The Finance Bill, 2017 places some restrictions on cash transactions which have far reaching implications. They will come into force with effect from 1st April, 2017. Broadly speaking, restrictions proposed in the Finance Bill are of two types:-

(i) Restriction on the amount of payments u/s. 40A(3) and 40A(3A) of the Income-tax Act, 1961 (the Act) and its extension to capital expenditure

(ii) Prohibition on receipts in cash of ₹ 3 lakhs or more — Section 269ST

Restriction u/ss. 40A(3) and 40A(3A) of the Act — Clause 15 of Finance Bill, 2017

2. As per the existing provision of sub-section (3) of section 40A of the Act, any expenditure in respect of which a payment or aggregate of payments made to a person in a day; otherwise than by a crossed account payee cheque or an account payee bank draft exceeding ₹ 20,000/- is not allowed as deduction in computing his income from business or profession.

3. Sub-section (3A) of section 40A of the Act prohibits the deduction of expenditure incurred in a particular year in computing the income from business and profession but the payment of a sum exceeding ₹ 20,000/- is made in a single day in any subsequent year otherwise than by account payee cheque or bank draft, it will be chargeable to tax as the income of the subsequent year.

4. In both the situations at paragraphs 2 and 3 above, the existing threshold of cash payment to a person on any single day is proposed to be reduced from ₹ 20,000/- to ₹ 10,000/-.

5. In order to discourage cash transactions even for capital expenditure, it is proposed to amend section 43 of the Act to provide that where an assessee incurs any expenditure for acquiring an asset for which, a payment or aggregate of payments made to a person in a day in cash exceeds ₹ 10,000/-, such expenditure shall be ignored. Besides, no deduction will be allowed in respect of capital expenditure for specified businesses covered u/s. 35AD of the Act where the cash expenditure exceeds ₹ 10,000/- in respect of which payment or aggregate of payments is made to a person in a day.

6. The specified mode of payment, namely, crossed account payee cheque or draft is also proposed to be expanded to include any payment through the use of electronic clearing system through a bank account. Such a clearing system may include Real Time Gross Settlement (RTGS), credit card or debit card payments and even payments through the Aadhaar Card System.

Prohibition on cash transactions each of ₹ 3 lakhs or more

7. The newly inserted section 269ST provides that no person shall receive in cash ₹ 3 lakhs or more,

(a) In aggregate from a person in a day or

(b) In respect of a single transaction or

(c) In respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account.

8. The restriction of ₹ 3 lakhs will not apply to Government, any banking company, post office saving bank or co-operative bank or any other person or class of persons or receipts that may be notified by the Central Government. In view of the insertion of section 269ST, the provision of section 206C relating to tax collection at source @1% of the cash sale consideration of jewellery exceeding ₹ 5 lakhs has become redundant and is to be omitted.

9. The restriction on cash transactions is the result of Supreme Court’s constituted Special Investigation Team which had made such a proposal in July, 2011. The objective of imposing restrictions on cash transactions is to curb the flow of domestic black money which is not only adversely affecting the revenues of the Government but is also affecting the investment for productive purposes because most of the black money is transacted in cash, it remains unaccounted and quite a sizable amount remains unproductive and is stored in the form of cash or remains invested in low priority investments in gold, jewellery etc. The restrictions are intended to move towards a less cash economy and to reduce generation and circulation of black money.

Implications of section 269ST of the Act

10. As stated above, three kinds of restrictions on receipt of cash of ₹ 3 lakhs or more have been prescribed. They relate to:

(i) Receipts from one person

(ii) Receipts in relation to a single transaction even though payments are made on different dates and

(iii) Transactions relating to one event or occasion from a person.

11. The cash restrictions are independent of the nature of transaction. It may represent the transaction of sale of goods on trading account or capital account or it may even be a loan transaction and is in addition to the provisions of section 269SS that deals with acceptance of loans, deposits or specified sum in cash exceeding ₹ 20,000/- which will be treated as the undisclosed income and subjected to tax.

12. In the first category, receipts from different persons in a day, of an amount which is less than ₹ 3 lakhs, will be permissible. However, if they relate to a single transaction, say, purchase of an expensive diamond or luxury durables, the total value of the transaction will be the determining factor and if it is of ₹ 3 lakhs or more, it will be hit by section 269ST even if the payments are made through more than one person or they are made on different dates of individual amounts of less than ₹ 3 lakhs.

