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2024 (11) TMI 882
Short-payment of Custom duty on import of cars - differential duty demand u/s 28 of Customs Act, 1962, along with applicable interest u/s 28AA of Customs Act, 1962 -stipulative description of ‘transaction value’ in section 14 of Customs Act, 1962 - HELD THAT:- The adjudicating authority has referred to adjustment of the amounts in credit balance held by M/s Bentley Motors Ltd but neither is any authentication of such account available nor its source established. It is also improbable that such purported outstandings are adjusted against an account which is not of M/s Exclusive Motors Pvt Ltd and, more so, in a contractual engagement bedrocked on prior payment. There is no record of any payment made through banking channels to the supplier either towards dues arising from the supplementary invoices or as transfers to the alleged adjustment account.
There is also no evidence of such dues having been made through unofficial route, commonly known as hawala, to M/s Bentley Motors Ltd. The illegality of these would surely have precluded M/s Bentley Motors Ltd from indulging in such transfers; the lack of any proceedings against them is sure evidence of the contrary. It appears improbable that invoices are raised and recorded without any payment insisted upon.
The certification in terms of section 138C of Customs Act, 1962 would also make it appear that the documents were sourced from the electronic records of M/s Bentley Motors Ltd and, though said to have been raised on M/s Exclusive Motors Pvt Ltd, was absent in the electronic records of the buyer.
The contention of appellants that intensive scrutiny of physical and electronic records of M/s Exclusive Motors Pvt Ltd had not yielded such invoices has not been disputed. It is also surprising that such supplementary invoices, on which, along with the finding that the original invoices are on FOB terms, has the enhancement of value of 51 cars despatched as air freight been justified, are not available for cars despatched by sea transport which were also held to be liable for enhancement owing to the original invoices being on FOB terms.
This is quite a leap of logic that may reasonably cast doubts on adjudicatory acknowledgement of the supplementary invoices. It is no less surprising that the correlation of 51 of the 63 supplementary invoices was rendered possible but not so for the remaining 12 and that there were another 12 cars despatched by air for which supplementary invoices were not available with the same source. That does not speak much about the record keeping by M/s Bentley Motors Ltd which the adjudicating authority has set such store by as to accept these documents without question merely owing to certification prescribed in section 138C of Customs Act, 1962. In the light of these discrepancies, we cannot permit ourselves the luxury that the adjudicating authority has of venturing to speculate on the cause and consequence of these supplementary invoices.
Much of the outcomes in the impugned order rest on interpretation of the contractual arrangement between buyer and seller as being on FOB terms and this mutation from CIP/ DAP terms stems from the purported export declaration filed with HMRC. These, undisputably, have been executed by the freight forwarders but there is scarcely a whisper about the representation rights of these entities to declare price of goods exported by M/s Bentley Motors Ltd. A perusal of these declarations make it abundantly clear that these are not export declarations but a document intended for data amassing. Though AR did fall back on the information pertaining to such documentation from the website of HMRC, it appears that undeserving sanctity has been accorded to them.
Apply known law to established facts for evaluating the correctness of the outcomes in the impugned order stemming from alleged non-inclusion of freight and insurance in the declared value which was allegedly only on FOB terms - It is clear that the contract for payment on CIP/DAP terms between M/s Bentley Motors Ltd and M/s Exclusive Motors Pvt Ltd squarely placed the risk liability till import into India on the former.
No evidence is available that these terms of contract underwent change. There is no provision in the contract for price revision or issue of supplementary invoices; indeed, it could not be as the contract mandates payment in advance. The payment terms would alter to FOB only upon shifting of risk liability to M/s Exclusive Motors Pvt Ltd which would be attended upon by the importer engaging transport and procuring insurance which, uncontestedly, has not happened. The only feasible alternative is for the buyer to place reliance on seller’s arrangement which not only varies the contract terms but brings in collusion between the two which is not the substance of the allegation in the notice or the findings in the impugned order.
Mere declaration, and inconsequential too, in document meant for statistical reporting without risk of penal consequence does not suffice to hold that contract terms were altered to transfer the liability. The fiscal consequences of such far-reaching alteration in contract for supply of high-end motor vehicles would be enough of disincentive to suggest that risk liability stood altered and unless risk liability was altered, the reading down of invoice as excluding freight and insurance on the basis of unreliable statements does not stand the test for recourse to rule 10(2) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Nor do they discharge the onus of customs authorities, not having recourse to rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, to establish that freight and insurance were not only excluded but also, as in large portion of this dispute, not ascertainable.
To affirm that, on tenuous suggestion of wrong-doing, the onus stands shifted to the importer would be tantamount to transplanting the valuation scheme in the Customs Valuation Rules, 1963 to the present day. Thus, the finding for concluding that the declared price should be loaded by 21.125% to render it to be ‘transaction value’ in 119 imports by sea or air is without any basis in law.
As far as supplementary invoices are concerned, there is nothing on record to suggest that these were issued to the buyers before or after the despatch of 51 cars by air. The scrutiny of records of importer-appellant had not yielded those. To conjecture so, and lend credence to documents reflecting transactions not envisaged in the contract, payment would have to be evidenced. Other than an inference of adjustment in some account purportedly held by M/s Bentley Motors Ltd, which, as set out supra, has only unreliable statements in support, no evidence has been led in the show cause notice.
