TMI Tax Updates - e-Newsletter
January 10, 2024

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. THE TELECOMMUNICATIONS ACT, 2023

   By: DR.MARIAPPAN GOVINDARAJAN

2. GST Refund is allowed for ITC accumulated on account of the different tax rates on inward supplies

   By: Bimal jain

3. PERFECTIBLE ADJUDICATION--IF NOT NOW, THEN WHEN?

   By: Sadanand Bulbule

4. Supreme Court issues Notice in SLP challenging the constitutional validity of Section 16(4) of the CGST Act

   By: Bimal jain

Notifications

GST - States

1. S.O. 91/P.A.5/2017/S.44/2023 - dated 15-12-2023 - Punjab SGST

Seeks to exempt the registered person whose aggregate turnover in the financial year 2022-23 is up to two crore rupees, from filing annual return for the said financial year.

2. S.O. 89/P.A.5/2017/S.148/2023 - dated 15-12-2023 - Punjab SGST

Special procedure to be followed by a registered person or an officer u/s 107(2) of PGST Act who intends to file an appeal against the order passed by the proper officer

3. S.O. 88/P.A.5/2017/S.128/2023 - dated 15-12-2023 - Punjab SGST

Amendment in Notification No. S.O.70/P.A.5/2017/S.128/2023, dated the 23rd of August, 2023

4. S.O. 87/P.A.5/2017/S.128/2023 - dated 15-12-2023 - Punjab SGST

Amendment in Notification No. S.O. 69/P.A.5/2017/S.128/2023, dated the 23rd of August, 2023

5. S.O. 86/P.A.5/2017/S.148/2023 - dated 15-12-2023 - Punjab SGST

Amendment in Notification No. S.O. 68/P.A.5/2017/S.148/2023, dated the 23rd of August, 2023

6. S.O. 85/P.A.5/2017/S.148/2023. - dated 15-12-2023 - Punjab SGST

Amendment in Notification No. S.O. 67/P.A.5/2017/S.148/2023 dated the 23rd of August, 2023

7. S.O. 84/P.A.5/2017/S.28/2023 - dated 15-12-2023 - Punjab SGST

Amendment in Notification No. S.O.7/P.A.5/2017/S.128/2018, dated the 7th of February, 2018

Income Tax

8. 11/2024 - dated 8-1-2024 - IT

Exemption from specified income U/s 10(46) – 'Punjab State Faculty of Ayurvedic and Unani Systems of Medicine', notified

9. 10/2024 - dated 8-1-2024 - IT

Exemption from specified income U/s 10(46) – 'Chennai Metropolitan Water Supply and Sewerage Board', notified

Highlights / Catch Notes

GST

• GST Demand Notice Invalid Due to Missing Components in FORM GST DRC-01; High Court Quashes Proceedings.

  Case-Laws - HC : Validity of Show cause notice (SCN) for GST demand - Transitional credit - The purpose of Section 73 and 74 of the JGST Act are entirely different from each other and the proceedings under either of the section can be initiated as the foundational facts do suggest. Thus, FORM GST DRC-01 being ‘Summary of Show Cause Notice” does not constitute a proper Show Cause Notice as the mandatory ingredients are absent. Thus, on this score alone, the impugned show-cause notice is fit to be quashed. - HC
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• Court Grants Three-Month Extension for Payment Installments After Finding Two-Day Period Insufficient for Interest Payment.

  Case-Laws - HC : Seeking sufficient time for payment of amount demanded by the respondent towards interest - This Court feels that the time period of 2 days is not sufficient to make the payment of demanded amount by the petitioner. Hence, this Court is inclined to grant a period of 3 months time to the petitioner for payment of balance amount demanded by the respondent towards interest in instalments prescribed. - HC
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• Bail Request Approved: No Evidence Tampering Risk; Conditions Set to Protect Complainant, With Option for Cancellation.

  Case-Laws - DSC : Seeking grant of bail - no chance of tampering with the evidences - no prejudice will be caused to the complainant, if the accused is released on imposing certain conditions. Moreover, if the accused has not obey his undertakings, then in that case the complainant has right to move an application for cancellation of bail for disobeying the undertaking as well as conditions. - DSC
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Income Tax

• Income Tax Act: Invalid Notice Due to Statute of Limitations Bars Further Proceedings, Jurisdiction Cannot Be Exercised.

  Case-Laws - HC : Reopening of assessment u/s 147 - issuance of notice u/s 148A extending period of limitation - Once the notice under Section 148A of the Act of 1961 is found to be barred by limitation, no further proceedings could be initiated under any of the provisions of the Act of 1961 and the purported exercise of jurisdiction pursuant to notice under Section 148A of the Act of 1961 could not be initiated or proceeded with. - HC
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• Reassessment Valid Under IT Act Section 147 Due to Reasons to Believe; Petitioner Does Not Dispute Applicability.

  Case-Laws - HC : Reopening of assessment u/s 147 - reasons to believe - notice u/s 148A(b) - the case of the petitioner is covered by information specified in Explanation 1(i) of Section 148 of the IT Act. It is not the case of the petitioner that information disclosed vide notice under Section 148A(b) of the IT Act is not covered by the information specified in Explanation 1(i) of Section 148 of the IT Act. - We respectfully disagree with the judgment of Charu Chains and Jewels Pvt. Ltd. [2023 (1) TMI 486 - DELHI HIGH COURT] - HC
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• Income Tax Penalty Order Dismissed Due to Expired Limitation Period; Issued Six Months Late Beyond Deadline.

  Case-Laws - HC : Penalty proceedings u/s 271D, 271E and 271AAA - period of limitation - the period of six months from the end of the month in which action for imposition of penalty was initiated ended on 30.06.2011. - Concededly, the penalty order was passed way beyond the later date i.e., 30.06.2011. The record discloses that the penalty order was passed on 30.12.2011. - No penalty - HC
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• Unaccounted Gold and Silver Stock Added to Income After Survey Admission, High Court Upholds Assessment Decision.

  Case-Laws - HC : Admission of income made by the assessee at the time of survey - the order passed by the AO for making addition on account of the admission made by the assessee at the time of survey with regard to the unaccounted stock of gold and silver ornaments, sustained - HC
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• Tribunal Limits Undervaluation Addition to 25% Without Evidence; High Court Declines Intervention Due to Potential Effects.

  Case-Laws - HC : Undervaluation of closing stock - the Tribunal ought not to have restricted such addition to 25% without any basis and only by estimating the same in absence of any material on record for the same. However, as the addition is in closing stock which would have a cascading effect and the year under consideration is 2011-12, we would not like to interfere in the impugned order of Tribunal on that ground only. - HC
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• Exemption Denied: Capitation Fees Allegedly Collected Without Reliable Evidence to Support Claims.

  Case-Laws - AT : Exemption u/s 11 - denial of claim as assessee has collected capitation fees - documents seized from employees cannot be considered as having any evidentiary value and cannot be considered to have trustworthiness, since no other corroborative material was brought on record to support the veracity of the same. - AT
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• Taxpayer's Source of Wristwatch Investment Deemed Satisfactory, Section 69A Addition Not Applicable.

  Case-Laws - AT : Addition u/s 69A - assessee had enough means to invest in the wrist watches - Only because bills and invoices of the wrist watches were not found at the time of search, the addition has been made. - the provisions of section 69A will not be attracted as the explanation offered by the assessee regarding the source of investment in the wrist watches, by no means, can be considered to be unsatisfactory. - AT
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• Invalid Assessment Quashed; Department's Grounds Dismissed, Natural Justice Not Separately Addressed.

  Case-Laws - AT : If the assessment order itself has been quashed then challenging the deletion of additions on merits is purely academic, because the assessment itself is quashed and held to be invalid against which there is no appeal. If the additional grounds is with regard to principle of natural justice on which ld. CIT (A) has given his remarks that also cannot be treated as additional ground. Consequently, all the grounds raised by the department is dismissed. - AT
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Customs

• Customs Department Accepts Fish Oil Capsule Classification, Case Remanded for Further Review on Classification Issue.

  Case-Laws - AT : Classification of imported goods - Fish Oil in the form of capsules - There has been no dispute on classification by the department for subsequent consignments in regard to assessment and classifying the goods under CTH 15042020 has been accepted by the Department. Taking note of these submissions, the matter has to be remanded to the adjudicating authority to consider the issue of classification - AT
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• Customs Broker License Suspension Overturned Due to Lack of Evidence of Delay or Inefficiency in Import Transaction.

  Case-Laws - AT : Suspension of Customs Broker License - There is no evidence or any document to prove that the appellants CB contributed to the delay or inefficiency, in handling the import transaction. Thus, there are no merits or any evidence to prove that the appellants are violated the requirements or obligations under Regulations 10(m) ibid. - AT
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• Customs Valuation Dispute: Rejection of Declared Value for Plastic Films Deemed Unjustified Due to Lack of Import Evidence.

  Case-Laws - AT : Valuation of imported goods - stock lot of plastic films - In absence of any evidence of contemporaneous import, the rejection of value and invoking Rule 4 or Rule 5 of the Customs Valuation Rules, cannot be upheld. - AT
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FEMA

• Seized Funds Remain Unresolved Despite Court Order; No Action on Representations After Nearly 3 Years.

