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Showing 321 to 340 of 420205 Records
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2024 (11) TMI 1158
Disallowing of deduction for bad debts written off being net of sale consideration of the non-performing asset (NPA) u/s 36(i)(vii) - HELD THAT:- As the claim of the assessee as a bad debt is as per the provisions of the Act and also allowable as a business loss. Therefore, we do not find any merit in the impugned addition. The AO is directed to delete the addition.
Denial of deduction for bad debts written off u/s 36(1)(vii) r.w.s. 36(2) of the Act and also u/s 37(1) - HELD THAT:- The assessee had assets of Rs. 7.84 Crores (being loan outstanding). The assessee was assigned assets, market value of which was Rs. 4.55 Crores (being price of shares on NSE on the date of credit in the D-Mat account). Thus, the assets of Rs. 7.84 Crores was exchanged for another asset for Rs. 4.55 Crores and hence the loss of Rs. 3.29 Crores, which is nothing but a business loss and deserves to be allowed. The reasons for denial of the claim have been considered while deciding Ground Nos. 1 to 5 (supra) and for our detailed reasoning therein, this claim of loss is also allowed. Ground Nos. 6 to 8 are accordingly allowed.
Disallowance u/s 14A r.w.r. 8D - shares were held as stock-in-trade - assessee claimed exempt income on which suo moto disallowance u/s 14 of the Act was computed by applying Rule 8D - HELD THAT:- The assessee while computing the income at Clause 8 of the notes to the computation of total income has made it abundantly clear that though the assessee has disallowed u/s 14A r.w.r. 8D out of abundant caution, the bank reserves its right to claim that provision of Rule 8D should not be attracted in their case. This was in line with the judicial decisions prevailing at the time of filing of the return of income. However, now that the Hon’ble Supreme Court in Maxopp Investment Ltd. [2018 (3) TMI 805 - SUPREME COURT] has settled the dispute, the assessee was not required to disallow any expenditure for earning the exempt income as mentioned elsewhere. Therefore, the AO is directed to delete the suo moto disallowance. Ground No. 9 is accordingly allowed.
Non-inclusion of the amount taxed as income of the head-office while working out adjusted total income for computing the deduction u/s 36(1)(viia) - AO has computed the adjusted total income without considering income of the head-office while working of deductions u/s 36(1)(viia) and Section 44C - HELD THAT:- . After giving a thoughtful consideration to the orders of the authorities below, we are of the considered view that this issue needs a fresh look qua the decision taken in AY 2013-14 by the appellate authorities. Therefore, this issue is restored to the file of the AO and the AO is directed to decide it afresh after considering the facts of AY 2013-14.
Disallowance of payment of professional fees - expenses not related with day to day business of assessee and also expenses were related with expansion of the assessee’s business - assessee explained that the fees were paid for services connected with developing India 2.0 plan for the Bank with focus on key areas like Macro and Regulatory Context, potential partnerships and inorganic play - HELD THAT:- As considering the business background of the assessee vis-à-vis the fees paid to McKinsey & Co. Inc., we are of the considered view that the expenditure was incurred primarily and essentially related to the operation and working of the business of the assessee. It was an expenditure which was not for acquiring any tangible or intangible asset but for conducting the business of banking better and more efficiently in the present. See Empire Jute Co. Ltd vs Commissioner of Income [1980 (5) TMI 1 - SUPREME COURT]
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2024 (11) TMI 1157
Characterization of receipt - interest u/s 28 of the Land Acquisition Act 1894 received by the appellant during the year, which was part of enhanced compensation for compulsory acquisition of his agricultural land exempt u/s 10(37) - whether interest u/s. 28 of the Land Acquisition Act 1894 awarded by the Court is a revenue receipt chargeable to tax as Income from Other Sources or is an integral part of enhanced compensation, and thus, is a capital receipt, which is exempt u/s. 10 (37) - HELD THAT:- We find that Hon’ble Punjab &Haryana High Court in Mahender Pal Narang [2020 (3) TMI 1115 - PUNJAB AND HARYANA HIGH COURT] held that interest issued on the compensation for enhanced compensation is to be treated as income from other sources and did not follow the principles laid down by Hon’ble Gujrat High Court and Special Leave Petition against the aforesaid judgment has also been dismissed.
In the case of PCIT vs Inderjit Singh Sodhi (HUF) [2024 (4) TMI 408 - DELHI HIGH COURT] observed that the enhanced compensation as income from other sources. The Hon’ble Supreme Court has not dealt with Finance (No-2) act of 2010 in the case of Hari Singh while the Hon’ble Delhi High Court has discussed the finance Act (No-2)/2010 and the judgement of Ghanshyam das (HUF) both. The interest on compensation or on enhanced compensation cannot be considered as compensation and shall be chargeable to tax under the head income from other sources. The Ld CIT(A) has rightly decided that interest received on compensation or enhanced compensation is to be treated as the income from other sources u/s 56(2)(viii) - Appeal of the assessee is dismissed.
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2024 (11) TMI 1156
Penalty levied u/s 271D - assessee had claimed the cash was received against sale of 32 sale deeds - Scope of phrase “specified sums” mentioned in section 269SS cover the amount received in cash - HELD THAT:- As we find that it is mentioned that AO had submitted a proposal for initiation of penalty u/s 271D for contravention of section 269SS of the Act. We fail to reconcile between the assessment order and the penalty order as to if the AO had in any way shown any indulgence during the assessment proceedings about the contravention of section 269SS of the Act.
We are of the considered view that even if it is assumed that subsequent to the assessment order dated 26.11.2018 the AO had submitted a proposal for initiation of penalty u/s 271D, then, the particulars of that communication should have been part of the impugned penalty order. In any case, if after conclusion of the assessment order any proposal was forwarded by the AO that does not fulfill the mandate of law which requires that the satisfaction of violation of section 269SS and a reference for initiating penalty u/s 271D of the Act should be made and recorded by the AO in the body of the assessment order. The reliance in this regard is rightly placed by Ld. AR on the decision of Sri Raja Reddy Nalla, Warangal [2023 (5) TMI 1254 - ITAT HYDERABAD].