There is no evidence of remittance either through banking channels or, as Learned Counsel put it, through ‘hawala’ route. Indeed, it would surprise that two corporate entities operating in jurisdictions that criminalize such payments that could also carry loss of liability cover would opt for such compensatory payments. Furthermore, that it could be brought to fruition by one of the parties to the contract does not sit well logically or commercially. That such supplementary payments, insinuated in the finding on shipment by sea, were held as having occurred even without the supplementary invoices brings the available documentation, too, within the penumbra of non-acceptability.
The declared price is, by default, not only the transaction value but also, unless established to the contrary, the price for delivery at the time and place of importation. With the law thus enacted, the onus for establishing the contrary rests with the adjudicating authority. On the evidence available and reliably acceptable, that onus has not been discharged. The declared price remains unimpeached to negate the enhancement and recovery of differential duty. In the absence of recourse to section 28 of Customs Act, 1962, ingredients for invoking section 114A against the importer do not exist. There being no misdeclaration of value, confiscation under section 111 of Customs Act, 1962 does not survive and with it the penalties under section 112 of Customs Act, 1962 lack sustenance. In the factual circumstances of this dispute, the impugned order is set aside to allow the appeals.
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2024 (11) TMI 881
Appointment of Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 - adjudication of penalties - HELD THAT:- In terms of the provisions of sub-rule (9) of Rule 3 of Companies (Adjudication of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, copy of this order is being sent to Khattu Housing Solutions Private Limited and its director in default mentioned herein and also to Office of the Regional Director (Eastern Region) and Ministry of Corporate Affairs at New Delhi.
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2024 (11) TMI 880
Appointment of Registrar of Companies, Chennai as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 - Non-compliance of the Companies Act, 2013 - HELD THAT:- It is concluded that the company and directors have violated Rule 14(6) of (Companies Prospectus and Allotment of Securities), Rules, 2014.
It is required to impose a penalty as prescribed under Section 450 of the Companies Act, 2013.
Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 a penalty of Rs. 10,000/- is imposed on the Company and Rs. 10,000/- is imposed on the Officers in default as mentioned above. Totally Rs.20,000/- as penalty amount for violation of Rule 14(6) of the Companies (Prospectus and Allotment of Securities), Rules, 2014 - The said amount of penalty shall be paid through online by using the website www.mca.gov.in(Misc. head) within 90 days of receipt of this order, and intimate this office with proof of penalty paid.
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2024 (11) TMI 879
Seeking to withdraw Appeal - seeking permission to withdraw the amount of Rs. 20,00,000/- that had been deposited in this Court pursuant to an interim order, along with accrued earnings thereon - HELD THAT:- The pleadings considered by the Supreme Court in Axis Bank vs. SBS Organics Private Limited and Another [2016 (4) TMI 917 - SUPREME COURT] on the very same question, and the resultant outcome of releasing the ICICI Guarantee, make it clear that security interests over the assets of the corporate debtor in order to secure amounts due from the corporate debtor under a judgement or decree would give way to the provisions of the IBC. The proceedings under the IBC may lead to an approved resolution plan or liquidation of the corporate debtor. Therefore, it is not appropriate to continue to hold the position that the interplay between the rights of a judgement creditor and the implications of insolvency law as existing in 1924 (in terms of Chowthmull) would still apply in 2024, when the IBC governs the field of insolvency and bankruptcy of corporate debtors.
The real import of the ruling by the co-ordinate Division Bench in the NAHAR BUILDERS LTD VERSUS HOUSING DEVELOPMENT AND INFRASTRUCTURE LTD [2020 (1) TMI 1704 - BOMBAY HIGH COURT], which was essentially to make the release of the amount deposited under Section 9 of the Arbitration Act, to the judgement creditor in the arbitration proceedings, subject to the provisions of IBC. Since another co-ordinate bench in Rajendra Bansal [2023 (1) TMI 306 - BOMBAY HIGH COURT] proceeded to release funds deposited by a corporate debtor to the judgement creditor on its reading of CHOWTHMULL MAGANMULL VERSUS THE CALCUTTA WHEAT AND SEEDS ASSOCIATION [1924 (5) TMI 5 - CALCUTTA HIGH COURT] and Nahar Case, it is clarified that the ruling in RAJENDRA PRASAD BANSAL VERSUS RELIANCE COMMUNICATION LIMITED [2023 (1) TMI 306 - BOMBAY HIGH COURT] applies only to the parties in that case, although the statement of law as contained therein, has been overtaken, as explained above. Since the Supreme Court has conclusively released the ICICI Guarantee in this very case, no question of law remains for reference to any larger bench.
