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Volume - XII | January 2020

Vadodara Branch of Western India Regional Council of

The Institute of Chartered Accountants of India

The Institute of

Chartered Accountants of India(Setup by an Act of Parliament)

Newsletter

Editorial Team

CA. Hitesh Agrawal 99980 28737Chairman

CA. Krunal Brahmbhatt 78748 11551Vice-Chairman

CA. Vinod Pahilwani 98980 78176Secretary

CA. Manoj Sahu 90990 94500Treasurer

CA. Vishal Doshi 98240 59901Ex-officio

CA. Dhiren Parikh 93762 11099IP - Chairman

CA. Rikin Patel 88667 09509Committee Member

CA. Rahul Agrawal 97233 10418Committee Member

CA. Dhruvik Parikh 99795 39966Committee Member

CA. Hitesh Agrawal CA. Rahul Agrawal

CA. Nayan Kothari CA. Manas Rindani

CA. Niraj N Shah CA. Ketki Desai

CA. Keyur Shah CA. Dhruti Vaidhya

CA. Daxesh Gandhi CA. Niraj Majmundar

Forthcoming Events 2Pg 0

Direct Tax Updates 2Pg 0

Judicial Decisions on 03PgIndirect Taxes

Revision of the Auditor’s Report Pg 04

Photo Gallery 0Pg 7

Managing Committee

Contents

There isn’t a person anywhere who isn’t capable ofdoing more than he thinks he can. -Henry Ford

Hello my Dearest Readers!

As I pen down this message, my heart is filled with mixedemotions. It seems just like yesterday when I was writing myfirst newsletter message as the Chairman of the Baroda Branch. And in the blinkof the eye, I’m standing here at the end of this highly opportunistic way. Ourguiding principle for year- ‘Brand Dharma’ indeed helped us pave our waythrough this year with great success.

Last month, the Branch completed 52 glorious years of its foundation andentered its 53rd year. Branch organised a program on “Vision India 2030” withGujarat Chhatra Sansad. This event witnessed legendary speakers at the NationalLevel. The event was a grand success with more than 5000 participants. Thisevent was a gem to the crown of the Branch. To add a jewel to this crown, theBaroda Branch made a World level record in having the maximum number ofMSME- Udyog Aadhar registrations under the scheme of - Maru Udyog, MaruAadhar. A two days Residential Conference at the Statute of Unity was alsoorganised. Additionally, time to time seminars on topics of academic andprofessional areas were organised. To name a few, Block chain seminar, InvestorAwareness programme, one day regional programme on GST and Income Tax andso on.

The month of January 2020 shall begin with the 29th Residential RefresherCourse at the Fern Samali Resort, Dapoli. This 29th RRC promises to be a vintageand outstanding one with some of the greatest and knowledgeable speakers toshare their professional knowledge with the participants. The Branch shallorganise various seminars on topics with academic significance to help thestudents and the professionals step with confidence in this newyear.

This, being my finale newsletter message as the Chairman of the Branch, I wouldlike thank each and every one from the Committee of the Baroda Branch, WICASA,fellow professionals and my dearest students for their strong support in all of myendeavours all the year around.

I exit this platform but shall never stop being the patronage for the developmentof this Branch, students as well as the members.

Good luck! Jai Hind!

Regards,

CA. Hitesh Agrawal

Chairman

Chairman Communication

NewsletterVadodara Branch of WIRC of ICAI

2 JANUARY 2020Volume - XII

Branch Events

Day & Date : Saturday, 18.01. 2020

Time : 10:00 am to 05:00 pm

Fees : Rs . 800/- inc luding 18% GST t i l l 16thJanuary’2020 afterwards Rs.1000/- including18% GST

Venue : ICAI Bhawan, Vadodara

Topics Speakers

Issues in ITC with specific emphasis Adv. Vaitheswaran,on matching & Rule 36(4) Chennai

Departmental Audits, Adjudication CA. Abhay Desai, Vadodara& replies – Issues & Approach

Issues in Real Estate Sector CA. Jignesh Kansara,Mumbai

New Return Filing System- Legal and CA. Yash Dhaddha, JaipurPractical Issues and Challenges

Full Day Seminar on GST

HrsCPE 6

Contributed by : CA. Narendra Hindochacan be reached at [email protected]

Direct Tax Updates

1. Appealable orders

of Orders againstSection 246A lists the classes

which an appeal can be filed before theCommissioner(Appeals) which is the first level atwhich a tax demand can be challenged. Whathappens if the order resulting in demand does not

fall in the category cases so listed in section 246A.