Further, we are of the considered view that the interpretation given to words, ‘specified sum’ by terming it as ‘residuary term’ to encompass all other transactions done in cash beyond a specified sums is incorrect interpretation. See Shri R. Dhinagharan (HUF) [2024 (1) TMI 61 - ITAT CHENNAI] wherein held sale consideration was received in cash at the time of execution of multiple sale deeds from different persons for the sale of plots and accepted as genuine in the assessment order completed on 23.05.2018 and admittedly there was no advance received by the seller. The amended provisions of Section 269SS of the Act was applied by the A.O to the facts of the present case only to the sale consideration received as 'specified sum' and on such presumption the JCIT levied penalty u/s 271D of the Act. The intention of the amendment is very clear right from the Budget speech of the Finance Minister that the said amendment is brought into the statute in Section 269SS of the Act would get attracted to sum received in cash as an advance in an immovable property transaction and not to the completed transaction namely cash received as a sale consideration at the time of execution of the registered sale deed.
This provision will not apply to the transaction that happens at the time of final payment at the time of registration of sale deed and payment is made before sub-registrar at the time of registration of property. In admitted fact that all sale deeds were registered and cash payment was made at one go before the sub- registrar at the time of registration of sale deeds of plots. Hence, in our view, there is no violation of provisions of section 269SS - Assessee appeal allowed.
Thus we consider the penalty levied to be against the provisions of law. The grounds are sustained. The impugned penalty is quashed. Assessee appeal allowed.
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2024 (11) TMI 1155
Liability of interest u/s 201(1A) - disallowance u/s 40(a)(ia) - assessee has suo moto disallowed 30% of the interest expenditure - HELD THAT:- The undisputed fact is that the assessee has suo moto disallowed the interest expenditure on which no tax was deducted at source. In our considered opinion, once an amount is disallowed u/s 40(a)(ia) of the Act for non-deduction of tax, it should not be subject to TDS provisions again so as to make an assessee liable to interest u/s 201(1A).
The recipients of the interest have already included the said amounts in their returns of income and paid taxes thereon and the assessee has furnished evidence for the same including an Accountant Certificate as directed in the relevant provisions of the Act and since the tax has already been paid by the recipients, no further tax recovery is necessary.
For this proposition, we draw support from the decision of Ansal Land Mark Township (P.) Ltd.[2015 (9) TMI 79 - DELHI HIGH COURT] wherein held what is common to both the provisos to Section 40(a)(ia) and Section 201(1) of the Act is that as long as the payee/resident has filed its return of income disclosing the payment received by and in which the income earned by it is embedded and has also paid tax on such income, the Assessee would not be treated as a person in default. Appeal of the assessee is allowed.
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2024 (11) TMI 1154
Rejection of books of accounts - Addition u/s 68 - assessee had deposited cash during demonetization period - case of the assessee was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS) - AO rejected the books of accounts of the assessee noting huge anomaly and differences in the financial figures of sales and cash in hand available with the assessee in the impugned year as compared to in the preceding year - HELD THAT:- In terms of the provisions of section 145(3) AO can reject the Books of accounts of the assessee and make a best judgement assessment u/s 144 of the Act, if he is not satisfied with the correctness or completeness of the Books of accounts of the assessee.
This dissatisfaction of the AO has to be vis a vis the correctness and completeness of the Books of the assessee for rejecting the same. And this power cannot be exercised in a subjective manner. The reason being that serious consequences follow the rejection of the Books of accounts of the assessee since it gives power to the AO to make a best judgement assessment. The AO surely cannot reject the Books on his own whims and fancies.
As pointed out by the in terms of provisions of Section 145(3) the Assessing Officer is duty bound to find patent, latent and glaring defects in the books of accounts while rejecting the Books of the assessee.
The reliance placed on the decision of Vikram Plastics [1998 (8) TMI 43 - GUJARAT HIGH COURT] clearly holds that for the purpose of rejecting the books of accounts of the assessee, discrepancies and defects in the same need to be pointed out.
In the facts of the present case, admittedly no defects or discrepancies have been pointed out. The rejection of books of accounts is merely on the basis of surmises and conjectures of the AO which he has based on a mere financial analysis of the sales and cash data of the assessee for the impugned year and the immediately preceding year.
Admittedly, no discrepancy in the books of accounts maintained by the assessee was pointed out before rejecting the books of accounts, and since it is settled law that the rejection of books of accounts can take place only when the books are found to be maintained in such a manner that true profits cannot be ascertained therefrom, for which it is necessary for the Revenue Authorities to pinpoint the defects in the maintenance of the same.
Addition made to the income of the assessee of the cash found deposited in its bank after rejecting books of accounts of the assessee - Since we have held that the rejection of books of accounts was not correct, the additions made do not survive and therefore are directed to be deleted.
Assessee appeal allowed.
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2024 (11) TMI 1153
Denial of setting off of carried forward Short Term Capital Loss against the Income under the head Capital Gains during the present AY - scope of section 115BAC - HELD THAT:- As we know that the return processing is computerized one and no manual interference is there and if any figure or claim is not entered in appropriate column the computer disallows the same. We find that in section 115BAC neither brought forward long term capital loss nor brought forward short term capital loss is required to be disallowed but due to the fact that the assessee has entered the figure of brought forward long term capital loss in correct column the same was allowed by CPC.
But the brought forward short term capital loss was not filled in proper column, the same was disallowed by CPC. Considering the totality of the facts, we deem it proper to set-aside the order passed by the ld. Addl./JCIT(A)-1, Coimbatore and remand the matter back to his file with a direction to pass a fresh order in the light of our observations after providing reasonable opportunity of being heard to the assessee.
The assessee is also directed to comply with the notices issued by the ld. Addl./JCIT(A)-1, Coimbatore and bring this fact to the knowledge of the ld. Addl./JCIT(A)-1, Coimbatore that brought forward long term capital loss was allowed by CPC but brought forward short term capital loss was not allowed by CPC due to entry in wrong column in income tax return.
Addl./JCIT(A)-1, Coimbatore shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Thus, the grounds of appeal raised by the assessee are partly allowed.