Taking into account the decision of the Supreme Court in respect of the ICICI Guarantee, and that too based on similar pleadings made by the parties before the Supreme Court; and also taking into account the provisions of the IBC and its implications for decree holders, the monies deposited in this Court are indeed assets under the ownership of the Applicant-Appellant, with possession being in the hands of the Court. No meaningful purpose would be served in continuing with the deposit, since even if the Appeal were to fail, the Respondent would need to be subjected to the CIRP run by the Committee of Creditors through the Resolution Professional. If the resolution attempts fail, the Respondent’s rights under the Impugned Judgement would be subject to the waterfall mechanism for distribution of liquidation proceedings, stipulated under the IBC.
The monies or any other asset deposited by a corporate debtor in court prior to commencement of CIRP by way of security (to protect against execution of any judgement or decree), would not cease to be the asset of the corporate debtor - the monies deposited by the Applicant-Appellant in this Court constitute assets owned by the Applicant-Appellant although they are not in possession of the Applicant-Appellant - the Applicant-Appellant is permitted to withdraw Appeal No. 597 of 2016, and indeed withdraw the amounts deposited in this Court in these proceedings, along with all earnings thereon. Refund of Court fees shall be processed as per Rules.
Appeal disposed off.
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2024 (11) TMI 878
Process amounting to manufacture or not - re-packing of various excisable goods (herbal and cosmetic products), affixing the brand names owned by them in their premises - Illegality of duty liability under Section 4 of the Excise Act - it was held by CESTAT that 'demand confirmed even under Section 4 of Central excise Act, 1944 set aside' - HELD THAT:- After having heard the learned counsel appearing for the appellant and after perusing the findings recorded by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, no error is found therein.
The appeal is accordingly dismissed.
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2024 (11) TMI 877
Disallowance of CENVAT Credit - service tax paid on the goods transport agency (GTA) services received by the appellant to transport the cement from its factory to the buyer’s premises sold on FOR (free on road) destination basis - place of removal - recovery alongwith interest and penalties - HELD THAT:- Since there were conflicting views, the issue was referred to the Larger Bench in Ramco Cement versus CCE [2023 (12) TMI 1332 - CESTAT CHENNAI-LB]. The Larger Bench decided that where the goods are sold on FOR destination basis and the ownership of the goods gets transferred at the customer’s premises, the place of removal shifts to the buyer’s premises.
In this case, there is no dispute that the goods were sold on FOR destination basis and so the place of removal gets shifted at the buyer’s premises. Therefore, following the decision of the Larger Bench, it is held that the ‘place of removal’ shifts to the buyer’s premises and the appellant is entitled to CENVAT credit of the service tax paid on GTA services availed to transport the goods to the buyer’s premises.
The impugned order is set aside - appeal allowed.
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2024 (11) TMI 876
Non-appearance of the Appellant or his authorised representative on the dates of public hearing - absence of authorized representative - HELD THAT:- Rule 20 of CESTAT (Procedure) Rules, 1982 provides that if the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non-appearance when the appeal was called on for hearing can set aside the dismissal and restore the appeal.
The adjournments can’t be given for the mere asking without any serious reason, backed with proof, for the non-appearance of the Appellant or his authorised representative on the dates of public hearing. Thus, no purpose would be served in continuing with this appeal and hence reject the same for default as per Rule 20 of CESTAT (Procedure) Rules, 1982.
The appeal is disposed of accordingly.
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2024 (11) TMI 875
Reversal of CENVAT Credit - packing material which is used for dutiable as well as non-dutiable products - invoice does not bear invoice number - HELD THAT:- In this case main denial of the Cenvat credit of Rs.10,03,635/- on the basis of ISD invoices issued to the appellant for promotional and marketing expenses alleging that the said promotional and marketing expenses are not wholly for the product manufactured by the appellant. The said issue has been examined by the Larger Bench of this Tribunal and the penalty in the case of M/s. Krishna Food Products [2021 (5) TMI 906 - CESTAT NEW DELHI] wherein this Tribunal observed 'A narrow and a literal interpretation of the phase its manufacturing units should, therefore, be avoided, more particularly when the Registration Exemption Notification provides for authorisation for manufacture of goods on behalf of the principal manufacturer. There appears to be no good reason as to why CENVAT credits should not be allowed to be distributed to a job worker in the facts and circumstances of the present case.'
The appellant is entitled to take Cenvat credit of Rs.10,03,635/-. Therefore, the said Cenvat credit is allowed.
Availment of Cenvat credit - HELD THAT:- The appellant has produced the invoice bearing invoice number and the learned Authorized Representative also admitted that invoice number mentioned in the invoice, therefore, the said Cenvat credit is correctly taken by the appellant. Accordingly, Cenvat credit of Rs.32,149/- is allowed to the appellant.
Cenvat credit on packing material - HELD THAT:- The reversal of proportionate Cenvat credit is sufficient for the appellant to avail Cenvat credit of Rs.39,159/-. If there is any discrepancy in the availment of Cenvat credit, the adjudicating authority shall verify from the records and if some calculation error is there, the appellant shall reverse the said proportionate Cenvat credit. In view of this, it is held that the appellant is entitled to take Cenvat of Rs.39,159/- also if there is no calculation error found by the adjudicating authority.
No penalty is imposable on the appellant.
The appeal is disposed of.
