Tax Column

I have received a notice under section 148 of the Income Tax Act for the assessment year 2013-14 requiring me to file Return of Income. I have not filed Returns of Income since assessment year 2012-13 as I did not have any taxable income in all these years. I am dependent on my son who earns and files his Return of Income regularly. What action should I take or tell me the procedure I need to follow and if I do not follow the same, what would be the consequences? 

Under section 147 of the Income Tax Act, if the Tax Officer believes that certain income has escaped assessment of a particular Assessee, then he can issue a notice under section 148 of the Income Tax Act for reopening the assessment. In your case, it seems the Tax Officer had reasons to believe that certain income has escaped or not disclosed correctly pertaining to the assessment year 2013-14; therefore, he must have issued notice under section 148 of the Income Tax Act. 

The first step to follow is to file the Return of Income online. Even if you have Nil Income, you should file the Return disclosing Nil Income. On filing the Return, the Tax Officer will give you a copy of the reasons recorded by him for reopening the assessment. Kindly go through the reasons and if you do not agree with the same, then you can file your objections. If the Tax Officer does not accept your objections, then he will issue a show cause notice as to why the escaped income should not be taxed. Now you have to give a detailed submission along with documentary evidences to justify that you have not earned any such income or earned income of lesser amount than recorded in the reasons. The Tax Officer may or may not accept your submission and may complete the assessment by making additions in the assessment order. 

Against this assessment order, you can file an appeal before the Commissioner of Income Tax (Appeals) and in appeal you can make your representation and convince the CIT (A). Even if the CIT (A) does not decide the appeal in your favour, then you can go to the Income Tax Appellate Tribunal, then High Court and then the Supreme Court. 

Thus, you will observe that filing of the Return is must. If you ignore the notice issued under section 148 of the Income Tax Act and do not file the Return, then the Tax Officer may pass an ex-parte assessment order taxing the entire income as concealed income and determine the tax liability. Even the CIT (A) may not be able to help you and ultimately the demand may become final, unless the higher appellate authorities give you one more opportunity to follow the procedure as I mentioned above. 

I am a promoter-director of a closely held company. The company has raised additional share capital during the financial year 2016-17 at a premium of Rs 100 per share. During the course of scrutiny assessment, the Assessing Officer has treated the entire share capital including share premium as undisclosed Cash Credit under section 68 of the Income Tax Act in the hands of the Company. Now what legal remedies are available with the company and how to present it before the higher authorities to get relief? 

Since the order has already been passed by the Assessing Officer under section 143 (3) of the Income Tax Act, the legal remedy available with you is to file an appeal within 30 days from receipt of the assessment order before the 

Commissioner of Income Tax (Appeals). These days, the appeal needs to be filed online with digital signature of the director. After filing the appeal, inform the Assessing Officer to keep the demand and the penalty proceedings in abeyance till the disposal of the First appeal. The Assessing Officer may keep the penalty proceedings in abeyance but may insist payment of 20 per cent of the disputed demand pending appeal. 

You may also write to the Commissioner of Income Tax (Appeals) for posting the appeal out of turn and at the earliest in view of tax demand. 

In the appellate proceedings, you have to file confirmations from all the investors who had invested in the share capital along with their credit worthiness and PAN. These all will be considered as additional evidence. Moreover, you have to file an affidavit before the Commissioner of Income Tax (Appeals) and request him to admit the additional evidence. Further, since you have issued shares at a premium, therefore, you are required to file a valuation report under section 11UA/11UB of the Income Tax Rules to justify the amount of the share premium. 

The Commissioner of Income Tax (Appeals) may admit your additional evidence and call for a Remand Report from the Assessing Officer. If the Assessing Officer gives a positive report, then the Commissioner of Income Tax (Appeals) is bound to delete the addition. But if the report is not that positive, then you can argue on merits before the Commissioner of Income Tax (Appeals) citing various case laws which may enable the CIT (A) to allow the appeal in your favour. Hence, the company has to gather all the information and present the same before the Commissioner of Income Tax (Appeals). 

In my past assessment records, I was entitled to substantial refund. Despite repeated request and a personal meeting with the Officer, my refunds are still pending. Can you suggest me what should I do or where to make my grievance which may result in immediate action? 

You can make your grievances on CPGRAMS PORTAL. Kindly check this website and file your grievance on https://pgportal.gov.in. I am sure you will get refund very soon.