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2024 (11) TMI 1152
Undisclosed income declared in Income Declaration Scheme, 2016 (IDS) - Nature/Character of income declared under IDS for tax purposes - non-payment of tax under the IDS, 2016 against the income declared - AO has made an addition on account of income from unexplained sources u/s. 68 r.w.s 115BBE
HELD THAT:- As per section 197(b) of IDS, 2016 where the assessee fails to pay the tax as per the income declared under IDS, 2016 the undisclosed income shall be chargeable to tax in the previous year in which such declaration is made.
We find force in the argument made by the AR that non-payment of tax under the IDS, 2016 against the income declared cannot change the character of the income declared under IDS, 2016 with respect to character of income assessable in the previous year in which such declaration was made under the Income Tax Act, 1961.
As before the Ld. Revenue Authorities the assessee has submitted that the amount disclosed in Form No.1 filed under IDS, 2016 was nothing but the capital gains arising out of the agricultural land sold through M/s. Satya Sai Housing by the assessee family and other members in various capacities. These facts were not disputed by the Ld. Revenue Authorities.
AO while framing the assessment has stated the same as undisclosed income u/s. 68 r.w.s 115BBE of the Act instead of taxing the same under capital gains. Merely because the assessee failed to discharge the tax liability under IDS-2016 as declared cannot change the character of the income under which it was declared under the IDS-2016.
IDS-2016 is also silent on the nature of income to be taxed in the event of failure by the declarant to pay the taxes. In these circumstances, we are of the considered view that the Ld. CIT(A)-NFAC has rightly directed the Ld. AO to re-compute the total income in the case of the assessee in the HUF status under the head capital gains and therefore the decision of the Ld. CIT(A)-NFAC does not suffer from any infirmity.
As decided in own case [2023 (12) TMI 134 - ITAT VISAKHAPATNAM] income to be taxed as capital gains in the hands of the assessee with the status of individual stating that “merely because the assessee failed to discharge the tax liability under IDS-2016 as declared cannot change the character of the income under which it was declared under the IDS-2016”. Appeal of the Revenue is dismissed.
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2024 (11) TMI 1151
Deduction u/s 80IB - Deduction denied as Non completion of project within the stipulated period provided u/s 80IB(10) i.e 31.03.2008 and commercial construction in the project exceeding the limit as provided in clause (d) of section 80IB (10) - thrust of the whole argument of the Ld. AR of the assessee is on the point that subsequent amendment vide Finance Act 2004 w.e.f 01.04.2005 in the provisions of section 80IB (10) cannot impose new condition for allowing deduction in respect of the project which was approved and commenced prior to 01.04.2005.
HELD THAT:- The conditions for restrictions of commercial space in the residential project as inserted by clause (d) vide Finance Act 2004 w.e.f 01.04.2005 is in the nature of asking the assessee to comply with a conditions which is not possible if the project has already reached to advance stage as per the approved plan by the local authority but the condition of completion of project cannot be in the nature of impossible task because a reasonable period of more than three years is provided by the said amendment w.e.f 01.04.2005 as the project is required to be completed on or before 31.03.2008.
In any case the time period of completion of the projects which are approved after 01.04.2005 is also only four years and therefore, the project which was approved in the year 2000 has already availed more than five years as on the date of amendment and further period of three years was allowed to complete such project for availing benefit of section 80IB(10) which is a proper and reasonable restriction placed by the legislature to protect the interest of the buyers who have booked their houses in ongoing project but would not get completed houses within a reasonable time.
Even otherwise the assessment year under consideration are not prior to the amendment w.e.f. 01.04.2005 and therefore, the question of retrospective applicability of this amendment prescribing time limit for completion of the project does not arise. Since the issue of requirement of completion certificate issued by the local authority is sub-judice before the Hon’ble Supreme Court therefore, in the facts and circumstances of the case we remand this issue to the record of the AO for fresh adjudication as per provisions as existed as on the date of approval of the project and subject to the decision in case of Global Reality [2015 (10) TMI 2384 - MADHYA PRADESH HIGH COURT] as well as Global Estate [2019 (7) TMI 1474 - SC ORDER].
Denial of claim of deduction on the ground of commercial area exceeding the prescribed limit in clause(d) of section 80IB(10) - This issue is covered by the judgment of Sarkar Builders [2015 (5) TMI 555 - SUPREME COURT] cited and reproduced in forgoing part of this order. Therefore, the claim of deduction cannot be disallowed on the ground that commercial space in the project is more than the prescribed limit as per clause (d) section 80IB(10) if the said commercial part of the project is duly approved by the local authority. The AO has to verify from the sanction plan about commercial area in the project approved by the local authority and the construction is in the conformity of the local approved plan. Accordingly the matter is remanded to the record of the AO for fresh adjudication in the light of above observations.
Appeals of the assessee are allowed for statistical purposes.
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2024 (11) TMI 1150
Classification of handcrafted articles of stone popularly known as ‘Chakla Belan’ (Rolling Board and Rolling Pin), mortar and pestle and other allied articles - petitioners were classifying the exported article specifically under ITC(HS) 68159990 and which constituted the residual clause and read as “others”. By virtue of the inclusion of articles falling within the ambit of ITC(HS) 68159990, those products became entitled to claim MEIS rewards @ 5%. The aforenoted Public Notice No. 02/2015 was thereafter amended from time to time including by way of Public Notice No. 44/2015-2020 dated 05 December 2017 in terms of which the MEIS reward was increased from 5% to 7%.
Scope of the assessment power that stands conferred upon the competent authorities under the FTDR Act and the Customs Act - HELD THAT:- A process of ‘self-assessment’ was ordained to form part of an ‘assessment’ as contemplated under the Customs Act. This change had essentially come to be introduced in 2011 and pursuant to which self-assessment was acknowledged to be one of the modes of assessment as contemplated under the Customs Act. The procedure for assessment of duty is prescribed in Section 17 of that enactment.
Prior to the amendments which came to be introduced in Section 17 by virtue of Finance Act, 2018, the Proviso to Section 17(2) while identifying the criteria relevant for selection of cases for purposes of verification, had recognised that power being guided by factors such as the valuation of goods, classification, exemption or concessional duties availed in terms of a notification issued under that Act. The Proviso had at the relevant time and prior to the passing of Finance Act, 2018 included the following phraseology “regarding valuation of goods, classification, exemption or concessions of duty availed consequent to any notification issued therefore under this Act”.