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2024 (11) TMI 874
Challenge to Award of the Labour Court - whether the appellant, as a family member of a land-loser, whose land was acquired for the Kaiga Atomic Power Project, had legally secured the job as the sonin- law, of the land-loser? - HELD THAT:- The relevant materials reflecting the marriage of the appellant with Smt. Ganga was however ignored by the Writ Court. The Court also failed to appreciate that the learned Labour Court reached the factual conclusion, after due consideration of the material evidence. Such factual finding of the Labour Court should not normally be disturbed by a Writ Court without compelling reason. Such reasons are absent. Therefore it is felt that the Award in favour of the appellant, granted by the Labour Court, was erroneously disturbed by the learned Single Judge.
The appellant is entitled to relief, in terms of the Labour Court’s Award dated 09.08.2012 with consequential service benefits. But allowing backwages may not be justified. It is therefore made clear that the reinstated employee, shall not be entitled to any back wages from 16.12.2020, when the learned Single Judge set aside the Award, till he is reinstated. However, the gap period i.e. 16.12.2020 till reinstatement, should be taken into account for all other service benefits. The appellant is ordered to be reinstated in service, within four weeks from today.
Appeal allowed.
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2024 (11) TMI 873
Validity of Final Assessment Order passed u/s 143(3) r.w.s. 144C(13) as barred by time limitation - HELD THAT:- In the context of faceless assessment process time and place of dispatch and receipt of electronic document (in this case DRP order) is required to be ascertained by reference to section 13 of Information Technology Act, 2000 which is the basis prescribed under section 144B of Income Tax Act also (refer section 144B (6)(v)).
Hon'ble Supreme Court in case of GS Chatha Rice Mills [2020 (9) TMI 903 - SUPREME COURT] interpreted this very provision. Applying principles laid down by Hon'ble Supreme Court, only relevant fact necessary for deciding additional ground in present appeal relating to time barred assessment, is time of uploading by DRP of DRP order onto ITBA portal. Intimation letter to DRP order unambiguously shows 26.05.2022 as date of uploading of DRP order. This fact cannot be disputed. Except this critical and relevant information everything else (like when order is visible to AO, date of uploading some document by DCIT/ACIT circle 2 (1) (1) Delhi) has been submitted by Respondents.
It is fair to conclude that date of uploading DRP order on ITBA portal is 26.05.2022. As per section 144C(13) of the Act, assessment had to be completed on or before 30.06.2022. In present case the assessment is completed only on 01.07.2022 i.e., it is time barred null and void. Therefore, impugned assessment order dated 30.06.2022 is set aside being barred by limitation.
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2024 (11) TMI 872
Addition u/s 68 - unexplained cash credits - cash deposited into bank account during the demonetization period - Use of theory of human probability - HELD THAT:- As going by the analysis of purchase and sales, there is no abnormality in sales declared by the assessee during the demonetization period.
As undisputedly clear that the AO has conveniently ignored the supporting evidences filed by the assessee to justify the cash sales made during the period October 2016 and upto 08/11/2016, because, if we go by the analysis of purchase and sales, there is no reason for doubting the sales declared by the assessee during the period of October and November, 2016.
AO has not made out any case of discrepancy in the books of accounts maintained by the assessee nor made out a case for any incorrectness in purchase, sales declared during relevant period. In fact, purchases are supported by necessary purchase bills and sales declared by the assessee including cash sales are supported by sale bills. Although the AO made observation with regard to uniform cash sales, in our considered view, only on the basis of uniform pattern of sales, it cannot be held that the sales declared by the assessee is not genuine.
Further in so far as the non-maintenance of phone number and PAN of the buyers, in our considered view, as per Rule 114B of IT Rules, 1962 there is no mandatory requirement of PAN of the buyers in case sales to single customer does not exceed Rs. 2 lakhs. Similarly, in respect of KYC compliances, the same is mandatory, in view of amendment to provisions of Money Laundering Act,2002 w.e.f. 04/05/2022 and the same is not applicable for the impugned assessment year. The observation of the AO on non-maintenance of phone and PAN number of the customer and adverse inference drawn against sales declared by the assessee is devoid of merit and cannot be accepted.
Assessee has furnished all relevant details in respect of cash deposited during demonetization period into bank account when the DDIT(Investigation) Wing has carried out enquiries with regard to source for huge cash deposit into bank account. In fact, the appellant has submitted all relevant information including supporting evidence for sales and cash in hand available as on 08/11/2016 to explain the source for cash deposits.
As undoubtedly clear that the additions made by the Assessing Officer towards cash deposited into bank account u/s 68 of the Act is purely on suspicion and surmises, without there being any contradictory evidence to suggest that the sales declared by the assessee is not genuine.
It is not the case of the AO that the cash sales made prior to 08/11/2016 were not recorded in the books of accounts. It is also admitted fact that the assessee has filed VAT returns and declared sales to VAT authorities. Closing stock of the year is carried forward as opening stock of the next year and even in the subsequent year, scrutiny assessment was made by accepting the opening stock which shows that the sales made in the year under consideration and income earned thereon was never disputed. Although the Assessing Officer doubted purchases made from related parties, the fact remains that there is no evidence with the AO to allege that said purchases are not genuine.
