TaxTalks by CA. NRK

🖇️ ITC Reporting Errors: Clubbing RCM Under the  Wrong Table A common reporting issue occurs when a registered person correctly pays Reverse Charge Mechanism (RCM) liability on the import of services but inadvertently clubs the Input Tax Credit (ITC) in Table 4(A)(3) (Inward supplies liable to reverse charge) instead of the designated Table 4(A)(2) (Import of services). Will the ITC be Denied? The short answer is no. According to established principles and reporting guidelines: ✅ Procedural vs. Substantive: Mere misclassification between these tables is considered a procedural lapse and does not lead to the denial of ITC. ✅ Eligibility Criteria: As long as the tax has been duly paid under RCM and the credit is otherwise admissible under the law, the right to claim remains intact. ...

🛠️ Rectifying Rule 86B Non-Compliance: A Procedural Guide Under Rule 86B of the CGST Rules, 2017 , taxpayers with a monthly taxable turnover exceeding ₹50 lakhs (excluding exempt and zero-rated supplies) are restricted from utilizing Input Tax Credit (ITC) beyond 99% of their output tax liability. This rule mandates that at least 1% of the tax liability must be discharged through the Electronic Cash Ledger. Nature of the Non-Compliance If a taxpayer inadvertently uses ITC to pay more than 99% of their liability, the consequences are procedural rather than substantive: ⚠️ ITC Validity: The excess utilization does not render the underlying ITC itself ineligible or invalid. ⚠️ Shortfall: It creates a shortfall in the mandatory 1% cash payment portion required by law. Steps for Rectification ...

Case Law Alert Ghanshyam Infrastructure Private Limited Vs DCIT (ITAT Ahmedabad) A recent ruling by the ITAT Ahmedabad has sent a clear message to corporate taxpayers: discrepancies in Form 26AS are sufficient grounds for reopening assessments. The tribunal upheld the validity of Section 147 proceedings where undisclosed contract income was revealed through TDS data. The Core Issue: Mismatched TDS Data The case revolved around the following key observations made by the tax authorities and subsequently upheld by the Tribunal: 📊 TDS Trail as Evidence: The reassessment was deemed valid because Form 26AS reflected unreported income upon which Tax Deducted at Source (TDS) had been deposited. ⚠️ Escaped Income: The Tribunal ruled that the reflection of TDS in Form 26AS is, by itself, enough to indicate that income has esca...

Retrospective Impact of Section 147A on Faceless vs. Jurisdictional Assessments. In a landmark ruling in the case of Income Tax Officer vs. Tej Partap Singh [2026], the Supreme Court has cleared the air regarding a long-standing jurisdictional conflict. The decision addresses whether reassessment notices issued by a Jurisdictional Assessing Officer (JAO) are valid in the era of faceless tax regimes. The Core Dispute: Faceless vs. JAO The controversy began with the notification of the e-Assessment of Income Escaping Assessment Scheme, 2022 under Section 151A . This scheme stipulated that reassessments and notices under Section 148 should be handled via automated allocation in a faceless manner. ❌ High Court Stand: Various High Courts previously quashed reassessment notices and orders on the grounds that they were issued by the JAO instead of through the mandated faceles...

Kalanther Madeena Textiles vs. DC(CT): Why a Late Fee Precludes a General Penalty. In a significant relief for taxpayers, the Madras High Court has addressed the issue of double penalization for the same default under the GST Act. The ruling in Kalanther Madeena Textiles vs. Deputy Commissioner (CT) confirms that authorities cannot simultaneously levy both a late fee and a general penalty for the failure to file annual returns. The Core Dispute The petitioner failed to file their annual returns (GSTR-9/9C) within the time prescribed under Rule 80. Consequently, the tax authorities issued a show-cause notice and passed an order imposing two distinct financial burdens: 1️⃣ Late Fee under Section 47(2). 2️⃣ General Penalty under Section 125. The petitioner challenged this concurrent levy, arguing that penaliz...

Key insights from recent High Court ruling Keeping track of evolving tax jurisprudence is essential for every taxpayer. Recent ruling from the Jammu & Kashmir and Ladakh High Court—provide critical guidance on the consequences of inflating stock statements to banks. The Peril of Inflated Bank Statements The High Court of Jammu & Kashmir and Ladakh took a strict stance in Ajay Food Products vs. Income-tax Officer regarding stock statements furnished to banks for credit facilities. ⚠️ The Issue: To secure higher cash credit limits, a firm furnished stock statements to its bank showing inflated quantities and values. ⚖️ The Verdict: The Court upheld additions to the firm's taxable income under Section 69 (Unexplained Investments), labeling the practice of declaring inflated stock as "commercial immorality" that cann...