Section 17 also included a sub-section (6) in terms of which a proper officer was empowered to undertake an audit in respect of duty in case it had failed to undertake a reassessment or pass a speaking order in respect thereof. The aforesaid sub-section (6) as it existed in Section 17 came to be omitted by Finance Act, 2018.
The observations appearing in ITC Limited 2019 (9) TMI 802 - SUPREME COURT (LB)]] and BT India [2023 (11) TMI 478 - DELHI HIGH COURT] assume significance when viewed in light of the various Bills of Entry as submitted by the writ petitioners on a self-assessment basis having been duly accepted and no questions in respect thereof having been raised. The Bills of Entry would thus be liable to be viewed as having been duly assessed and accepted. Undisputedly, it is decades after those exports had been affected and assessments completed that the respondents now seek to reopen those transactions and seek to question the benefits claimed by the writ petitioners.
Undisputedly, consequent to the self-assessed Bills of Entry having been accepted and thus liable to be viewed as assessed, the stage of enquiry contemplated in terms of Section 17 of the Customs Act has clearly passed. That then leaves us to identify and determine the avenues which would otherwise be available to the customs authorities to reopen or review an assessment duly made.
Recovery of duty u/s 28 and 28AA - The provisions of Section 28AAA are attracted where it is found that an instrument issued to a person under the FTDR Act was obtained by means of collusion, wilful misstatement or suppression of facts. While Section 28AAA does undoubtedly statutorily empower the respondents to recover duty benefits illegitimately claimed by virtue of an instrument, the larger question which merits consideration is of identifying the authority which could be recognized in law to undertake a determination with respect to whether an instrument could be said to have been obtained by way of collusion, wilful misstatement or suppression of facts.
While we propose to return to this principal question a little later and in the subsequent parts of this decision, suffice it to note that Section 28AAA is a provision which stands at the crossroads of the Customs Act and the FTDR Act. It constitutes, in that sense, a junction or an intersection where the two statutes meet. Section 28AAA deals with situations of convergence and where a demand of duty is predicated upon a doubt being raised with respect to an instrument issued under the FTDR Act. Of critical significance, therefore, would be the issue of which authority should be recognised to have the jurisdiction to undertake the adjudication contemplated under that provision.
An adjudication is warranted for the purposes of invoking Section 28AAA cannot possibly be doubted. The usage of the expression “proper officer”, and which is defined in Section 2(34) of the Customs Act to mean an officer of customs, also cannot be accorded undue significance when one bears in mind Section 28AAA (1) speaking of an instrument issued to a person "for the purposes of this Act” or the FTDR Act. The former undoubtedly is a reference to the Customs Act. Thus, Section 28AAA is clearly intended to encompass all contingencies arising out of or relating to an instrument issued for the purposes of the Customs Act or the FTDR Act as the case may be.
Scope of the audit power which came to be independently incorporated in the Customs Act - As we read Audit Regulation 5, it becomes apparent that it is only after the disposal of any such objections that may have been invited that a final report containing the audit findings would come to be drawn. What however needs to be borne in mind is that the family of provisions pertaining to audit do not, at least in explicit terms, include a power to review, suspend or cancel an instrument issued either under the Customs or the FTDR Act. While hypothetically speaking an audit could contain findings or observations doubting a benefit or exemption claimed, we find ourselves unable to construe those provisions as enabling the customs authorities to suspend or cancel an instrument itself, be it under the Customs or the FTDR Act.
Powers of DGFT - The Director-General or the licensing authority may by an order in writing suspend the operation of any 62[licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] granted under these rules, where proceedings for cancellation of such [licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] has been initiated under rule 10.
FDTR Rules thus confer a power on the DGFT or the licensing authority to regulate the grant, renewal, suspension and cancellation of licenses, certificates, scrips or any other instrument “bestowing financial or fiscal benefits”. The MEIS certificate would undoubtedly be an instrument which bestows a fiscal benefit. What we seek to emphasize and highlight is Rules 7, 9 and 10, embody in clear and unequivocal terms, a conferral of jurisdiction and power to commence an adjudicatory process that the DGFT could undertake while evaluating whether a license, certificate, scrip or instrument was liable to be suspended or cancelled.
Validity of Audit objection letter - As the audit objection letter teems with definitive and predetermined conclusions and would not sustain when tested on the principles enunciated by the Supreme Court in Oryx Fisheries.
We then find ourselves unable to sustain the audit objection letter even when tested on the anvil of the Audit Regulations which may be said to have been applied or invoked. As is evident from a reading of Regulation 5, the proper officer, after having apprised the exporter or the importer, as the case may be, of its intent to initiate an audit, is obliged to apprise the auditee of the objections before preparing the audit report. In case the auditee disagrees with the findings that appear in that report, a demand could be validly raised or created. Undisputedly, no such procedure appears to have been followed by the respondents in the facts of the present case. In fact, and contrary to the mandate of Regulation 5, the Assistant Commissioner has required the petitioners to pay sums representing amounts which according to that authority had been wrongly claimed under the MEIS and having clearly failed to abide by the statutory procedure prescribed.
Purview of Sections 28(4) and 28AAA of the Act to sustain the direction for deposit as framed - Section 28(4) of the Act, as noted above, could have been invoked only if the Assistant Commissioner had come to the conclusion that the goods had escaped duty by reason of collusion, wilful misstatement or suppression of facts. It is only in those contingencies that Section 28(4) could have enabled the proper officer to reopen an assessment. However, all that is alleged in this respect is that the petitioners had failed to make a correct and truthful declaration and thereby mis-classified the goods with the avowed objective of claiming benefits under the MEIS.
Unable to appreciate how the petitioners could have been charged of having failed to make a “correct and truthful” declaration when the imports were affected under the cover of MEIS certificates granted by the DGFT and which had never been questioned. In fact, the DGFT has not even and till date initiated any action against the writ petitioners alleging that the MEIS Certificate had been wrongly obtained. This too leads us to conclude that the impugned action is rendered wholly illegal, arbitrary and unsustainable.