Therefore, in our considered view, merely for the reason of purchase from a related party, genuineness of purchases cannot be doubted in case said purchases are supported by necessary evidence. Further, the assessee has made payment against purchases through proper banking channel - adverse inference drawn by the Assessing Officer is devoid of merit.
AO ignored all evidence filed in support of the claim for cash deposit, which is in favour of the assessee. However, consider only the elements which go against the assessee, which is evident from the discussion of the Assessing Officer in the assessment order to draw adverse inference against the assessee. The Assessing Officer rested his discussion only on the basis of cash in hand maintained by the assessee during demonetization period, prior to demonetization period and post demonetization period.
According to the Assessing Officer, the cash balance held by the assessee is against human tendency. In our considered view, theory of human tendency or probability cannot work in a situation which is an exception to the normal conditions / situations. No one was aware as to what was the right step to move. Further huge amounts cannot be sent at a time through any one employee to avoid the risk of employees running away, theft, snatching money from employees etc. Therefore, the adverse inference drawn by the Assessing Officer considering human probability that no prudent person would carry huge cash in hand is only on suspicion and surmises. Therefore, in our considered view, the Assessing Officer is not justified in giving more weightage to unnecessary factors even though the evidence filed by the assessee clearly shows that the cash deposited in the bank account during demonetization period is out of opening cash in hand available as on 08/11/2016, which is supported by sales declared with supporting evidence.
Merely for the reason of carrying excess cash balance during a particular period when compared to other periods, it cannot be held that the argument of the assessee is against the theory of human probability, more particularly, when evidences clearly suggest that the explanation of the assessee is genuine and supported by necessary evidences - Decided in favour of assessee.
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2024 (11) TMI 871
Denial of exemption u/s 11 - assessee society has violated the provisions of section 13(1)(c) on account of Loans and Advances to related parties and Transportation fees received by M/s. Ashram Educational and Consultancy Pvt Ltd (AECPL) - HELD THAT:- In the present case, it is not disputed that the loans were advanced in earlier years and were not extended during the relevant assessment year. AO failed to demonstrate how any income of the assessee society was used to confer a benefit during A.Y. 2015-16.
Assessee’s claim that the loans were given out of advance received against proposed property sale and do not form income of the assessee, has merit. In our considered view the advances, being liabilities, do not constitute income of the society. Hence, the invocation of Section 13(1)(c) for AY 2015-16 is legally untenable.
‘Transportation Fees’ involving AECPL the assessee drew our attention to the audited financial statements as on 31/03/2015 of the company AECPL showing that after deducting operating expenses and agreed amount of Rs. 40.00 Lakhs to the assessee Trust as vehicle lease charges, the net income of the Company from transportation fees was very nominal i.e. Rs. 2.46 Lakhs for the whole year. There is no evidence that the assessee conferred an undue benefit to AECPL. AO’s conclusion that the lease arrangement was disadvantageous is based purely on a comparison of gross receipts, without considering the associated costs. Hence, the denial of exemption under Section 11 on this ground is not justified.
There is no violation of section 13(1)(c) of the Act, by the assessee, we direct the AO to allow the exemption u/s.11 of the Act and direct the AO to delete the addition made on account of the Corpus donation received. Further, according to the submission of the Ld.AR section 40(a)(ia) is not applicable for the A.Y. 2015-16 to the institutions / funds eligible for exemption U/s.11 of the Act. On perusal of the provisions of section 40(a)(ia), the claim of the assessee is found correct and the disallowance of Rs. 24,95,469/- i.e. 30% of the Rent of Rs. 83,18,230/- is hereby deleted by allowing the grounds of the assessee.
Exemption u/s.11 denied for violation of Section 13(1)(c) along with certain disallowances due to non-furnishing of details during the re-assessment proceedings - We note from the assessment order as well as impugned order, it is established that there was no opportunity for the assessee in prosecuting his case, but, however, on the undertaken given by assessee is ready to prosecute his case before the AO without fail, we deem it proper in the interest of justice to remand the matter back to the file of the AO - The assessee is at liberty to file evidence in support of his claim and the AO shall conduct the assessment proceedings de novo, by allowing the appeal of the assessee.
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2024 (11) TMI 870
Territorial Jurisdiction - Search and seizure - multiple agencies have carried out search operations - centralisation of investigation with DGGI, AZU - it was held by High Court that 'Section 6(2)(b) of the CGST Act has limited application and therefore, is not applicable to the facts of the present petitions. Similarly, the Circular dated 05.10.2018 also has no application to the facts of the present petitions.'
HELD THAT:- Having heard learned counsel for the petitioner and learned ASG appearing on behalf of the respondent(s)/Department, it is not required to interfere in the matter.
The Special Leave Petition is hence dismissed.
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2024 (11) TMI 869
Challenge to impugned order and rectification order for assessment year 2018-19 - mismatch between GSTR-3B and GSTR-2A/GSTR-2B - impugned order is challenged on the premise that neither the show cause notices nor the impugned order of assessment dated 24.11.2023 has been served by tendering to the petitioner or by registered post, instead it was uploaded in the common portal - principles of natural justice - HELD THAT:- The impugned order dated 24.11.2023 is set aside and the petitioner shall deposit 25% of the disputed tax i.e., as reduced by order of rectification dated 08.05.2024 within a period of four (4) weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four (4) weeks from the date of receipt of a copy of this order along with supporting documents/material.
