Additional ITC on Construction Service not passed to Purchaser: NAA finds M/s Total Environment

The National Anti-Profiteering Authority (NAA), has held that M/s Total Environment Habitat Pvt. Ltd has not passed the benefit of additional ITC available after introduction of GST on ‘construction service‘ to the purchaser and found guilty of anti-profiteering

The applicant, Mr. Yogesh Sharma had purchased a flat in the respondent’s project “Pursuit of Radical Rhapsody”. An application was filed against the respondent M/s Total Environment Habitat Pvt. Ltd alleging that the respondent had not passed on the benefit of additional Input Tax Credit (ITC) on ‘construction service’ to the applicant by way commensurate reduction in the prices.

The respondent contended that the project was in 3 phase and besides phase 1, other phases of the project were launched post GST regime . Home buyers in the 1st phase were informed that the benefits of ITC accruing to the respondent should be passed on to them at the end of project as actual quantum of benefit should be known at that point only.

The Authority observed that the project was approved prior to the introduction of GST by the competent authority. The respondent has taken bookings for the specific units in phase 2 and taken amount prior to the introduction of GST. All the Wings numbered from 1 to 7, which is now demarcated as tower no: 1 to 7 in phase 1 and 2 by the respondent, have to be considered together for the purpose of section 171 of CGST Act and for determination of profiteered amount.

The Coram of Mr. Amand Shah, Chairman, Mr. Pramod Kumar Singh, Technical Member and Mr. Hitesh Shah Technical Member has held that “in the post GST period, the respondent has been benefited from additional ITC to the tune of 0.82% of his turnover and the same require to be passed on by him to recipients of supply”. The Authority further held that “the amount of 3,87,94,493 that has been profiteered by the respondent from his home buyers, including applicant, shall be refunded by him along with interest”.

Interest on Maturity of Govt Bonds cannot be Taxed in the Year of Accrual solely because TDS Deducti

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) comprising Shri Waseem Ahmed, Accountant Member and Shri Siddhartha Nautiyal, Judicial Member has held that the interest income received on maturity of Government bonds cannot be taxed in the year of accrual only for the reason that the deductor bank has deducted TDS on the entire interest amount at the time of payment on cash basis, and the same would amount to double taxation.

The assessee, Ramanlal Jawanmal Shah HUF, received maturity interest amount of Rs. 601,000/- on Government of India 8% saving (taxable) bonds on which the deductor HDFC Bank Ltd, deducted TDS on the entire maturity amount of Rs. 6,01,000 on cash basis. However, the assessee has already offered the yearly amount of interest in earlier years on accrual basis.

Before the Tribunal, the assessee submitted that if the entire maturity amount of Rs. 6,01,000 is again subject to tax in the impugned year, it would amount to double taxation since the annual interest amount has already been offered to tax in various previous years on accrual basis. It was also submitted copies of acknowledgement of return of income for the various years in support of the fact that the interest income which has accrued on annual basis has been offered to tax in the various respective years.

Accepting the contentions of the assessee, the Tribunal held that “In our considered view, we are in agreement with the Ld. Counsel for the assessee that since the interest income has been offered to tax in the respective assessment years (from AY 2011-12 to AY 2017-18) on accrual basis, the same income cannot be taxed in the impugned assessment year under consideration only for the reason that the deductor HDFC bank has deducted TDS on the entire interest amount at the time of payment on cash basis, since the same would amount to double taxation. Therefore, the order of Ld. CIT(A) is set aside and the appeal of the assessee is allowed.”

No Penalty u/s 271 AAA(1) if Assessee offered Undisclosed Income in Statement Recorded u/s 132(4)

The Income Tax Appellate Tribunal, Delhi Bench has held that no penalty u/s 271 AAA(1) if assessee offered undisclosed income in statement recorded u/s 132(4) and ready to pay tax with interest.

The assessee, Late Mr. Krishan Kumar Modi was a resident individual. During the course of search and seizure under section 132 of the Act cash of Rs.11,82,500/-. The statement recorded under section 132(4) of the Act in course of search operation, the assessee offered the cash found amounting to Rs.11,82,500/- as its income. The assessee, subsequent to the filing of the original return of income, filed a revised return of income offering the interest income of Rs.29,28,474/- earned on the deposits in the foreign bank accounts.

The AO completed the assessment proceedings and initiated proceeding for imposition of penalty of Rs.12,84,631/- under section 271AAA of the Act alleging that the assessee would not have surrendered the cash found of Rs.11,82,500/- had search and seizure operation not taken place. Against the penalty order passed, assessee preferred an appeal before CIT (A), which confirmed the penalty imposed with the observation that the manner in which cash was derived was not specified by the assessee.

The counsel for the assessee submitted that the assessee is willing to offer the additional income found as a result of search and pay tax on the same. Further submitted by the counsel that while recording the statement under section 132(4) of the Act, since, the authority concerned did not put any specific query regarding the mode and manner in which undisclosed income was derived, the assessee did not give any specific answer.

The Tribunal has observed that at the time of search and seizure operation itself the assessee had offered the cash found of Rs.11,82,500/- as his additional income. The Tribunal further observed that the penalty under section 271AAA(1) cannot be imposed in a case where the assessee has offered the undisclosed income in the statement recorded under section 132(4) of the Act, specifying the manner in which such income has been derived and if the assessee pays the tax along with interest of such income. Hence, the assessee should be given the benefit of the exceptions provided under sub-section (2) of section 271AAA.

The division bench presided by Mr. Saktijit Dey, Judicial Member and Mr. Pradip Kumar Kedia, Accountant Member has held that “a liberal and compassionate view has to be taken qua the imposition of penalty under section 271AAA of the Act. Accordingly, we delete the penalty imposed under section 271AAA of the Act. Grounds are allowed”.

Advocate Mr. Rohit Jain and Ms. Shivangi Jain, CA appeared for the assessee and Smt. Sunita Singh appeared for the respondent.