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2024 (9) TMI 1724
Direction upon the respondents to allow TRAN-1 credit to the petitioner - rejection of petitioner’s prayer for TRAN-1 credit - HELD THAT:- This writ petition cannot be decided without calling for affidavits.
Accordingly, let affidavit-in-opposition to the present writ petition be filed within four weeks after the annual vacation. Reply thereto, if any, be filed within three weeks thereafter.
Liberty to mention for inclusion in the list after expiry of the period for exchange of affidavits.
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2024 (9) TMI 1723
Addition u/s 68 - bogus share transactions - denial of deduction u/s 10(38) - Onus to prove - assessee is directly involved in rigging of the share scrips - HELD THAT:- AO has not provided any evidence even worth a name that assessee's own money has been routed back to him. There is no nexus with the assessee with price rigging and no adverse observation from stock exchange. The addition simply on third party statement is uncalled for. We respectfully relied on the order of Smt. Renu Aggarwal [2023 (7) TMI 288 - SC ORDER] The additions amount U/s 68 and U/s 69C are quashed. Decided in favour of assessee.
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2024 (9) TMI 1722
Characterization of receipt - treating the amount of compensation received from DLF Company for non delivery of property - interest income OR capital receipt - HELD THAT:- As decided in M/s. West Bengal Housing Infrastructure development Corporation Limited [2019 (4) TMI 541 - SC ORDER] applying the provisions of section 2(28A) of the Income-tax Act held that the compensation paid to the builder to the flat allottee cannot be construed as interest at all and hence, there is no question of deduction of tax at source in terms of section 194A of the Act thereon.
Similar view was taken in the case of Delhi Development Authority vs. ITO [1995 (1) TMI 126 - ITAT DELHI], decision of Beacon Projects Pvt. Ltd.[2015 (6) TMI 939 - KERALA HIGH COURT] and Sawhney Builders Pvt. Ltd. [2023 (4) TMI 473 - ITAT DELHI]
Thus, we hold that the compensation received by the assessee from DLF for delayed handing over of the property in the sum is not chargeable to tax in the hands of the assessee - Appeal of the assessee is allowed.
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2024 (9) TMI 1721
TP adjustments on specified domestic transactions following the omission of Clause (i) of Section 92BA - Scope of retrospective application/omission of clause (i) of section 92BA - HELD THAT:- It is apparent on record that the grounds of present appeals are similar to grounds of appeal in DCIT Vs. DLF Urban Pvt. Ltd. [2024 (4) TMI 451 - ITAT DELHI] and DLF Urban Vs. DCIT [2024 (4) TMI 451 - ITAT DELHI] decided on 08/04/2024.
By following judgment of Hon’ble High Court of Karnataka in the case of Taxport Overseas (P.) Ltd.’s case [2019 (12) TMI 1312 - KARNATAKA HIGH COURT] a Co-ordinate Bench of ITAT Delhi in order [2024 (4) TMI 451 - ITAT DELHI] declined request for reference to President ITAT to constitute Special Bench. As such the request of Learned Departmental Representative for reference to the President ITAT for constitution of Special Bench is hereby declined. In view of the above material facts and well settled principle of law no transfer of adjustment on account of domestic transaction after omission of clause (i) of Section 92BA of the Act could be made. Therefore, the impugned order is not legal and deserves to be set aside. Appeal of the appellant assessee is allowed.
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2024 (9) TMI 1720
Initiation of proceedings u/s 11A of CEA for the recovery of the excise duty which is alleged to have been refunded by playing fraud? - HELD THAT:- In the background of similar facts, this Court had framed almost identical substantial question of law in CEA No. 06/2018 [2023 (7) TMI 661 - JAMMU AND KASHMIR AND LADAKH HIGH COURT], where it was held that 'Such order passed by the Assessing Authority is appealable under Section 35 of the Act or the competent Authority of the revenue may invoke Section 35E of the Act and direct the concerned Authority to take an appropriate remedy against such order sanctioning erroneous refund, if any, in favour of the assessee'.
From conjoint reading of the substantial questions of law framed in the two appeals, it is evident that the questions of law are almost identical in nature though the same have been framed slightly differently.
Appeal dismissed.
