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Showing 341 to 360 of 1354 Records
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2024 (3) TMI 1014
Validity of reopening of assessment - prerequisite for reopening assessment - Non disposal of objections given by appellant against reassessment - HELD THAT:- As carefully perusing the materials placed on record, we find that the learned Tribunal on considering the factual position rightly noted that the objections given by the appellant for initiation of re-assessment were not disposed of by the AO. The law on the subject has been rightly taken note by the Tribunal and we find the matter being entirely factual, no question of law much less substantial question of law arise for consideration.
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2024 (3) TMI 1013
Interest on Refund u/s 7 of the DTVSV Act, 2020 - petitioner’s right to interest on declared refunds due from the Department, determined in the Final Order passed under the Income Tax Act, 1961 - taxability of the transaction, the amount payable by the petitioner is the amount of tax due sans the penalty and interest in terms of Sl. No.(a) to Table to Section 3 of DTVSV Act, 2020 - refunds ordered in Form-3 for Assessment Year 1999-2000 to 2002-2003 to be re-calculated along with interest u/s 244-A
HELD THAT:- Under Section 7 of the DTVSV Act, 2020, any amount paid in excess in pursuance of the declaration is not refundable. However, where the declarant had, before filing the declaration under Sub-Section (1) of Section 4, paid any amount under their Act, 1961 in respect of his tax arrears which exceeds the amount payable under Section 3, shall be entitled to a refund of such excess amount.
Such a declarant is not be entitled to interest on such excess amount under Section 244-A of the IT Act, 1961. Section 7 of DTVSV Act, 2020 is a complete code by itself. If the case is to be settled under it, no interest under Section 244-A of the IT Act, 1961 is available.
In this case, no amount was paid by the petitioner either along with Form-1 on 31.1.2021 or after Form-3 that was issued on various dates. The petitioner wants the Designated Authority to issue a fresh Form-3 together with interest on refunds under Section 244-A of the IT Act, 1961 on belated adjustment of refunds. This is not available in view of explanation to Section 7 of the DTVSV Act, 2020.
Designated Authority while issuing Form-3 has correctly acceded to refund of the amounts to the petitioner for the Assessment year 1999-2000 to 2002-2003. The Designated Authority has declined to order interest under Section 244-A of the IT Act, 1961. It is in accordance with explanation to Section 7 of the DTVSV Act, 2020.
Neither the Deputy Commissioner of Income Tax, International Taxation nor the Designated Authority were required to order refund of the amount for the Assessment Year 1999-2000 and Assessment Year 2000-2001 in Form -3, as no amount was paid in excess by the petitioner. There was only adjustment of the refunds due for the Assessment Year 2004-2003 and Assessment Year 2005-2006. In fact, the Deputy Commissioner of Income Tax, International Taxation while passing order dated 29.01.2021 under Section 154 of the IT Act, 1961 was not required to order interest under Section 244-A of the IT Act, 1961 for the Assessment Years 1999-2000 and 2000-2001.
The excess amount after adjustment were to be refunded along with interest under Section 244-A for the Assessment Year 1999-2000 and Assessment Year 2000-2001. The excess amount after adjustment were to be refunded along with interest under Section 244-A read with Section 245 of the IT Act, 1961 for the Assessment Year 2004-2005 and Assessment Year 2005-2006.
For these two Assessment Years viz., Assessment Year 1999-2000 and Assessment Year 2000-2001, there were mere adjustment of the amounts towards tax liability out of the refunds that were due to the petitioner for the Assessment year 2004-2005 and Assessment Year 2005- 2006.
Excess amounts after adjustments of the liability ought to have been refunded together with interest under Section 244-A of the IT Act, 1961 for the Assessment Year 2004-2005 and Assessment Year 2005- 2006, provided no applications were filed for Assessment Year 2004-2005 and Assessment Year 2005-2006 under Sl.No.(a) to Section 3 of the DTVSV Act, 2020.
For the Assessment Year 2001-2002 and for the Assessment Year 2002-2003, the petitioner was entitled to interest under Section 244-A of the IT Act, 1961, if no declaration was filed under DTVSV Act, 2020. Interest under Section 244-A of the IT Act, 1961 will not be available to the petitioner in view of explanation to Section 7 of the DTVSV Act, 2020. It makes it clear, that a declarant shall not be entitled to interest under Section 244-A of IT Act, 1961 on such excess amounts.
Therefore, the petitioner is not entitled to the relief as prayed for in full.
