Saturday, 26 April 2014

Do you want to get your Income Tax Refund? Use Right To Information Act 2005

The Right to Information Act, 2005(RTI) is a potent tool for tax payers to find solutions to their everyday problems. Unfortunately, most taxpayers & tax professionals have not understood the scope and potential of the Act. With this article I want to bring to notice use of Right to information Act,2005 for encashing your pending Income tax Refunds.

The Right to Information (RTI) Act came into effect from 12th October, 2005 and is applicable on the whole of India, except Jammu and Kashmir. The Act helps many citizens to obtain information not disclosed publicly.
It must be noted that only assessee can apply under RTI to know the status of his/her income tax refund after one year from date of filing return. But he can be assisted and accompanied by a Chartered Accountant or a Lawyer. 

I do not prefer for making application under RTI immediately. The course of action to be followed is -
1) File a simple letter inquiring about status of your return and status of Refund
2) File first reminder letter  if you do not receive any communication for step 1. (Usually you don't get, do you?) after 15 days from step 1.
3) File second reminder  after 15 days from step 2.
4) File Third reminder letter after 15 days from step 3.

My usual experience is that AO never reply to such communications and not at all bothered by your reminders. 

Now your case becomes ripe enough to file an application under RTI seeking information about -
1)  Status of your return and status of Refund
2)  Information on how AO acted on our letter as filed in step 1 above. 
3)  Information on how AO acted on our reminders as filed in step 2, 3, and 4. 

So far in my cases, the success of RTI applications in the Income Tax department is unbelievably approximately 100 per cent. In each and every case, the RTI application gets attended to immediately and you get pending refunds within 30 days. In fact I got most of the refund on the same day without any need to submit the RTI application. Mere disclosure to AO the intention of filing RTI was enough. 

I advise all professionals as well as assessees to use encourage use of RTI Act, it is an opportunity to minimise corruption and improve accountability. Let professionals become catalysts for Better Bharat Bhavisya through the use of Right to Information.

For more information  you can contact me on

CA Anand Mutha 

Saturday, 19 April 2014

Do you think you can escape from Arrest for Service Tax Dues Prior to 10th May 2013

Service tax law was amended with arrest provisions w.e.f. 10th May 2013. Section 89(1)(d) was amended to provide that non-payment of amount collected as service to government treasury will be liable for prosecution for period up to seven years. A question would come to mind that what would happen in cases where the amount as described in section 89(1)(d) is collected prior to the date when this section became effective i.e. 10th May 2013. 

High Court of Bombay has given its judgement on the same matter which is as below. 

Assessee-director was arrested on 22-1-2014 under section 89(1)(d)(ii), read with sections 90 and 91 for non-payment of service tax of Rs. 2.44 crores by his company despite having collected same from customers - Assessee argued that : (a) said offence had become cognizable vide Finance Act, 2013 only on 10-5-2013; (b) amended provisions could not be applied retrospectively for dues pertaining to prior period; and (c) dues for period on or after 10-5-2013 were only Rs. 5 lakhs i.e., not exceeding Rs. 50 lakhs, therefore, assessee was to be granted bail - Department argued that : (a) in balance sheet dated 31-3-2013, liability to pay tax was admitted; (b) non-payment of outstanding dues was a continuing offence; therefore, amended provisions were applicable - HELD : It being a continuing offence, entire outstanding/arrears as on 10-5-2013 was to be taken into consideration while calculating limit of Rs. 50 lakhs under section 89(1)(d)/(ii) - Since, as on 10-5-2013, there was huge outstanding beyond Rs. 50 Lakhs and said amount continued to be outstanding even at time of arrest, assessee could not be granted bail, more so, when investigation was still ongoing and assessee's payment plan was not agreed to by department [Paras 13 to 15] [In favour of revenue]

Case : Kandrarameshbabu Naidu vs. Superintendent (AE) Service Tax, Mumbai-II

Wednesday, 2 April 2014

Now cost accountant, company secretary will also able to do tax audit under proposed Direct Tax Code

Tax Audit under the Income Tax Act is currently allowed to be conducted only by the Chartered Accountant but Proposed Direct Tax Code 2013 allows Tax Audit not only by Chartered Accountant but also by Company Secretaries and Cost Accountants. 
Clause 88 of the Proposed Direct Tax code prescribes who needs to get the book audited under the direct tax code 2013 and it further says that the same needs to be audited by an accountant. 

The Term accountant is been defined in Clause 320(2) which says that accountant means Chartered Accountants , Company Secretaries , Cost Accountants any person having such qualifications as the Board may prescribe, for the purposes specified in this behalf.

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