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2024 (9) TMI 1719
Relief u/sec. 89 - payment of ex-gratia compensation received - capital receipts or as profits in lieu of salary u/s 17(3) of the Income Tax Act, 1961 - HELD THAT:- As recently decided in Ashok Raghunathrao Kulkarni [2024 (8) TMI 821 - ITAT PUNE] the payment of ex-gratia compensation received by the assessee was voluntary in nature without there being any obligation on the part of the employer to pay further amounts to the assessee in terms of any service rule and therefore, would not amount to compensation in terms of section 17(3) of the Act. We, therefore, set aside the order of the CIT (A) / NFAC and direct the Assessing Officer to delete the addition. The grounds raised by the assessee are accordingly allowed.
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2024 (9) TMI 1718
Characterization of receipts - ex-gratia payments received - amount received by the assessee from Pfizer company should be treated as a capital receipt or as profits in lieu of salary u/s 17(3) - HELD THAT:- Similar issue decided by us in the case of Ashok Raghunathrao Kulkarni [2024 (8) TMI 821 - ITAT PUNE] wherein the amount received from Pfizer company as ex-gratia was held to be not taxable.
Thus we hold that the amount received as ex-gratia is not taxable being capital in nature - Decided in favour of assessee.
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2024 (9) TMI 1717
Characterization of receipts - amount received by the assessee from Pfizer as ex-gratia payment - HELD THAT:-Since the facts of the instant case are identical to the facts of the case already decided in the case of Ashok Raghunathrao Kulkarni [2024 (8) TMI 821 - ITAT PUNE] we hold that the amount received as ex-gratia is not taxable being capital in nature. Accordingly, the same is directed to be deleted. Appeal filed by the assessee is allowed.
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2024 (9) TMI 1716
Reversal of acquittal judgment of the Trial Court and convicting the accused under Sections 143, 147, 148, 120B, and 302 read with 149 of the Indian Penal Code (IPC) - criminal conspiracy to murder - HELD THAT:- The High Court merely summed up the depositions of the so-called eyewitnesses and baldly concluded that the presence of the eyewitnesses, PWs 1 to 3, could not be doubted. Surprisingly, despite the Trial Court detailing, at great length, the contradictions and discrepancies in their depositions, the High Court observed that the Trial Court had not pointed out any major contradictions which would discredit the evidence of PWs 1 to 3 and the evidence of other witnesses. According to the High Court, the evidence adduced by the prosecution outweighed the findings recorded by the Trial Court, but no reasons worth the name were recorded by the High Court to support this conclusion. On the strength of these cryptic observations, the High Court deemed it fit to reverse the judgment of acquittal; hold the accused guilty of the offences as charged and sentence them to imprisonment for life.
Once the Trial Court found no evidence to convict the accused, the burden was upon the High Court, while reversing the said judgment, to record clear findings in relation to each of the charges and, more particularly, the charge of criminal conspiracy under Section 120B IPC. However, no such exercise was undertaken by the High Court. At this stage, it would be relevant to refer to the general principles culled out by this Court in Chandrappa and others vs. State of Karnataka [2007 (2) TMI 704 - SUPREME COURT], regarding the power of the appellate Court while dealing with an appeal against a judgment of acquittal.
In Rajendra Prasad v. State of Bihar [1977 (2) TMI 142 - SUPREME COURT], a 3-Judge Bench of this Court pointed out that it would be essential for the High Court, in an appeal against acquittal, to clearly indicate firm and weighty grounds from the record for discarding the reasons of the Trial Court in order to be able to reach a contrary conclusion of guilt of the accused. It was further observed that, in an appeal against acquittal, it would not be legally sufficient for the High Court to take a contrary view about the credibility of witnesses and it is absolutely imperative that the High Court convincingly finds it well-nigh impossible for the Trial Court to reject their testimony. This was identified as the quintessence of the jurisprudential aspect of criminal justice. Viewed in this light, the brusque approach of the High Court in dealing with the appeal, resulting in the conviction of Appellant Nos. 1 and 2, reversing the cogent and well-considered judgment of acquittal by the Trial Court giving them the benefit of doubt, cannot be sustained.
The conviction of Appellant Nos. 1 and 2 on all charges set aside - appeal allowed.
