SEBI signs MoU with CBDT for Data Exchange

There is a need to create a regulator or authority for data business, which provides centralized regulation for all non-personal data exchanges,” the government-appointed panel said in the report. Such a regulator would be armed with legal powers to request data, supervise data sharing requests and settle disputes“.
A formal Memorandum of Understanding (MoU) was signed today between the Central Board of Direct Taxes (CBDT) and the Securities and Exchange Board of India (SEBI) for data exchange between the two organizations.
 
The MoU was signed by Smt. Anu J. Singh, Pr. DGIT (Systems), CBDT, and Smt. MadhabiPuri Buch, Whole Time Member, SEBI in the presence of senior officers from both the organizations via video conference.

The MoU will facilitate the sharing of data and information between SEBI and CBDT on an automatic and regular basis.

In addition to regular exchange of data, CBDT and SEBI will also exchange with each other, on request and suo moto basis, any information available in their respective databases, for the purpose of carrying out scrutiny, inspection, investigation and prosecution,” SEBI said in a statement.

In addition to regular exchange of data, SEBI and CBDT will also exchange with each other, on request and Suo moto basis, any information available in their respective databases, for the purpose of carrying out their functions under various laws.

The MoU comes into force from the date it was signed and is an ongoing initiative of CBDT and SEBI, who are already collaborating through various existing mechanisms.

A Data Exchange Steering Group has also been constituted for the initiative, which will meet periodically to review the data exchange status and take steps to further improve the effectiveness of the data-sharing mechanism.

The MoU marks the beginning of a new era of cooperation and synergy between SEBI and CBDT.

In the past, SEBI has cracked on several entities who had manipulated the stock prices of listed companies. The regulator had observed in the penny stock scam that promoters and market operators were using the stock exchange platform to evade taxes and launder black money.

Read the Press Release: SEBI signs MOU with CBDT for Data Exchange

CBDT extends till Jan 31 deadline for compounding of I-T offences

Taxpayers get one more chance to clear their tax dues.

The CBDT has extended till January 31 the last date for taxpayers to avail a “one-time” facility to apply for compounding of income tax offences, an order issued on Friday said.

The earlier deadline was December 31, 2019.

In I-T parlance, compounding means that the taxman does not file a prosecution case against the offender or tax evader in court in lieu of payment of due taxes and surcharges.

The decision to extend the last date was taken “in view of references received from field formations, including requests made by ICAI (Institute of Chartered Accountants of India) chapters wherein it has been brought to the notice of the CBDT that the taxpayers could not avail the benefit of the one-time relaxation window due to genuine hardships,” the order issued by the Central Board of Direct Taxation (CBDT) said.

The order was accessed by PTI.

Final opportunity
Hence, the order stated, the date has been extended to give a final opportunity to such taxpayers and reduce the pendency of existing prosecution cases before the courts.

Applications, as per the procedure of the scheme, are to be filed before the appropriate competent authority that is either a principal chief commissioner or a chief commissioner or a principal director general or director general of the Income-Tax Department “on or before” January 31, 2020.

The CBDT, while launching the scheme in September last year, had said that this “one-time measure” is being undertaken to mitigate unintended hardship to taxpayers in deserving cases and to reduce the pendency of existing prosecution cases before the courts.

“Cases have been brought to the notice of CBDT where the taxpayers could not apply for compounding of the offence as the compounding application was filed beyond 12 months,” it had said.

The riders
The relaxation, however, shall not be available in respect of an offence which is generally or normally not compoundable, indicating instances of serious tax evasion, financial crime, terror financing, money laundering, possession of illegal foreign assets, benami properties or conviction by a court in the past.

The CBDT circular added that application for compounding of an income tax offence can be filed in cases where: Prosecution proceedings are pending before any court of law for more than 12 months or any compounding application for an offence filed previously was withdrawn by the applicant solely for the reason that such application was filed beyond 12 months or any compounding application for an offence had been rejected previously solely for technical reasons.

The CBDT, which frames policy for the tax department, had earlier said that compounding of offences is “not a matter of right” and the department can extend such a relief only in certain cases.

This will be done keeping in view factors like “conduct of the person, the nature and magnitude of the offence on the context of the facts and circumstances of each case,” it had said.

Income tax department eyes over Rs 100 bn from ‘struck off’ firms

The income-tax (I-T) department is estimating tax recovery of over Rs 100 billion from companies that have been struck off from records of the Registrar of Companies (RoC) last year.

The tax department is in the process of filing a petition before the National Company Law Tribunal (NCLT) for restoration of registration in as many as 50,000 such companies.