13. Likewise, the transactions relating to one event, say marriage or birthday, the aggregate of all the transactions like say, rent of tents, decoration, cost of food and beverages will be aggregated to determine the threshold limit of ₹ 3 lakhs beyond which, the restriction of cash transaction will be applicable. This provision is likely to adversely affect the sale of luxury goods and consumer durables. It will also affect adversely the marriage market by restricting the sale of gems and jewellery, designer apparels etc. However, it will reduce the size of the grey market as well as the size of the unorganised sectors of the economy. The sellers of goods and services will look for buyers who can make the payments by modes other than cash.

14. Some important issues may also arise concerning the compliance with section 269ST vis-à-vis the Sale of Goods Act, 1930, under which, most of the business transactions are made. Section 4 of the Sale of Goods Act, 1930 defines the contract of sale as a contract whereby a seller transfers or agrees to transfer the property in goods to the buyer for a price. Where the transfer of the property in the goods has to take place at a future date or is subject to some conditions thereafter to be fulfilled, the contract will be an Agreement to Sell. The contract of sale or agreement to sell may provide for the immediate delivery of the goods or immediate payment of the price or both. It may also provide for the delivery or payment by installments, or that the delivery or payment or both shall be postponed. The goods which form the subject of a contract of sale or agreement to sell may be either existing goods, owned or possessed by the seller, or future goods. The payment may be made in advance even where the transaction is not final, in that the price is required to be settled in future when the goods would come into existence.

15. There may also be situations where the price is settled but quantity and time of the delivery is uncertain. For example, when a person agrees to buy the steel rods for the construction of his house, the price may be settled but the quantity depending upon the requirement of steel may be uncertain and the delivery may also depend upon the requirements of the buyer. The price may be payable when delivery of the required lot is taken.

16. In such situations, record would be to keep of the aggregate value of the transaction and if it exceeds ₹ 3 lakhs or more, each payment, even if it is less than ₹ 3 lakhs, would need to be made other than cash.

Penalty u/s. 271DA of the Act

17. Under the newly inserted section 271DA, contravention of section 269ST prohibiting cash receipt of ₹ 3 lakhs and above is punishable with penalty which is equal to the amount of such cash receipt. The penalty is required to be imposed by the Joint Commissioner of Income Tax. No penalty will, however, be levied if the person concerned proves that there were good and sufficient reasons for the contravention. By use of the words “good and sufficient reasons” in contra-distinction to a ‘reasonable cause’, a greater burden of proof has been cast on the assessee to show that the reasons for contravention would not only be good but also sufficient. The absence of the bank account of the payer, say an agriculturist, may not qualify to be a good and sufficient reason for accepting the payment in contravention of section 269ST particularly because the Government has been laying great emphasis on opening of Jan Dhan accounts in banks by every person even though there was to be a no deposit in that account. In pursuance of the policy of the Government, several crores of such Jan Dhan bank accounts have been opened by villagers including farmers and as such, the absence of a bank account may not provide good and sufficient reason for the payee to accept the cash of ₹ 3 lakhs or more.

18. To conclude, the restriction of cash transaction, though harsh and difficult to comply, will go, in the long run, bring about great benefits to country by curbing the use of black money and other attendant evils associated with it. It will not only improve tax compliances but in the long run, accelerate economic growth by larger utilisation of money through banking and other verifiable channels unlike at present where quite a large proposition of cash representing black money stays idle or is invested in unproductive assets like gold jewellery or other precious metals.

Live as if you were to die tomorrow. Learn as if you were to live forever.

— Mahatma Gandhi

1. Introduction

Union Finance Minister Shri Arun Jaitley, placed Union Budget for the year 2017-18 before Parliament on 1st February, 2017, instead of
28th February, 2017. No separate budget for Railways was placed by the Railway Minister and the Railway Budget stands merged with the General Budget, which have been claimed as an historic step. Classification of expenditure between plan and non-plan have been done away with. The Finance Bill, 2017 to give effect to the financial proposals of the Central Government for the Financial Year 2017-18 was introduced in Lok Sabha on 1st February, 2017. Though many amendments, insertions, and substitutions have been made in the existing Act, this article is restricted to the provisions relating to search, assessment and reassessment only.