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2024 (9) TMI 1715
Reopening of assessment u/s 147 v/s assessment u/s 153C - information obtained during a search on a third party - HELD THAT:- Since admittedly the Assessing Officer in the instant case has reopened the assessment on the basis of information that emerged at the time of search at the premises of M/s. Shri Renuka Mata Multistate Credit Society Ltd., therefore, the proper course of action by the Assessing Officer should have been under the provisions of section 153C and not under the provisions of section 147 of the Act. Therefore, we hold that the initiation of provisions of section 147 are not in accordance with law and liable to be quashed. Appeal filed by the assessee is allowed.
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2024 (9) TMI 1714
Validity of revision u/s 263 - Assessment was framed u/s. 143(3) r.w.s. 147 as subsequently revised by CIT directing AO to frame the assessment afresh after recalculating the income u/s 115JB
HELD THAT:- As the order passed by the CIT u/s 263 of the Act has reached to the finality and therefore all the proceedings in consequence to the order of the CIT u/s 263 of the Act cannot be challenged until and unless the proceedings u/s 263 are agitated by the assessee.
As such we are of the view that the remedy does not lie for the assessee in the present proceedings. As such we are of the view that the assessee should have preferred an appeal against the findings of the learned CIT u/s 263 where the issue originated. However, it is the option of the assessee to take remedial action by challenging the proceedings u/s 263 of the Act as per the provisions of laws. Appeal filed by the assessee is dismissed.
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2024 (9) TMI 1713
Seeking to quash the Non bailable warrants - HELD THAT:- A bare perusal of the petition reveals that the petitioners have directly approached this court without exhausting remedy before the court below for conversion of arrest warrant issued against them into bailable warrant.
Petition disposed off.
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2024 (9) TMI 1712
Payments received for General Business Support Services (BSS) - 'Fees for Technical Services' (FTS) liable to be taxed in India under the Income Tax Act, 1961 and the India-UK Double Taxation Avoidance Agreement (DTAA) - HELD THAT:- As services rendered by the assessee are not in the nature of technical service and are merely managerial in nature, though in the case of SIMPL [2012 (2) TMI 98 - AUTHORITY FOR ADVANCE RULINGS], the same has a binding effect on the assessee for the reason that it arises out of the same CCA for availing General BSS.
As the ruling of Hon’ble AAR [2012 (2) TMI 98 - AUTHORITY FOR ADVANCE RULINGS] holding that the same is liable to be taxed in India as ‘fee for technical service’ has been reversed by the Hon'ble High Court, we find no reason to uphold the order of the ld. A.O. who in fact has relied on the Hon’be AAR’s ruling to decide the issue in hand.
We, therefore, deem it fit to allow the grounds of appeal raised by the assessee. Appeal filed by the assessee is allowed.
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2024 (9) TMI 1711
Validity of reopening of assessment - whether AO is empowered to assess or reassess income in respect of any issue that has escaped assessment, notwithstanding the reasons recorded under sub-section (2) of Section 148 not alluding to or forming the basis for reopening the assessment? - HELD THAT:- The Income Tax Appellate Tribunal ultimately bore in consideration the decision of the Court in Ranbaxy Laboratories Ltd. [2011 (6) TMI 4 - DELHI HIGH COURT] to hold that the reassessment shall stand confined to items which had been mentioned or taken note of by the AO while forming the opinion that income had escaped assessment. Ranbaxy had principally held that unless additions are made on that score, no further additions would be sustained.
As decided in ATS Infrastructure Limited [2024 (7) TMI 1441 - DELHI HIGH COURT] enunciation with respect to the indelible connection between Section 148A(b) and Section 148 A(d) are clearly not impacted by Explanation 3. As we read Sections 147 and 148, we come to the firm conclusion that the subject of validity of initiation of reassessment would have to be independently evaluated and cannot be confused with the power that could ultimately be available in the hands of the AO and which could be invoked once an assessment has been validly reopened.
Explanation 3, or for that matter, the Explanation which presently forms part of Section 147, would come into play only once it is found that the power to reassess had been validly invoked and the formation of opinion entitled to be upheld in light of principles which are well settled.