The RoCs had struck off 300,000 companies after it was found they had not filed their statutory returns. Directors of these companies have been prohibited from holding directorships in any other company.
The move follows Central Board of Direct Taxes’ (CBDT) directive to identify, process and file petition to restore these companies by August 31. The board also asked the Ministry of Corporate Affairs (MCA) not to oppose the restoration application in the tribunal, as such a move would refrain them from launching tax recovery proceedings against these firms.
“Several of these companies are restricted to operate their bank accounts and movable and immovable properties until they are restored. The restoration will compel these firms to make relevant disclosures of credentials under Companies Act, and then accordingly tax proceeding will be initiated for tax recovery,” said an I-T official.

Tax industry experts, too, believe that restoration is essential to recover taxes due from these firms.

“The tax department is contesting the strike off of so-called companies as in several cases there would be pending tax demands that cannot be recovered if the company is not active. Also, even in cases where genuine companies have been struck off, with the best intentions, the companies would not be able to pay the tax dues as all their assets including bank accounts would be non-operational,” said Amit Maheshwari, partner at Ashok Maheshwary & Associates LLP.

The I-T department is of the view that these companies abused their corporate structure by creating multi-layering during  demonetisation for cash deposits. I-T probe also reveals that many individuals have used these firms for siphoning money or converting undisclosed cash to legitimate money post the note ban.

Official data say that 35,000 companies deposited and withdrew cash worth over Rs 170 billion after the note ban, through about 60,000 bank accounts.

It was noticed that the accounts that had negligible balance on November 8, 2016, have seen significant cash deposits and withdrawal during this period.

According to people with knowledge of the matter, along with restoration, the I-T department will also start issuing notices to these firms under Section 179 of the I-T Act, which makes the company’s directors/promoters liable to pay dues on behalf of the firm, without adjudication by the court.

Further, tax recovery officers have been asked to conduct survey operations on select firms where the tax demand is high. In cases where assets or bank accounts are lying abroad, the department will seek the foreign tax authority’s assistance to recover tax claims with the provisions in the relevant treaty, said another senior official.

Sources said that in a meeting of a task force on shell companies set up by the Prime Minister’s Office, on November 30 last year, the director general of corporate affairs (DGCoA) had suggested that the tax department approach RoCs for taking up the matter of reviving these companies. It was also suggested that revenue considerations should weigh in favour of restoring them.

Apart from these companies, another set of above 200,000 firms have been sent notices and action will soon be taken against them. However, the tax department wants MCA to keep them posted before striking off any company, since there could be tax dues.

 Taxing Affair
  • I-T pursuing restoration of 50,000 struck-off companies
  • RoCs had struck off 300,000 companies, prohibited their directors from holding directorship in other firms
  • Tax industry experts believe that restoration is essential for recovery of taxes from these firms
  • Restoration will allow companies to operate bank account, assets
  • After restoration, I-T to issue notices under Section 179 of I-T Act
  • Directors/promoters would be liable to pay tax dues
  • These firms abused corporate structure to facilitate significant cash transactions post note ban

Source: Business Standard

DIR-3-DIN eKYC annual filing deadline extended to 30th June of next financial year

MCA extends due date of DIR -3 / E-KYC of Directors

 

 

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, 30th April, 2019

 

MCA has notified that the Deadline for Annual Filing of Form DIR 3 ((KYC of Directors) has been Extended from 30 April to 30 June, of the immediately next financial year, i.e. the due date for filing of DIR 3 (KYC of Directors) for Financial Year 2018-19 has been extended from 30 April 2019 to 30 June 2019.

G.S.R.-(E).- In exercise of the powers conferred by the second proviso to sub-section (1), sub-section (4), clause (f) of sub-section (6) of section 149, sub-sections (3) and (a) of section 150, section 151, sub-section (5) of section 152, section 153, section 154, section 157, section 160, sub-section (1) of section 158 and section 170 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Appointment and Qualification of Directors) Rules, 2014, namely: –

1. (1) These rules may be called the Companies (Appointment and Qualification of Directors) Amendment Rules, 2019.

(2) ‘They shall come into force on the date of their publication in the Official Gazette.

2. In the Companies (Appointment and Qualification of Directors) Rules, 2014, in rule 12A, for the words and figures “on or before 30th, April of immediate next financial year”, the words and figures “on or before 30th June of immediate next financial year” shall be substituted.

[F. N o. 1/22/2013-CL-V]

(K.V.R. Murty)
Joint Secretary to the Government of India

Note: – The principal notification was published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i) vide number G.S.R. 259(E) dated the 31st March, 2014 and subsequently amended vide the following notifications:-

Read the MCA – Notification here

MCA Extends Due date of filing form INC 22A (ACTIVE) till 15th June 2019

A non-compliant company would not be able to amend its capital structure or carry out any merger or amalgamation.