  Case-Laws - HC : Validity of seizure/confiscation made by the respondents - seeking a direction to return/release the money, currency illegally confiscated/seized - In the present case, search took place on 14/3/2019 and despite repeated representations made in the year 2019 and 2020, neither the assets have been released nor the representations have been rejected indicating any reason. Further, even when a show cause notice was issued on 16/10/2020 and a response was filed on 19/3/2021, despite passage of over 02 years and 09 months, no determination has taken place. - Release order issued - HC
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IBC

• CIRP Initiation Valid for Pre-Section 10A Default; Corporate Debtor's Section 7 Challenge Dismissed.

  Case-Laws - AT : Initiation of CIRP - Bar u/s 10A - The present is a case where the default has been committed by the Corporate Debtor prior to commencement of Section 10A period. The default having been committed before the bar of Section 10A came into play, the Corporate Debtor was clearly not entitled to claim that the Section 7 application was not maintainable. - AT
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• Resolution Plan Approval: Upholding Timeliness in Insolvency Process, Denying Unnecessary Delays in CIRP Proceedings.

  Case-Laws - AT : Approval of Resolution Plan - CIRP - when a resolution plan is approved by the CoC with more than 66% vote share and submitted before the Adjudicating Authority for approval, it follows therefore that this process cannot be allowed to be frustrated on flimsy grounds. Hence, further delay in CIRP cannot be countenanced. The RP and the CoC cannot be faulted for disallowing further time to the Appellant to study the resolution plan of DK. - AT
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Service Tax

• Refund of Cenvat Credit: Rule 14 vs. Rule 5 Proceedings Clarified for Proper Case Handling.

  Case-Laws - AT : Refund of accumulated Cenvat credit - Applicability of Rule 5 of CCR - Even if the contention of the revenue was to be accepted then also the credit should have been denied by initiating the proceedings under Rule 14 and not in proceedings of refund under Rule 5 of CENVAT Credit Rules, 2004. - AT
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Case Laws:

• GST

• 2024 (1) TMI 379
  Seeking grant of bail - raising fake invoices from de-facto complainant s GST login without his knowledge - HELD THAT:- It is not mentioned either in the statement recorded under Section 161 Cr.P.C. produced by the Additional Public Prosecutor or in the complaint that the password and other details of GST login of the de-facto complainant were informed to the petitioner. The above said aspects are subject matter of investigation. In the interest of investigation, this Court deems it appropriate to grant the relief of anticipatory bail, subject to conditions imposed. Bail application allowed.

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• 2024 (1) TMI 378
  Pre-deposit was made but not to the credit of the appeal - HELD THAT:- Since the impugned order is subject to a statutory appeal, this writ petition need not be entertained and adjudicated on merits. However, by taking note of the fact that the pre-deposit has been made, this writ petition is disposed of by granting leave to the petitioner to file an appeal before the Appellate Deputy Commissioner within a maximum period of ten days from the date of receipt of a copy of this order subject to the condition that the 10% pre-deposit made by the petitioner shall be credited to such appeal. Petition disposed off.

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• 2024 (1) TMI 377
  Validity of assessment order - Rejection of Input tax credit - reason for denial is that though the petitioner had filed GSTR-1 and GSTR-3B within the enlarged time, since certain suppliers had not filed GSTR-1 before the due date ie 30.04.2019, the entire ITC claim had been rejected under Section 16(4)of the Act. HELD THAT:- The matter is remitted back to the file of the assessing authority, 1st respondent to consider the issue afresh in the light of judgment in Diya Agencies [ 2023 (9) TMI 955 - KERALA HIGH COURT] and pass a fresh order after hearing the petitioner. The petitioner is directed to appear before the Assessing officer on 05.01.2024, with all evidence and report denying the input tax credit, which is evident in Ext. P1 order. The impugned order set aside - the writ petition stands finally allowed.

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• 2024 (1) TMI 376
  Validity of Show cause notice (SCN) for GST demand - Transitional credit - Input Tax Credit availed by the petitioner under the Pre-Goods and Services Tax regime and rolled over to the Goods and Services Tax regime - setting aside DRC-07 dated 23.08.2018 issued by respondent No. 4 without passing of adjudication order and in violation of Principle of natural justice - Validity of SCN - it is also alleged that SCN does not fulfill the ingredients of proper show cause notice and is issued in excess of its jurisdiction. Input Tax Credit availed by the petitioner under the Pre-Goods and Services Tax regime and rolled over to the Goods and Services Tax regime - HELD THAT:- The said issue is squarely covered by the decision of this Court rendered in the case of Usha Martin Limited being W.P.(T) No. 3055 of 2022 dated 10.11.2022 [ 2022 (11) TMI 1266 - JHARKHAND HIGH COURT ], wherein this Court held that the repeal of the existing laws upon coming of the G.S.T. law regime did not leave a vacuum as to past transactions which were not closed. The repeal and saving clause (e) under Section 174(1) of the C.G.S.T. Act allowed such legal proceedings to be instituted in respect of inchoate rights except rights under transactions which were past and closed. As a matter of fact, section 174 of the JGST Act deals with repeal and saving provision, wherein the JVAT Act, 2005, except in respect of goods included in Entry 54 of the State List of the Seventh Schedule of the Constitution, Jharkhand Entertainment Tax Act, 2012, Jharkhand Advertisement Tax Act, Jharkhand Entry Tax on consumption or use of goods Act, 2011 were repealed - However, section 174(2)(e), saves any investigation, inquiry, verification, assessment, adjudication and any other legal proceedings as if these Acts have not so amended or repealed. Thus, the GST authorities are incorrect in assuming jurisdiction and initiating a proceeding under the provision of the JGST Act alleging therein that the Input Tax Credit so transited from the pre-GST regime is inadmissible under the JVAT regime. S etting aside DRC-07 dated 23.08.2018 issued by respondent No. 4 without passing of adjudication order and in violation of Principle of natural justice - HELD THAT:- The Respondent department without issuing any detailed Show Cause Notice has proceeded with the matter by merely issuing a Summary of Show Cause Notice being FORM GST DRC-01 dated 21.07.2018 (Annexure-2). Thus, the very initiation of the adjudication proceeding without issuance of detail Show Cause Notice is void ab initio and any consequential adjudication order passed thereto is non-est in the eyes of law. In the case at hand, FORM GST DRC-01 (Annexure-2) in question has been issued without specifying any date of hearing nor the relevant provisions have been struck down for the reason that the Show Cause Notice has been issued u/s 73 74 both. The purpose of Section 73 and 74 of the JGST Act are entirely different from each other and the proceedings under either of the section can be initiated as the foundational facts do suggest. Thus, FORM GST DRC-01 being Summary of Show Cause Notice does not constitute a proper Show Cause Notice as the mandatory ingredients are absent. Thus, on this score alone, the impugned show-cause notice is fit to be quashed. Validity of SCN - it is also alleged that SCN does not fulfill the ingredients of proper show cause notice and is issued in excess of its jurisdiction - HELD THAT:- In the present case no adjudication order has been passed by Respondent authority and they have straightaway proceeded to issue FORM GST DRC- 07 being summary of order in utter disregard to the mandatory provisions of the GST Act and thus the entire proceeding is non-est in the eyes of law - The fact that no adjudication order has been passed in the present matter has duly been accepted by the Respondent authority in their Counter Affidavit at para 15. It is reiterated that no opportunity of hearing at any stage has ever been granted to the Petitioner being utter disregard to the section 75(4) of the JGST Act. Thus, the present case is also hit by violation of Principles of Natural Justice. The impugned show cause notice being reference no. 1519 dated 21.07.2018 (Annexure-2) the DRC- 07 dated 23.08.2018 (Annexure-3), is hereby quashed and set-aside - Application allowed.

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• 2024 (1) TMI 375
  Seeking sufficient time for payment of amount demanded by the respondent towards interest - provision of 2 days time for payment of demand - HELD THAT:- It appears that the petitioner was not in a position to pay the demanded amount, since all of a sudden, the respondent had issued a notice demanding the interest of a sum of Rs. 2,80,247/-. Further, it appears that only a sum of Rs. 26,667/- was paid by the petitioner till date. This Court feels that the time period of 2 days is not sufficient to make the payment of demanded amount by the petitioner. Hence, this Court is inclined to grant a period of 3 months time to the petitioner for payment of balance amount demanded by the respondent towards interest in instalments prescribed. Petition disposed off.

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• 2024 (1) TMI 374
  Seeking grant of bail - no chance of tampering with the evidences - HELD THAT:- The present accused is behind the bars since his arrest from 12/12/2023. It is also seen that, accused had given his official laptop, bank data and phone to the I.O. which is seized and panchanama is made by investigation officer for further investigation. The investigation officer was permitted to record the statement of the accused into the Judicial custody and accordingly I.O. had recorded detailed statement of accused. Moreover, it is seen that accused has co-operated to the investigation officer as there is no any whisper of non co-operation by I.O. during custody. Hence, the contention raised by the complainant regarding the non co-operation and abscondence of the accused is washed away. Further, it appeared that accused is taken into Judicial custody. No purpose will serve by detention of the accused behind the bar as accused is in custody since 12/12/2023. The investigation-agency has to unfold modus operandi as well as intention of the present accused in the light of charges levelled against him. Thus, there is no need of instant accused to be detained behind the bars. It further appears that, accused is ready and willing to co-operate in further investigation. It is well settled law that Bail is a rule, jail is an exception . It is also observed that, investigation officer has seized official laptop, bank data and phone by panchanama. Hence, there are no chances of tampering the evidence. Hence, no prejudice will be caused to the complainant, if the accused is released on imposing certain conditions. Moreover, if the accused has not obey his undertakings, then in that case the complainant has right to move an application for cancellation of bail for disobeying the undertaking as well as conditions. Hence, no prejudice will be caused to the complainant, if the accused person is enlarged on imposing conditions. The apprehension raised by the prosecution can be safeguard by imposing stringent conditions. Bail allowed subject to conditions imposed.