Explanations would be applicable to issues which may come to the notice of the AO in the course of proceedings of reassessment subject to the supervening requirement of the reassessment action itself having been validly initiated.
Explanation 3, cannot consequently be read as enabling the AO to attempt to either deviate from the reasons originally recorded for initiating action u/s 147/148 of the Act nor can those Explanations be read as empowering the AO to improve upon, supplement or supplant the reasons which formed the bedrock for initiation of action under the aforenoted provisions. Decided against revenue.
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2024 (9) TMI 1710
Maintainability of petitions before the Governor and the complaints before the concerned Court - approval under Section 17A of the Act is mandatory or not - Section 17A of the Act requires only a Police Officer to seek approval from the Competent Authority - want of application of mind in the order of the Governor - sufficient reasons to be recorded in the file of the decision making authority and the same culled out in parts in the impugned order - decision taken by the Governor in alleged hottest haste of issuing a show cause notice on the same day of receipt of the petition has vitiated the entire decision or not - reference to Section 218 of BNSS in the impugned order vitiates the entire order - prima facie role of the petitioner is established or not.
Whether the petitions before the Governor and the complaints before the concerned Court were justified in the fact situation? - HELD THAT:- After cancelling the resolution it appears that a Technical Committee was appointed by Government to go into the illegalities of MUDA. The Technical Committee is said to have submitted its report highlighting huge corruption and fraud played by MUDA officials. When all these inquiries were going on a complaint comes to be registered by 3rd and 4th respondents before the jurisdictional police on 3-07-2024. The jurisdictional Police though acknowledged the complaint, did not take it further. On 12-07-2024 both the 3rd and 4th respondents register complaints before the Commissioner of Police. This was in compliance with clause (1) of sub-section (2) of Section 154 of the Cr.P.C.. Even then, no action is taken. The 4th respondent then approaches the Lokayukta on 26-07-2024 to register a complaint against the petitioner. When things stood thus, the 3rd and 4th respondents file their respective private complaints before the Special Court constituted exclusively to deal with criminal cases against MPs and MLAs. It is then, the 3rd respondent knocks at the doors of the Governor seeking approval/sanction to prosecute the petitioner as obtaining under Section 17A of the Act. The facts narrated would clearly justify the complaints/petitions by the complainants.
Whether the approval under Section 17A of the Act is mandatory in the teeth of facts? - Whether Section 17A of the Act requires only a Police Officer to seek approval from the Competent Authority? - HELD THAT:- This Court considered the importance and purport of Section 17A. The petitioner is a public servant and the allegations against him are wanting to be investigated into. If investigation has to ensue, it must pass through the gates of 17A. Therefore, an approval under Section 17A from the hands of the Competent Authority is imperative, as it is the mandate of the statute. Without an approval under Section 17A, no enquiry, inquiry or investigation can commence against a public servant.
The High Court has issued a circular to all the concerned Court, for implementation of the said directions. The approval under Section 17A of the PC Act is mandatory to be obtained, in the teeth of the obtaining facts. It is not necessary for the police officer to seek approval from the hands of the Competent Authority, in a private complaint. It is the complainant, whomsoever it is, should discharge the duty of seeking approval from the hands of the Competent Authority, a caveat, only in a private complaint registered under Section 200 of the Cr.P.C. or under Section 223 of the BNSS.
Whether the order of the Governor suffers from want of application of mind? - Whether it would suffice for reasons to be recorded in the file of the decision making authority and the same culled out in parts in the impugned order? - HELD THAT:-Whether the order of the Governor suffers from nonapplication of mind. The order that is communicated to the petitioner is quoted. Complete proceedings in the file maintained in the Secretariat of the Governor are also quoted supra. The Secretary of the Governor has communicated the decision of the Governor which thus contains all the material though excerpts of the decision. The decision runs into several pages. The entire file; the documents that are in the file run into 1200 pages are perused. The comparative chart of the complaint, replies and the analysis are in great elaboration. This Court is not testing the order passed by the Disciplinary Authority or an Officer of the State. It is testing the order passed by the high functionary. The high functionary in the case on hand is the Governor.