Therefore, to do complete justice and to balance the interest of the petitioner and the Income Tax Department, these writ petitions are disposed with the following directions/orders/ observations:-
i. The amounts adjusted and appropriated towards tax liability for the Assessment Year 1999-2000 and Assessment Year 2000- 2001 under the provisions of the Direct Tax Vivad Se Vishwas Act, 2020 from and out of the refunds due for the Assessment Year 2004-05 and Assessment Year 2005-06 are treated as amount paid by the petitioner for the Assessment Year 1999-2000 and Assessment Year 2000-2001 under Direct Tax Vivad Se Vishwas Act, 2020;
ii. Consequently, the Designated Authority or any other Authority in its place shall issue Form 5 to the Petitioner and close the pending case of the petitioner for the Assessment Year 1999- 2000 and Assessment Year 2000-2001;
iii. Consequently, the Income Tax Department is directed to process the excess amount quantified as refundable in Section 154 orders dated 29.01.2021 for the Assessment Year 1999-2000 and Assessment Year 2000-2001 together with interest under Section 244-A of the IT Act, 1961 for Assessment Year 2004-2005 and Assessment Year 2005-2006, subject to Section 7 of the Direct Tax Vivad Se Vishwas Act, 2020;
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2024 (3) TMI 1012
Estimation of income - bogus purchases - case of bogus bills arranged from the entities and diamonds purchased from somewhere else at a lower cost - CIT(A) restricted the disallowance to 12.5% of the alleged bogus purchases - HELD THAT:- Since the profit margin embedded in the transaction of alleged bogus purchases of cut and polished diamonds has been accepted at 5% in other years in assessee’s own case, following the rule of consistency in view of the peculiar facts of the present case, we deem it appropriate to restrict the disallowance to 5% of the disputed purchases in the year under consideration. As a result, grounds raised by the assessee on merits are partly allowed.
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2024 (3) TMI 1011
Penalty levied u/s 271(1)(c) - Estimation of income - bogus purchases - addition of 12.5% of the total purchases - HELD THAT:- As decided in MUKESH SHALIGRAM SHARDA [2023 (4) TMI 678 - ITAT MUMBAI] no penalty u/s 271(1)(c) is leviable on estimated additions.
Thus the impugned order deleting the penalty levied u/s 271(1)(c) of the Act is upheld. As a result, grounds raised by the Revenue are dismissed.
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2024 (3) TMI 1010
Revision u/s 263 - as per CIT AO has not examined increase in share capital - HELD THAT:- As gone through the entire facts and noticed that the PCIT while revising the assessment has simpliciter gone through the original balance sheet which is part of the assessment record. But the AO has never acted upon on the original balance sheet but he accepted the correct balance sheet filed during the course of assessment proceedings.
We find that the assessee has admitted the new balance sheet and the differentials between the original and rectified balance sheet which are part of assessee’s paper-book. We noted that on merits also, the assessee has explained the differentials and hence, the assessment order is neither erroneous nor prejudicial to the interest of Revenue because of non-verification of assessment. AO has verified the complete details as it is evident from the assessee’s paper-book that the AO asked for the entire details and the assessee replied the same on various dates. In view of the above, we allow the appeal of assessee and quash the revision order passed by the PCIT. Appeal filed by the assessee is allowed.
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2024 (3) TMI 1009
Capital gain computation - lease rental expenses are related to the transfer of slump sale business while computing the capital gain u/s 48(1) or not? - HELD THAT:- It is not in dispute that the company has incurred these charges to complete the transfer of the property as per scheme of agreement and leasehold rights in the land was part of the port undertaking which was transferred as per the scheme of arrangement.
When it was a slump sale section 45 & 48 do not bar the company from claiming expenses. So in order to compute the capital gains provisions contained under section 48 are applicable which provide that while computing the capital gain the value of consideration reduced by the cost of improvement and cost of acquisition and also expenditure incurred for transfers are to be considered.
When the income of the assessee is chargeable under the head capital gains qua the years in which transfers was affected, the expenses pertaining to the transfer, they crystallized later on but as per scheme of arrangement it has to be allowed.
So when the assessee has incurred the amount in question to complete the transfer as per scheme of arrangement approved by the Hon'ble NCLT, without which transfer could not have been effected, the Ld. CIT(A) has rightly and validly decided the issue in favour of the assessee.
Eligibility of deduction claimed by the assessee on account of stamp duty and registration charges for the purpose of computing the gains arising on demerger of port business - In view of the findings returned on the earlier issue when it is proved on record that the assessee is entitled for upfront lease rental expenses incurred in relation to the transfer of slump sale business while computing the capital gains under section 48(i) of the Act the assessee is also entitled for deduction of stamp duty and registration charges.
CIT(A) despite thrashing the facts has denied this relief to the assessee on the ground that no request for admission of any additional evidence or additional ground has been raised before him hence this claim cannot be entertained. When the amount has been crystallized in the books of account and facts have been brought on record before the Ld. CIT(A) which have not been disputed the claim of the assessee, otherwise admissible, cannot be denied on the basis of hyper technical reasons. Both the questions framed are answered in favour of the assessee. So the AO is directed to allow the stamp duty and registration charges after due verification.
Appeal filed by the Revenue is hereby dismissed and the cross objection filed by the assessee is hereby allowed.