The writ petition stands disposed of.
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2024 (11) TMI 868
Computation of total income in the Computation Sheet attached with the assessment order - HELD THAT:- We notice from the assessment order that the total income was determined by the AO at Rs. 16,82,668/-. However, in the computation sheet, the total income has been taken as Rs. 36,69,410/-. We also find that the AO has not given any explanation for the income so adopted in the computation sheet. Hence, there is some merit in the submission of the Ld.AR that there was an error in adopting the figure of total income by the AO in the computation sheet.
However, we are of the view that this plea of the assessee requires verification at the end of AO. Accordingly, we set aside the order passed by the Ld.CIT(A) on this issue and restore the same to the file of AO for examining this plea of the assessee. If it is an error as pointed out by the assessee, then the AO may correct the same.
Addition made u/s. 14A - assessee had earned share income from partnership firm and claimed same as exempt. However, the assessee did not make any disallowance u/s. 14A - HELD THAT:- We notice that the investment have been made by the assessee in the year 2000-01 and Over Draft facility has been obtained from ICICI Bank in November, 2014. Hence, there is merit in the contentions of the Ld A.R that the assessee could not have utilized loan funds for making investments. It is also stated that the overdraft facility availed from ICICI Bank was used for day to day activities. Hence, as per the decision rendered in the case of Gujarat Narmada Valley Fertilizers Company Ltd. [2014 (3) TMI 847 - GUJARAT HIGH COURT] no disallowance out of interest expenditure is called-for. Accordingly, we set aside the order of the Ld.CIT(A) on this issue and direct the AO to delete the disallowance made under Rule 8D(2)(ii).
Disallowance made under Rule 8D(2)(iii), the Ld.AR submitted that there is an error in computing average value of investment. Since this plea of the assessee requires verification, we restore this issue to the file of the AO for examining the same afresh. After affording adequate opportunity of being heard to the assessee, the AO may take appropriate decision in accordance with law. Appeal of the assessee is treated as allowed.
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2024 (11) TMI 867
Taxation of long-term capital gains arising on the development agreement u/s 153C r.w.s 144C(3) - assessee, being an NRI, was assessed to have no source of income in India and therefore, was taxable under the residual charge at Delhi, having a PAN number - As argued JDA, based on which the additions were made in the assessment for 2016-17, though registered, did not result in a transfer of possession
Jurisdiction of the AO u/s 153C r.w.s. 144C(3) - challenge the assessment made by the AO without a transfer order u/s 127 - HELD THAT:- In the present case, the documents were found during the course of search belonging to the assessee and notice u/s 153C was issued by the Assessing Officer having the territorial jurisdiction where the property is situated. The contention of the assessee that the notice should have been issued by the AO at Delhi will lead to lot of complications as there is no record available at the AO of Delhi nor the documents were available at the AO of the Delhi. The law is fairly settled that the forum in whose jurisdiction the situs is situated and where the necessary documents / information is available should be the appropriate forum for adjudication.
Section 127 of the Act will only come into play when there is some transfer of jurisdiction from one authority / office to the other. In the present case, the assessee has not filed the return of income and has not assessed at the Delhi ITO / Assessing Officer and therefore, there is no question of transfer of jurisdiction of the Assessing Officer from ITO, Delhi to ITO, Hyderabad. In view of the above, we are of the considered opinion that the jurisdiction invoked by the Assessing Officer at Hyderabad is in accordance with law - this ground is decided against the assessee.
Whether the transfer took place on account of JDA entered on 30.12.2015 or not? - Undoubtedly, as per the JDA, both parties agreed to raise the construction and share the built-up area - CIT(A) had captured the various clauses of the JDA which clearly shows the respective transfer of rights by one party to the other in respect of land share.
Assessee before us, pursuant to the construction was also entitled to receive the built-up flats as per the Annexure to the JDA. We are unable to comprehend as to how the assessee will receive the possession of built-up flats when the assessee has not allegedly transfer the possession. In fact, the ld.CIT(A) has categorically mentioned that no document has been produced by the assessee to separate transfer of possession to the developer.
No error in the decision of ld.CIT(A) on this aspect as the fact speaks for itself. The Developer was under obligation to construct the property after receiving due sanctions from various authorities as per the specification and cost of construction agreed between it and the assessee. For all purposes, there is a transfer of land / capital asset within the meaning of law and for the above said purposes, we may rely upon the decision of Balbir Singh Maini [2017 (10) TMI 323 - SUPREME COURT] In the light of the above, this ground of the assessee is dismissed.