It is no doubt true that reasons cannot be supplied by way of statement of objections. That would be a situation where there are no reasons even in the file. Therefore, the said judgment would not become applicable to the facts of the case. Copious reasons are found in the file and even in the impugned order. There are no hesitation to hold that it does bear application of mind. Therefore, the submission of the learned senior counsel for the petitioner qua application of mind would tumble down like a pack of cards.
Whether the decision taken by the Governor in alleged hottest haste of issuing a show cause notice on the same day of receipt of the petition has vitiated the entire decision? - HELD THAT:- A feeble attempt is made by the learned senior counsel for the petitioner that the Governor refers to two other petitions, but no show cause notices were issued on those two petitions. Those petitions are of respondents 4 and 5. The Governor though in three lines of a particular paragraph observes that there are petitions of other petitioners also; he does not deliberate upon the contents of those petitions and it is no law that prior to grant of an approval under Section 17A the person against whom the approval is sought should be heard in the matter. If natural justice is stretched to the extent of hearing the person against whom a complaint is registered prior to registration of the crime it would be stretching it to an unimaginable extent. If the submission of the learned senior counsel for the petitioner is to be accepted, every person against whom approval is sought, a notice will have to be issued to the person against whom such approval is sought under Section 17A of the act. It is akin to hearing an accused before registering the FIR. This is not the purpose of law. Merely because the Governor has in the case at hand issues a show cause notice only to seek a reply from the hands of the petitioner or the Cabinet, it does not mean that it must comply with the principles of natural justice.
If the submission of the learned senior counsel for the petitoner is accepted, it would undoubtedly be stretching natural justice to an unnatural extent, as prior to registration of the crime, every accused will have to be heard. Likewise, prior to approval being granted, the person against whom approval is sought will have to be heard. This is turning the law topsy-turvy. Therefore, the multi-pronged attack on the order of the Governor, on the aforesaid contention/s, does not hold water, as none of the submissions of the learned senior counsel for the petitioner against the order of the Governor qua the approval under Section 17A are acceptable.
Whether reference to Section 218 of BNSS in the impugned order vitiates the entire order? - HELD THAT:- What was sought before the Governor in the petition filed by the 3rd respondent was in fact approval under Section 17A of the Act. Though the petition was worded sanction, it was in fact not a sanction, but an approval under Section 17A of the Act. The operative portion of the order of the Governor is indicative of the fact that both approval and sanction under Section 218 are granted. The crime is yet to be registered and investigated into. Therefore, granting of sanction under Section 218 of BNSS would not arise at this juncture as investigation itself is yet to take place. The learned Solicitor General has admitted that observation or grant of sanction under Section 218 of BNSS at this juncture was erroneous. The order could be considered only as an order under Section 17A of the Act. Therefore, no submissions are made qua Section 218 of BNSS by any of the counsel representing the parties. It is, therefore, it is deemed appropriate to restrict and read the order only as an approval under Section 17A of the Act and not an order for grant of sanction under Section 218 of BNSS.
Whether prima facie role of the petitioner is established? - HELD THAT:- The allegations would require investigation in the least, for the reason that if the petitioner was not in the seat of power, helm of affairs, the benefit with such magnitude would not have flown. It has highterto never flown to any common man, nor can it, in future flow. It is unheard of for a common man to get these benefits in such quick succession bending the rule from time to time. Therefore, the petitioner may not have put his signature, made a recommendation or taken a decision, for bringing him into the offence against him under the Act, but the beneficiary is not a stranger. The beneficiary of these acts is the wife of the petitioner. It is the open proclamation which is in public domain by the petitioner himself that if MUDA gives him Rs. 62 crores, he would give back the property. Therefore, merely because the wife of the petitioner has indulged in all these acts, legal or illegal, the petitioner cannot be said to be completely ignorant of what is happening in the life of his wife, qua these factors. It, prima facie, depicts stretching of the arms of undue influence and portrays abuse of power of the seat of the Chief Minister or any other post held by the petitioner.