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2024 (3) TMI 1008
TP Adjustment - comparable selection - assessee is aggrieved with inclusion of one comparable namely Golden Chemical Private Limited having PLI of 8.88% - HELD THAT:- As the relevant financial data of comparable company is available only for 9 months, whereas, the accounting period of the assessee is for 12 months and in absence of non-availability of the data in case of comparable company from 1st January, 2012, to 31st march, 2012, as same being Private Limited company, the above comparable for this reason is required to be excluded. Accordingly, the learned Transfer Pricing Officer is directed to exclude Golden Chemical Pvt. Ltd. from the comparability analysis. The appeal of the assessee on this issue succeeds.
Comparable Nilchem Industries Ltd. - We find that in the remand report proceedings, the learned Transfer Pricing Officer included the above comparable company i.e. Nilchem Industries Ltd. having the margin of 10.78%. The assessee did not object to this comparable company for its exclusion but provided the correction in the margin. The learned Transfer Pricing Officer recomputed the margin of (-) 3.23%. Thus, we find that Nilchem Industries Ltd. is a comparable not in dispute between the assessee and TPO, could not have been excluded by the learned CIT (A) when none of the parties contended so. Accordingly, we direct the learned TPO/ Assessing Officer to include the Nilchem Industries Ltd. as a good comparable.
Appeal of the assessee is partly allowed.
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2024 (3) TMI 1007
Penalty u/s 270A and 271AAB - Defective notice u/s 274 - allegation of non specification the basis of charge subject to which the penalty is imposed - as submitted allegation of the A.O. in the penalty notice was only regarding "under reporting of income" post search and seizure - HELD THAT:- In the instant case, on perusal of the penalty notice placed on record it is evident that the Ld. AO had show caused the assessee as to why the assessee should not be imposed with penalty for ‘under reporting of income’. The assessee had filed its submissions stating that he had not ‘under reported its income’.
We are unable to comprehend ourselves to accept to the argument of the Ld. DR that assessee did not make any submissions with regard to ‘mis reporting of income’. The assessee could be expected to give reply only in respect of show cause notice that is put to him. Why at all the assessee should infer/ assume/presume that the Ld. AO having recorded satisfaction in the quantum assessment order that offence of both ‘under reporting’ and ‘mis reporting’ is committed by the assessee and accordingly the penalty would be levied on the assessee for both in terms of section 270A(9) of the Act?
It is well settled that penalty proceedings and assessment proceedings are separate and distinct.
Hon’ble Supreme Court in the case of Anantharam Veera Singhaiah & Co. [1980 (4) TMI 2 - SUPREME COURT] wherein it was held that findings recorded in assessment proceedings cannot be taken as conclusive for penalty proceedings. Even the provisions of section 270A(6) of the Act provides for granting immunity from penalty if the case falls in “under reporting of income”. Moreover different rates of penalty are prescribed for ‘under reporting of income’ alone and for ‘under reporting’ in consequence of ‘misreporting of income’. Hence it is all the more essential to mention in the show cause notice itself as to which of the offence is committed by the assessee for which explanations are being sought for by the Id. AO. There is no whisper at all in the notice issued u/s 270A read with section 274 of the Act about “misreporting of income”.
In-fact two notices were issued by the Id. AO and in both the notices, the A.O. had only directed the assessee to reply with regard to ‘under reporting of income’. But we find that the penalty had been levied ultimately for both ‘under reporting’ and ‘misreporting of income’ @ 200% in terms of section 270A(9) of the Act for which show cause notice was never issued to the assessee.
Hence we direct the Ld. AO to delete the penalty levied u/s 270A of the Act for the Assessment Year 2017-18. Accordingly, we allow the Appeal of the Assessee on this technical ground.
Penalty u/s 271AAB - As no specific charge has been mentioned in the penalty notice issued u/s 271AAB of the Act, we delete the penalty imposed by the A.O. On this technical grounds for the Assessment Years 2018-19 & 2019-20.u/s 271AAB.
Appeals of assessee allowed.
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2024 (3) TMI 1006
Assessment proceedings against one of the legal heirs - deceased/assessee had admittedly more than one legal representatives - deceased father has six sons - Addition u/s 69A - cash deposits made in his bank accounts during the demonetization period - HELD THAT:- As undisputed fact for the Asst. Year 2017-18, the assessee has not filed his Return of Income, since there is no taxable income in his hands and also for the reasons of wound-up of his business activities. However during demonetization period, the assessee made cash deposits in his three Bank Accounts.
In the meanwhile, the assessee died on 28.01.2019. Thereafter the final show cause notice was issued by the Ld. A.O. on one of the legal heir namely Shri Vijay Laxmichand Demla filed a detailed letter that his deceased father has six sons and given their details. Further he refused to accept any responsibility, since he is not sole legal heir for the estates of his deceased father and also he was not in possession of any details/documents regarding his father’s cash deposits which was rejecgted by AO.