2. Search Provisions

Existing section 132(1) of this Act requires the prescribed authority to record “reasons to believe” before issuing authorisation to the authorised officer to search and reasons in the situation detailed in clauses (a) or (b) or (c) of the said section. Recording of reasons is not an idle formality. There must be live link and rational and reasonable connection, between the information and the satisfaction. On challenge it is justiciable and in case there is no information on which a reasonable person well instructed in law could form the belef, action is liable to be quashed. Assessees used to apply for copy of authorisation, copy of reasons recorded with material and information in possession for recording such reasons. The Revenue used to deny the copy or the inspection on the plea it is an administrative act and informer/ information is in secrecy and cannot be disclosed.

2.1 In CIT v. Smt. Chitra Devi (2009) 313 I.T.R. 174 (Raj.), it was held that on challenge of invalidity of the search before the tax authorities or the Appellate Tribunal the Revenue is bound to produce the search authorisation and relevant record for perusal of the Income Tax Appellate Tribunal and on failure to do so, search could be held as bad and assessment proceedings quashed. SLP was dismissed by the Supreme Court. In CIT v. Smt. Umesh Goel (2016) 387 I.T.R. 575 (Raj.) it was found that on challenge to validity of the search and reasons recorded, the CIT(A) called for Form No. 45, warrant. It was perused and found that there is no specific warrant of authorisation against the assessee and hence search being invalid proceedings for assessment are bad.

2.2 In order to avoid such challenge, it is proposed to insert an Explanation after the fourth proviso to the said sub-section (1) so as to provide that the “reason to believe” recorded by the prescribed authority shall not be disclosed to any person or any authority or the Appellate Tribunal. This amendment will take effect retrospectively from the date of commencement of the Act i.e., 1st April, 1962. Now the assessee would not be able to call for copy of recorded reasons, nor to inspect or to require the assessing authority or appellate authority or the Income Tax Appellate Tribunal to call for the records, peruse the “reasons recorded”, to entertain objection as to invalidity of the search so conducted and seizure effected. Challenge to the validity of the search and its consequence would not be entertained by the tax authorities and Appellate Tribunal.

2.3 In my view the challenge to the validity of the search, non-existence of “reason to believe”, non-existence of material information to entertain, the belief, absence of conditions precedent which are sinequanon for issuance of authorisation for search and seizure can continue to be challenged under Articles 226 and 227 of our Constitution, by way of a suitable writ. On challenge and on
prima facie satisfaction, the writ court would be competent to direct the Revenue to produce the record and after production to peruse, to furnish copy, to provide copy to the petitioner and to consider issue of lack of jurisdiction and invalidity of the action. The forbidden authorities are appellate, the Income Tax Appellate Tribunal and the person searched or any other person, other than the High Court or the Supreme Court in challenge under Article 32 of the Constitution. Right to challenge as on an action u/s. 148 of the Act by way of a writ remains open. All judicial precedents for the expression “reason to believe” for section 147 would be to the aid of the petitioner.

2.3.1 In New Kashmir and Oriental Transport Co. (P.) Ltd. v. CIT (1973) 92 I.T.R. 334 (Allahabad), as early as on 7-9-1972, it was held that when a challenge is thrown to the validity of search in a writ petition, the petitioner is entitled to inspect the record of the proceedings and to obtain copies of the orders passed in those proceedings, as Rule 12 framed under section 132 (14) requires, the reasons shall be recorded. In
M. D. Overseas Ltd. v. DGIT (2011) 333 ITR 407 (Allahabad), it observed. “The Court, in an appropriate case, can order the Department to indicate the contents or nature of information/ material and reasons to believe authorising the search (without disclosing the source of information) to the aggrieved person. The question of relevancy of information/material and reasons to believe is to be judged after hearing the aggrieved person. The question of their relevancy is not to be decided without assistance of the aggrieved person. This is subject to any valid claim of privilege under sections 123 and 124 of the Evidence Act, 1872.” It directed for disclosure of the information.

2.3.2 In Visa Comtrade Ltd. v. VOI (2011) 338 ITR 343 (Orissa) it was held “Before taking action under section 132 the competent authority must assure and reassure about the truthfulness and correctness of the information. A search under section 132 is a serious invasion into the privacy of the citizen. Therefore, section 132(1) has to be strictly construed and the information of the person or reason to believe by the authorising officer must be apparent from the note recorded by him”. It also observed “Formation of opinion on the basis of reason to believe that a particular property/asset has not been disclosed or would not be disclosed so that the action under
section 132 would be taken, is not an empty formality.”