In the case of Genpact India Private Limited vs.DCIT (Supreme Court) reported at (2019)TaxCorp(LJ) 20542, the issue related to liability topay The list ofbuyback tax under section 115QA.

appealable orders given in section 246A primafacie does not cover orders relating to suchliability. It was held by the thatSupreme Courtliability to pay such tax is also appealable andfalls in the clause worded as ‘orders where the

assessee denies his liability to be assessed’. Thelogic is that in this context, the term ‘assessed’ isnot confined to assessment under section143(3) as normally understood. This may appearto be an order favourable to assessee but wasactually against the assessee. The reason is thatthe decision was given on a writ petition and thedecision resulted in dismissal thereof as theremedy of appeal was available to the assessee.

2. Scope of limited scrutiny

In cases in which a case is selected for limitedscrutiny, the Assessing Officer restricts himself tothe issue for which the case is selected forscrutiny. If he goes beyond that to other issues,some decisions have considered such action asnot tenable. In case of M/s.Sahyadri Agencies Ltd.V. Income Tax Officer before the Income TaxAppellate Tribunal, Cochin Bench, order undersection 263 was challenged on the ground thatmatter for which the action was taken related to amatter other than the matter for which the casewas selected for scrutiny and apparently theAssessment order could not be considerederroneous as the matter was not at all required tobe considered by the Assessing Officer.

However, the action was upheld based on thelogic that even in case of limited scrutiny

assessment, the Assessing Officer is duty bound to

make a prima facie inquiry as to whether there is

any other items which requires examination and

in appropriate cases, he ought to have sought the

permission of the CIT / DIT to convert a `limited

scrutiny assessment’ to a `complete scrutiny

assessment’.

3. Software limitations

From time to time you come across cases in whichlaw permits something but the form does notallow it. For example, capital gains on sale assetsof business can be setoff against business lossesof earlier years, according to judicial decisions.However, the software for uploading the returnwill not permit it. In such a situation, in the casereported at (2019) TaxCorp (DT) 80306 (HC-BOMBAY) in case of Samir Narain Bhojwani VersusDeputy Commissioner Of Income Tax, it was heldthat the procedure of filing the return of incomecannot bar an assessee from making a claimunder the Act which he feels he is entitled to. TheHon’ble High Court observed that it would beappropriate that the petitioner make arepresentation on the above issue to the CBDT,who would then consider it in the context of factsinvolved in the present case and issue necessaryguidelines for the benefit of the entire body of theassessees, if the petitioner is right in his claim thatthe prescribed return of income to be filedelectronically prohibits an assessee from makingits claim. It was further observed that in themeantime, the petitioner without prejudice to his



rights and contentions, would file the return ofincome in electronic form on the system beforethe last date. Besides, he should also file hisreturn of income in paper form with the AssessingOfficer before the last date.

4. Change in address

The address of an assessee is available to Income-tax Department in different databases. The Database of Permanent Account Numbers has theaddress.Then the ‘Profile’ tab on the efilingwebsite has the address. Then the address isstated in Returns filed from year to year. Theaddress is also stated in Forms of appeal, lettersfiled etc. The address may be different in each ofthese sources available to the Income-taxDepartment .

When a person changes his place of business orresidence, the necessary change may not beeffected in each of the databases or the sources,either due to omission on the part of the Assesseeor otherwise. In such a case, there is a risk of nonreceipt of communication and consequentcompliance failure resulting in tax demand.

The question is what is the obligation on theAssessee in case of change in address. Should hewrite a letter ? Should he change the address onthe ‘Profile’ tab ? Should he file the form forchange in address in the PAN Database ? Thisissue was considered by The Supreme Court OfIndia in Civil Appeal No.8132 OF 2019 (Arisingout of SLP(C) No.3530/2019) in case of PrincipalCommissioner of Income Tax, Mumbai Versus M/sI-Ven Interactive Limited, in which the Revenuepreferred the appeal against orders of earlierforums in which the Assessment was held to beinvalid. In this case, notices were issued to therespondent at the assessee’s address availableas per the PAN database. It was held that thechange of address in the database of PAN is must,in case of change in the name of the companyand/or any change in the registered office orcorporate office and assessee is required toapproach the Department with the copy of thesaid document and the assessee is also requiredto make an application for change of address inthe departmental database of PAN.