Assessing Officer when put to notice about the death of the assessee and the details of the six legal heirs of the deceased assessee, A.O. ought not have proceeded with only one of the legal heir namely Shri Vijay Laxmichand Demla in spite of his specific objection - Admittedly the legal heir Shri Vijay Laxmichand Demla is not only the legal heir on the estate of the deceased. Thus the Assessing Officer having not included all the legal heirs of the deceased assessee and framed the assessment only against one of the legal heir is against the provisions of law and the assessment is invalid in law. Thus the entire assessment is hereby quashed. Assessee appeal allowed.
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2024 (3) TMI 1005
Exemption u/s 10(26) - Exemption to individual members of Scheduled Tribes - Whether a partnership firm consisting of individual partners would be entitled to the same exemption u/s 10(26) of the Income Tax Act, 1961 as any or all of the partners would be in their individual capacity? - As submitted that the partners in the firm were related to each other and both the partners belong to Khasi tribe whose income was exempt u/s 10(26) - HELD THAT:- As under the Income Tax Act, a firm has been specifically included in the definition of person and is treated at par with every artificial juridical person.
Under the Income Tax Act, a partnership firm is a separate and distinct “person” assessable to Income Tax. There are separate provisions relating to the rate of Income Tax, deduction and allowances etc. in relation to a firm as compared to an individual. The benefits in the shape of deductions or exemptions available to an individual are not transferrable or inter-changeable to the firm nor the vice versa. The firm in general law may not be treated as a separate juristic person, however, under the Income Tax Act, it is assessable as a separate and distinct juristic person. The Income Tax Act is a special legislation, therefore, the interpretation given in general law cannot be imported when the special law defines the “firm” as a separate person assessable to Income Tax.
Therefore, the contention of the Ld. Counsel that section 2(23) of the Income Tax Act gives meaning to firm, partner and partnership as defined in the Indian Partnership Act, 1932, in our view, does not, in any way, effect, take-away or exclude the “firm” from the definition of “person” as defined u/s 2(31) of the Income Tax Act. Under the relevant provisions of the Indian Partnership Act, 1932, the “partnership firm” has been defined as a relationship between the persons who have agreed to share the profits of the business carried on by all or any of them acting for all and the persons who have entered into partnership with one another is called individually partners and collectively a firm. The contention of the ld. AR is that the partnership is a relation between “persons” and that partnership is not a person in itself. The aforesaid contention of the ld. AR in the light of the specific definition given of the word “person” u/s 2(31) of the Income Tax Act and in view of the discussion made above, in our view, is misconceived and not tenable.
Even under the Negotiable Instruments Act, a firm is treated at par with a company. In explanation to section 141 of the Negotiable Instruments Act it is provided that “ “company” means any body corporate and includes a firm or other association of individuals; and director”, in relation to a firm, means a partner in the firm”. The hon’ble Supreme court in S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan [2022 (9) TMI 846 - SUPREME COURT] has held that for the purpose of Section 141 of the NI Act, a firm comes within the ambit of a company. Therefore, the status of the firm is to traced under the respective special statutes and not under the general law.
In the case in hand, even though the partners of the firm are brothers in one case and Husband and wife in another case, but their relation does not affect either the status of the partnership firm nor its taxability in any manner. Partnership arises out from a legal contract of sharing profits of a business and in that case, even in a case of partnership Firm having partners of a Khasi family only, the mother or wife, as the case may be, being the head named as “ Kur” would not be having any dominant position. All the partners, subject to the terms of the contract between them , will have equal status and rights inter se and even equal duties and liabilities towards firm. The profit of the partnership firm are shared as per the agreement/capital contributed by the partners. Neither the capital, nor the profits of the firm can be held to be the joint property of the family. There is no obligation on the partners being related or to say members of the same family to contribute the profits to the other family members or any other obligation towards them.
There is a separate proforma of information required in case of firm as compared to an individual. The individual members of the Scheduled Tribe whose income is exempt under the Income Tax Act, are even not supposed to file the Income Tax Return subject to the fulfilment of the relevant conditions as prescribed under law. Though, a firm may consist of partners who belong to the exempted category of Scheduled Tribe in their individual capacity, however, there will be not any mechanism available to the Assessing Officer to know that such a firm consists of the individuals whose income is exempt or not.
Thus under the Income Tax Act, the exemption of 10(26) of the Act is available to the individual members of the Scheduled Tribe and that this benefit cannot be extended to a firm which has been recognized as a separate assessable person under the Income Tax Act. The advantages and disadvantages conferred under the Act on separate class of persons are neither transferrable nor inter-changeable. The scope of the beneficial provisions cannot be extended to a different person under the Act, even after liberal interpretation as it may defeat the mechanism and process provided under the Income Tax Act for assessment of different class/category of persons.