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• Income Tax

• 2024 (1) TMI 383
  Deduction u/s 80IA(4) - whether assessee is a contractor or developer of infrastructure facilities? - ITAT deleted the addition - HELD THAT:- Sub-clause 1 of Sub-section 4 of Section 80IA provides that Section 80IA applies to any enterprise carrying on the business of (1)developing, or (2)operating and maintaining or (3) developing operating and maintaining any infrastructure facilities which fulfills the condition prescribed therein. In the facts of the case as held by the CIT (A) as well as the Tribunal on giving a factual finding to the effect that the assessee has undertaken a work of development of infrastructure facilities by execution of the contract awarded to it as per the terms of the contract as enumerated by the CIT (A). CIT (Appeal) has further examined as to whether the project assigned to the assessee was in capacity of a contractor or the same was executed as a developer with respect to the canal projects, agreements were entered into by the assessee was analysed and tendered documents containing the terms and conditions of the project were taken into consideration with respect to the following aspects as to the entire investment in the project was to be made by the assessee. Interim payment to the tune of estimated contract value in respect of the development work done for each month after retention and other adjustments were to be made, security deposit was to be paid by the assessee, there was a penalty for delay, procurement of the material was the responsibility of the assessee, procurement of land for camp, for shop, labour camp etc. also the employment of qualified engineers, action and compensation in respect of bad work, defect liability of the accidents to persons in relation to Workman Compensation Act, indemnity insurance of the workmen employed. CIT (Appeal) and the Tribunal considering such aspects of the tendered agreement, concurrently held that the assessee has entered into a development of infrastructure facility agreement and not the works contract. No substantial question of law.

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• 2024 (1) TMI 382
  Amortisation of expenditure in case of amalgamation or demerger u/s 35DD - 2/5th of 3/5 claim of expenses in each year - DR submitted that there is no provision for the assessee under section 35DD to claim 2/5th of expenses since the provisions are very clear that the assessee should be allowed to claim only 1/5th of the merger expenses in each year - HELD THAT:- Section 35DD is unambiguous wherein it is provided that the expenses incurred wholly and exclusively for the purpose of amalgamation is to be allowed as a deduction in 5 equal installments beginning from the year in which the amalgamation or demerger takes place. Therefore the claim of 2/5th of the merger expenses by the assessee during the year under consideration cannot be allowed for the reason that there is no provision under section 35DD to claim 2/5th of the expenditure incurred towards amalgamation / demerger. Accordingly we dismiss Ground no.3 raised by the assessee in this regard. First year of claim of merger expenses - Alternate prayer of the assessee through additional ground is to treat AY 2007-08 as the first year from which the merger expenses are claimed under section 35DD and allow the assessee to claim the expenses in next 4 assessment years subsequent to AY 2007-08 - Though the amalgamation is effective from 01.04,2005, the amalgamation became operative only post the approvals from the Hon ble High Court which happened during the financial year relevant to AY 2007-08. Therefore we see merit in the contention that AY 2007-08 should be the first of claim u/s 35DD since the said year is when the amalgamation has taken place. A careful reading of language u/s 35DD would support this view for the reason that the section does not mention that claim should begin from the year in which the amalgamation is effective but uses the words from the previous year in which the amalgamation or demerger takes place. In present case, we are of the considered view that the amalgamation has taken place in AY 2007-08 since the amalgamation is operational only after the approval of Hon ble High Court which is received during the previous year relevant to AY 2007-08. We therefore tend to agree with the alternate plea of the assessee that AY 2007-08 be treated as the first year of claim of merger expenses for the purpose of section 35DD of the Act. Accordingly the additional ground is allowed in favour of the assessee. Not allowing the MAT credit as per section 115JAA - HELD THAT:- From clarifications of VSV Scheme it is clear that the if the assessee chooses to include the amount of tax related to such MAT credit in the amount of disputed tax then the assessee shall be allowed to carry forward the MAT credit. It is the submission of the assessee that the assessee has chosen the said option. It is important to verify based on evidences and supporting documents relating submitted under VSVS by the assessee before allowing the MAT credit to be adjusted in the tax for the year under consideration. We notice that the lower authorities have denied the claim of the assessee for the reason that the claim is not adequately substantiated. Therefore we remit the issue back to the assessing officer with a direction to verify the claim of the assessee based on the documentary evidences and allow the claim in accordance with law.

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• 2024 (1) TMI 381
  Eligibility for benefits of section 10AA with regard to units at Chennai and at Coimbatore SEZ - whether assessee has not satisfied the conditions mentioned u/s 10AA(4)? - HELD THAT:- In view of the finding of Ld.CIT(A), even if it is assumed that existing plant machinery was used at Chennai SEZ or Commercial SEZ even then the value would be lower than 50%. This finding is not controverted by the Revenue. Therefore, we do not find any merit in the appeal of the Revenue, the same is hereby dismissed. Grounds raised by the Revenue are accordingly, dismissed.

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• 2024 (1) TMI 380
  Excess stock value of gold and silver u/s. 69B found at the time of survey - said excess stock of gold and silver are not recorded by the assessee in his books of accounts and assessee also failed to furnish any documentary evidence to substantiate the claim that the excess stock was from regular business activity and no source for purchase of excess stock, no bills/vouchers etc. were filed in support of his claim - AR submitted that section 115BBE of the Act is not attracted as the assessee explained the source of the excess stock and the income was earned from business activity only - assessee is engaged in the business of Jewellery and Pawn Broking HELD THAT:- . We observe that the Tribunal have already decided the similar matters in favour of the assessee. The decisions relied on by the ld. AR are recent decisions of the Tribunal, wherein the decision of the Hon ble jurisdictional High Court of Madras in the case of M/s SVS Oil Mills [ 2019 (5) TMI 1392 - MADRAS HIGH COURT] has also been considered while disposing of the cases in favour of the assessee. It is our considered opinion that as the business of the assessee is Jewellery and Pawn Broking, the excess stock of gold and silver found during the survey operation is part and parcel of that business of the assessee. No other business is carrying on by the assessee. Accordingly, claim of the assessee has to be allowed. No application of provision of Section 115BBE of the Act on the excess stock of the assessee. Decided in favour of assessee.

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• 2024 (1) TMI 373
  Exemption u/ 11- Cancellation of registration u/s 12A - Eligibility for interim relief - petitioner has made a case for grant of interim stay and for further examination of the matter by the court [ 2023 (10) TMI 39 - DELHI HIGH COURT] as made out a case that the registration could not have been cancelled for years earlier than the period commencing from 28.05.2021. In the ordinary course, the registration granted to the petitioner on 28.05.2021, would have extended till Assessment Year (AY) 2006-07. HELD THAT:- In view of the fact that the order impugned is interim in nature, we are not inclined to interfere with the impugned judgment passed by the High Court. Hence, the Special Leave Petition is dismissed.

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• 2024 (1) TMI 372
  Revision u/s 263 - period of limitation - as decided by HC [ 2016 (4) TMI 961 - PUNJAB AND HARYANA HIGH COURT] order u/s 263 in the case of the assessee was passed on 20.3.2013 which was required to be passed upto 31.3.2013, thus, was within the period of limitation. HELD THAT:- As reported by the learned Counsel for the petitioner(s)- assessee(s) that these petitions could be disposed of as the assessees have settled their matter under Vivad Se Vishwas Scheme, 2020 and therefore, the issues raised in the Special Leave Petitions no longer survive for consideration. The Special Leave Petitions are therefore disposed of as having become infructuous in the aforesaid terms.

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• 2024 (1) TMI 371
  Revision u/s 263 - Lack of enquiry or inadequate enquiry - as per CIT AO had failed to obtain necessary records like income tax return, balance-sheet and bank statements etc. of M/s DLF Commercial Projects Corporation with whom the respondent/assessee had entered into development agreement and had received advances - HELD THAT:- It not to be a case of complete absence of enquiry. As reflected from para 2 of the said Assessment Order, in compliance with the statutory notices, the respondent/assessee had electronically submitted the details and replies and subsequently, at request of the respondent/assessee, manual scrutiny assessment on account of technical difficulties faced by the respondent/assessee was carried out with necessary approvals and hearings were held on various dates during which the documents and replies submitted by the respondent/assessee were duly considered. As reflected from records produced before the Tribunal, AO had sent notice u/s 142(1) along with a detailed questionnaire comprising 38 questions to which replies were submitted by the respondent/assessee and the AO duly applied mind to the same before passing the Assessment Order. That having been done, it could not be labelled as a case of lack of enquiry and consequently, invocation of Section 263 of the Act was not justified in the light of judicial precedents quoted above. According to records, prior to passing the order under Section 263 of the Act, the PCIT had issued show-cause notice dated 15.02.2021, which was duly served on the respondent/assessee. As mentioned in the order under Section 263 of the Act, on behalf of the respondent/assessee, not just written submissions in response to the show-cause notice were filed but even a chartered accountant and an advocate on behalf of the respondent/assessee attended hearings. But in the order under Section 263 of the Act, the PCIT did not even whisper about the contents of reply to show-cause notice, what to say of holding any enquiry. In the name of dealing with the reply to show-cause notice, the PCIT simply observed that on behalf of the respondent/assessee, legal issue of assumption of jurisdiction under Section 263 of the Act was raised. But even on that aspect, the PCIT did not record any discussion in the order under Section 263 of the Act. In the order under Section 263 of the Act, the PCIT also did not record the reasons for arriving at the conclusion that the Assessment Order was erroneous and prejudicial to the interest of revenue, what to say of basing the said discussion on some minimal enquiry. Therefore, we have no hesitation to hold that the order u/s 263 of the Act was not sustainable in the eyes of law. Decided in favour of assessee.