Year of assessment - assessee has disclosed his capital gains in the assessment year 2019-20 and therefore, it should not have been assessed in A.Y. 2016-17 - The law is settled that the tax has to be levied in the year when it is due and payable. In the present case, the taxable event as per the judgment in the case of Potla Nageswara Rao [2014 (6) TMI 494 - ITAT HYDERABAD] and Balbir Singh Maini [2017 (10) TMI 323 - SUPREME COURT].happened in the year 2016-17 and therefore, it is to be charged in the said assessment year only. In case, as claimed by the assessee, the income has been offered in 2019-20, then the Assessing Officer may verify and pass rectification order, otherwise, it amounts to double taxation. In view of the above, the argument of the assessee is unsustainable.
Valuation of property - value of Rs. 5,000/- per sq.yd taken by the AO as against Rs. 8,000/- per sq.ft adopted by the registered valuer - The valuation report was required to be given of the property as on the date of its transfer i.e., in the assessment year 2016-17 and not on a the subsequent occasion. The inspection of the property on 08.06.2019 had not thrown the light on the extent and nature of construction. Furthermore, the valuation report cannot be considered as it does not inspire confidence and is therefore required to be rejected. In this regard, the Assessing Officer has relied upon the guidance value of the area in which the property is situated, we do not find any reason to interfere with the same as the assessee failed to point out the peculiarity of the location, status and construction of the property for fetching more price in comparison to the guidance value. In view of the above, this ground of the assessee is dismissed. Accordingly, the appeal of the assessee is dismissed.
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2024 (11) TMI 866
Demand u/s 201(1)/201(14) as barred by limitation - assessee company has failed to deduct tax at source as reflected by Tax Auditor in his report - assessee submitted that the order passed by the AO was time barred by limitation - Scope of amendment - HELD THAT:- Only change which was effected from the earlier provision was the limitation period of four years in case of a deductor not filing TDS statement was extended to six years from four years. Whereas, in case of a person /deductor filing TDS statement, the limitation period of two years remained unchanged.
The aforesaid sub section (3) of section 201 was again amended by Finance Act, 2014 w.e.f 1st October 2014 by substituting the earlier provision and earlier provision with a uniform limitation period of seven years from the end of relevant financial year wherein payments made or credit given was made applicable. If the legislature intended to apply the amendment provision of sub-section (3) retrospective it would definitely have provided such retrospective effect expressing in clear terms while making such amendment.
In the instant case the time limit for passing order u/s 201(1) of the Act pertaining to financial year 2010-11 where a statement u/s 200 of the Act has been filed was two years from the end of the financial year in which such statement was filed. It is evident from the order of the AO that the tax statement in the relevant form i.e. Form 26Q for F.Y. 2010-11 was filed by the assessee on 13-05-2011. The time limit for passing an order u/s 201(1) of the Act was up to 31-03-2014.The assessment order was completed on 28-03-2018 by the AO beyond the prescribed time limit. The sub-section (3) of the Section 201 of the Act does not applicable in this case.
We find that the assessment was made by the AO was time barred has no leg to stand and the Ld. CIT(A) has rightly allowed the appeal. The appeal of the revenue is liable to be dismissed.
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2024 (11) TMI 865
Salary received by non-resident in India - appellant was seconded on overseas assignment to UK - Income taxable in India or not? - number of days stay in India -Taxability of Salary Income under the India-UK DTAA - whether employer-employee relationship existed or not? - assessee is assessed as non-resident in AY 2020-21 as he had spent less than 60 days in India and was an employee of the M/s. Ernst & Young LLP during the previous year 2019-20. During Financial Year 2019-20 the appellant was seconded on overseas assignment to UK by his employer -
Assessee submitted before AO that salary is taxable in India only if it accrues in India and salary is considered to be accrued where the employment is exercised
HELD THAT:- We find substance in the arguments of the Ld.AR that assessee being tax resident of UK, the salary income was taxable in UK only. In fact, salary received for the employment exercised in UK is taxable in UK and in the light of Article 15(1) of the India-UK DTAA it is exempt income.
A similar view, has also been taken in the case of Nanthakumar Murugesan [2024 (6) TMI 815 - ITAT CHENNAI]. We find that identical fact exists before us in the present appeals. The proportionate salary for services rendered in India has already been offered to tax in India whereas the balance salary has already been offered to tax in UK. The assessee has not claimed any foreign tax credit in any of the jurisdiction. The UK tax has been paid. Therefore, ld. CIT(A) has rightly deleted the addition - Decided in favour of assessee.
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2024 (11) TMI 864
Assessment u/s 153A - Addition u/s 69 - assessee had availed of unsecured loan - HELD THAT:- It is true that the AO observed that the assessee had deposited a sum in the account of M/s Mohan Broker Agency, and credit was also shown by M/s Mohan Broker Agency and the assessee did not disclose in her Income tax return about said transaction, once said credit dated 7.1.2017 had been depicited in said statement of M/s Mohan Broker Agency, and no action was taken as regards the Income tax return furnished by the husband of the appellant in the relevant Assessment Year, it cannot be said that this is a case of discovery of any incriminating material only on search and seizure action on 29.3.2018.
Therefore, this addition made by resorting to provisions of section 69 of the Act deserved to be set aside. We order accordingly.
Sale of immovable property - Other addition, the only submission on behalf of the appellant is that having regard to the income declared by the assessee for the year under consideration and income declared in the previous 3 years, it cannot be said that the assessee had not the capacity to make payment of Rs. 92,700/-, and as such, this addition deserves to be set aside.