Proposed questions are answered in negative by holding that a partnership firm being a separate assessable ‘person’ under the Income Tax Act, would not be entitled to the same exemption u/s 10(26) as any or all of the individual partners would be in their individual capacity and further that the ratio decidendi in the judgment of Mahari & Sons (1991 (12) TMI 51 - GAUHATI HIGH COURT) in context of a ‘Khasi family’ would not be applicable in case of a partnership firm, though consisting solely of partners, who in their individual capacity are entitled to exemption u/s 10(26) of the income Tax Act, 1961. All the captioned appeals of the two assessee-partnership firms are hereby dismissed.
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2024 (3) TMI 1004
Validity of reopening of assessment u/s 147 - Sanction for issue of notice u/s 151 - as alleged illegal approval u/s 151 obtained by AO from inappropriate authority - assessee’s stand is that the AO issued notice after expiry of four years from end of relevant assessment-year which could have been done only after taking approval from Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner u/s 151(1) but since the AO has failed to do so, the notice is violative of section 151(1) but it was obtained from Joint Commissioner.
HELD THAT:- If the AO wants to issue notice after expiry of four years, this can be done only under the approval of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. The language does not give any scope or flexibility to AO to obtain approval within four years from lower-authority u/s 151(2), keep such approval in file and subsequently issue notice after four years without taking approval from higher authority u/s 151(1).
AR is very much correct in submitting that if such an approach is allowed to AO, this would be a clear circumvention as well as defiance and violation of section 151(1) made by Parliament. We may be hastened to add here that although in present appeal, the Ld. DR is supporting AO’s approach just to save this case of department but otherwise even the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner would not accept such approach of AO and they would certainly say that such approach of AO is unauthoritative and invalid.
We may also add here that the AO was having time to issue notice uptill 31.03.2022, therefore the AO could very well obtain a fresh approval from Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner u/s 151(1) and issue notice to assessee after four years even though he had taken earlier approval u/s 151(2) from Joint Commissioner. In that case, there would have not been any lapse. But the AO has not done so. Therefore, in the present case, we agree with Ld. AR’s pleading that the AO was not having a valid approval from a competent authority as required u/s 151(1), hence the notice issued u/s 148 suffers from an invalidity.
Applicability of Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 dated 31.03.2020 [“TOLA”], there was an extension of time-limit - As relied on JM Financial and Investment Consultancy Services Private Limited[2022 (4) TMI 1446 - BOMBAY HIGH COURT] we are of the considered view that the TOLA is not appliable and in any case, the TOLA has not amended section 151. Hence, the revenue’s claim that its case is protected by TOLA is meritless and liable to rejected.
Protection of section 292BB - Section 292BB has a limited application, it operates in only one of the three situations mentioned in (a), (b) or (c) which are basically situations of ir-regularity in “service” of notice. In present case of assessee, the AO has issued notice u/s 148 without having a valid approval u/s 151(1) which is not at all covered by section 292BB. Therefore, the Ld. DR’s pleading that the revenue has protection of section 292BB is meritless and liable to be rejected.
AO has issued notice u/s 148 without having a valid approval mandated by section 151(1). Being so, we are of considered view that the revenue’s case is suffering from jurisdictional defect and the entire proceeding u/s 148 / 147 undertaken by AO is illegal and unsustainable. Decided in favour of assessee.
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2024 (3) TMI 1003
Deemed dividend u/s 2(22)(e) - amount received as part of salary/remuneration paid to the assessee - as per AO date of survey the said amount was not part of remuneration paid to assessee and no TDS was deducted before the date of survey for such salary as no documentary evidence etc. were produced before the AO for the aforesaid salary amount - double taxation on one receipt - as submitted Junior accountant of the company has made the wrong entries of advance remuneration to assessee in the account of short term loan account by mistake
HELD THAT:- The contention of the appellant is found to be correct with regard to salary received from WaghadInfraprojects Pvt. Ltd. as salary income as evident from the copy of ledger account of Shri Ashok Jain in the books of assessee company. The Ld. DR failed to rebut the contention of the appellant which were found to be factually correct on record. Therefore, the observation made by the AO that claim of the assessee is not supported by the documentary evidences is factually incorrect observation and cannot be acceptable. In view of that matter we hold that it is established by the appellant that the amount incorrectly shown as loan, was in fact an advance towards remuneration which is adjusted later on and TDS was also deducted by the company. Therefore, in our view, this amount cannot be treated as deemed dividend.
As pertinent to mention here that in the present case, there is no loss to the revenue because even if this advance is treated as deemed dividend, then it would be reduced from the salary/remuneration amount being paid to the assessee as the assessee is paying tax at maximum marginal rate and he has not taken any deduction out of salary/remuneration received. It is settled law that there cannot be the double taxation on one receipt/income and therefore, this amount is once treated deemed dividend then it would be reduced from the salary income shown by the assessee in computation of income. In our view, the action of the learned AO was not justified and thus, the addition is rightly deleted by the Ld. CIT(A). Appeal filed by the Revenue is dismissed.