2.3.3 Recently on 13-5-2015 in DGIT v. Spacewood Furnishers Pvt. Ltd. and Others (2015) 374 I.T.R. 595 (S.C.)
observed “The necessity of recording of reasons for issue of a warrant of authorization for search under section 132 of the Income-tax Act, 1961, so as to ensure accountability and responsibility in the decision-making process acts as a cushion in the event of a legal challenge being made to the satisfaction reached. Reasons enable a proper judicial assessment of the decision taken by the Revenue. However, this, by itself, would not confer in the assessee a right of inspection of the documents or to communication of the reasons for the belief at the stage of issuing of the authorisation. Any such view would be counter-productive of the entire exercise contemplated by section 132 of the Act. It is only at the stage of commencement of the assessment proceedings after completion of the search and seizure, if any, that the requisite material may have to be disclosed to the assessee. While reasons in support of the “reasonable belief” contemplated by section 132 must be recorded, there is no provision requiring the reasons recorded prior to authorising the search to be disclosed or communicated to the person against whom the warrant of authorisation is issued.”

2.4 The proposed Explanation is to do away with the claim of an assessee to challenge validity of the search on non-recording of valid reasons. However, as explained earlier the inherent right to challenge the validity and jurisdiction for issuance of the authorisation to search exists, could not be done away with and could not be closed. It would be open to an assessee to challenge the search and subsequent action by an appropriate writ, before the High Court. The Hon’ble Court would be entitled to call for the records, peruse and provide copy or permit inspection, as it may deem fit and proper.

2.5 Similar Explanation has been proposed to be inserted w.e.f. 1-10-1975, in the said sub-section (1A) of section 132 so as to declare that “reason to suspect” shall not be disclosed to any person or an authority or the Appellate Tribunal. However, as analysed herein before the right of the Courts and High Courts remain as hithertofore.

2.6 It has also been proposed to insert sections (9B), (9C), (9D) in existing section 132, to attach provisionally any property belonging to the assessee with the prior approval of Principal Director General or Director General or Principal Director or Director. This power is conferred for the purpose of protecting the interest of Revenue. Reasons shall have to be recorded and provisional attachment order shall have to be issued in writing with the prior approval of the specified authority. Such order would be operative for six months from the date of the order. Power has also been conferred on the authorised officer to refer valuation of a property to the valuation officer in the manner provided u/s. 142A of the Act. The valuation officer to provide the valuation report in six months. The proposed provisions are similar to existing section 281-B of the Act.

2.7 It has been further proposed to amend existing Explanation to section 132 so as to apply the provisions of existing section 153B, time limit for completion of assessment, with respect to “execution of an authorisation for search” for the purposes of the existing section (9A) and proposed new sections (9B — Provisional Attachment) and section (9D — Valuation). These amendments will take effect from 1-4-2017 i.e., are prospective.

2.8 On the same lines as under section 132 (1)and 132(1A) it has been proposed to insert an Explanation to the said sub-section, so as to declare that the reason to believe for making the requisition shall not be disclosed to any person or any authority or the Appellate Tribunal. But it can be called for by the Court or the High Court as discussed hereinabove. This amendment has been proposed to be operative from 1-10-1975.

3. Return, assessment and reassessment

Existing sub-section (4C) of section 139 mandates filing of returns by certain entities which are exempt u/s. 10. It is proposed to provide that — (1) Fund established for the welfare of employees u/s. 10 (23AAA), Investor Protection Fund u/s. 10(23 EC or Clause 23 (ED); Core Settlement Guarantee Fund u/s. 10(23 EE) and Board or Authority u/s, 10(29A) shall also be mandatorily required to furnish the return of income.

3.1 Section 139(5) regarding filing of revised return is proposed to be amended whereby time for furnishing revised return shall be up to the end of the relevant assessment year or before completion of assessment whichever is earlier. Existing period of one year from the end of the relevant assessment year is reduced. Both these amendments would be from 1-4-2018 and shall apply to the Assessment Year 2018-19 and subsequent years

3.2 Section 234F has been proposed to be inserted whereby late fee of ₹ 5,000/- or ₹ 10,000/- as the case may be shall be payable if return for the Assessment Year 2018-19 and onwards is filed not on the due date but before 31st December or after 31st December, as the case may be. However whose total income does not exceed ₹ 5 lakh quantum of fee would be ₹ 1,000/-. It shall be payable along with tax and interest on self-assessment u/s. 140A of the Act. Such fee payable shall also be considered while processing of return u/s. 143(1) of the Act.