I. ATTACHMENT & RECOVERY

1.1 Search proceedings were conducted at thepremises of the petitioners on 27.9.2018.Thereafter, there was a visit by the revenueauthority on 1.4.2019 which led to the arrest ofthe second petitioner. Thereafter, no search hasbeen conducted at the premises of thepetitioners. Thereafter, the bank account wasattached u/s 83 of the CGST Act,2017. TheHonourable High Court observed that on a plainreading of section 83 of the GST Acts, it is clearthat a sine qua non for exercise of powersthereunder is that proceedings should bepending under section 62 or section 63 or section64 or section 67 or section 73 or section 74 of theGST Acts. The Honourable High Court thereforeheld that in the absence of pendency of anyproceedings under sections 62, 63, 64, 67, 73 or74 of the GST Acts, the orders of provisionalattachment of the bank accounts of thepetitioners under section 83 of the GST Acts arewithout authority of law and are renderedunsustainable.

[Kushal Ltd – Gujarat HC]

1.2 The revenue authorities proceeded for recoveryu/s 79 of the CGST Act,2017 based on thestatement of the petit ioner, which wassubsequently retracted. The Honourable HighCourt observed in in absence of any otherproceedings issued against the petitioner todetermine either the tax, interest or penalty, theimpugned proceeding u/s 79 cannot besustained. The Honourable High Court furtheralso held that recovery u/s 83 of the CGST Act,2017 by attaching the bank account could alsonot be resorted in absence of any pendingproceedings u/s 62, 63, 64, 67, 73 or 74 of the GSTActs

[V.N.Mehta & Co – Madras HC]

1.3 The State of UP had filed WP against order of HighCourt that had given directions for release ofseized goods without following the provisions

Contributed by : .CA Anirudh Sonpalcan be reached at [email protected]

Judicial Decisions onIndirect Taxes



contemplated u/ 97 of the CGST Act, 2017 ad Rule141 of the CGST Rules,2017. The HonourableSupreme Court observed that ‘there is no reasonwhy any other indulgence need be shown to theassessees, who happen to be the owners of theseized goods. They must take recourse to themechanism already provided for in the Act andthe Rules for release, on a provisional basis, uponexecution of a bond and furnishing of a security, insuch manner and of such quantum (even upto thetotal value of goods involved), respectively, asmay be prescribed or on payment of applicabletaxes, interest and penalty payable, as the casemay be, as predicated in Section 67 (6) of the Act.’The Honourable Supreme Court directed that allsuch orders of the High Court should be not beimplemented and proceedings shall be initiatedas per the legal provisions.

[State of UP vs Kay Pan Fragrance Pvt Ltd – SC]

II. REFUND OF ITC

The Petitioner could not carry forward its ITCunder Trans1 on account of failure to allowsmooth migration of the credit standing in thePetitioner’s account of

unutilized input tax. Consequently, the Petitionercould not use and exploit the Input Tax Creditwhile making exports in the months of July andAugust, 2017. The Petitioner, being an exporterunder the GST regime is entitled to undertake zerorated supplies. The Honourable High Courtobserved that the rights of the parties cannot besubjugated to the poor and inefficient softwaresystems adopted and accordingly directed torefund the transitional credit of Rs.1,37,37,029.

[Vision Distribution Pvt Ltd – Delhi HC]

III. LEVY OF IGST ON IMPORT FREIGHT

Following the High Courts of Gujarat & AndhraPradesh, the Honourable Calcutta High Court alsogranted interim relief on levy of IGST on CIFImport freight on one of the grounds being Importduty being levied on the total value, includingfreight component.

[Adani Wilmar Ltd – Calcutta HC]

IV. VALUATION

The Applicant is in the business of providingsecurity personnel to various Govt Hospitals andwas paying GST on the charges recovered for the

security personnel. However, the Govt Hospitalsseparately paid bonus for the security personnelas per the rules applicable. It was held that sincethe security personnel were not the employees ofthe Govt Hospitals, there was no employer-employee relationship between the securitypersonnel and the Govt Hospitals and GST waspayable by the security agency on such bonusrecovered from the Govt Hospitals.

[Ex-Servicemen Resettlement Society – WB AAR]

Contributed by : CA. Parvej Mansurican be reached at [email protected]

Revision ofthe Auditor’s Report

As we are aware that the audit report is a very

important and critical document as stakeholders,

Government agencies and public at large rely on the

audit report in analyzing the financial health of any

entity.

Being a document of such a great importance,

members of profession are expected to take great care

in preparation and issuance of the audit report.

