Phoenix Auditing

Compilation of CBDT Notifications & Circulars of January 2021

1. Amount of remuneration prescribed u/s 9A(3)(m) of the Incometax Act, 1961: CBDT vide Circular No. 1 dated 15th January 2021, clarified that remuneration to be paid by an eligible investment fund u/s 9A (activities of which shall not constitute business connection in India) to an eligible fund manager in respect of fund management activity undertaken by him on its behalf shall not be less than the prescribed amount as per rule 10V(12). Prior board approval would be required in case remuneration is less than the prescribed amount. However, for FY 2019-20 and 2020-21, no prior approval is required if the amount of remuneration is at arm’s length. For FY 2021-22, where the remuneration is less than prescribed amount, the application for approval of such lower remuneration be filed before 1st February 2021.

2. Income Tax Department conducts searches in Kolkata: Search and seizure operations were carried out on person/entities engaged in the business of hotels, real estate, automobile, financing etc. at Kolkata. In course of search, certain documents were found which revealed bogus entries for loss on sale of penny stocks, sale of shares of unlisted companies through layering to bring back unaccounted cash in the books of account in the form of unsecured loan/share capital, , unaccounted cash loan/ commission/brokerage/interest etc., `. Concealment of income and undisclosed income was detected worth Rs 450 crores and Rs 105 crores respectively and unaccounted cash of Rs.1.58 crores has been seized.

3. Special Court for the State of Tripura: The Central Government, in consultation with the Chief Justice of the High Court of Tripura, designates the Court of Chief Judicial Magistrate, West Tripura Judicial District, Agartala as the Special Court for the State of Tripura

4. CBDT launches e-portal for filing complaints regarding tax evasion/Benami Properties/Foreign Undisclosed Assets: CBDT launches e-portal for filing of complaints regarding tax evasions, foreign undisclosed assets, benami properties etc. by persons whether or not having PAN/Aadhaar holders. After an OTP based validation process (mobile and/or email), the complainant can file complaints in respect of aforesaid violations under the respective Acts and regulations. in three separate forms designed for the purpose.

5. Tax Department conducts searches in Kolkata: Search and seizure operations was conducted on three real estate and stock broking groups of Kolkata. Evidences revealing various shell entities being used for raising bogus share capital/unsecured loans, certain unaccounted cash transactions and significant amount of un-booked revenue on account of sale of flats have been found. Undisclosed income amounting to Rs 111 crores has been identified and unaccounted cash and jewellery worth Rs 3.02 crores and Rs 72 lakh respectively has been seized.

6. Income Tax Department conducts searches in Hyderabad: The search and seizure operation was conducted on around 19 premises of a prominent civil contractor working in Telangana, generating cash through the use of bogus sub-contracts and bogus billers. . Documents evidencing accommodation entries of more than Rs. 160 crores have also been found and seized.

7. Income Tax Department Kerala invites application from qualified Chartered Accountants firms for empanelment as Special Auditors: The Income Tax Department Kerala invites application from qualified Chartered Accountants firms for empanelment as Special Auditors subject to eligibility conditions like (i) Applicant should be a reputed partnership firm or proprietary concern or a company, having its office in the area falling within the territorial jurisdiction of Principal Chief Commissioner of Income Tax, Kerala. (ii) Applicant should have auditing experience of minimum period of 10 years as on 31.03.2019. (iii) Applicant should not have been charged with any professional misconduct, etc. The remuneration for the same shall be in accordance with Rule 14B of Income-tax rules, 1962.

8. Central Government makes the Faceless Penalty Scheme (FPS), 2021: Central Government vide Notification dated 12th January 2021 specified the Faceless Penalty Scheme, 2021 which shall come into force on the date of its publication in the Official Gazette The scheme will be centrally managed through the National Faceless Penalty Center (NFPC) and Regional Faceless Penalty Centers (RFPC), penalty units, penalty review units may also be set up. Various other aspects like procedural, rectification proceedings, appellate proceedings authentication and delivery of electronic record etc. has been specified under this notification. Also Read-Faceless Penalty Scheme, 2021 – CBDT notifies directions

9. Income Tax Department conducts searches in Assam: The search and survey actions were carried out at 29 locations in Guwahati, Nalbari and Dibrugarh in the cases of renowned doctors/medical professionals of Assam. They had grossly understated their medical receipts both in their individual capacities and the turnovers in their hospitals and pharmaceutical business. Suppressed turnover of more than Rs 50-60 crore has been detected. Unexplained cash of approximately of Rs 7.54 crore has been seized and handwritten notes/diaries of investments made in immovable assets in cash of around Rs. 20 crores were also seized.

10. Income Tax Department conducts searches in Pune: Search and survey operations were carried out in the cases of leading builders located in Thane. Unaccounted income of earlier years on sale of land and flats, accommodation entries of non-genuine unsecured loans routed through certain shell companies, unaccounted cash receipts in the nature of capital introduction/cash loan, unaccounted cash expenses etc. worth Rs. 520.56 crores including Rs. 10.16 crores of unaccounted cash have been detected and seized.

11. Income Tax Department conducts searches in Jaipur: Search and survey operations were out on three groups, involving one jeweller and two real-estate colonizers and developers. Plethora of incriminating documents and digital data in the form of unaccounted receipts, unexplained development expenses, unexplained assets, cash loans & advances, on-money receipts were found and seized in case of a prominent builder. Total unaccounted transactions amounting to Rs. 650 crore have been detected, so far in the first group group. Documents relating to Benami property amounting to Rs. 15 crore were found in the second group (jeweller). Total unaccounted transactions amounting to Rs.225 crore have been detected from the third group (renowned builder and developer in Jaipur). In all, unaccounted & unrecorded transactions exceeding Rs. 1400 crore have been unearthed due to the search & seizure operation conducted on these 3 groups.

12. Extension of date for filing Declaration under Vivad Se Vishwas Scheme: The Central Board of Direct Taxes (CBDT) has extended the deadline for filing declaration under the Vivad Se Vishwas Scheme by a month to February 28, 2021, from the earlier deadline of January 31, 2021. The extension was made via a notification dated February 1, 2021. This means that eligible taxpayers will be able to avail the benefit of the scheme or file declarations under it till February 28, 2021.

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