We then proceed to consider whether the action of the respondents would sustain under Section 28AAA - Section 28AAA is principally concerned with the right vested in the respondents to initiate action for recovery of duty and interest where an instrument issued to a person is found to have been obtained by means of collusion, wilful misstatement, or suppression of facts. The word “instrument” is defined by Explanation 1 to Section 28AAA to include any scrip, authorization, license, certificate, or any other document by whatever name called issued under the FTDR Act. We have already held that the MEIS certificate would clearly fall within the ambit of that expression in the preceding parts of this decision.
Custom and DGFT Crossroad - It would be impermissible for the customs authorities to either doubt the validity of an instrument issued under the FTDR Act or go behind benefits availed pursuant thereto absent any adjudication having been undertaken by the DGFT. An action for recovery of benefits claimed and availed would have to necessarily be preceded by the competent authority under the FTDR Act having found that the certificate or scrip had been illegally obtained. We have already held that the reference to a proper officer in Section 28AAA is for the limited purpose of ensuring that a certificate wrongly obtained under the Customs Act could also be evaluated on parameters specified in that provision. However, the said stipulation cannot be construed as conferring authority on the proper officer to question the validity of a certificate or scrip referable to the FTDR Act.
Invocation of Section 28AAA on a more fundamental ground - The controversy with respect to classification appears to have been raised for the first time in December of 2018 when the respondent no. 6 raised a doubt as to whether the stone and marble handicraft articles were liable to be placed under ITC(HS) 68159990. As was noted hereinabove, the sine qua non for Section 28AAA getting attracted is the triumvirate of collusion, suppression and wilful misstatement which are spoken of in sub-section (1) being attracted. Even if it were assumed for the sake of argument that the writ petitioners had wrongly classified or placed articles in question under ITC(HS) 68159990, the same would clearly not amount to it being ipso facto assumed that the same amounted to an act of suppression or wilful misstatement.
Rendering of a finding in favour of the respondents on the issue of collusion would have far greater ramifications. A finding on that score, if returned against the writ petitioners, would essentially require us to hold that the MEIS certificates had been obtained by the writ petitioners in collusion with the officers working under the DGFT. That too is not the allegation which is levelled by the respondents against the writ petitioners. The controversy, therefore, as to whether the subject articles were liable to be classified under CTH 6802 or 6815, would clearly not qualify the tests constructed by Section 28AAA.
Classification - handicraft articles being liable to be classified as falling under HSN 6815 or not? - The issue of classification was indelibly connected with the right of the writ petitioners to avail benefits under the MEIS. The MEIS scrip was issued by the office of the DGFT. The issuance of the MEIS scrip was dependent upon the exported article falling in the detailed list of products which came to be published by the DGFT on 01 April 2015. Table 2 set out the code wise list of products, as well as corresponding reward rates under the MEIS Scheme. There was undisputedly a reference to CTH 6815 as well as ITC(HS) 68159990 in that table.
Once the DGFT had proceeded to issue the MEIS scrip to the writ petitioners, they would have been justified in assuming that the issue of classification was neither questioned nor doubted. It is on the aforesaid basis that exports were affected between the period 1991 to 2018.
In the absence of the DGFT having ruled upon the issue of classification or having expressed any doubt with respect to the eligibility of the writ petitioners to claim benefits under the MEIS, it would be wholly impermissible for the respondents to take punitive action against the writ petitioners. The subject of classification stands explicitly reserved for the consideration of the DGFT in terms of Para 2.57 of the FTP. This too convinces us to conclude that the action as initiated by the respondents is rendered arbitrary.
Determination - As we allow the present writ petitions hereby quash the audit objection letters and summons issued - direct the respondents to refund the amounts collected from the writ petitioners
Since we have desisted from rendering any final opinion on the aspect of classification, the present decision shall be without prejudice to the right of the DGFT to initiate proceedings pertaining to the validity of the MEIS certificates issued to the writ petitioners if so chosen and advised and if otherwise permissible in law.
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2024 (11) TMI 1149
Bail application of the accused-applicant - gold recovered from the possession of the applicant from there car - Officers of D.R.I., NOIDA on information intercepted a Car at Kashi Toll Plaza on Delhi-Meerut Expressway and found package wrapped with brown colour tape and found a yellow metal bar in rectangular shape was found which was weighing 999 grams - as submitted that co-accused Naman Jain has a jewellery shop in the name of 'Namokar Jewellers' and the gold recovered from the applicant was from the stock of co-accused Naman Jain which he was carrying to melt and make jewellery. It is also submitted that the recovered gold from the applicant has not been found to have any kind of mark attached to the smuggled gold nor has it been proved by the Investigator that the said gold was brought into India by smuggling
HELD THAT:- Having regard to the entire facts and circumstances and keeping in view the fact that in the matter trial has not started even yet and the complicity of the accused applicant is yet to be determined in trial, the gold seized is in the possession of the Department, the offence appears to be compoundable by virtue of Section 137(3) of the Customs Act and there is nothing on record to demonstrate that the applicant, if enlarged on bail, would in any way adversely affect the trial, no criminal antecedent to the credit of the applicant, his willingness and readiness to deposit the adequate customs duty over the said gold, the applicant is in jail since 17.6.2024, without further commenting upon the merits of the case, the applicant has made out a case for bail.
Accordingly, the bail application of the accused-applicant is allowed.
Let the applicant involved in Case No. 29 of 2024 under Sections 135(1)(a), (b), 135(1)(i)(a) of Customs Duty Act, 1962, Police Station D.R.I. NOIDA, District Gautam Budh Nagar be released on bail on furnishing a personal bond and two heavy sureties each in the like amount to the satisfaction of the court concerned subject to few conditions.
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2024 (11) TMI 1148
Demand of anti-dumping duty - benefit of Notification No.21/2016- CUS (ADD) dated 31.05.2016 is not to be provided to the appellant - invocation of extended period of limitation u/s 28 (4) of the Customs Act, 1962 and consequent imposition of penalty under Section 114 A of the Act
Invoking extended period for raising demand of ADD - HELD THAT:- We find that though, the appellant have made out a very strong prima facie case on merit in their favour but in our considered view the appeal can be disposed of on the ground of limitation itself.
We find that dispute relates bill of entry No.7216037 filed on 24.10.2016, bill of entry No.7250924 filed on 27.10.2016 whereas bill of entry No.8389062 was filed on 31.01.2017, however the show cause notice was issued on 20.10.2021. We find that the dispute which was raised by the department is on the basis of the information available on import invoice, bill of lading which are vital documents for the purpose of processing the bill of entry and assessment thereof.
