Saturday, September 19, 2020
Home Government and Policy I-T dept disputes claim of Travel Khana over angel tax recovery, says only unexplained...

I-T dept disputes claim of Travel Khana over angel tax recovery, says only unexplained cash receipts penalised

The company did not provide records of funds received, despite repeated reminders, hence the department was unfortunately left with no choice

Yesterday, a shocking news had emerged that the bank account of a start-up was emptied by the Income Tax department due to the recovery of angel tax. It was reported that four bank accounts of Travel Khana was frozen, and around ₹33 lakh was withdrawn from the accounts towards due of angel tax. Travel Khana is a start-up company that delivers food for passengers of Indian Railways. The Angel Tax has raised lots of concern for start-up businesses, and the action on Travel Khana was seen as an example of Tax Terrorism.

But now the Central Board of Direct Taxes (CBDT) has issued a clarification saying that no Angel Tax was recovered from the bank accounts of the company. In a statement issued last night issued by CBDT spokesperson Surabhi Ahluwalia, CBDT says that tax was recovered from Travel Khana on account of unexplained cash credits and not on the premium of shares, as has been alleged.

The statement says that during the assessment of the company, the assessing officer had requested for confirmation of the persons from whom deposits had been received. Wherever confirmations were submitted, the same were accepted by the assessing officer. But for some cash deposits no confirmation about the depositors was received from the company, therefore proper show-cause notice was issued in such cases. CBDT says that due to the failure of Travel Khana in furnishing detail of depositors, a demand of around ₹2.22 crore was raised by the department.

The statement clarifies that action against the company was taken under section 68 of the Income Tax department, not under section 56(2)(viib). The section 68 deals with unexplained cash credits, while the section 56(2)(viib) deals with premiums received on shares issued.

- Advertisement -

The CBDT also says that the company did not obtain a stay against the demand raised by the I-T department. Had they obtained a stay, recovery proceedings would not have been undertaken by the department, it says.

Due to the concerns about the Angel Tax among the start-ups, the government had issued an instruction prohibiting coercive measures for enforcing recovery of outstanding demand in Angel Tax cases. But CBDT says that Travel Khan is not eligible for this relaxation as the tax demand was for unexplained cash credit, not Angel Tax. Moreover, the company did not submit any certificate from DIPP indicating its status as start-up, which mandatory to obtain the relaxations. Had the company or its directors had furnished such a certificate, the situation would not have arisen.

The statement says that “the benefit of doubt should and must be given to our entrepreneurs. However when after repeated reminders, records of funds received are not provided, the department is unfortunately left with no choice.”

The full statement of CBDT can be seen below:

CBDT

Press Release – 08.02.2019

CBDT clarification

New Delhi: It has come to the notice of CBDT, through some media reports that Rs 36 lakh have been recovered from a start-up, namely, Travel Khana as part of recovery of outstanding demand on account of Angel Tax. It has been alleged that this was in violation of the CBDT instructions dt 24th December, 2018 pertaining to recovery of dues in Angel Tax cases.

On ascertaining the facts it is seen that the additions in the case were made u/s 68 of the Income-tax Act, 1961 on account of unexplained cash credits and not u/s 56(2)(viib) on account of premium on shares, as has been alleged.

During the assessment proceedings, the assessing officer requested for confirmation of the persons from whom deposits had been received. Wherever confirmations were submitted, the same were accepted by the assessing officer and no addition was made. However, where no confirmations were furnished by the assessee, the assessing officer made the addition after issuing proper show-cause notice and obtaining reply in the matter. Thus, the addition was made only when the taxpayer failed to substantiate the source of the deposit resulting in demand of Rs. 2.22 crore approximately.

The assessee did not obtain any stay in respect of the demand raised. Had the stay been obtained, recovery proceedings would not have been instituted by the department. Since there was no stay against recovery and the demand had become due, the department recovered Rs. 36 lakh after attaching the bank accounts of the assesse. Thereafter, all the bank accounts were released.

It may also be noted that neither the assessee nor its Director submitted any certificate from DIPP to indicate its status of being a startup, either during the assessment proceedings or thereafter, which is a mandatory requirement as per extant instructions in the matter. Had such a certificate been furnished, this situation would not have arisen.

Thus, it is clear that the case of Travel Khana is not covered by the instruction issued by CBDT dated 24th December, 2018  prohibiting coercive measures for enforcing recovery of outstanding demand in Angel Tax cases as the addition was made under section 68 of the IT Act and not under section 56(2)(viib). Therefore, the action of the assessing officer of enforcing recovery of demand is not in violation of CBDT’s instructions.

The benefit of doubt should and must be given to our entrepreneurs. However when after repeated reminders, records of funds received are not provided, the department is unfortunately left with no choice. Our agencies also have a duty to prevent and expose suspected evasion.

 

  Support Us  

Whether NDTV or 'The Wire', they never have to worry about funds. In name of saving democracy, they get money from various sources. We need your support to fight them. Please contribute whatever you can afford

OpIndia Staffhttps://www.opindia.com
Staff reporter at OpIndia

Related Articles

Trending now

Netflix distorts ‘Kabuliwala’ to show Hindu girl offering Namaz in an attempt to secularise ‘Stories by Rabindranath Tagore’

A scene in 'Kabuliwala' in the 'Stories by Rabindranath Tagore' series by Anurag Basu on Netflix shows 'Mini' offering Namaz

Protests against Left minister in Kerala gold smuggling case ‘anti-Quran’, says Communist Party leader: Here is how he came to that strange conclusion

CPI(M) state secretary Kodiyeri Balakrishnan, in his weekly column has referred to the protest against the Kerala Communist govt and minister KT Jaleel as an "anti-Quran agitation"

HRCE Dept uses the ‘we are doing what Kings did’ argument, claims ‘secular’ state of Tamil Nadu entitled to control temples

HR&CE Dept has filed an affidavit at the Madras HC saying that though the state of Tamil Nadu is secular, it is entitled to control temples.