Conclusion - i) The complainants were justified in registering the complaint or seeking approval at the hands of the Governor. ii) The approval under Section 17A of the PC Act is mandatory in the fact situation. iii) Section 17A nowhere requires Police Officer to seek approval in a private complaint registered under Section 200 of the Cr.P.C./223 of BNSS against a public servant for offences punishable under the provisions of the Act. It is the duty of the complainant to seek such approval. iv) The Governor in the normal circumstance has to act on the aid and advice of the Council of Ministers as obtaining under Article 163 of the Constitution of India, but can take independent decision in exceptional circumstances and the present case is one such exception. v) No fault can be found in the action of the Governor exercising independent discretion to pass the impugned order. vi) It would suffice if the reasons are recorded in the file of the decision making authority, particularly of high office, and those reasons succinctly form part of the impugned order. A caveat, reasons must be in the file. Reasons for the first time cannot be brought before the constitutional Court, by way of objections. vii) The Gubernatorial order nowhere suffers from want of application of mind. It is not a case of not even a semblance of application of mind, by the Governor, but abundance of application of mind. viii) Grant of an opportunity of hearing prior to approval under Section 17A is not mandatory. If the authority chooses to do so, it is open to it. ix) The decision of the Governor of alleged hottest haste has not vitiated the order. x) The order is read to be restrictive to an approval under Section 17A of the Act and not an order granting Sanction 218 of BNSS. xi) The facts narrated in the petition would undoubtedly require an investigation. In the teeth of the fact that the beneficiary of all these acts is not anybody outside, but the wife of the petitioner.
Application disposed off.
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2024 (9) TMI 1709
Seeking recall of order - HELD THAT:- This Court notes with pain that the DPSC has been taking contradictory stand and has not come at the early stage before this Court to indicate that they had not formally approved the consent communicated to this Court by their counsel.
Be that as it may, since the orders have been passed on consent and such consent has never been given in writing or given and withdrawn, this Court is inclined to recall the order dated 26th April, 2024.
All the review applications along with connected applications shall stand disposed of.
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2024 (9) TMI 1708
Challenge to Assessment Orders - the orders were within the time frame or not - penalty imposed u/s 22(5) of the TNVAT Act was within the period of limitation or not - HELD THAT:- Section 22(4) of TNVAT Act, 2006 is a stand-alone provision which is applicable in the above three circumstances. The limitation under Section 27(1)(a) of TNVAT Act, 2006 or under Section 22(5) of TNVAT Act, 2006 cannot be read into Section 22(4) of TNVAT Act, 2006 - Under Section 22(4) of TNVAT Act, 2006, there is no period of limitation prescribed for either initiating or passing an order. However, it should be within reasonable period. In case where any of the above three circumstances in Section 22(4) of TNVAT Act, 2006 are attracted, the Assessing Authority can also impose penalty equal to One Hundred and Fifty Percent (150%) of the difference of the tax assessed and the tax already paid as per the returns, with a caveat that such penalty cannot be imposed after a period of six years from the date of the Assessment Order and after reasonable opportunity of showing cause against such imposition.
The limitation under Section 22(5) of TNVAT Act, 2006 for imposing penalty also cannot be said to have expired for any of Assessment Years as the last date would have expired only on 30.10.2021, 30.10.2022 and 30.10.2023, whereas notices for reassessment under Section 22(4) of TNVAT Act, 2006 were issued well before the time limit under Section 22(5) of TNVAT Act, 2006 during the period when the Country was still under intermittent lockdown due to outbreak of Covid-19 pandemic.
The date of assessment for all the Assessment Years is 11.01.2021. Therefore, penalty imposed under Section 22(5) of TNVAT Act, 2006 for all the three years were well within the period of limitation.
Conclusion - i) There is no period of limitation under Section 22(4) of TNVAT Act, 2006 for passing an order, if any of the three circumstances stipulated in Paragraph 24 are attracted. ii) Though no period of limitation has been prescribed under Section 22(4) of TNVAT Act, 2006, such period has to be exercised within a reasonable period. The powers that have been exercised under Section 22(4) and Section 22(5) of TNVAT Act, 2006 are within reasonable period. iii) The limitation for imposing penalty is 6 years in terms of Section 22(5) of TNVAT Act, 2006.
The challenge to the Impugned Assessment Orders has to therefore fail - petition disposed off.