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2024 (3) TMI 1002
Benami transaction - Beneficial owner of property - Provisional attachment order - scope of Amendment Act of 2016 - Constitutional validity - Amendment to Prohibition of Benami Property Transactions Act, 1988 as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 - retrospective or prospective effect - Attachment of property
As decided by HC [2022 (5) TMI 262 - TELANGANA HIGH COURT]Section 2 (9) (A) and Section 2 (9) (C) can only have effect prospectively. Central Government has notified the date of coming into force of the Amendment Act of 2016 as 01.11.2016. Therefore, these two provisions cannot be applied to a transaction which took place prior to 01.11.2016. Admittedly, in the present case, the transaction in question is dated 14.12.2011. That being the position, we have no hesitation to hold that the show cause notice dated 30.12.2019, provisional attachment order dated 31.12.2019 and the impugned order dated 30.03.2021 are null and void being without jurisdiction.
HELD THAT:- Delay of 624 days in filing this special leave petition is condoned.
The issues raised in this petition are squarely covered by a judgment rendered by a three-Judge Bench of this Court in Union of India & Anr. Vs. Ganpati Dealcom Pvt. Ltd. [2022 (8) TMI 1047 - SUPREME COURT] wherein held Section 3(2) of the unamended 1988 Act is declared as unconstitutional for being manifestly arbitrary. Accordingly, Section 3(2) of the 2016 Act is also unconstitutional as it is violative of Article 20(1) of the Constitution.
In rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2016 Amendment Act, was unconstitutional for being manifestly arbitrary. The 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions. In rem forfeiture provision under Section 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively.
Concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016.
Hence, the special leave petition is disposed of in the aforesaid terms.
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2024 (3) TMI 1001
Duty demand - Bonded Warehouse - seizure of 264 cases found outside the warehouse - Unauthorisedly clearance of 27 cases from the notified public bonded warehouse - clearance in a clandestine manner - Confiscation - Interest - - Import of second hand steel mill machinery and parts - warehousing period expired - HELD THAT:- Since the imported goods covered by the 264 cases were never warehoused inside the notified public bonded warehouse but were unloaded outside the notified area but within the factory premises of the appellant and kept under a shed on permission granted by the Superintendent which permission was neither cancelled nor revoked, question of warehousing the goods covered by the 264 cases within the notified public bonded warehouse did not arise. As a corollary, the further question of improperly or unauthorisedly removing the 264 cases from the notified warehouse to outside the said area but within the factory premises of the appellant attracting Section 71 and the consequences following the same did not arise. Inference drawn by the respondent that the permission granted by the Superintendent was only temporary and therefore, the rigor of Section 71 would be attracted, in our view, would not be a correct understanding of the situation and the law.
We find that there is no explanation on the part of the appellant qua the missing 27 cases. Therefore, the view taken by the respondent and affirmed by the CESTAT that those 27 cases were improperly or unauthorisedly removed from the notified public bonded warehouse is correct and requires no interference.
Evidently, the circular dated 12.7.1989 would not be applicable to the facts of the present case in as much as it is not the case of the respondent that either the warehousing period had expired or that the warehousing period was extended. As we have seen, the warehousing in the notified public bonded warehouse continued as the Corporation had deposited with the respondent a sum of Rs. 56,10,294.00 in respect of the notified warehouse as custom establishment charges for the period from 1992-1993 to 2007-2008. That apart, we can refer to the fact that respondent had not levied any customs duty on the 304 cases found within the notified area which would mean that the notified warehousing continued. Therefore, this is not a case where Section 15(1)(b) could have been invoked.
Thus, having regard to the discussions, we are of the view that the demand raised by the respondent against the appellant and affirmed by the CESTAT qua the 264 cases including levy of customs duty and interest cannot be sustained. Those are accordingly set aside and quashed.
Demand of customs duty and interest on the 27 cases is concerned, the same is hereby sustained. The decision imposing penalty on the appellant u/s 112 of the Customs Act is also not disturbed in view of the conduct of the appellant in unauthorisedly removing the 27 cases of imported goods not only from the notified public bonded warehouse but also from the industrial/factory premises of the appellant.
Impugned order of CESTAT would stand modified accordingly - Appeal is allowed in part in the above terms.
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2024 (3) TMI 1000
Classification of goods - consignment imported under SKD condition - Exemption for the purpose of assessment for countervailing duty - Import of components for manufacturing colour Doppler SSD-4000 Ultra Sound Scanners - it was held by CESTAT that When the goods are presented in SKD condition, Revenue does not have authority of law to separate different parts and components and classify them differently in view of Rule 2(a) of General Rules for Interpretation of the Customs Tariff - HELD THAT:- The impugned judgment passed by the Customs, Excise and Service Tax Appellate Tribunal, Chennai need not be interfered - The Civil Appeals are dismissed.