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• 2024 (1) TMI 370
  Revision u/s 263 - PCIT took a view that the assessee was not eligible to any deduction u/s 80IA(4)(ii) - HELD THAT:- In the case of Commissioner of Income Tax (Central) Ludhiana vs Max India Ltd. [ 2007 (11) TMI 12 - SUPREME COURT ] the Supreme Court referred to its earlier judgment in the case of Malabar Industrial Company Limited [ 2000 (2) TMI 10 - SUPREME COURT ] and reiterated that every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of revenue within the meaning of Section 263 of the Act; and that where the Income Tax Officer adopts one of the courses permissible in law and the same results in loss of revenue or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue, unless the view taken by the Income Tax Officer is not sustainable in law. As the respondent/assessee was being allowed deduction under Section 80IA of the Act since AY 2007-08, but revenue took a U-turn by denying the benefit in AY 2010-11, that too invoking jurisdiction under Section 263 of the Act, which cannot be justified. No material was brought on record by the appellant/revenue to show that merely by migration from IP-VPN to NLD-ILD license, a new and different undertaking of the respondent/assessee within the meaning of Section 80IA(4)(ii) of the Act came into existence. As held by this court in the case of PCIT vs Verizone Communications India Pvt. Ltd [ 2023 (12) TMI 347 - DELHI HIGH COURT ] mere addition of services or expansion of the same undertaking would not take it out of the realm of Section 80IA(4)(ii) of the Act. Although PCIT did carry out an inquiry, but did not arrive at any finding challenging the sustainability of the view of the Assessing Officer. According to the settled legal position as quoted above through various judicial precedents, merely because PCIT holds a view different from that of the Assessing Officer, the jurisdiction under Section 263 of the Act cannot be invoked to substitute the view of the latter with that of the former. PCIT wrongly invoked jurisdiction under Section 263 of the Act and fell in error by taking a U-turn in fourth assessment year thereby denying benefit of Section 80IA of the Act to the respondent/assessee. Decided against revenue.

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• 2024 (1) TMI 369
  Reopening of assessment u/s 147 - notice under Section 148A extending period of limitation - cash deposited in the bank unexplained - petitioner made submissions that the show cause notice was issued on the premise that the cash transactions of the petitioner were about Rs.50,00,000/- and extended period of limitation was invoked - petitioner promptly responded indicating that the sum of cash transactions was Rs.33,62,000/- only i.e. less than Rs.50,00,000/- and as the notice was issued after three years from the assessment year, the same was barred by limitation. HELD THAT:- The authority despite the specific indications made by the petitioner, without application of mind and in a wholly mechanical manner came to the conclusion that the amount deposited in cash was Rs.59,75,000/- and consequently, found it a fit case u/s 148 of the Act of 1961. Though the notice was issued on the assumption that the cash deposits were Rs.59,75,000/- by invoking extended period of limitation, as a fact, it was found that the same was Rs.33,62,000/- only and once, the said aspect was clear to the authority, the authority lost its jurisdiction to further continue with the proceedings as the limitation u/s 149(1)(a) of the Act of 1961 of three years would trigger and the authority would lose the jurisdiction on account of limitation, as the amount was less than Rs.50,00,000/-. However, the authority while passing the order u/s 148A(d) in a wholly mechanical manner rejected the plea and proceeded to issue notice u/s 148 of the Act of 1961. Whereafter, proceedings were sought to be converted into notice under Section 69A read with Section 115 BBE which action also is wholly impermissible. Once the notice under Section 148A of the Act of 1961 is found to be barred by limitation, no further proceedings could be initiated under any of the provisions of the Act of 1961 and the purported exercise of jurisdiction pursuant to notice under Section 148A of the Act of 1961 could not be initiated or proceeded with. Thus following the dictum of this Court in case of Abdul Majeed [ 2022 (7) TMI 865 - RAJASTHAN HIGH COURT ] the action of the respondent being barred by limitation cannot be sustained. Decided in favour of assessee.

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• 2024 (1) TMI 368
  Reopening of assessment u/s 147 - reasons to believe - notice u/s 148A(b) - whether information disclosed vide notice under Section 148A(b) of the IT Act is not covered by the information specified in Explanation 1(i) of Section 148 of the IT Act? - HELD THAT:- The information , on the basis of which, the Assessing Officer can proceed under Section 148A of the IT Act is explained in Explanation 1 and 2 of Section 148 of the IT Act. We are of the view that Section 148A(b) mandates only to supply information to the assessee and not the material, on the basis of which, the Assessing Officer has formed prima facie opinion that any chargeable income to tax has escaped assessment. It is settled that the words used in the provisions of taxing statute are required to be given their plain meaning and nothing can be implied from or read in it. In our opinion the plain reading of Section 148A clearly suggests that the Assessing Officer is required to supply information before issuing notice under Section 148A in the prescribed manner and not the other material on the basis of which it has formed prima facie opinion that income of the assessee chargeable to tax has escaped assessment. In the present case, the Jurisdictional Authority along with notice dated 13.3.2023 under Section 148A(b) of the IT Act has supplied information available with it with the documents such as insight portal, wherein information/description has been given. In the notice dated 13.3.2023 under Section 148A(b) and the order dated 28.3.2023 under Section 148A(d) of the IT Act issued by the Assessing Officer, it is clearly mentioned that in the insight portal, the case of the petitioner is flagged on High Risk CRIU/RU PAN Case for the relevant assessment year. We are of the view that the case of the petitioner is covered by information specified in Explanation 1(i) of Section 148 of the IT Act. It is not the case of the petitioner that information disclosed vide notice under Section 148A(b) of the IT Act is not covered by the information specified in Explanation 1(i) of Section 148 of the IT Act. So far as the judgment of this Court rendered in Micro Marbles Private Limited [ 2023 (1) TMI 282 - RAJASTHAN HIGH COURT] on which, the petitioner has placed reliance is not applicable to the present case as the same was passed while taking into consideration the unamended provisions of Sections 147 148 of the IT Act and there is no discussion about the provisions of Section 148A of the IT Act inserted vide Finance Act w.e.f. 1.4.2021. We respectfully disagree with the judgment of Charu Chains and Jewels Pvt. Ltd. [ 2023 (1) TMI 486 - DELHI HIGH COURT] in view of the above discussion regarding provisions of Section 148A of the IT Act. WP dismissed.

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• 2024 (1) TMI 367
  Income taxable in India - consideration received qua off- the- shelf sale of the software being brought to tax - consideration received from various entities on account of sale/supply of software - royalty received within the meaning of Article 12(3) of the Indo-Singapore -DTAA - finding of fact returned by the statutory authority is that assessee had not transferred the copyright it had qua the subject software - HELD THAT:- Tribunal, with regard to the said issue, in our opinion, ruled correctly, in favour of respondent/assessee and concluded that the amount could not be treated as royalty within the meaning Article 12(3) of the India-Singapore Double Taxation Avoidance Agreement. Tribunal relied upon the judgment of the Supreme Court rendered in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. v CIT [ 2021 (3) TMI 138 - SUPREME COURT ] Having regard to the findings of fact and the enunciation of law by the Supreme Court in the aforementioned judgment, according to us, the impugned order does not require interference - no substantial question of law arises for consideration.

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• 2024 (1) TMI 366
  Validity of order of ITAT dismissing the appeal of assessee and revenue on the ground of CIRP proceedings - Corporate Insolvency Resolution Process (CIRP) undergone by assessee - We have been informed several times by appellant/revenue that the respondents/companies, which are the part of the Amrapali Group, are undergoing insolvency proceedings - It was also conveyed to us that proceedings qua Amrapali Group are being looked at by the Supreme Court. HELD THAT:- Since more than one year has passed without definite information, we are inclined to close the instant appeals, with liberty to the appellant/revenue to approach the court for revival, albeit as per law, as and when they obtain clarity in the above-captioned matters.

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• 2024 (1) TMI 365
  TP Adjustment - comparable selection - HELD THAT:- Insofar as each of the comparables are concerned, the Tribunal has indeed reached a conclusion, albeit on facts, that there is functional dissimilarity between the respondent/assessee and the comparables. Accentia as encountered an extraordinary circumstance in the form of amalgamation during the Financial Year (FY) 2006-07 (AY 2007- 08), Eclerx and Mold-Tek were in the business of Knowledge Process Outsourcing (KPO) and in particular, were providing services concerning data analytics, data process solutions, and other high end services. It was found that these entities had a dedicated team that developed automation tools and thus, were not comparable with companies providing low end services, like that of the assessee and TSR merged with Tata Share Registry. Evidently, TSR was operating in the Business Process Outsourcing (BPO)/ KPO sector with an emphasis on financial services. Furthermore, in the period in issue, TSR had registered unusually high margins. The main source of revenue for TSR was the software it developed for payroll processing. No substantial question of law.