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2024 (9) TMI 1707
Unaccounted Receipts and Unaccounted Expenses - AO treated the entire unaccounted cash receipts as the income of the assessee for the relevant assessment years - AO did not allow for any deductions or expenses related to these receipts, effectively treating the gross receipts as taxable income and also made an addition u/s 69C, treating the unexplained expenditure as deemed income of the assessee - AO also did not allow any set-off against the unaccounted receipts, effectively treating the expenditures as independently unexplained and taxable.
Whether the entire unaccounted receipts should be taxed as income or whether only the profit element embedded in these receipts should be considered? - We find that the CIT(A) has correctly applied the net profit rate to the unaccounted receipts based on the principle laid in President Industries case. There is no material evidence to suggest that the entire unaccounted receipts represent the income of the assessee.
DR’s submissions, while highlighting procedural violations, do not justify taxing the gross receipts without considering the expenses involved in generating such receipts. Once profit is estimated, no further additions can be made for procedural violations like cash payment limits or TDS non-compliance. This is consistent with judicial principles that when profit is computed based on estimation, it covers all aspects of the business, including potential violations.
We also find that the 12% Net Profit Rate (NPR) applied by the CIT(A) is reasonable, given the nature of the case. The assessee was found to have engaged in unaccounted cash transactions, and in such cases, where the full details of receipts and expenses are not available, higher profit rates are often justified. The application of a higher NPR ensures that any profit derived from undisclosed income is appropriately taxed, and it compensates for the lack of documentation.
We find that no concrete evidence has been provided by the assessee to substantiate a lower profit rate. Assessee has not demonstrated, with comparable industry data or business-specific records, that a lower NPR should be applied. In cases involving unaccounted income, courts have consistently upheld the application of a higher NPR. We further note that the assessee has not provided any alternative basis for applying a lower NPR.
In the absence of any detailed documentation or business records from the assessee, the CIT(A)’s estimation of 12% NPR stands justified. Estimation by nature requires some discretion, and it must account for the lack of transparency in the assessee’s accounts. Therefore, the assessee’s ground of appeal challenging the 12% NPR is dismissed.
Additions related to the poker income and expenses, which arose from noting found in the seized material during the search operation - CIT(A) deleted addition - HELD THAT:- For both the Assessment Years 2017-18 and 201819, the CIT(A) rightly observed that the poker-related amounts had already been addressed under the general headings of unaccounted receipts and unaccounted expenditures. Hence, making separate additions for these items would result in double taxation of the same income.
CIT(A)’s decision was based on a thorough examination of the facts, supported by the principle that seized material should be considered in its entirety. This approach ensured that the assessment captured the real income of the assessee without inflating the tax liability through double additions.
CIT(A) correctly deleted the separate additions for poker income and expenses for both Assessment Years 2017-18 and 2018-19, as these were already included in the broader unaccounted receipts and expenditures. Accordingly, the grounds of the Revenue on this issue are dismissed.
Assessment u/s 153A - Delayed PF/ESIC Contributions u/s 36(1)(va) - In the present case, the additions made by the Assessing Officer (AO) regarding the delayed deposit of employees' contributions to PF and ESI for the assessment years 2013-14 to 2017-18 fall under unabated assessment years, as no proceedings were pending for these years when the search was initiated. As per the judgment in Abhisar Buildwell [2023 (4) TMI 1056 - SUPREME COURT] for completed assessments, no additions can be made unless they are based on incriminating material found during the search. The revenue and CIT(A) both failed to point out any incriminating material found during the course of the search that would warrant the disallowance under section 36(1)(va) of the Act for these assessment years 2013-14 to 2017-18.
As the assessment year 2019-20 was an abated assessment year due to the search proceedings, the AO made additions for late deposit of employees' contributions, citing a delay for contributions related to June 2018, which were deposited on 16th July 2018. The CIT(A) rightly deleted the addition, noting that 15th July 2018 was a Sunday, and hence the payment on the next working day (16th July 2018) was within the permissible time limit.
This finding aligns with the judicial principles governing General Clauses Act, where payments made on the next working day following a holiday are treated as timely payment. Accordingly, the corresponding grounds of appeals filed by the assessee are allowed and grounds of revenue deserve to be dismissed.