In the bill of entry itself the name of OCI is mentioned. In the bill of lading name of Lu Xi is clearly mentioned. Therefore, for purpose of making the present case all the information were gathered only from those documents which were very much available at the time of filing of bill of entry. Therefore, there is absolutely no suppression of the fact on the part of the appellant. Accordingly, the ingredients to invoke extended period in terms of Section 28 (4) are not available in the facts of the present case. For the bill of entry dated 24.10.2016, 27.10.2016 and 31.01.2017, the show cause notice was issued on 20.10.2021 that is much after the normal period of limitation. Therefore, in our considered view the demand is clearly time barred.
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2024 (11) TMI 1147
Appellant has financed person for smuggling of gold from Dubai and Sold in India - penalty imposed u/s 112(b)(i) of the Customs Act 1962 - mens rea - Commissioner held that the appellant is concerned with selling, purchasing and dealing with the goods for which they knew that the same were liable for confiscation and rendered himself liable to penalty in terms of Section 112(b)(i) of Customs Act, 1962.
HELD THAT:- Penalty u/s 112(b) can be imposed when a person acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111.
In the present case it is not the case of the Revenue that the Appellant was indulged in any of the activities as mentioned under Section 112(b) of the Customs Act. As the Appellant did not acquire possession of or in any way concern with import of gold, penalty under Section 112(b) ought not to have been imposed. The appellant cannot come within the ambit of Section 112(b) because appellants had never acquired possession or in any way concerned in any of the activities mentioned in the Section or any measure dealing with any goods which the appellant knew or had reason to believe are liable to confiscation.
In the absence of the department having not proved the knowledge of the appellant in the activities relating to the smuggled gold, there were no grounds for imposition of penalty on him.
It is now well established that mens rea is an important ingredient for imposing a penalty on the persons enumerated in Section 112(b) of the Customs Act. The evidence brought out by the department nowhere suggests that the appellants were aware that the goods in question were smuggled into the India. The penalty imposed on Appellant, therefore, cannot be sustained.
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2024 (11) TMI 1146
Licence /AROs obtained fraudulently - EOU's only falsified their records without manufacture or removal of any excisable goods against the said Licences/ARO's, that clearances were made only on paper against certain Advance Licence Nos./ ARO's against which no goods were moved from their units - E.O.U's obtained Advance Licences/Advance Release Orders through their local agents and manipulated their record s to show clearance of excisable goods as if manufactured by them, against such Licences/A.R.O's, so that the said records could be used to show their deemed export by which their export obligation would be shown to have been fulfilled.
HELD THAT:- As appellant has acted as agent for purchase and sale of advanced licence / Advance Release Order which were fraudulently obtained by 100 % EOU. In this fact even though the licence /AROs were obtained fraudulently, the appellant being not the party to said fraud, whereas he is only involved in the purchase and sale of advance licence /AROs.
Without Knowledge of such fraud, it cannot be penalized. On the same set of fact, the appellant has been exonerated from penalty in the decision of this Tribunal reported as T.S Makkar Vs. Commissioner of Central Excise, Surat [2012 (10) TMI 981 - CESTAT AHMEDABAD] wherein on the issue of imposition of penalty on the appellant there were difference of opinion between the Hon’ble Member (T) and the Hon’ble Member (J), due to which the third Member was appointed which hold the penalty is not imposable on the appellant. The aforesaid order was also followed in the appellant’s own case by this Tribunal vide final order No. A/11619-11620/2023 dated 28.07.2023, whereby the penalty imposed under Rule 209 A of Central Excise Rules, 1944 and under Section 112 (b) of Customs Act, 1962 were set aside.
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2024 (11) TMI 1145
Confiscation of the illegally imported cigarettes in the guise of stationery items - imposing penalties for the appellants herein for their role in the alleged offence - HELD THAT:- As evidences available on record indicate that Sri Man Singh was well aware of the smuggling activities of the smuggling syndicate involved in the subject case, who diverted smuggled cigarettes concealed in the Nepal bound container No. 3707024, in transit.
Thus, we hold that the evidences available on record prove that Shri Man Singh has abetted the act of smuggling in the present case also. Knowing fully well that the container in transit contained smuggled cigarettes, he provided the transportation and helped in replacing the smuggled cigarettes with stationery items. He also helped in storage of the stationery goods to be replaced in the godown owned by Shri Akhilesh Singh.
We hold that the Appellant No. 1 has abetted the act of illegal smuggling activities and thereby connived with the smuggling racket for smuggling of cigarettes in to the country. Accordingly, we hold that the ld. adjudicating authority has rightly imposed penalty on the Appellant No. 1 under Section 112(b) of the Customs Act, 1962 in the impugned order and hence, we uphold the same.
Regarding the penalty imposed on the Shri Pravin Kumar Singh (Appellant No. 2), we observe that penalty has been imposed on him for abetting the alleged offence and for the role played by him in the past and present smuggling activities. The role played by him has been elaborated by the ld. adjudicating authority of the impugned order.
From the statements of Shri Santosh Kumar Prasad and Shri Srimonta Rakshit, it is evident that Shri Pravin Kumar Singh has refused the clearance work of the said consignment brought to him and advised Shri Santosh Kumar Prasad to approach Shri Srimonta Rakshit as he has no experience of clearance of Nepal bound transit containers. In respect of clearance of the goods imported through the container GESU 5984886, we observe that Shri Santosh Kumar Prasad had come to his office again on 18/19.05.2015, when he was not available in the office. Shri Prasad had informed him over phone that he had left some documents in his office related to clearance of one more Nepal bound import consignment of the same party. In turn, he had given the said documents to Shri Srimonta Rakshit for clearance of the second consignment.
From the statements mentioned above, therefore, we observe that Shri Pravin Kumar Singh has played no role in the clearance of the earlier import vide container no. VMLU 3707024 or in the smuggling of cigarettes through the container GESU 5984886 in the present case.
