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In a noteworthy ruling, the Income Tax Appellate Tribunal (ITAT), Mumbai clarified that penalty under Section 270A of the Income Tax Act cannot be imposed when income additions arise solely due to deeming provisions under Sections 43CA and 56(2)(x).
The case involved an assessee whose return was scrutinized, and additions were made based on the differential between actual sale consideration and stamp duty value. The Assessing Officer (AO) proceeded with penalty under the misreporting clause. However, the Tribunal held that since the addition stemmed from deeming fiction rather than active misreporting by the assessee, the penalty was unwarranted. Moreover, the penalty notice lacked clarity on whether it was for under-reporting or misreporting, making the penalty arbitrary and unsustainable.
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To streamline deductions for preliminary business expenses under Section 35D, the CBDT has notified Form 3AF. This form must be submitted electronically—via digital signature or EVC—at least one month prior to the ITR due date under Section 139(1).
General taxpayer information (PAN, Aadhaar, address, etc.)
Nature and amount of preliminary expenditures (e.g., feasibility studies, surveys)
Party details who conducted such activities (with PAN and address)
Payment modes and TDS-related particulars
This move ensures transparency and standardization in claiming these deductions.
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Effective October 1, 2023, small sellers whose turnover remains below the GST registration threshold can now sell through e-commerce platforms without mandatory registration—provided certain conditions are met.
No inter-State sales
Supplies must be restricted to a single State/UT
Adherence to all procedural conditions as notified by CBIC
This exemption comes through Notification No. 34/2023–Central Tax and aims to ease compliance for micro-entrepreneurs in the digital marketplace.
See how we help e-commerce sellers
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CBIC has introduced specific operational rules for e-commerce platforms dealing with composition scheme sellers, effective October 1, 2023 (via Notification No. 36/2023–Central Tax).
E-commerce operators (ECOs) must restrict interstate supplies for such dealers
ECOs must collect and deposit tax at source
Details of these transactions must be reported in FORM GSTR-8
These measures ensure better control over tax compliance in digital commerce.
We simplify GST for e-commerce platforms
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Another important update from CBIC is the introduction of a special procedure for unregistered sellers using e-commerce platforms (Notification No. 37/2023–Central Tax).
ECOs must ensure such sellers are enrolled and allotted an enrolment number
Interstate supplies are disallowed
No TCS needs to be collected from these sellers
ECOs must furnish sales data via FORM GSTR-8
This step enables formal participation of micro-businesses in digital trade while keeping regulatory oversight intact.
Our team helps onboard unregistered sellers
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In its 51st meeting, the GST Council recommended that the valuation of supplies for online gaming and actionable claims in casinos be based on the entry amount—i.e., the amount deposited by a player, excluding winnings from earlier rounds.
To implement this, relevant amendments to CGST Rules and possibly the GST Act itself are planned, with a target effective date of October 1, 2023.
This approach is expected to bring clarity to the taxation framework of the rapidly growing digital gaming and betting industries.
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SEBI has moved to improve transparency in portfolio management by issuing a standardized set of audit terms for reporting firm-level performance data. These terms, developed in consultation with APMI, will be effective from October 1, 2023.
Key directives:
Audits must cover all discretionary and non-discretionary portfolios (excluding advisory-only clients unless promoted publicly)
Compliance reports must be filed with SEBI within 60 days from the end of the financial year
Certification should come from directors or authorized representatives of the portfolio manager
This step strengthens investor confidence and ensures uniform benchmarking of PMS performance.
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The National Financial Reporting Authority (NFRA) penalized a statutory auditor for insufficient audit procedures related to the “going concern” assumption, despite the auditor issuing a qualified opinion.
The audit report flagged uncertainty regarding the company’s ability to continue operations, but NFRA found that the auditor relied on an unsigned Management Representation Letter (MRL) without conducting adequate verification. This lapse, combined with failure to apply professional skepticism, led to regulatory action.
This case emphasizes NFRA’s intent to enforce high-quality auditing standards and hold professionals accountable for lapses in judgment or documentation.
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