidavit.

      Held that whether a witness shall be directed to file affidavit or be required to be present in court for recording of his evidence is a matter to be decided by the court in its discretion having regard to the facts of each case.

      Evidence of a witness to be taken by the Court or by the Commissioner.

      Order 18 Rule 4(2) gives the court the power to decide as to whether evidence of a witness shall be taken either by the court or by the Commissioner.

      An apprehension was raised to the effect that the court has no discretion and once it decides that the evidence will recorded by the Commissioner then evidence of other witnesses cannot be recorded in court.

      The hon'ble bench did not agree to the above contention. The Court has a discretion to either record the evidence in Court or through Commissioner or either of them.

      Order 18 Rule 4(3) provides that the evidence may be recorded either in writing or mechanically in the presence of the Judge or the Commissioner. The use of the word 'mechanically' indicates that the evidence can be recorded even with the help of the electronic media, audio or audio-visual, and whenever the evidence is recorded by the Commissioner it will be advisable that it should be done simultaneously,at least an audio recording of the statement of the witnesses so as to obviate any controversy at a later stage.

      Held by the court that Rule 17A has been deleted by the Amendment Act, 2002 with a view that unnecessarily applications are not filed primarily with a view to prolong the trial. The contention of the counsel as to deletion may cause hardship to the litigants was not accepted by the hon'ble court.

      Memorandum of Appeal.

      Rule 9 which was inserted in Order 41 states of "Registry of memorandum of appeal". The court from whose decree an appeal lies shall entertain the memorandum of appeal and shall endorse thereon the date of presentation and shall register the appeal in a book of appeal kept for that purpose. This book be called the register of appeal.
      It being a clear proposition of law that an appeal is to be filed under Order 41 Rule 1 in the court in which it is maintainable.

      Order 41 Rule 9 contemplates that a copy of memorandum of appeal which has been filed in the Appellate Court should also be presented before the court against whose decree the appeal has been filed and endorsement thereof shall be made by the decreeing court in a book called the Register of Appeals.

      The intention of the Legislature being that the court against whose decree an appeal has been filed should be made aware of the factum of the filing of the appeal which may or may not be relevant at a future date.

      Now just because a memorandum of appeal is not filed under Order 41 Rule 9 will not, to our mind, make the appeal filed in the appellate court as a defective one.

      The hon'ble court  hoped that the amendments made in the Code of Civil Procedure would help in expeditious disposal of cases in the trial courts and the appellate courts.

      The hon'ble apex court further held, that a copy of the judgment of the present matter/writ petition be sent to the Registrars of all the High Court’s so that necessary action can be taken by the respective High Courts and any writ petition pending in those High Courts can be formally disposed of.

      Thus the amendments made to the Code of Civil Procedure, 1908 by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002 were upheld/guarded by the hon'ble apex court in the present Writ Petition (civil) 496 of 2002.

      Procedure is an enabling tool to achieve the objectives of equity and justice. It may not be easy to challenge the same by way of invoking the writ jurisdiction/s.

       

       


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      2002 (10) TMI 796 - Supreme Court

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