Sunday, May 9, 2021
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 It was reported that four bank accounts of Travel Khana was frozen, and around ₹33 lakh was withdrawn from the accounts towards due of angel tax.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.

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

Hemkunt Foundation, Rana Ayyub and Jignesh Mevani: How Covid-19 fundraisers could possibly be violating FCRA laws

A deep dive into fundraisers for Covid relief with questionable management which may be violating FCRA laws.

Chinese state media Editor accuses Subramanian Swamy of being ‘ungrateful’ over ‘war on COVID’, it doesn’t go down well for him

Chinese state media Global Times Editor Hu Xijin on Sunday accused BJP leader Subramanian Swamy of being 'ungrateful' after he tweeted that India is...

Patanjali was the first Indian company to publish a research paper on the new Covid-19 drug approved by DCGI: Read details

Patanjali had published a research paper on use of the drug 2-deoxy-D-glucose for Covid-19 treatment in March 2020

West Bengal: BJP leader Swapan Dasgupta files a complaint with the police on targeted persecution of its party workers

Dasgupta in his complaint to the police mentioned on record the names of all 260 victims, some of whom have been unable to return home after the TMC goons unleashed violence post their victory in the state.

Netizens call out actor Sonu Sood’s claims of arranging for plasma, bed for COVID patients

After multiple media reports and social media posts on how Sonu Sood was helping out migrants go back home last year amid the nationwide lockdown, Sood had written an autobiography, 'I am no no messiah'.

Here is how The Lancet used dubious sources to blame Modi Govt for the Covid crisis

Following the abrogation of Article 370, The Lancet had issued a strong condemnation of the Indian Government.

Recently Popular

Meet AAP’s ‘Delhi ke Nirmata’: Who is Navneet Kalra, the businessman on the run after oxygen hoarding scandal was busted

Oxygen Concentrators have been found at Khan Chacha, Nege & Ju bar and Town Hall restaurants in Delhi, all owned by Navneet Kalra

Arvind Kejriwal govt expels 7 journalists from Whatsapp group after report critical of govt handling of oxygen crisis, senior journalists keep mum

The Arvind Kejriwal government has been the darling of the media for a long time but it seems to want absolute devotion

Comedian Sanket Bhosale who had featured in ad mocking Rahul Gandhi booked for violating Covid-19 norms in Punjab

A week after the vandalism by the Congress workers in Mumbai, the Congress-led Punjab government has now booked comedian Sanket Bhosale, the actor featured in the advertisement, on the pretext of violating Covid-19 regulations during his wedding.

‘Dominance of one religious group cannot prevent religious celebrations of other’, says Madras HC after local Muslims object to Hindu procession

The Madras High court concluded that similar acts of 'resistance' by other religious groups would result in loss of lives, destruction of properties, riots, religious fights and chaos.

Chinese research paper, published 6 years ago by Chinese military backed authors, discussed weaponising Coronavirus: Reports

A 2015 research paper by Chinese scientists reveals nefarious plans to weaponise the SARS Coronavirus against the world.

Call girl from Thailand passes away in Lucknow due to Covid-19, had come to India recently with help from agent Salman

A call girl from Thailand has passed away in Lucknow, Uttar Pradesh at the Lohia Hospital due to Covid-19.
- Advertisement -

 

Connect with us

254,885FansLike
540,465FollowersFollow
24,300SubscribersSubscribe