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2024 (3) TMI 999
Confiscation of Goods - Penalty - Clearance of goods described as “Caresmith Wave Body Massager” - Commissioner, categorise the item not as a body massager, but an Adult Sex Toy - prohibited for import as per the Customs Notification No. 01/1964-Customs - HELD THAT:- The only relevant portion of the notification is the underscored portion being Clause (ii), as referred by the Commissioner to label the goods as prohibited. Such clause prohibits import of the goods, namely, any obscene book, pamphlet, paper, drawing, painting, representation, figure or article. Necessarily, in our opinion, the different items as set out in Clause (ii) are required to be read ejusdem generis. These machines like massagers certainly cannot be compared with the companion items in the said entries which are in the nature of book, pamphlet, paper, drawing, painting, representation, figure or article, etc.
This apart, we are in complete agreement with the findings as recorded by the tribunal that it was totally unwarranted and in our opinion, perverse for the Commissioner to take recourse to clause (ii) of the said Notification to regard the goods in question as prohibited goods, for more than one reason. Firstly, it was clearly the figment of the Commissioner’s imagination and/or his personal perception that the goods are prohibited items. This was far from the legal consequence as brought about by the notification that the goods could be so categorized. We may add that such thinking of the Commissioner was beyond anybody’s control. The notification also could not have supported such perception of the Commissioner when he regarded the goods as obscene. As rightly observed by the tribunal, and obviously as body massagers being traded in the domestic market, were not regarded as prohibited items, was certainly a relevant consideration.
In the facts of the present case, the Commissioner (adjudicating officer) has failed to act as a prudent official who would be expected to act reasonably in deciding the issues of clearance of goods in question, which ought to have been strictly in accordance with law. Any perverse application of law would fall foul of the rules of legitimacy and fairness expected from a quasi-judicial authority. Such approach of the Commissioner has been rightly criticized by the tribunal. If what was observed by the Commissioner in the order-in-original is accepted to be the only test, it would amount to accepting personal views of the officer which would be something unknown to law. Such approach is certainly not permissible. We also say this in the context of the opinions which were gathered by the Commissioner. These experts invited by the department clearly opined that the goods in question were body massagers which could be subjected to other uses.
Thus, merely because the goods can be subjected to an alternative use, of the nature, as the Commissioner contemplated, this can never be the test to hold that the goods were prohibited, when they otherwise satisfied the test of goods, which could be imported and sold. Thus, there was no material before the adjudicating officer, to categorize the goods under clause (ii) to be any obscene book, pamphlet, paper, writing, drawing, painting, representation, figure or article, and of objectional description, falling under the notification. Such view of the Commissioner was patently perverse.
Thus, we are of the clear opinion that no substantial question of law would arise for our consideration as raised on behalf of the Revenue. The tribunal is correct in its view when it set aside the orders passed by the Commissioner. The appeal is without merit. It is accordingly rejected. Dismissed. No costs.
In view of our aforesaid judgment confirming the order passed by the tribunal in the revenue’s appeal against the firm, the present appeals are also required to be rejected. They are rejected for the reasons we have set out in deciding the aforesaid appeal against the revenue and in favour of the firm. Dismissed. No costs.
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2024 (3) TMI 998
Levy of penalties - smuggling of Gold - baggage rules - petitioner could not produce any licit document in support of the possession/acquisition or legal importation of the said gold - Absolute confiscation of gold weighing 3203.900 gram - HELD THAT:- Petitioner has imported the gold within the Indian customs waters contrary to the prohibition imposed for its import. The Gold was concealed in medicine packets, which were concealed under several layers of packing. The goods were also not declared in the Indian Customs Declaration Form. On the other hand false declaration was made in the said Form - Consequently, the gold was liable to be confiscated under section 111 of the Act. Petitioner has also conceded to the said position and has not objected to the confiscation of the said gold items.
Petitioner has clearly done an act that has rendered the gold liable to confiscation under section 111 of the Act and as such is liable under 112(a) of the Act. Further, Petitioner had carried the gold and had concealed the gold knowing or having reason to believe that the article he was carrying was liable to confiscation under section 111 of the Act and as such he is also liable under Section 112(b) of the Act.
There is no merit in the contention of learned counsel for the Petitioner that he was not aware of the gold. Petitioner was carrying the packet containing gold. The gold items were concealed inside two pieces of Medicine Sachets which were kept inside a Multi coloured zipper jute bag further kept in the Black coloured zipper handbag that was carried by the Petitioner. The manner of concealing the gold clearly establishes knowledge of the Petitioner that the goods were liable to be confiscated under section 111 of the Act. The Adjudicating Authority has rightly held that the manner of concealment revealed his knowledge about the prohibited nature of the goods and proved his guilt knowledge/mens-rea - Admittedly, petitioner would always bring back goods for others. Petitioner, who travels internationally so often cannot be permitted to contend that he was not aware of the law and that he was not aware of the contents of the packets that he was carrying. A person carrying any article on his belonging would be presumed to be aware of the contents of the articles being carried by him.
