THE WB NATIONAL UNIVERSITY OF JURIDICAL SCIENCES, KOLKATA

End Semester Examination (online) – 10th Semester – 2017 Batch

Advanced Tax Laws

Full Marks: 50 Time Allowed: 4 Hours

Please Note the following

-Question 1 is compulsory.
-Attempt any 3 questions out of questions 2 to question 5

Question No 1

The assessee has received this assessment order (Annexed herewith) . The assessee is
aggreieved by this order therefore intends to file an appeal before CIT(A). He intends to take your
professional help in following: -
1) Drafting Statement of Facts & Grounds of Appeal (10 marks )
2) Advice an Alternate mechanism available (if any) (4 Marks)
3) Procedure to file an appeal online (3 marks)
4) Assuming the CIT(A) has partly allowed the appeal of an Assessee. Who can further prefer
an appeal before higher appellate forum (3 marks)

(10+4+3+3=20 Marks )

Assessment Order

The assessee, an Individual MR BEAN (ABCDE4321F), has filed return of Income for A.Y.2017-
18 declaring income of Rs.72,16,770/- . The case was reopened for scrutiny u/s 147 of the Income
tax Act, 1961 for AY 2017- 18 for the following reasons:

2. In this case directions was received from erstwhile JCIT, Range-2, Asansol to initiate
proceedings u/s.148 in respect of Shri Mr Bean for A.Y.2017-18 vide letter dated 23.09.2019
for reasons that information was transpired from the system that the assessee firm “M/s. Tom &
Jerry deposited a sum of Rs.4,30,96,660/- in the Bank during the demonetization period. The firm
M/s. Tom & Jerry had failed to file the Return of Income for A.Y. 2017-18. A letter dated
22.05.2019 was issued to the assessee firm to file the return of income and state the reasons for
non-filing of Return of Income for A.Y. 2017-18. In response to the same the assessee vide his
reply dated 28.05.2019 has stated that Due to death of one of the partners Mr Dean, the firm is
dissolved on 27.12.2015 and the concern “M/s. Tom & Jerry” was being run as proprietorship

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concern of Shri Mr Bean and further the PAN of the firm was surrendered by them.

In view of the above facts, the AO concluded that the firm M/s. Tom & Jerry” was legally non-
existent w.e.f.27.12.2015 and after the same it was a sole proprietorship
concern of Shri Mr Bean and the amounts of Rs.4,30,96,660/- deposited in Bank
account pertains to Shri Mr Bean(Individual). On Analysis of the above
information it is ascertained that, income amounting to RS. 4,30,96,660/- has
not been taxed. Therefore, the assessment for A.Y. 2017-18 was reopened for
assessment with prior approval of the Competent Authority u/s 151 of the
Income tax Act, 1961.

3. The assessee vide issue of notice u/s 148 of the Income tax Act, 1961 dated 31/03/2021 was
asked to furnish the return of Income in the prescribed form for the said Assessment year. In
response to the in response to notice u/s.148 of the I.T.Act the assessee has filed the return of
income on 28.04.2021. Subsequently the notice u/s.143(2) was issued on 17/11/2021.

4. Further, notice u/s 142(1) of the Income Tax Act, 1961 was issued on 16.12.2021. In response
to the same the assessee has furnished reply vide letter 03/02/200 & 17/02/2022 raising
objections against the reasons for issue of Notice u/s.148 of the I.T.Act. The objections raised has
been rebutted vide order dated 11/03/2022. Further, with regards to the cash deposited the
assessee’s reply is perused but not accepted as the assessee has failed to furnish the supporting
documentary evidences from which it can be proved that the assessee is having sufficient fund.
Further, before completing the assessment proceedings a show cause was issue to the assessee
on 24/03/2022 alongwith the Draft assessment order.

4.1 In response to the show cause notice, the assessee has filed the reply on 25/03/2022.The
assessee has not furnished the requisite details as per notice u/s.142(1) dated 16.12.2021
regarding details of cash deposit during the demonetization as per pro-forma for comparison with
the earlier Financial year mentioned in the notice. The assessee has also not furnished the details
of Denominations of currency note deposited in the bank during the demonetization period
alongwith the supporting documentary evidence. The assesse has also failed to furnish the entire
sales details and cash deposited for the financial year 2016-17. In absence of such details, the
average value of the cash deposit cannot be ascertained. Further, on perusal of the details
submitted it is seen that the assessee are the same which were earlier submitted vide letter dated
03.02.2022 and no new facts brought on record except the details of cash sales during the
demonetization period.