3.3 Section 143(1D) (as substituted by section 68 of the Finance Act, 2016) has been proposed to be substituted whereby it shall not be necessary to do processing u/s. 143(1), where a notice for scrutiny has been issued u/s. 143(2). It shall be for the Assessment Year 2017-18 and onwards.

3.4 Existing section 153 of the Act provides for time limit for completion of assessment, reassessment and recomputation. Time limit proposed for regular assessment u/s. 143 or 144 is being reduced to 18 months from existing 21 months for the Assessment Year 2018-19 and 12 months for the Assessment Year 2019-20 and onwards.

3.5 Similarly for an assessment, reassessment or recomputation u/s. 147, if notice u/s. 148 is served on or after 1-4-2019, time limit for completion of assessment shall be 12 months from the end of the financial year in which notice was served.

3.6 Time limit for making fresh assessment pursuance to an order of the Tribunal u/s. 254 or revision u/s. 263 or 264 shall be 12 months from the end of the financial year in which order is received or passed.

3.7 From existing third proviso to Explanation 1 of section 153, the reference to section 153B has been proposed to be omitted. All these amendments will take effect from 1-4-2017.

3.8 It is proposed to amend existing sub-section (5) of section 153. Where an order u/s. 250 or 254 or 260 or 262 or 263 or 264 requires verification of any document or other person or granting on opportunity of being heard, the time limit relating to fresh assessment shall be as that in amended section 153(3).

3.9 Section 153(9) has been proposed to be amended to provide that where a notice under Section 142(1) or 143(2) or 148 has been issued prior to 1-6-2016 and assessment or reassessment has not been completed by the due date due to exclusion of time referred to in Explanation I, such act shall be completed in accordance with the provisions existing before the substitution of the said section by the Finance Act, 2016 meaning thereby under the old section. These amendments will take effect from 1-6-2016.

4. Special Agreement in search or requisition cases.

During the last five years there is thrust on searches and its expeditious assessments, to enable to collect additional revenue and to curb unaccounted for assets, transactions, black money and corruption, which is flagrantly prevalent in all the fields. Section 197(c) of the Finance Act, 2016, provided that where any income has accrued, arisen or received or any asset has been acquired out of such income prior to commencement of the Income Declaration Scheme, 2016, and no declaration in respect of such evaded income is made, then such income shall be deemed of the year in which a notice under section 142(1) or 143(2) or 148 or 153 A or 153C of the Act is issued by the Assessing Officer and it shall be taxed in such year. It was noticed that such section is unconstitutional and action would be void. However, the Central Board of Direct Taxes clarified that the Finance Act, 2016, being later on point of time would prevail over the provisions of the Income-tax Act. It is not correct interpretation of law. Good sense have prevailed and the said section 197(c) stand omitted. We are happy it is better to correct the mistake rather then to harass the taxpayers with long drawn litigation. We have been told that some enlightened super active assessing authorities issued notices under the said provision. Such notices shall have to be withdrawn as a face saving. This amendment is w.e.f. 1st June, 2016.

4.1 Section 153A provides in case of search under section 132 and requisition under section 132A for issuance of notice to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. Now it is proposed to extend the said six years up to ten assessment years relevant to the previous year in which search is conducted or requisition is made in the following circumstances:

(i) If the Assessing Officer has in his possession books of account or other document or evidence which reveal, the escaped income is likely to be fifty lakhs or more in ten years;

(ii) Such escaped income is represented in the form of asset including immovable property being land or building or both, shares and securities, deposits in bank account loans and advances and it relates to the said ten years ;

(iii) Search is initiated or requisition is made on or after 1-4-2017. Consequent amendments have been proposed to the provisos of section 153A. It is also proposed to insert Explanation to define the expression “relevant assessment year”, to mean an assessment year preceding the previous year of search or requisition which falls beyond six assessment years, but not later than ten assessment years, from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2 explains the word “asset” as noted earlier. Applicability of this provision from 1-4-2017 shows the intention of the Government to give one more final chance to avail of “Pradhan Mantri Garib Kalyan Yojana, 2016”, which is open up to 31-3-2017.