Sale consideration in respect of the immovable property was Rs. 12,48,000/-, and the assessee admittedly paid Rs. 12,28,000/-by way of cheque. As such, the assessee was required to disclose source of payment of remaining sale consideration and stamp duty charges, total amounting to Rs. 92,700/-, as submitted by Learned DR.
But having regard to the income of the assessee during the last 3 years, and the income of the year under consideration as shown in the ITR, it cannot be said that payment of this much amount remained unexplained. As is established from the documentary evidence, which was also made available before the AO and Learned CIT(A), we find that said addition also deserves to be set aside.
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2024 (11) TMI 863
Undisclosed investments u/s 69 and undisclosed investment in purchase of agriculture land - no explanation regarding the source of this investment provided - HELD THAT:- Firstly, it may be mentioned that payment of the sale consideration in cash to the vendors for purchase of immovable property was clearly in violation of provisions of the Act.
Secondly, there is no evidence from the assessee-appellant to suggest that she had received cash from her mother in law and paid the said cash amount to the vendors.
Contrary to it, the submission put forth by AR for the appellant is that Smt. Yashoda Devi had withdrawn the abovesaid amount and paid the same in cash to the co-owners. This version was never put forth by the assessee at any stage of the proceedings before the AO or before Learned CIT(A).
Thirdly, the assessee did not disclose said income in the Income tax return for the year under consideration. Same adversely affects the case of the assessee, particularly, when, admittedly, she has not been maintaining any books of accounts.
In the given situation, self serving confirmation by Smt. Yashoda Devi, mother in law of the appellant, does not come to the help of the assessee-appellant.
Nowever, taking into consideration income of the assessee during the F.Y. 2016-17 i.e. of Rs. 3,66,224.00 - Rs. 54,000.00 paid to Mohan Broker Agency during said year, we restrict the addition to Rs. 9,08,376 (i.e. Rs. 12,20,600.00 - Rs. 3,12,224.00, source of which she failed to establish, despite reasonable opportunity, before the Assessing Officer and before Ld. CIT(A).
Validity of impugned assessment order as no DIN Number was generated as regards the assessment order - Record reveals that while challenging the impugned assessment order before Learned CIT(A), no such ground/objection on behalf of the assessee-appellant was raised.
Even though this is a legal ground and can be raised before the Appellate Tribunal, it was for the assessee-appellant to prove to the satisfaction of this Tribunal if any prejudice has been caused to the assessee-appellant due to non mentioning of DIN number.
Instructions issued by Central Board of Direct Taxes are meant for compliance by the Income Tax Authorities. When the instructions were issued that such communications without DIN number shall be treated as ‘non-est’, and shall be deemed to have never been issued, can safely be said to have been issued to ensure and lay emphasis on their compliance by the Income tax authorities, without fail.
It is not the allegation of the appellant that no assessment proceedings were conducted by the Assessing Officer or that the impugned assessment order is a made up or forged and fabricated document.
In absence of any such plea or material to suggest that any prejudice was caused to the assessee-appellant, we do not find any merit in the contention raised on behalf of the assessee-appellant that because of non mentioning of DIN number. in the impugned assessment order, the same deserves to be set aside.
Impugned assessment order not digitally signed-its impact - Instruction No.1/18 dated 12.2.2018 issued by Central Board of Direct Taxes has also been relied on in the written submissions to submit that all departmental orders/notices/communications issued to the assessee through ‘e-proceedings’ are to be digitally signed by the AO.
As already noticed above, instructions issued by Central Board of Direct Taxes are meant for compliance by the Income Tax Authorities. Same can safely be said to have been issued to ensure compliance and lay emphasis on their compliance by the Income tax authorities, without fail.
It is not the allegation of the appellant that no assessment proceedings were conducted by the Assessing Officer or that the impugned assessment order is a made up or forged and fabricated document. Ld. AR for the appellant has not been able to satisfy if any prejudice was caused to the assessee-appellant for want of digital signatures on the impugned assessment order. Accordingly, we do not find any merit in the contention raised on behalf of the appellant.
Prior approval u/s 153D of the Act, whether the same was granted mechanically? - Significant to note that after having raised abovesaid inconsistent grounds as regards the approval, in the common paper book-II dated 29.08.2024 presented on behalf of the assessee-appellant on 17.09.2024, the very first document made available at page No. 23 (as assigned by the Ld. AR for the appellant), is the copy of approval u/s 153D of the Act, accorded by Additional Commissioner of Income Tax, Central Range, Udaipur, vide its letter dated 31.12.2019.The impugned assessment order is dated 30.12.2019.
It is available from the abovesaid letter dated 31.12.2019 that on receipt of letter dated 30.12.2019 from the office of DCIT, Central Circle, forwarding therewith draft assessment orders, mentioned therein, for approval u/s 153D of the Act, Additional Commissioner of Income Tax went through the contents of draft assessment orders and accorded approval u/s 153D of the Act.
In view of the said document submitted by the appellant, there is no merit in the contention raised on behalf of the assessee-appellant.
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