5. Unexplained money u/s 69A of the I.T. Act:

In this case, on the basis of directions received from erstwhile JCIT, Range-2, Asansol
to initiate proceedings u/s.148 in respect of Shri Mr Bean for A.Y.2017-18 the sole proprietor of
the Firm “M/s. Tom & Jerry” had deposited a sum of Rs.4,30,96,660/- in the Bank during the
demonetization period. The assessee’s reply is perused but not accepted. Since the assessee
has not given his explanation towards the cash deposited in the saving accounts the entire
amount of cash deposits of Rs.4,30,96,660/- reflecting in the statement submitted by the bank is
being held as ‘unexplained money’ u/s 69 A of the I.T. Act and added back to the total income of
the assessee. Under such circumstances there is no option but to complete the time barring
assessment. It is amply proved beyond doubt that the cash deposited by the assessee stands
unexplained and the total sum of Rs. 4,30,96,660/- shown as cash deposits in the bank account
are identifiable as unexplained money. All three limbs of section 69A of the Act stands qualified
in the case of the assessee, i.e.

• The assessee was found to be owner of the money;

• Such money was not recorded in the books of accounts; and
• Its nature and source is not identifiable.

The cash deposits amounting to Rs. 4,30,96,660/- in the F.Y.2016-17 relevant to A.Y. 2017-18

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 made by the assessee remains unexplained. The assessee failed to give any satisfactory
explanation about the nature and source of cash deposits. As the assessee has failed to explain
the nature and source of cash deposits, entire amount of cash entries amounting to Rs.
4,30,96,660/- is being held as ‘unexplained money’ u/s 69 A of the I.T. Act and added to the total
income of the assessee. Penalty Proceedings u/s 271AAC(1) of the Act is initiated separately
for under reported income.

(Addition : Rs.4,30,96,660/-)

As discussed above and after taking into account the various details and submissions filed by the
assessee, the total income of the assessee is computed as under:

Particulars Amt(Rs.)

Total Income as per ROI 72,16,770

Add: Cash Deposits - Unexplained Money u/s.69A of the 4,30,96,660

I.T.Act

Total Assessed Income 5,03,13,430/-

Assessed u/s. 143(3) r.w.s 147 r.w.s 144B of the Income-tax Act, 1961. Credit for prepaid taxes is granted
after due verification. Accordingly, tax payable on Rs. 4,30,96,660/- u/s 115BBE rws 69A of the I.T. Act shall
be @60% plus applicable surcharge and cess. Interest under section 234A, 234B, 234C and 234D is
charged, as applicable, as per the ITNS-150A which forms part of this order. Penalty u/s 271AAC(1) of the
I.T.Act is initiated separately. Demand Notice is issued accordingly.

Question- 2

(a)

Ms Ritika commenced a business who turnover was 1.75 crores in the first year . She does not want to make
books of accounts and file Income Tax Returns . Whether she can do so ? If yes please suggest her the
approach and also apprise her the related provisions of the law

(5 Marks )

(b)

Mr Ranbir engaged M/s ABC Co an event management company for his wedding as professional fees . M/s
ABC Co. sent a bill of Rs 50,00,000 as professional fees and also Rs 12,00,000 as out of pocket expenses.
Discuss TDS liability of Mr Ranbir regarding the amount of TDS to be deducted and whether the credit of the
same will be available.

(5 Marks)

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Question – 3

(a)

State what is capital & revenue receipt ? Give an illustration and also what is the importance of the same
under Income Tax Act, 1961
(5 Marks )

(b)

State whether the statutory requirements of Audit under Income Tax Act, 1961 & GST Laws

(5 Marks)

Question – 4

PLC Ltd , a Singapore based company entered into a contract between ABC Ltd , An Indian company, for
provisions of technical know-how and made an application in June 2021 to the authority of advance rullingson
rate of withholding tax on receipts from ABC Ltd .ABC Ltd made an application in April 2021 to the assessing
officer for determination of the rate at which tax is deductible on the said payment to PLC Ltd . The authority
for Advance rullings rejected the application of PLC Ltd on the ground that question raised in the application is
already pending before an income tax authority. Is the rejection of PLC Ltd justified in Law

(10 Marks)

Question – 5

(a)

What do you mean by substantial question of law?

(2 Marks )

(b)

State the process of authentication of Income Tax Return?

(2 Marks)

(c)

An Individual aged 58 years has earned Rs 4,87,000

Whether it is mandatory for him to file the return?

Suppose he intends to file income tax return whether he can do so ?
Calculate his net tax liability

(6 Marks )

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