The Supreme Court of India in STATE OF MAHARASHTRA VERSUS NATWARLAL DAMODARDAS SONI [1979 (12) TMI 78 - SUPREME COURT] has held that smuggling particularly of gold, into India affects the public economy and financial stability of the country.
Penalties - HELD THAT:- For the contravention Petitioner was liable to be imposed penalty not exceeding the value of the goods. Petitioner brought in 24 Karat Gold, collectively weighing 3203.900 gm. totally valued at Rs. 88,42,764/-. Thus the penalty that could be imposed was upto Rs. 88,42,764/- but only a penalty of Rs. 10,00,000/- was imposed on the petitioner. It is found that the penalty imposed is not disproportionate in the facts and circumstances of the case.
There are no merit in the Petition. The same is consequently dismissed.
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2024 (3) TMI 997
Interest on Delayed Refund - Refund of additional duty was allowed in the remand proceedings - benefit of provisions of Section 27A of Customs Act - HELD THAT:- There is substance in the contention as urged of behalf of the Petitioner as certainly Section 27A would provide for payment of interest on delayed payment of the refund amounts, which is the statutory entitlement of the Petitioner and which necessarily was required to be considered by the adjudicating officer in considering the Refund Applications on remand. It clearly appears that although a specific prayer was made before the Commissioner of Appeals and the proceedings were remanded in that regard, the Designated Officer has failed to consider such prayers. Even assuming the Petitioner had not made a prayer for interest, however, the fact remains that it would be a statutory entitlement of the Petitioner to seek the interest on the refund amounts when such applications were allowed.
The Adjudicating Officer/Respondent be directed to decide the interest claim of the Petitioner on the Refund Applications, after granting to the Petitioner an opportunity of a hearing on the quantum. This be done within a period of four weeks from today and accordingly grant appropriate interest to the Petitioner in accordance with law.
Let the Adjudicating Officer call the Petitioner for hearing by issuing seven days notice, so that all the documents whatever necessary can be presented before the Adjudicating Officer so as to enable him to pass appropriate order granting refund to the Petitioner - Petition disposed off.
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2024 (3) TMI 996
Refund of SAD - amount paid by the Appellant was a deposit in lieu of an inquiry or not - applicability of time limitation on the refund of amount of deposit or not - HELD THAT:- The letter dated 20.06.2017 by which refund amount along with interest dated 12/20.06.2017 had been paid by the appellant of amount of erroneous refund along with interest on same having been communicated to them was voluntarily act and which falls within parameter of requirement of Section 28 1(b) and because of which the proper officer was not required to issue any further show cause notice, unless the erroneous refund was found to be short paid. The appropriation of amount of refund and interest once paid voluntarily by appellant is selfappropriation. The amount thus paid was clearly on account of erroneous refund which vide its payment was accepted by the party obviating any necessity of further show cause notice.
If for any reason appellant wanted refund of such erroneous refund amount paid by them, then the same had to be within the prescribed limitation which as per the concurrent findings of the lower authorities was not done and therefore, the claim filed in the year 2021 was clearly barred by limitation.
Impugned order is therefore maintained and appeal is rejected.
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2024 (3) TMI 995
100% EOU - Denial of benefit of exemption under Notification No. 52/2003-Cus - violation of input output norms - excess generation of waste and scrap - HELD THAT:- The present case is entirely covered by the case of Meridian Impex Vs. CCE & ST,[2018 (7) TMI 865 - CESTAT AHMEDABAD], wherein it is held that after segregation of the mixed imported scrap, the segregated scrap, if cleared, cannot be considered as clearance of the 'inputs as such. The same has been affirmed by the Gujarat High Court in the decision of Commissioner of Customs (Preventive) Vs. Monarch Overseas,[2019 (1) TMI 1513 - GUJARAT HIGH COURT].
It was submitted that Chapter 6 of the Foreign Trade Policy ("FTP") nowhere mentions that for the excess generation of waste and scrap, duty equivalent to the duty on proportionate quantity of imported raw material is required to be paid. Chapter 6 of the FTP provides that there should be no duty demand even in case where the waste or scrap is destroyed in EOU. Further, it is also stated that the byproducts included in the LOP can be sold in DTA with the permission of the Deputy Commissioner on the payment of applicable duties.
Thus, nowhere it was mentioned that duty amount on proportionate raw materials is to be paid in case, there is excess clearance of waste and scrap and therefore the same cannot be demanded. Further, the only restriction on the excess clearance of the waste and scrap is that the same can be cleared on the payment of full duty which the appellants have already paid.
Moreover, as per Chapter 10 of the CBEC's Custom Manual of instruction issued on 11.09.2001 duty on bonded goods can only be demanded in certain specified circumstances. Therefore, the appeal is allowed with consequential relief.
Appeal allowed.
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