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• 2024 (1) TMI 364
  Penalty proceedings u/s 271D, 271E and 271AAA - period of limitation - assessee had accepted monies from 29 parties, which led to addition u/s 69C and 68 - whether penalty was barred by the limitation? - HELD THAT:- As in terms of the provisions of Section 275(1)(c), the penalty order could have been passed either before the expiry of the Financial Year [FY] in which proceedings in the course of which action for imposition of penalty was initiated is completed or within six months from the end of the month in which action for imposition of penalty was initiated, with the caveat that the appellant/revenue had the benefit of taking advantage of whichever period expired later. In the facts that obtain in the instant case, the FY in the course of which the quantum proceedings, in the course of which the penalty proceedings were initiated, concededly culminated on 31.03.2011. On the other hand, the period of six months from the end of the month in which action for imposition of penalty was initiated ended on 30.06.2011. Concededly, the penalty order was passed way beyond the later date i.e., 30.06.2011. The record discloses that the penalty order was passed on 30.12.2011. We may note that the very same issue stands concluded against the appellant/revenue via the decision rendered by this Court in Thapar Homes Limited [ 2023 (10) TMI 1321 - DELHI HIGH COURT] appellant/ revenue, cannot extend the period of limitation by deciding at its whim and fancy when the notice has to be issued. The notice under Section 274 should have been issued before the period of limitation, as discussed above. Decided against revenue.

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• 2024 (1) TMI 363
  Accrual of Income in India - PE in India - attribution rate of revenue for the Indian operations of the Permanent Establishment - 75 percent of the gross profits earned from Indian operations, attributed to the respondent/assessee sustained by DRP - HELD THAT:- Tribunal partly allowed the appeal of the respondent/assessee by following its own decision for AYs 2007-08 to 2014-15, thereby directing the Assessing Officer to adopt the attribution rate of revenue for the Indian operations of the Permanent Establishment at 15 percent of gross booking fees for the AY in issue, i.e., AY 2015-16. The coordinate bench in AY 2006-07, while dealing with [ 2022 (9) TMI 311 - DELHI HIGH COURT] , has sustained the said conclusion and gone on to hold that no substantial question of law arose for its consideration. It is this decision which was affirmed by the Supreme Court with the dismissal of the SLP, as noted in Travelport L.P. USA [ 2023 (7) TMI 700 - SC ORDER] Given this position, we are of the opinion that no substantial question of law arises for our consideration.

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• 2024 (1) TMI 362
  Admission of income made by the assessee at the time of survey - suppression of value of closing stock - unaccounted stock of gold and silver ornaments - HELD THAT:- It is not in dispute that the assessee did not include the difference in the return of income filed by the assessee and merely declared the gold and silver ornaments in survey proceedings in subsequent assessment year was rightly not held that there was no excess stock or unaccounted stock available during the assessment year under consideration. Even the Tribunal perused the document shown on the time of hearing on 11.04.2022 and observed that the assessee could not give any bifurcation as to how much was the quantity sold on the particular period related to the gold ornaments and silver ornaments which shows that the assessee deliberately not bifurcated the unaccounted stock and the regular stock during the period from the date of survey till 31st March, 2015 and accordingly, the Tribunal upheld the finding arrived at by the CIT (Appeals). No infirmity in the concurrent findings of fact arrived at by the CIT (Appeals) as well as the Tribunal while upholding the order passed by the Assessing Officer for making addition on account of the admission made by the assessee at the time of survey with regard to the unaccounted stock of gold and silver ornaments and therefore - no substantial question of law - Asessee appeal is dismissed.

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• 2024 (1) TMI 361
  Undervaluation of closing stock - Tribunal restricting the disallowance to the extent 25% as AO did not brought any contrary evidence on record to disbelive the contention of the assessee with regard to the justification for increase of quantum of damaged goods before the CIT (Appeal) - Whether Tribunal was right in restricting the disallowance, inspite of the fact that Hon ble Tribunal itself has observed that the assessee has not provided the quantity of damaged or unsaleable product and valued it without justifying with the comparable cases? - HELD THAT:- As the findings of fact arrived at by the Assessing Officer and CIT (Appeal) are without any basis and contrary to the materials produced on record by the Assessing Officer in form of the stock statements of various C and F locations whose stocks were physically taken and verified by the Firms of the Chartered Accountant of those locations. The Tribunal has therefore in order to prevent the revenue leakage has adopted a middle path by restricting the addition to 25% in the closing stock. We would also like to observe that the Tribunal ought not to have restricted such addition to 25% without any basis and only by estimating the same in absence of any material on record for the same. However, as the addition is in closing stock which would have a cascading effect and the year under consideration is 2011-12, we would not like to interfere in the impugned order of Tribunal on that ground only. No substantial question of law arises.

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• 2024 (1) TMI 360
  Validity of Assessment framed in the name of non-existing entity - assessee company has merged and amalgamated vide order passed by the Hon ble Calcutta High Court - HELD THAT:- As relying on Marshall Sons Co. [ 1996 (11) TMI 6 - SUPREME COURT ] and Maruti Suzuki [ 2019 (7) TMI 1449 - SUPREME COURT ] assessment order passed by the AO in the name of non-existing entity is nullity and void ab initio. Accordingly we quash the assessment order. Thus the additional ground raised by the assessee is allowed.

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• 2024 (1) TMI 359
  Unexplained cash credit u/s 68 - Original assessment proceedings the assessee did not appear before the AO nor any compliance was made to the summons issued u/s 131 of the Act - CIT(A) came to the conclusion that the assessee has satisfied all the ingredients of Section 68 of the Act while allowing the appeal and analyzed the credentials of the subscribers through financial data - HELD THAT:- CIT(A) has taken a reasoned view by passing a detailed and speaking order which does not require any interference at our end. Moreover the contentions of the revenue does not carry any force when the AO has examined all the details, evidences, share subscribers and issued summons u/s 131 of the Act. In most of the cases we observe that where the subscribers did not appear personally , they filed all the details/evidences in compliance to summons issued u/s 131 of the Act. Meaning thereby that the identity, creditworthiness of the subscribers and genuineness of the transactions were substantially proved. We also note that the ld CIT(A) has also considered the issue that there is no bar on issuing shares at a price higher than the FMV in the instant assessment year as provisions of section provisions of section 56(2)(viib) of the Act are effective from assessment year 2013-14. While allowing the appeal of the assessee we observe that the ld. CIT(A) has relied on a series of decisions as discussed by ld CIT(A) in his order and also distinguished the Hon ble Apex Court decision in the case of CIT Vs NRA Steel [ 2019 (3) TMI 323 - SUPREME COURT ] In our opinion the ld CIT(A) arrived at a correct conclusion after considering all the facts of the assessee s case and the ratio laid down in various decisions as referred to in the appellate order. Therefore, we do not find any merit in the appeal of the revenue and consequently the same is dismissed.

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• 2024 (1) TMI 358
  Deduction u/s 80P - deduction claimed by the assessee was denied in the intimation generated u/s 143(1) on the reasoning that the relevant columns in the return of income tax were not properly filed up - assessee against such denial of its claim filed rectification application u/s 154 which was also denied in the order passed u/s 154 - HELD THAT:- It is the settled position of law that the income has to be computed by the assessee as per the provision of Act. To our understanding, if there is any mistake on the part of the assessee for claiming the legitimate deduction, it is the onus upon the revenue to rectify the same. As such the revenue cannot take the shelter of the ignorance of the assessee by denying the legitimate benefit to the assessee. CIT(A), was bound to follow the verdict of Esar Coste [ 2004 (12) TMI 62 - GUJARAT HIGH COURT ] In the event of noncompliance of Hon ble Jurisdictional High Court, it amounts to a mistake apparent from the record and therefore the same can be rectified u/s 154 of the Act. None of the authorities below has gone to verify the genuineness of the claim of the assessee whether it was within the provision of law. Thus, for the limited purpose, we are delegating the issue to the file of the AO for fresh adjudication to the extent to find out whether the interest in dispute has been earned from the co-operative society and from other sources. As such, the AO shall verify the deduction claimed by the assessee within the provisions of section 80P(d)/80P2(c)(ii) of the Act. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.