4.2 Section 153B is proposed to amend time limit for completion of six assessments under section 153A within 21 months from the end of the financial year in which the last of the authorisation for search or requisition was executed. Hence time limit for searches conducted up to 31-2-2017 shall remain as it exists earlier. However for the search and seizure cases conducted on or after 1-4-2017 the time limit for making an assessment shall be reduced from 21 months to 18 months. It is also proposed to reduce the time limit for completion of assessment in case of such searches from
1-4-2019 and onwards to 12 months

4.3 In case of third party assessment under section 153C the time limit for completion of assessment shall be same as that of the person searched or 12 months from the end of the financial year in which books of account or documents or assets seized or requisition are handed over to the said Assessing Officer, whichever is later.

4.4 It is also proposed to insert a proviso to the Explanation to the said section, that where a proceeding before the Settlement Commission abates under section 245HA, the period of limitation shall not be less than one year after exclusion of the period taken in the settlement proceedings under section 245HA(4) of the Act.

4.5 As a saving measure, in respect of a notice under section 153A or 153C, issued prior to 1-6-2016, and assessment is pending, such assessment shall be completed in accordance with the provision of this section as it stood before its substitution from 1-6-2016. Second proviso to section 153C has been proposed to be amended, so as to provide a reference to the relevant assessment year as referred in the Explanation to section 153 A (1) i.e., instead of six years — not to exceed ten years. All these amendments shall be operative from 1-6-2017.

5. Conclusion

The extension of period to 10 years in search cases as against six years in other cases cannot be said to be discriminatory or unconstitutional. Separate classification of person searched and found possessed with specified assets and without the specified assets, can be claimed to be reasonable classification and two identifiable categories. Reduction in period for completion of assessments and reassessments is welcome. If would expedite revenue collection and also expeditious end of lis with the Revenue. However, it is desirable to change mindset of assessing and appellate authorities so as to make assessment in accordance with law and not hanky-panky or on surmises or suspicions or conjectures. Let the taxpayers and the tax collectors have introspection and both to do their duty as a civilized citizen of this Great country of India.

Respected Professional Colleagues,

Wish you a Very Happy Basant Panchami and Mahashivratri.

Basant Panchami is a festival of flowers, brings new hopes, new aspirations, new zeal and new fervour. Basant Panchami has also brought with it the Budget 2017-18.

In the words of our Prime Minister Mr. Narendra Modi, “it is an Uttam Budget, devoted to strengthening the hands of the poor. The commitment to eliminate corruption and black money is reflected in the budget. It is yet again devoted to the well-being of the villages, farmers and the poor. In many ways, this budget will facilitate the changes that our country is going through. This budget will help small business to become competitive in the global market.”

In any case, Budget 2017-18 has brought the inflation under control. CPI-based inflation declined from 6% in July, 2016 to 3.4% in December, 2016. Economy has moved on a high growth path. India’s Current Account Deficit declined from above 1% of GDP last year to 0.3% of GDP in the first half of 2016-17. FDI grew 36% in first half of fiscal year 2016-17 over first half of 2015-16, despite 5% reduction in global FDI inflows. Foreign exchange reserves have reached
361 billion USD as on 20th January, 2017.

Budget agenda for 2017-18 is “transform, energise and clean India”— TEC India which seeks to transform the quality of governance and quality of life of people, to energise various sections of society, especially the youth and the vulnerable, and to enable them to unleash their true potential and clean the country from the evils of corruption, black money and non-transparent political funding. We the members of AIFTP are committed to stand by the Government for a welfare State where each and every countryman has fresh air to breathe in. The
budgetary amendments are being discussed in the separate article by our AIFTP stalwarts.

It gives me an immense pleasure to inform that many of our suggestions included in the representation sent by AIFTP to the Finance Ministry have been accepted and included in the Budget 2017-18. Our special thanks to Mr. Narayan Jain (Kolkata) who has helped in preparing the representation.

Friends as you are aware, we have started a task of preparing the papers to be sent to Charity Commissioner on war-footing. Shri Vipul Joshi, our worthy Treasurer, has done a great job and prepared the consent letters / representation to be made by each and every NEC Member starting from 1997 till date. Mr. Ravi is sending the letters through e-mail to all the members. It is requested to kindly send the scanned copy of these consent letters duly signed immediately on receipt of the same and also to send through courier so that report may be prepared accordingly, for filing to the Charity Commissioner. I hope that the said task can be completed within a month through your whole hearted support. As Martin Luther King J. R. said “the time is always right to do the right thing”. Therefore, treat this as a right time to send your letters to do the right thing.