However, in certain circumstances, the revision of audit

report may be warranted due to apparent mistakes or

factual inaccuracies, wrong information about facts,

subsequent discovery of facts existing at the date of

Audit report etc. The nature and range of situations are

distinct from one enterprise to another depending

upon facts and circumstances. The instances of

revision of the audit report may be rare in actual

practice and therefore, members are expected to

exercise professional judgment, care and caution

depending upon the actual facts and circumstances of

the case while issuing audit report or in revision of

original audit report. The revision in audit report under

the required situations shall enhance the confidence

of stakeholders, Government agencies and public at

large for the independence of auditor and for the

profession also.

There are three guidance notes viz., “Guidance Note on

Revision of the Audit Report”, “Guidance Note on

Auditor’s Report on Revised Accounts of Companies



B e f o r e C i r c u l a t i o n To S h a r e h o l d e r s ” a n d

“Revision/Rectification of Financial Statements”, and

standards on auditing practices issued by Institute of

Chartered Accountants of India, which collectively

provide procedures to be followed by the members for

revision of the audit report. It is to be noted that the

audit report once issued cannot be withdrawn but it

may be revised as per the procedures laid down in

guidance notes and standards on auditing.

The audit report is not required to be revised under the

following situations occurring after the date of audit

report:

- on account of any new development;

- final determinations or resolutions are made of

contingencies or other matters which had been

disclosed in the financial statements;

- final determinations or resolutions are made of

contingencies or other matters which had resulted in

qualification/disclaimer/adverse opinion in the

original audit report.

The auditor has to ensure that the audit report can be

revised under the situations warranting him to do so

but it does not absolve the member from the

professional misconduct, if any, committed by him

while discharging his duties in normal course of audit.

The reference in relation to the audit report is not only

limited to the financial statements but also extends to

such other statement which is subject matter of audit

report. The term “audit report” includes any report

issued pursuant to audit or related services.

After the date of auditor’s report, the auditor is not

required to perform any audit procedures related to

financial statements. However, after the date of the

auditor’s report but before the date the financial

statements are issued, If any fact becomes known to

the auditor, it may cause the auditor to amend the

auditor’s report. Once the auditor considers that the

financial statements need amendment, he has to

discuss the matter with the management and may

advise the management to revise the financial

statements. When management agrees with the

auditor's suggestion and decides to revise the financial

statements then while reporting on such revised

financial statements, members are expected to follow

“Guidance Note on Audit Report on revised accounts of

Companies Before Circulation to Shareholders”.

Before issuing audit report on amended accounts, the

auditor needs to ensure that such amended accounts

have been approved by the Boards of Directors of the

company. The auditor has to ensure that the

new/revised auditor’s report on the amended financial

statements shall not be dated earlier than the date of

approval of the amended financial statements. The

new or amended auditor’s report should include a

statement in an Emphasis of Matter paragraph or Other

Matter(s) paragraph that conveys that the auditor’s

procedures on subsequent events are restricted solely

to the amendment of the financial statements as

described in the relevant note to the financial

statements.

In case of the corporate clients, One can revise the

auditor’s report till the adoption of the accounts in

annual general meeting while in case of the non-

corporate clients, there is no need to adopt accounts

by any such body. In such case, the auditor may revise

the auditor’s report within reasonable time

considering the situation but not later than issuance of

the audit report for the accounts of immediately next

accounting period. In case auditor is continuing one, he

may consider that there is no need to revise the

financial statements and issue a revised report as he

may be of the view that appropriate disclosures are

made in the financial statements to be released

pertaining to the immediate following period, when

such situation is imminent. One noteworthy fact is that

re-opening or rectification of accounts after they have

been adopted at the Annual General Meeting is not

permitted and therefore, it becomes imperative for the

auditor to bear in mind that in case auditor is called

upon by the management to issue auditor’s report on

revised/rectified accounts after their adoption in AGM,

he should qualify his report stating the fact of non-

permissibility of revision/rectification of accounts by

management after their adoption in AGM.

If the management of the entity is not in agreement for

the revision of the financial statements, the auditor

should notify those persons ultimately responsible

and he shall take required actions to prevent future

reliance on the audit report. The action taken will

depend on the auditor's legal rights and obligations

and the recommendations. In circumstances, if

required, the auditor may consider seeking legal



advice. He can consider the following steps:

-Notify the client that the audit report must no longer

be associated with the financial statements;

-Notify Regulatory Agencies such as the Registrar of

Companies, the Securities and Exchange Board of

India, Reserve Bank of India, Income-tax Department,

Insurance Regulatory and Development Authority or

any other Governmental Regulatory body having

jurisdiction over the client that the audit report should

no longer be relied upon;

-Making an appropriate statement at the annual

general meeting, if requested by the Chairman;

In case of partnership firms, it should be ensured that

the revised report should be signed by the person who

has signed the original report or issue letter

mentioning preventing reliance on the audit report. If it

is signed by another partner, the reason for the signing

by another partner should be stated.