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• 2024 (1) TMI 357
  Exemption u/s 11 - assessment of trust - denial of claim as assessee has collected capitation fees - whether the assessee has collected Capitation fees or not? - AO has come to the conclusion that the assessee-trust has collected capitation fees on the basis of data found in laptops, pen drives, diary, loose papers seized from various employees from their residences and has also concluded that the cash found from the employees of the Trust are part of capitation fees collected by the assessee. HELD THAT:- In the instant case, all the documents/materials have been seized from the employees only. It has been categorically stated by the trustees of the assessee trust that have not authorized anyone to collect capitation fees. The trustee has also stated that the employees might have collected it without the authority of the trust. Under the principle of vicarious liability, the employer is normally liable for any act performed by his employees during the course of employment. However, when an employee does anything that is neither directed nor controlled by the employer, then the said action of employee cannot be considered to be within the scope of his employment. In that kind of situation, the employer is not liable for the action of the employee and hence is not liable for damages. A.R further submitted that the relevant news paper report is placed at pages 279 280 of paper book relating to AY 2015-16. This information further supports the case of the assessee trust that it is not collecting capitation fees and only the employees might have collected money without its authority. We notice that the co-ordinate bench of Tribunal, in the case of Anil Mahavir Gupta [ 2016 (10) TMI 163 - ITAT MUMBAI ] has considered the issue as to whether the documents seized from employees could be relied upon for making addition in the hands of the assessee. It was decided in favour of the assessee As statements/materials do not vindicate or link the information/evidences found from the employees. The revenue also did not find/seize any credible material from the assessee trust to corroborate the information/document seized from the employees. In respect of alleged receipt of capitation fee and in respect of payments recorded in the materials, the AO did not make enquiries with the payer/recipient of money. In the absence of any independent material to link/vindicate the information found from the employees, we are of the view that the AO could not have made additions on the basis of that information. Thus we are of the view that documents seized from employees cannot be considered as having any evidentiary value and cannot be considered to have trustworthiness, since no other corroborative material was brought on record to support the veracity of the same . None of the material would show that the assessee trust was collecting capitation fees. Hence, the AO could not have placed reliance on the materials seized from the employees to draw conclusion that the assessee was collecting capitation fees. Thus additions made by the AO including the protective additions, on the basis information found in the laptops, diaries and other documents found/seized from the employees and third parties (employees of another trust) are liable to be deleted. Accordingly, we direct the AO to delete the addition made towards Capitation fees and other additions made on the basis of the materials seized from the employees in all the years under consideration. AO has rejected the claim for exemption u/s. 11 of the Act on the reasoning that the assessee cannot be considered to be a charitable trust, when it collects capitation fees - In the earlier paragraphs, we have held that there is no evidence to show that the assessee has collected capitation fees. Hence the reasoning given by the AO to reject the claim for exemption u/s. 11 would fail. As under the provisions of sec.11 to 13 of the Act, the AO is entitled to reject the exemption only when the provisions of sec.13 are attracted, i.e., there is any of the violations mentioned in sec. 13 of the Act. The possible case of the AO, in the instant case, would be that the trustees have siphoned off the capitation fees collected by the assessee trust, by not accounting the same in the books and it may attract the provisions of sec.13. We have noticed earlier that there is no evidence to show that either the trust or the trustees have collected capitation fees. We have also held that the AO has arrived at such a conclusion only on presumptions. In that view of the matter, it cannot be said that the trustees have siphoned off money belonging to the assessee trust. Hence it cannot be said that there was violation as mentioned in the provisions of sec.13 of the Act. Assessee should be granted exemption u/s. 11 of the Act in all the years under consideration - we hold that the corpus donations received in the form of development fees and also other corpus donations are eligible for exemption u/s. 11 of the Act. AO did not allow capital expenditure incurred by the assessee as application of income, since he had denied exemption u/s. 11 - Since we have restored the exemption u/s. 11 to the assessee, the income of the assessee for all the years under consideration has to be computed in accordance with the provisions of sec.11 of the Act. Hence the capital expenditure incurred by the assessee is required to be treated as application of income. Thus direct the AO to allow the above said capital expenditure incurred by the assessee as application of income u/s. 11(1) of the Act. Levy tax u/s. 115BBE - As the income has to be computed for all the years in terms of sec.11 of the Act. Accordingly, the tax could not be levied u/s. 115BBE of the Act in all the years under consideration. Accordingly, we set aside the order passed by Ld CIT(A) on this issue in all the years under consideration and direct the AO not to levy tax u/s. 115BBE of the Act. Depreciation denied on opening balance of assets on the reasoning that the value of concerned assets has been treated as application of income - We notice that such embargo to claim depreciation on the assets, whose value has been allowed as application of income has been brought into the statute with effect from AY 2015-16 only. Accordingly, we direct the AO to allow depreciation on the opening value of assets in AY 2013-14 and 2014-15. For other years, the disallowance of deprecation should be restricted only on those assets, whose value has been allowed as application of income in the earlier years. Set off of deficit brought forward from earlier years denied - Since we have restored the exemption u/s. 11 of the Act to the assessee, the claim of the assessee is allowable as per the decision rendered by Hon ble Bombay High Court in the cases of DIT (E) vs. Maharashtra Industrial Development Corporation [ 2013 (3) TMI 654 - BOMBAY HIGH COURT ] and CIT vs. Institute of Banking [ 2003 (7) TMI 52 - BOMBAY HIGH COURT ] Accordingly, we direct the AO to allow set off of deficit brought forward from earlier years. Bogus purchases - We have noticed that Smt Taruna Maheswari is not the employee of the assessee and the allegation of bogus purchases has been made on the basis of noting made by her. On the contrary, the assessee could prove the genuineness of purchases before the AO. On the contrary, the AO has placed reliance on the statement given by Smt Taruna Maheswari, which has been retracted by her later. When the assessee is able to prove the genuineness of purchases and payments, the AO should have accepted the same, since there was no other material to support the noting made by a third person, i.e., Taruna Maheswari. Accordingly, we are of the view that the Ld CIT(A) was not justified in confirming the addition of Rs. 84.50 lakhs made by the AO in AY 2014-15. Accordingly, we direct the AO to delete this addition. Cash balances seized from the employees with the assessee trust - As noticed that there is no material to link the above said cash balances seized from the employees with the assessee trust. Hence there is no reason to make this addition in the hands of the assessee on substantive basis, since the onus to explain the cash balances will lie upon Shri Pratap Patil and Shri Unmesh Khanvilkar. We noticed that both these persons have owned up the cash balances and offered the same as their income under Income declaration Scheme, 2016. Accordingly, we direct the AO to delete both the above said additions in AY 2017-18.

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• 2024 (1) TMI 356
  Validity of assessment u/s 153C - date of recording of satisfaction - HELD THAT:- As date of search 22.03.2012 (A.Y. 2012-13) and Date of recording of satisfaction u/s 153C 18.11.2013 (A.Y. 2014-15), thus on going through the judgments of Hon ble jurisdictional High Court and Jasjit Singh [ 2023 (10) TMI 572 - SUPREME COURT] AND RRJ Securities Ltd [ 2015 (11) TMI 19 - DELHI HIGH COURT] we have no hesitation to hold that the Assessments made for A.Y. 2006-07 and A.Y. 2007-08 u/s 153C consequent to the satisfaction note recorded on 18.11.2013 are outside the scope of Section 153C of the Income Tax Act, 1961 and hence, the assessments are treated as void ab initio. Decided against revenue.

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• 2024 (1) TMI 355
  Capital gain addition - Year of chargeability - transfer of capital assets in this year or not? - HELD THAT:- As the year of chargeability as per section 45(3) is the year in which transfer takes place . The AY in which transfer took place is AY 2011-12 and not the impugned Ay in which assessment is made. On this sole reason, the appeal of the ld AO fails. As following the decision of Honourable High court Blue Heaven Griha Nirman (P.) Ltd [ 2022 (2) TMI 186 - CALCUTTA HIGH COURT ] and also on plain reading of the provision of section 45 (3) of the Act , no addition could have been made in AY 2013-14 in absence of transfer of capital assets in this year. Decided in favour of assessee.

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• 2024 (1) TMI 354
  Addition u/s 69A - Search and seizure and survey operation u/s 132/133A as conducted on the assessee and other family members as well as the entire group - jewelleries and three watches were sent for valuation to a registered Valuer - HELD THAT:- As assessee had enough means to invest in the wrist watches. It will be pertinent to mention that the departmental authorities have accepted the source of investment in jewelleries found at the time of search and seizure operation. Only because bills and invoices of the wrist watches were not found at the time of search, the addition has been made. Thus we are of the view that the provisions of section 69A will not be attracted as the explanation offered by the assessee regarding the source of investment in the wrist watches, by no means, can be considered to be unsatisfactory. On the contrary, the explanation offered by the assessee appears to be plausible. Thus, in our view, the addition made under section 69A of the Act is unsustainable. While coming to such conclusion, we have drawn support from the decision of the Coordinate Bench in case of ACIT Vs. Gurnam Arora [ 2016 (4) TMI 249 - ITAT DELHI] . Accordingly, we delete the addition. Grounds are allowed.

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• 2024 (1) TMI 353
  Reopening of assessment u/s 147 - addition being LTCG on sale of flat - claim of exemption u/s 54 of the Act for the LTCG on sale of flat - HELD THAT:- In the present case, it is undisputed that the sale of immovable property and subsequent purchase of immovable property were not disclosed by the assessee in his original return of income physically filed on 03/11/2011. Therefore, we are of the considered view that the reassessment proceedings were validly initiated by the AO under section 147 of the Act on the basis of information received from the ITD system under the NMS module, which constitutes tangible material u/s 147 of the Act. Accordingly, reassessment proceedings initiated u/s 147 and issuance of notice u/s 148 of the Act are upheld. As a result, ground no. 1 raised in assessee s appeal is dismissed. However, at the same time, it is also evident from the reasons recorded by the AO while reopening the assessment, that the assessee purchased immovable property valued at Rs. 1,46,88,500 and sold immovable property at Rs. 1,27,00,000, during the year under consideration. Thus, when such are the facts, we are of the considered view that the AO was also required to grant the benefit of section 54 of the Act to the assessee while computing the income under the head capital gains . However, as evident from the record, despite noting the aforesaid reasons for reopening the assessment, the AO merely computed the long-term capital gains and added the same to the total income of the assessee, without granting the benefit of section 54 of the Act as provided under the law. Therefore, in view of the facts and circumstances as noted above, we deem it appropriate to restore the computation of income under the head capital gains to the file of the AO for de novo adjudication as per law after verification of the claim of exemption under section 54 of the Act. The assessee is directed to furnish all the documents/information in support of his claim under section 54 of the Act. As a result, grounds no. 2 and 3 raised in assessee s appeal are allowed for statistical purposes.