Friends, we have also made representation to the Hon’ble Finance Minister for including the names of Advocates and Tax Practitioners in section 53(4) of the Amended Model GST Law. Shri Axat P. Vyas (Jamnagar) and Shri Bhaskar Bhai Patel (Vadodara) have not left any stone unturned for this noble cause.

Friends, North Zone of AIFTP is organising a National Tax Conference at Chandigarh on 25th and 26th February, 2017. This 1st NEC meeting will also be held on 25th February, 2017 at Chandigarh. All the NEC members are invited to this first meeting to have a face-to-face discussion and decide a road map for the year 2017.

Our West Zone members have also organised a workshop at Mumbai on various dates for imparting knowledge on GST, MVAT and Service Tax. Similarly, East Zone and Central Zone are also organising similar workshops in Kolkata and Ratlam respectively. Special thanks to all our members for organising the conferences/seminars to enrich the legal knowledge.

I once again wish all of you A VERY HAPPY BASANT PANCHMI followed by MAHASHIVRATRI and HOLI.

Best Wishes,

Prem Lata Bansal
National President

Union Budget 2017-18

India’s Union Budget 2017-18 is historic in many ways. Departing from the colonial-era tradition of presenting the Union Budget on the last working day of February, the Honourable Finance Minister (FM) Mr. Arun Jaitley presented it on a much earlier date of February 1, 2017.

This was also the first time the Railway Budget was not separately presented but merged into the Union Budget and the distinction between Plan and Non Plan expenditure was done away with, shifting instead to a more meaningful distinction between capital versus revenue methodology.

The Budget 2017 is also unique in view of the few unprecedented events. The decision of the Government to implement demonetisation and embark on digitalisation at rapid pace coupled with implementation of Goods and Services Tax (GST) during the ensuing fiscal year would be close on the heels of the shake-up because of uncertain and politically changed environment.

With the imminent arrival of GST, the Finance Minister preferred not to make many changes in current regime of Excise & Service Tax as the same would be replaced by GST soon.

Prime Minister Mr. Narendra Modi stated that the pro-poor Budget presented by Honourable Finance Minister, is an ‘Uttam’ Budget, devoted to strengthening the hands of the poor and has focused on all sectors and classes.

For sure, this Government was voted in on an expectation of good governance. That it has ushered in a transformation in the way India is run, cannot be denied. The strong leadership has brought back India to the discussion tables, if not centre-stage, be it on the Comity of Nations or the niche World Economic Forum. Right from the tough posture displayed in handling national security affairs or charting a new course in diplomatic relations, this Government has certainly shown resolve.

Admittedly, the crackdown on black money or the ‘Shuddhi Yatra’, as our PM terms it, has been a key hallmark of this regime. The relentless focus on measures to target income from illicit activities, be it counterfeiting or terror financing or corruption, has indeed been pervasive.

Great art is always a balancing act. But all art has both — an emotional content and an intellectual content. The Hon’ble Finance Minister pulled off a good balancing act in the Union Budget 2017-18 and the first impression of it seems to have let people euphoric. The Budget attempts to pave a path for the transformative shift towards growth following the overarching agenda of Transform, Energise and Clean India.

However, the Finance Bill 2017, has made many provisions of Direct Taxes applicable retrospectively, though the Hon’ble Finance Minister had promised that he will not resort to retrospective amendment. Further, a couple of judgements of the Supreme Court have been reversed by the Finance Bill, 2017. So, how and when the stabilisation and simplification would be achieved in tax laws?

Furthermore, the Finance Bill, 2017 proposes to introduce a section 271J to the Income-tax Act, 1961 by providing that an accountant or a merchant banker or a registered valuer furnishes incorrect information in a report or certificate, the Assessing Officer or CIT(As) may direct him to pay by way of penalty a sum of ₹ 10,000/- for each such report or certificate, but it is to be noted that no appeal has been provided against the proposed section.

In this issue, various eminent authors have analysed the important provisions of the Union Budget 2017-18, which would help the readers to understand the implications of the Budget. We are thankful to all the authors for their valuable contribution to this issue.

H. N. Motiwalla

Joint Editor