Treatment of unexplained cash discovered during the search and seizure operation carried out at the assessee’s premises - AO made an addition based on the cash seized during the search, treating it as unaccounted income u/s 69A - assessee’s contention that the cash represents business receipts from daily operations aligns with the nature of its business activities and the usual practice in the hospitality industry of dealing with cash transactions - HELD THAT:- AO's invocation of Section 69A to treat the seized cash as unexplained income is not justified in this case. Section 69A applies when money is found in possession of the assessee for which no explanation is provided. However, the assessee has provided a plausible explanation supported by evidence that the cash was generated from the business and was not accounted for yet. Since the unaccounted receipts and payments for the relevant period were already considered for taxation, adding the seized cash separately would lead to taxing the same income twice. The CIT(A) rightly deleted the addition, recognizing that a substantial portion of the unaccounted income had already been brought to tax and that the addition would result in duplication.
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2024 (9) TMI 1706
Seeking grant of bail under Section 439 of Cr.P.C. - prolonged detention - Whether the petitioner's extradition and the charges against him justify his continued detention without bail? - HELD THAT:- In Babu Singh and others vs. State of U.P. [1978 (1) TMI 171 - SUPREME COURT], inter alia held that a subsequent bail application is maintainable only if it is supported by additional material, further developments, or new considerations arising after the earlier application.
In State of M.P. v. Kajad [2001 (9) TMI 1129 - SUPREME COURT], the Supreme Courtinter alia held that while successive bail applications are permissible, they must be predicated on changed circumstances. It emphasized that without a change in circumstances, a second bail application would effectively seek a review of the prior decision, which is not allowed under criminal law.
Whether Section 467 IPC is made out or not will still need to be determined by the trial court at the stage of framing charges. A detailed examination of the facts should not detain this Court any further, as the matter has already been examined in detail in CHRISTIAN MICHEL JAMES VERSUS CENTRAL BUREAU OF INVESTIGATION [2022 (3) TMI 1632 - DELHI HIGH COURT]. This Court finds that there is no subsequent development or new material on record that would entitle the petitioner to bail. The grounds on which earlier bail application was dismissed still hold ground and there is no substantial change in the fact situation. Thus, Court is of the considered opinion that merely on period of incarceration, the accused cannot be admitted to bail as he is still a flight risk. However, learned trial court is requested to expedite the proceedings.
This Court finds that there are no new or fresh grounds in the current bail application. Furthermore, there has been no substantial change in facts and circumstances concerning the merits of the case.
The bail application is dismissed.
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2024 (9) TMI 1705
Addition u/s 68 - bogus LTCG - disallowance of exemption claim made u/s. 10(38) - HELD THAT:- Assessee has furnished the financial information, details of broker and the transactions status. AO has doubted the purchase and sale of shares and observed that the price rise is not commensurate with the financials of the investee company.
The assessee has substantiated with all the details and information and the AO has relied on the investigation report of income tax department and treated the long term capital gains on sale of shares as not genuine.
AO has not made any enquiry or independent investigation or cross examination but relied only on the investigation report and the assessee’s name is not included in the list of investigation report.
The fact remains that the assessee has submitted the requisite details in respect of purchase and sale of shares and were not disproved.
The assessee has filed the SEBI order to highlighting on the facts that the assessee name was not included and he was only a investor and was not involved/connected in price manipulation of scrip.
AR has referred to the Audited financial statements in the Annual report in particular financial results summary to substantiate the creditworthiness of the company.
AR referred to the share price and volume of trading of shares of M/s Vishvjyoti Trading Ltd at the the Bombay Stock Exchange from February 2014 to January 2015 and the assessee has sold the shares at the average price of Rs. 29.27 (appx) per share on BSE and subsequently the share price movement was high and low at intervals.
Whereas the transaction of purchase and sale of shares is through banking channel. The assessee after the sale of shares still was holding 8,00,000 equity shares as on 31-03-2015 in the DCB Bank Demat account statement placed.
AR has furnished the data from the MCA Website on the status of the company, which is active and the investee company i.e M/s Vishvjyoti Trading Ltd has filed the last Balance sheet dated 31-03-2023 and the Annual General Body meeting was held on 30-09-2023. Accordingly, set aside the order of the CIT(A) and direct the assessing officer to delete the addition and we allow the grounds of appeal in favour of the assessee.
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