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• 2024 (1) TMI 352
  Allowability of business expenses and business loss - as submitted business of the assessee was not set up during FY 2009-10 and that the assets were not used by the assessee for the purpose of its business during AY 2010-11 - AR submitted that the assessee company has been admitted to Corporate Insolvency Resolution Process ( CIRP ) under the Insolvency and Bankruptcy Code HELD THAT:- On perusal of records, we find that the NCLT in the matter of M/s. Rapid Buildwell Ltd. [ 2022 (11) TMI 1437 - NATIONAL COMPANY LAW TRIBUNAL NEW DELHI BENCH] has granted moratorium against the institution of proceedings against the corporate debtor by issuing direction as a consequence of the application being admitted, moratorium as envisaged under the provisions of Section 14(1), shall follow in relation to the corporate debtor, prohibiting as per proviso (a) to (d) of the Code However, during the pendency of the moratorium period, terms of Section 14(2) to 14(4) of the Code shall come in force. Pursuant to the aforementioned directions of the NCLT, we dismiss the appeal of the Revenue without going into the merits of the case. Revenue shall be free to institute the appeal after the completion of the CIRP proceedings, if so advised, as per the relevant provisions of the Act, for which the Ld. Sr. DR had no objection.

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• 2024 (1) TMI 351
  Bogus purchases - addition made as in the earlier years assessee had admitted that certain purchases made from three parties were not genuine - HELD THAT:- If assessee had shown purchase bills for licenses along with copy of covering letter for transfer of licenses duly attested by the Bank Manager along with transactions reflected in the bank accounts then it cannot be held that assessee had not made any purchases. Apart from that, assessee has also produced stock register highlighting the purchases, corresponding sales made to various parties. These document shows date wise, license number wise purchases made from M/s. SAR Engineering Ltd. and corresponding sales made to various parties along with inward and outward quantity of stock. None of these details of trading account have been doubted or the books of accounts has been rejected by the ld. AO. The assessee has also filed copy of ledger accounts of the parties to M/s. Mota Trading Pvt. Ltd. 15 whom assessee has made sales of the same licenses purchased from M/s. SAR Engineering Ltd. which are also reflected in the bank statements, that the amount received from the parties to whom the same licenses were sold. Another important piece of evidence was that assessee had filed customer wise VAT sales return not only in the case of assessee itself but also of SAR Engineering Ltd., which goes to show that the purchase and sales have been accepted by the VAT department. Once the source of purchases are from the books duly corroborated by inward stock register, quantity details of licenses purchased and corresponding details of sales made to various parties, then it cannot be held that purchases are bogus. The entire case of the ld. AO hinges upon the fact that in the earlier years assessee had admitted that certain purchases made from three parties were not genuine. However, nothing has been stated for the current assessment year, nor even in the earlier years, M/s. SAR Engineering Ltd. was amongst the three parties. The AO has drawn adverse inference based on some admission in the earlier year of some other party to doubt otherwise genuine purchases made from another party in this year. There is no substance or any concrete finding based on material for doubting the purchases made from SAR Engineering Ltd. and accordingly such reasons are unsustainable. Accordingly, the finding and the observation given by the ld. CIT (A) are upheld and addition has been deleted. AO was not given opportunity while admitting the additional ground - It has not been specified which additional ground has been admitted. If it is for challenging the validity of reopening u/s 147/148, then it cannot be reckoned as additional ground, because assessee has raised objections against reopening u/s. 147/148 which the ld. AO has rejected in his letter disposing of the objection. Assessee has raised this ground before the ld. CIT (A) as it was also raised before the ld. AO, therefore, it cannot be held that the validity of reopening was additional ground. Infact, the department has not even challenged the quashing of the assessment order. If the assessment order itself has been quashed then challenging the deletion of additions on merits is purely academic, because the assessment itself is quashed and held to be invalid against which there is no appeal. If the additional grounds is with regard to principle of natural justice on which ld. CIT (A) has given his remarks that also cannot be treated as additional ground. Consequently, all the grounds raised by the department is dismissed.

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• 2024 (1) TMI 350
  Assessment of trust - treating voluntary donations as anonymous donation u/s 115-BBC - HELD THAT:- From the order of the coordinate bench of the Tribunal for AY 2008-09 [ 2022 (10) TMI 1220 - ITAT DELHI] wherein the appeal of Revenue has been dismissed approving conclusion of ld. CIT(A) deleting the addition, we note that the Tribunal upheld the order of ld CIT(A) by observing that the provisions of Section 115BBC of the Act would not be applicable to the facts of the case. The Tribunal further noted that details of the names, addresses, their PAN card nos., cheque nos., dates and amounts of donation of the donors has not been proved to be wrong. He, therefore, held that for these reasons also the donation received by the assessee-trust cannot be considered to be anonymous donation by virtue of sub-section (3) of Section 115BBC of the I.T. Act, 1961. Before us, no fallacy in the findings of the Ld. CIT(A) has been pointed out by the Revenue. With these observations the Tribunal dismissed the appeal of Revenue for A.Y. 2008-09[ 2022 (10) TMI 1220 - ITAT DELHI] on identical issue, upholding the conclusion of Ld. CIT(A) i.e., deletion of addition made by the A.O. on the allegation of anonymous donation. CIT(DR) could not show us any contrary factual position or order or judgment which may lead us to take a contrary or different view as taken by the Tribunal for AY 2008-09. Assessing Officer is directed to delete the addition. Decided in favour of assessee.

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• Benami Property

• 2024 (1) TMI 384
  Prohibition of Benami Property Transaction - scope of provisions of Section 5 of the Amended Act, 2016 - HELD THAT:- This court judgment on 17.11.2023, [ 2023 (12) TMI 620 - MADRAS HIGH COURT] is of the opinion that as on date, the decision of the Hon ble supreme court in Union of India v. Ganapati Dealcom Pvt Ltd [ 2023 (1) TMI 1327 - SC ORDER] holds the field and hence, the arguments advanced on the side of the appellants that the provisions of Section 5 of the Amended Act, 2016 have to be applied retrospectively, cannot be countenanced. pendency of the review of the decision in Union of India vs. Ganapati Dealcom Pvt. Ltd, cannot be a ground to interfere with the order passed by the Tribunal. It is also well settled that mere pendency of the Review Petition will not be a ground to assail the orders impugned in the appeals. In this context, it is useful to refer to the decision of the Honourable Supreme Court in Union Territory of Ladakh and others vs. Jammu and Kashmir National Conference and another [ 2023 (9) TMI 1407 - SUPREME COURT] as held High Courts will proceed to decide matters on the basis of the law as it stands. It is not open, unless specifically directed by this Court, to await an outcome of a reference or a review petition, as the case may be. it is also not open to a High Court to refuse to follow a judgment by stating that it has been doubted by a later Coordinate Bench. In any case, when faced with conflicting judgments by Bench of equal stength of this Court, it is the earlier one which is to be followed by the High Courts, as held by a 5 Judge Bench in National Insurance Company Limied v. Pranay Sethi [ 2017 (10) TMI 1276 - SUPREME COURT] Following the earlier order passed by this Court, all these civil miscellaneous appeals are disposed of, leaving it open to the appellants herein to proceed further on the basis of the outcome of the Review Petition filed by them before the Honourable Supreme Court.

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• Customs

• 2024 (1) TMI 349
  Classification of imported goods - Fish Oil in the form of capsules - classifiable under CTH 15042020 as claimed by the appellant or under CTH 21069099 as confirmed by the Commissioner (Appeals)? - refund of excess duty paid - HELD THAT:- The Commissioner (Appeals) has referred to the NOC issued by Food Safety and Standards Authority of India. A decision on classification cannot be made merely because the goods are mentioned by the said Authority as Food Supplement in these documents. No discussion made by the Commissioner (Appeals) as to the classification with regard to the tariff or the ingredients of the goods imported. Though the goods are claimed by the appellant to be fish oil , they are imported in the form of capsules. It requires to be examined whether there are any other ingredients other than Fish Lipid Oil and whether these are chemically modified or not. The appellant has not been able to place any evidence to substantiate the ingredients of the Fish Lipid Oil Capsules imported by them. There has been no dispute on classification by the department for subsequent consignments in regard to assessment and classifying the goods under CTH 15042020 has been accepted by the Department. Taking note of these submissions, the matter has to be remanded to the adjudicating authority to consider the issue of classification after giving opportunity to the appellant to produce documents / evidence, if necessary. It also requires to be stated that the Chapter Heading 21069099 refers to Other which a residual entry of Chapter Heading 2106 which includes Food Preparations not elsewhere specified or included . The matter is remanded to the Commissioner (Appeals) to reconsider the issue of classification and the eligibility of refund - appeal allowed by way of remand.