Thus, we find that the evidence on record does not indicate that the Appellant No. 2 had played any role in the alleged smuggling of foreign origin cigarettes. Accordingly, we hold that the penalty imposed on him under Section 112(b) of the Customs Act, 1962 in the impugned order is not sustainable and hence, we set aside the same.
We pass the following order: -
(i) We uphold the penalty of Rs.10,00,000/- (Rupees Ten Lakhs only) imposed on the Appellant No. 1 (Shri Man Singh) under Section 112(b) of the Customs Act, 1962.
(ii) We set aside the penalty of Rs.20,00,000/- (Rupees Twenty Lakhs only) imposed on the Appellant No. 2 (Shri Pravin Kumar Singh) under Section 112(b) of the Customs Act, 1962.
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2024 (11) TMI 1144
Non-fulfilment of export obligation in respect of import of Clinker made under Advance Authorization issued by DGFT - Imposition of penalty under Section 112 (a) & (b) of the Customs Act, 1962 - HELD THAT:- We observe that duty free import of Clinker under Advance Authorization has been made by the Company M/s. SUPL and for non-fulfilment of export obligation separate action has already been initiated by enforcing the Bond. There is no finding in the impugned order about the role played by the appellants in the alleged offence. It is observed that penalty has been imposed on them only on the ground that their company had acquired 51% of shares in the company viz. M/s. SUPL and they were appointed as Directors in M/s. SUPL. Thus, the imposition of penalty on the appellants is not sustainable when separate proceedings have already been initiated against the company M/s. SUPL for the duty free import of Clinker under Advance Authorization and for the non fulfilment of export obligation. Thus, we hold that penalty imposed on the appellants are not sustainable.
Penalty of Rs.20,00,000/- each has been imposed on both the appellants under Section 112 (a) & (b) of the Customs Act, 1962. The impugned order has not specified categorically as to under which sub-section of Section 112 the penalty has been imposed. The penalty has been imposed under both sub-sections 112(a) and (b) together, which is legally not sustainable. Further we observe that the ingredients required for imposing penalty under Section 112 are not existing in this case. Accordingly, we hold that that penalties imposed on the appellants are not sustainable and the same are liable to be set aside.
We set aside the penalties of Rs.20,00,000/- each imposed on the appellants and allow the appeals filed by them.
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2024 (11) TMI 1143
Cancellation of sale certificate issued by the Respondent - Appointment of a local commissioner to verify the machinery mentioned under the tender document and as per valuation report annexed to the application - Grant of Stay on auction going to be conducted on 08.02.2022 by the liquidator - HELD THAT:- In the present case, admittedly the Sale Certificate was issued to the Successful Bidder, after issuance of Sale Certificate on 08.11.2021, it is failed to see any relevance of LoI which was referred to in Clause 9. Under the Liquidation Regulation 2016, there is a statutory requirement of payment of bid amount within 90 days.
The submission of the Appellant that he was never intimated that he has to make the payment of 90 days cannot be accepted. The bid document as well as Regulation clearly provided for payment. Appellant having failed to make the payment of the balance amount. Liquidator did not commit any error in forfeiting the EMD and cancelling the Sale Certificate. The amount of Rs.58.10 Lakhs which was paid after e-Auction has already been refunded to the Appellant.
There is no ground to interfere with the Impugned Order - Appeal is dismissed.
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2024 (11) TMI 1142
Locus of the Appellant to file the Appeal - nonfulfillment of threshold for filing a Section 7 application under the Insolvency and Bankruptcy Code (IBC).
Whether the appellant has locus to file this Appeal? - HELD THAT:- By admission of Section 7 Application, the Corporate Debtor or allottees of project may have any grievance, a person, who is neither allottee of the project, nor has any stake in real estate project, which is subject matter of the insolvency, cannot be allowed to challenge the order admitting Section 7 application. Section 7 application has been admitted on account of debt and default by the Corporate Debtor, who committed default in delivering the possession of the unit to the allottees. There are substance in the submission of learned Counsel for the Respondent that the Appellant has no locus to challenge the order admitting Section 7 application.
Nonfulfillment of threshold for filing a Section 7 application under the Insolvency and Bankruptcy Code (IBC) - HELD THAT:- Section 7 application filed by the Financial Creditors in class is dated 25.09.2021, is much subsequent to the registration of the project Lotus Isle (Residential). The Applicants in the application under Section 7 have given relevant facts. The copy of the application is filed as Annexure A-44, which clearly mentions that the project was bifurcated by permission dated 31.01.2017. Section 7 application was filed by the Financial Creditor in a class alleging default committed by the Corporate Debtor in giving possession of the units, within the time given in the Builder Buyers Agreement. Several amounts have already been disbursed by the Financial Creditors in a class in residential units consisting three towers wherein total allotted units are 255, out of which 29 unit holders were Applicants in Section 7 application.
The Adjudicating Authority has returned a finding in paragraph 17 that 10% allottee of the real estate can maintain a petition. It is not a dispute between the parties that total units for the residential project are 255 and the application was filed by 29 unit holders - the application filed by Financial Creditors in a class, fulfill the threshold as provided under Section 7, second proviso and the submission advanced by the learned Counsel for the Appellant that application did not fulfill the threshold limit, cannot be accepted.
There are no ground to interfere with the impugned order - The Appeal is dismissed.
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2024 (11) TMI 1141
Rejection of liquidator's claim by the workmen - closure of factory - violation of the provisions of the Industrial Dispute Act, 1947 - HELD THAT:- From the facts brought on the record, it is clear that the corporate debtor ceased to work from June, 2010 and according to the case of the Appellants themselves, they worked in the factory till April 2012 only. The claim was filed by the Appellants who were asked by the liquidator to submit evidence to substantiate the claims. No satisfactory evidence having been produced by the Appellant that they were in the employment of the corporate debtor on the date of commencement of the liquidation, the Liquidator rejected the claims and sent communication dated 02.03.2019.
In the present case, according to own case of the Appellants that they could not work after April, 2012. They had not taken any proceedings before the Industrial Court or Labour Court for their wages and other claims. For violation of provisions of the Industrial Disputes Act, 1947, the remedy available to the workmen was to approach the Industrial Court or Labour Court. Adjudicating Authority has rightly observed that the workmen/ employees have slept over their rights for years together and they filed the claim only when CIRP/ liquidation has commenced - The NCLT while exercising its jurisdiction on the liquidation process of the corporate debtor is not entitled to enter into issue as to whether the closure of the factory from June 2010 was in violation of the Industrial Dispute Act, 1947. The said issue ought to have been raised by the Appellants before the Industrial Court or Labour Court.