‘No right to question integrity of successors’: 26 former cops slam Julio Ribeiro for supporting people pushing ‘anti-India and communal narrative’

26 former police officers have written a letter slamming Julio Ribeiro for supporting people who push 'anti-India and communal narrative'.

In an ironical turn of events, BMC calls Kangana Ranaut’s plea an ‘abuse of law’ after hounding her for dissenting views

In an affidavit, BMC has also demanded that costs be imposed on Kangana Ranaut for making this plea and demanding Rs 2 crores damages

Delhi Police arrests journalist Rajeev Sharma for possessing classified defence documents, had written for Chinese mouthpiece GlobalTimes

Rajeev Sharma had written several columns for Chinese newspaper Global Times, the mouthpiece of Communist Party of China for the last several years.

Recently Popular

An eyewitness tells media that Disha Salian was gang-raped by 4 men in the party held on the eve of her death: Here are...

An eyewitness has told News Nation that Disha Salian was gang-raped by 4 men in the party which she attended on the eve of her death on June 8.

‘He opened his zip and tried to force his c**k inside my vagina,’ actress Payal Ghosh accuses filmmaker Anurag Kashyap of sexual harassment

Actress Payal Ghosh has claimed that she was sexually harassed by filmmaker Anurag Kashyap and called him a hypocrite.

Here is why #BabyPenguin is trending on Twitter, and why Aaditya Thackeray is called so by some

Yuva Sena registered complaint against twitter user for calling Aaditya Thackeray "Baby Penguin" and Uddhav Thackeray "Aurangzeb"

Nepal claims Indian cities Dehradun, Nainital under its ‘Greater Nepal’ campaign: Reports

The tension between Indian and its Himalayan neighbour Nepal is likely to mount again as Nepal continues to provoke India.

“You are supposed to be unprejudiced,” investor Rakesh Jhunjhunwala schools BJP-hater NDTV journalist Sreenivasan Jain

Without nothing left to say, Sreenivasan Jain laughed aloud and claimed, "I would love to think that I am unprejudiced."

Delhi Police arrests journalist Rajeev Sharma for possessing classified defence documents, had written for Chinese mouthpiece GlobalTimes

Rajeev Sharma had written several columns for Chinese newspaper Global Times, the mouthpiece of Communist Party of China for the last several years.

‘He opened his zip and tried to force his c**k inside my vagina,’ actress Payal Ghosh accuses filmmaker Anurag Kashyap of sexual harassment

Actress Payal Ghosh has claimed that she was sexually harassed by filmmaker Anurag Kashyap and called him a hypocrite.

Fact-finding report on Bengaluru riots: Survivors claim Hindus were selectively hunted and targeted during the pre-planned riots

These testimonies establish that Bengaluru riots were pre-planned and particularized to target the Hindu community

Rajeev Sharma was paid by China to convey crucial information on Army movement, Defence acquisitions and Dalai Lama: Delhi Police

Rakesh Sharma was in contact with several Chinese operatives, and were made payments through shell companies in Delhi

Justice Kirubakaran cautions against linguistic chauvinism, warns against ‘fringe elements’ wearing the mask of NGOs and human rights organisations

Justice Kirubakaran expressed concern over media reports showing links of educated and respected people of the country with the Naxal movement.

Bihar: Hindu group attacked by Mohammed Nirala, Sarfaraz and others as Vishwakarma idol procession passes through Muslim colony

Muslims attacked a Vishwakarma idol procession in Motihari in Bihar, assaulted people, damaged the idol

More anarchy in USA? Justice Ruth Bader Ginsburg passes away, liberals threaten riots as Donald Trump could have third Supreme Court pick

Justice Ruth Bader Ginsburg, breathed her last on the 18th of September 2020 at the age of 87 after prolonged illness.

Mumbai doctor slams Maharashtra government on its new circular governing the consumption of oxygen in private COVID-19 hospitals

Dr Amit Thadani said that 12 litre per minute of oxygen is not enough for COVID-19 patients in ICU as suggested by Maharashtra govt

Devendra Fadnavis exposes how ABP Majha abruptly ended his interview, shares video of parallel recording he had arranged anticipating foul-play by the channel

Devendra Fadnavis had alleged that his interview was cut short midway while he was explaining centre's help to Maharashtra on GST credit

Sushant Singh Rajput case: Muzaffarpur court orders eight Bollywood celebrities including Salman Khan and Karan Johar to appear before it on October 7

The court has acted on the complaint filed by lawyer Sudhir Ojha, three days after the death of Sushant Singh Rajput

Days before his arrest for having classified documents, Journalist Rajeev Sharma had spoken about the state of Indian media and ethics

Rajeev Sharma had spoken about the state of media in the country and the lack of ethics in reporting the real issues

Connect with us

243,917FansLike
453,474FollowersFollow
16,000SubscribersSubscribe