The Government of India, through the Ministry of Corporate Affairs, has made it mandatory for to file ACTIVE eForm or INC-22A.  The due date for filing INC-22A was 25th April 2019.

There have been representations made to the MCA for Form INC-22A due date extension.

News coming that government has extended the deadline of filing form INC 22A (ACTIVE) to June 15, gives companies more time to comply, with a provision aimed at spotting shell companies.

The disclosure requirement, which came into effect from February, makes it mandatory for registered companies to upload pictures of their business premises and at least one director.

The last date for filing FORM INC 22A (ACTIVE),which was Thursday, April 25 is now extended till 15th June 2019.

Ministry of Corporate Affairs have received many representations from industry associations for Extension of the Due date with many companies yet to comply thereafter Ministry of Corporate Affairs decided to Extend the Due date of form INC 22A.

Startups have, in particular, pointed out that many of them operate out of homes or shared premises or office suites.

The government had launched a crackdown on shell companies as part of the anti-black money drive and these norms were follow-up measures to establish existence of registered entities. Names of thousands of shell companies were struck off as part of this drive.

This new electronic form INC 22A, which is also known as e-Form ACTIVE (Active Company Tagging Identities and Verification), was notified as part of the Companies (Incorporation) Amendment Rules, 2019 in February.

MCA VPD Service

The Ministry of Corporate Affairs on 24/04/2019 has announced the following on their homepage “VPD service will be unavailable from 8:00AM to 08:00PM IST on 24th – 25th Apr 2019 for system maintenance. Stakeholders are requested to plan accordingly.”

VPD Service means View Public Documents Service which can be accessed from http://www.mca.gov.in/mcafoportal/viewPublicDocumentsFilter.do

With VPD Service being taken down on the same last date for filing of INC22A ACTIVE eForm, there are more chances for the due date being extended for INC-22A filing.

Representation from ICSI

The Institute of Companies Secretaries of India has made a representation to the Ministry of Corporate Affairs on 22nd April 2019. In the letter, the Institute explains the difficulty faced by certain stakeholders while filing Form INC22A-ACTIVE as below:

  • The Auditors’ details not getting prefilled in certain cases.
  • Compliance by dormant companies.
  • Companies in management disputes.
  • Issues faced by corporates having a different financial year.

As the difficulties are still unresolved as on 22nd April 2019, the ICSI has requested the MCA to extend the due date for filing of Form INC-22A.

A non-compliant company would not be able to amend its Capital Structure, Change in Directorship or carry out any Merger or Amalgamation, as per the various provisions listed below:

  • Changes in authorized capital (Form SH-07)
  • Changes in paid-up capital (Form PAS-03)
  • Changes in Director (Form DIR-12) (cessation would be allowed).
  • Changes in Registered Office (Form INC-22)
  • Amalgamation or Merger (INC-28)

If the form is filed within the due date, there is no fee, while late filing will attract a fine of Rs 10,000.

Read the Official Notification from MCA

Auditors barred from putting a value on companies they are auditing

An income tax tribunal has barred auditors from issuing valuation certificates to the companies they are auditing. This is set to impact several tax disputes around valuations in companies including angel tax disputes involving start-ups.

The Bangalore Income Tax Appellate Tribunal (ITAT) said that auditors of a company cannot double up as accountants especially in situations while dealing with “share valuation for the purpose of excess share-premium taxability.”

In several cases the income tax department has disputed valuations of companies around the time of investments.

The ITAT ruling came in a case where the tax department had challenged valuation of a company by its auditor.

In most cases, valuations of startups were challenged by the tax department, leading to “angel tax.” The angel tax controversy surrounds the valuations during various rounds of startup funding. In several cases, the revenues at startups kept reducing or remained stagnant, but their valuations increased. The taxman is questioning the premiums paid by the investors and wants to categorise them as income that would be taxable at 30%. In most cases, the investments made by angel investors, venture capital funds or any other investor have been challenged by the taxman.

Many accountants and valuers are already facing heat from the tax department. ET had, on December 25, reported that the tax department has started issuing show-cause notices to valuation experts, questioning the premiums several startups fetched during their investments rounds.

Valuation experts, however, say that they merely projected and calculated future growth, using the facts and figures provided by the startups. Many tax experts point out that the tax department’s approach to the fair value as a benchmark for calculating premiums may not be accurate in the context of startups.

Income tax officers claim that the scrutiny on startups is mainly due to concerns that black money may have changed hands.

ITAT Ruling