Reference made to the judgment of this Tribunal in Era Labourer Union of Sidcul, Pant Nagar, through its Secretary vs. Apex Buildsys Ltd. [2024 (9) TMI 1323 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB]. In the above case also, labourer union of Sidcul, Pant Nagar had filed a claim in the CIRP of the corporate debtor which commenced on 20.08.2018. Direction for liquidation was also passed by the Adjudicating Authority on 09.01.2020. Before the Adjudicating Authority, IA was filed by Era Labourer Union where declaration of the lockout on 31.07.2017 was under challenge and Appellant claimed for payment from date of the lockout till the commencement of the liquidation proceedings. The liquidator had not accepted the claim from date of lockout till the commencement of the CIRP. The claims of the Claimants were not verified from the date of closure. Adjudicating Authority rejected the application of the Labourer Union questioning the layoff. Challenging the said order, the appeal was filed.
The above judgment fully supports the submission of the Liquidator that the issue of closure of the factory from June, 2010 cannot be questioned and the issue which ought to have been raised by the Appellants before the Industrial Court or Labour Court. Before the liquidator, no material having brought by the Appellants to prove their employment and working till 31.12.2018, the Liquidator did not commit any error in rejecting the claims.
There are no infirmity in the order of the Adjudicating Authority warranting interference by this Tribunal in exercise of Appellate Jurisdiction - There is no merit in the Appeal - The Appeal is dismissed.
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2024 (11) TMI 1140
Condonation of 26 days delay in filing the Appeal - sufficient cause for delay or not - admission of Section 95 Application filed by the State Bank of India (SBI) against the Appellant, Sanjay Jain - whether the Appellant has made out the case for condonation of 26 days delay as prayed in the Application? - HELD THAT:- Law is well settled that this Tribunal has no jurisdiction to condone delay beyond 15 days. The Hon’ble Supreme Court in the matter of National Spot Exchange Limited. Vs. Anil Kohli, Resolution Professional for Dunar Foods Limited, [2021 (9) TMI 1156 - SUPREME COURT], has held that Appellate Tribunal has no jurisdiction at all to condone the delay exceeding 15 days.
The submission of the Appellant for explaining the delay is on the basis that Appellant came to know about the Order only on 30.03.2024, hence from 30.03.2024, the Appeal filed on 22.04.2024 is within time. Limitation for filing an Appeal begins from the date when the Order is pronounced by the Adjudicating Authority. In the present case, Order was delivered on 26.02.2024. The Hon’ble Supreme Court in the matter of V Nagarajan Vs. SKS Ispat & Power Limited & Ors., [2021 (10) TMI 941 - SUPREME COURT (LB)], had laid down about commencement of limitation for filing the Appeal had noted the difference between the Statutory Scheme under Section 421 of the Companies Act, 2013, and Section 61 of the Insolvency and Bankruptcy Code, 2016. It was held by the Hon’ble Supreme Court that omission of the words “from the date on which a copy of the Order of the Tribunal is made available to the person aggrieved from Section 421(3) to Section 61(2)” are not mere omission and power to condone the delay is slightly circumscribed and conditioned upon showing sufficient cause.
In the case of AARYAN PROJECTS PRIVATE LIMITED VERSUS KLOWIN INFRASTRUCTURE PRIVATE LIMITED [2022 (8) TMI 1551 - CALCUTTA HIGH COURT], even after substituted service, Plaintiff obtained fresh summons of service which was returned unserved and when the summons were pending suit was transferred into the list of undefended case which were the reasons for allowing the Application by the Hon’ble High Court. The said Judgment was also on its own fact. The above Judgment does not help the Appellant for condonation of delay as prayed in the present Appeal.
The Application for condonation of delay of 26 days is rejected - Memo of Appeal is also rejected.
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2024 (11) TMI 1139
Rejection of Application filed under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (“SVLDR Scheme”) - quantification of demand is made after 30 June 2019, Petitioner is not eligible to avail the benefit of the said Scheme.
HELD THAT:- Section 121 (r) of the Scheme defines “quantified” to mean a written communication of the amount of duty payable under the indirect tax enactment. The said definition does not state that who is required to quantify. Therefore, even if an assessee admits in the course of investigation prior to 30 June 2019 and arrived at the quantification same would fall within the meaning of the term “quantified” as defined.
Section 125 of the said Scheme provides for the eligibility except the exclusion mentioned therein. One of the exclusion under Section 125(1)(e), which is relevant for our purpose, is where a person has been subjected to an enquiry or investigation or audit and the amount of duty involved has not been quantified on or before 30 June 2019. The Ministry of Finance by its clarification dated 27 August 2019 in paragraph 10(g) clarified that the duty liability admitted by the person during enquiry, investigation or audit quantified before 30 June 2019 would be eligible under the Scheme.
In the instant case, admittedly in the course of the enquiry / investigation, the Petitioner has admitted its liability of Rs.1,39, 58,752/- and, therefore, the Petitioner is eligible for availing the benefit of the Scheme. Merely because a higher figure is mentioned in the application by way of abundant caution, the Petitioner cannot be deprived of the benefit of the Scheme moreso, when the object of the Scheme is to reduce the litigation. It is also important to note that the Petitioner is not seeking refund of any amount paid or payable on the basis of his declaration of Rs.1,50,37,871/-.
Petitioner is justified in relying upon the decisions of the Co-ordinate Bench in the case of Sabareesh Pallikere, Proprietor of M/s. Finbros Marketing Vs. Jurisdictional Designated Committee, Thane Commissionerate, Division IV, Range-II & ORs. [2021 (2) TMI 515 - BOMBAY HIGH COURT] wherein on an identical fact situation the rejection of the declaration was found to be not justified.
Thus rejection of the Petitioner's application is unjustified - Respondents are directed to accept the application of the Petitioner made in Form SVLDRS-1 and inform the Petitioner of any amount due and payable, if any, under the SVLDR Scheme within a period of four weeks from the date of uploading the present order.
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