The auditor had to ensure that the terms of

engagement letter should include the agreement of

management to inform the auditor of facts that may

affect the financial statements, of which management

may become aware during the period from the date of

the auditor’s report to the date the financial

statements are issued.

If the financial statements are amended by the

management, auditor has to carry audit procedures on

the amendments made in the financial statements. The

Auditor has to ensure that management has taken

sufficient steps to inform the situation of amendment

of financial statements to all and one who had received

the previously issued financial statements along with

auditor’s report thereon.

As stated earlier, the auditor has to include an

Emphasis of Matter paragraph or Other Matter(s)

paragraph, as the case may be, in the revised/amended

auditor’s report as additional communication. An

Emphasis of Matter paragraph or Other Matter(s)

paragraph should include reference of relevant notes

to the financial statements mentioning the reason for

the amendment of the previously issued financial

statements and auditor’s report. The revised auditor’s

report should also include reference of the date of the

original financial statements covered by the audit

report.

The above-referred additional communication is

required to be included in auditor’s report to draw

attention of users for the matters presented or

disclosed in the financial statements and which are

basic for the understanding of the financial

statements. In such a case, the auditor has to include an

Emphasis of Matter paragraph in the auditor’s report.

The auditor should include the paragraph within a

separate section of the auditor’s report with an

appropriate heading that includes the term “Emphasis

of Matter”. The auditor has to provide clear reference to

the matter being emphasized and where it can be

mentioned in the financial statements with full

description. The auditor has to mention that the

auditor’s opinion is not modified in respect of the

matter emphasized.

I n c e r t a i n c i r c u m s t a n c e s , t h e a d d i t i o n a l

communication may also be required to be included in

auditor’s report to draw attention of users for any

matters other than those presented or disclosed in the

financial statements and which are relevant for

understanding the audit, auditor’s responsibility or

auditor’s report like explanation for auditor’s inability

to withdraw from engagement due to scope limitation.

In this case, auditor has to include an other Matter

paragraph in the auditor’s report. The auditor should

include the paragraph within a separate section of the

auditor’s report with an appropriate heading that

includes the term “Other Matter”. Before including the

other matter paragraph in the auditor’s report, the

auditor has to ensure that it should not be prohibited

by any law and regulation and it cannot be determined

as a key audit matter.

If the auditor expects to include an Emphasis of Matter

or Other Matter(s) paragraph in the auditor’s report, the

auditor shall communicate with those charged with

governance regarding this expectation and the

wording of the paragraph.



Photo Gallery

Lecture Meeting on New Return Scheme Under GST & Various Issues Under New Return Scheme on 06.12.2019

Media Seminar on 08.12.2019

Lecture Meeting onChange Your Beliefs & ChangeYour Life on 14.12.2019

Lecture Meeting on Look Back,Year Ahead on 20.12.2019

Staff Orientation Program on 20.12.2019

YOGA on 20.12.2019

Lecture Meeting on Analysis ofImportant Judgement of SC, HCand ITAT under Income Tax Acton 21.12.2019

Leadership Conclave on 22.12.2019



Full Day Seminar on Blockchain on 25.12.2019

Regional Conference on Insolvency & Bankruptcy Code on 28.12.2019

Seminar on ICAI – MCA Investor Awareness Programme on 30.12.2019

Regional Conference on Corporate & Allied Laws on 31.12.2019



S T U D Y C I R C L E

Important Issues - Audit and Taxation of Charitable Trust on 10.12.2019

Ergo Fitness Fundas for Chartered Accountants on 19.12.2019

Excel Automation Through Macro And VBA on 27.12.2019


JANUARY 2020Volume - XII

DISCLAIMER : The ICAI and the Vadodara Branch of WIRC of ICAI is not in any way responsible for the result of any action taken on the basis of the advertisement published inthe Newsletter. The members, however, may bear in mind the provisions of the Code of Ethics while responding to the advertisements. The views and opinion expressed orimplied in the Newsletter are those of the authors / contributors and do not necessarily reflect those of Vadodara Branch. Unsolicited matters are sent at the owner's risk andthe publisher accepts no liability for loss or damage. Material in this publication may not be reproduced, whether in part or in whole, without the consent of Vadodara Branch.Members are requested to kindly send material of professional interest to The same may be published in the [email protected]/[email protected] to availability of space & editorial editing.

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