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• 2024 (1) TMI 348
  Suspension of Customs Broker License - contravention of Regulations 10(d) and 10(m) of CBLR, 2018 - appellants CB did not declare the complete details of the imported goods and the mandatory declarations required under BIS, WPC certification, Legal Meteorology Packaged Commodities Rules - whether the appellant Customs Broker has fulfilled all his obligations as required under CBLR, 2013 or not? - violation of principles of natural justice. HELD THAT:- The impugned order dated 23.05.2023 has been passed by the Principal Commissioner of Customs (General) after taking into consideration the written submissions made by the appellants and the record of oral submission made at the time of personal hearing on 27.04.2023, for considering the charges of violations against them, before passing the impugned order. Thus, sufficient and reasonable opportunity was given to the appellants before passing an order, in respect of charges framed against them. Violation of Regulation 10(d) ibid - HELD THAT:- The appellants could not submit the complete details in respect of the imported goods. The facts also revealed that during an investigation by CIU, the appellants CB had submitted the BIS certificates and ETA (self-declaration) one time import permission in respect of few imported goods, which the customs authorities have found to be proper. This has also been recorded in paragraph 2.2 of the impugned order. In the absence of any document to prove that the appellants CB had purposefully mis-declared the description or other details of imported goods, it is difficult to fasten liability for the violation of Regulation 10(d) ibid on the appellants for not advising their clients or informing the Customs Authorities in respect of the details that was not furnished at the time of filing of bill of entry. Violation of Regulation 10(m) ibid - HELD THAT:- The appellants CB had filed the bill of entry on the basis of invoice and packing list, providing the details of brand name, model number, battery ratings/capacity, nature of goods such as neckband or wireless type earphone etc. Thus, the appellants CB has been careful and diligent in submitting the complete details inasmuch as the same are available in the invoice, packing list while submitting the bill of entry before the customs authorities. There is no evidence or any document to prove that the appellants CB contributed to the delay or inefficiency, in handling the import transaction. Thus, there are no merits or any evidence to prove that the appellants are violated the requirements or obligations under Regulations 10(m) ibid. It is also found that the appellants CB had specifically requested for cross examination of the importer and the persons whose statements were recorded by the Inquiry Officer on 07.02.2023. However, no reasons were given for declining the cross examination to the appellants - there is a failure in the Inquiry proceedings to comply with the requirement of providing natural justice under Regulation 17(4) ibid. In the case of M/S SHASTA FREIGHT SERVICES PVT. LTD. VERSUS PRL. COMMISSIONER OF CUSTOMS, HYDERABAD AND COMMISSIONER OF CUSTOMS, 2. COMMISSIONER OF CUSTOMS, O/O THE COMMISSIONER OF CUSTOMS CENTRAL EXCISE, HYDERABAD [ 2019 (9) TMI 363 - TELANGANA AND ANDHRA PRADESH HIGH COURT] , the Hon ble High Court of Telangana had clearly held the noncompliance with providing of opportunity of cross examination to a Customs broker in the inquiry proceedings as violation of principles of natural justice under 17(4) of the CBLR, 2018. There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the CB license of the appellants; and for forfeiture of entire security deposit, inasmuch as there is no violation of Regulation 10(d) and 10(m) of the CBLR, 2018, and the findings in the impugned order is contrary to the facts on record. The impugned order set aside - appeal allowed in favor of appellant.

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• 2024 (1) TMI 347
  Levy of penalty under Regulation 22 and 23 of Customs Broker Licensing Regulations (CBLR), 2013 - prohibition on Customs Broker from working in the jurisdictional area of the Cochin Customs Commissionerate till the completion of the adjudication proceedings against the Customs Broker, which is pending at Mumbai - HELD THAT:- From the records, it is seen that the Customs Broker was issued with two show cause notices one for availment of fraudulent drawback claims by the Commissioner of central Excise Coimbatore and the second SCN by the Commissioner of Customs Cochin for obtaining documents from the government records without authorization of the proper officer. It seen that these two notices are completely on different grounds issued by different Commissionerate for the offence committed by two different employees of the appellant. In the first show cause, it was found that Shri Murthy one of the employees of the appellant had obtained signatures of the authorized representatives of the exporter on blank shipping bills and the same were used for claiming fraudulent drawback. This fact was admitted before the enquiry officer and based on the enquiry report the matter was adjudicated - The impugned order which deals with the second show cause notice issued by the Commissioner of Customs Cochin is entirely of different grounds which involves another employee Shri Pradeep Nangia of the same appellant. In this case the employee had taken a copy of unsigned letter of the Deputy Commissioner without proper authorization thus violating the Sub-clauses 11(h) and 11(i) of the Regulations. Since the proceedings are on entirely different grounds, the Final order issued by the Mumbai Commissionerate will have no bearing in as much as the penalty is concerned. Moreover, the notices are on different employees of the same customs broker and the offences committed vary and commission of offence is at Coimbatore and Cochin, the orders issued by the Commissioner Mumbai cannot completely exonerate the appellant from penalty. However as per the impugned order the suspension of license in the jurisdiction of Cochin was only till the date of adjudication proceedings by Mumbai and the adjudications proceedings having finalized the suspension within the jurisdiction of Cochin Commissionerate is set aside taking into consideration the fact the license has been extended upto 2027. Appeal allowed in part.

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• 2024 (1) TMI 346
  Refund of Customs Duty - refund denied on the ground that the benefit of reduction in the rate of duty cannot be extended to the goods - what is the relevant date for payment of duty in the case of goods being exported? - HELD THAT:- The relevant Sections to determine the rate of duty is Section 16 read with Section 50 of the Customs Act ,1962. The reliance placed on Section 18 and 19 of the Customs Act, 1962 by the Commissioner (Appeals) is irrelevant as far as determination of rate of duty is concerned - As per Section 16, the date of let export order is the date for determining the rate of duty. This view is also upheld by the Hon ble High court of Bombay in the case of NARAYAN BANDEKAR SONS PVT. LTD. VERSUS COMMR. OF CUS. C. EX, GOA [ 2010 (8) TMI 234 - BOMBAY HIGH COURT] . The impugned order is set aside and the appeal filed by the Revenue is allowed.

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• 2024 (1) TMI 345
  Valuation of imported goods - stock lot of plastic films - rejection of declared value - no data of comparable imports - HELD THAT:- It is noticed that Revenue was at no stage produced a comparable import data of other importers and in absence of that, it was not viable for them to reject the declared value - there is no data even in grounds of appeal. In absence of any evidence of contemporaneous import, the rejection of value and invoking Rule 4 or Rule 5 of the Customs Valuation Rules, cannot be upheld. In view of above, appeal filed by Revenue is dismissed.

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• Insolvency & Bankruptcy

• 2024 (1) TMI 344
  Validity of assessment orders which is part of the resolution plan sanctioned by NCLT - Recovery of demand - HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petitions are accordingly dismissed.

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• 2024 (1) TMI 343
  Time Limitation - Condonation of delay of 20 days in filing and 191 days in re-filing the Special Leave Petitions - HELD THAT:- Since the impugned order of the National Company Law Appellate Tribunal dated 28 September 2022 is amenable to the appellate jurisdiction of this Court under Section 62 of the Insolvency and Bankruptcy Code 2016, we decline to entertain a petition under Article 136 of the Constitution. The bar of limitation cannot be obviated or circumvented by taking recourse of proceedings under Article 136 of the Constitution when a statutory appeal is available. The Special Leave Petitions declined only on that ground leaving it open to the petitioner to adopt appropriate remedies in accordance with law. The Special Leave Petitions are, therefore, dismissed on the ground of delay as well as on merits.

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• 2024 (1) TMI 342
  Petition filed by the Appellant challenging the decision of the Resolution Professional rejecting the claim of the Appellant as Financial Creditor, dismissed - HELD THAT:- From the materials brought on the record, it is clearly prove that there is no disbursement by the Appellant to the Corporate Debtor. When there is no disbursement for time value of money essential ingredients to prove a financial debt is missing. As noted, in Form C which was filed by the Appellant, financial debt was claim on the basis of inter corporate loan given from time to time. It is not the case of the Appellant that any inter corporate loan was given to the Corporate Debtor at any point of time. According to the own case of the Appellant what was claimed in Form C was neither proved nor substantiated. In the application which was filed by the Appellant before the Adjudicating Authority there was no mention of any loan at any point of time given to the Corporate Debtor by the Appellant. Whether there was any financial debt owed to the Appellant by the Corporate Debtor for which the claim was filed? - HELD THAT:- The Balance Sheet even if it is taken on its face value does not in any manner prove that there is any financial debt. The financial debt ought to have reflected under the heading of borrowings and there being no reflection of the claim which is filed in Form C under the heading borrowings . The Submission of the Appellant that the balance sheet supports the claim of the Appellant cannot be accepted. The balance sheet as on 31.03.2022 does not prove that there was any financial debt owed by the Corporate Debtor to the Appellant. The Adjudicating Authority in exercise of its jurisdiction under subsection (5) of Section 60 having adjudicated the claim as submitted by the Appellant, the question to be answered in this Appeal is as to whether the order of the Adjudicating Authority adjudicating the claim of the Appellant is sustainable or not. Adjudicating Authority after noticing the judgment of the Hon ble Supreme Court in PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VERSUS AXIS BANK LIMITED ETC. ETC. [ 2020 (2) TMI 1259 - SUPREME COURT ] has held that the applicant has failed to prove the transaction as a deposit of money or a loan from the applicant s account to the Corporate Debtor s account. The Adjudicating Authority did not commit any error in rejecting application filed by the Appellant. There is no merit in the Appeal - appeal dismissed.

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• 2024 (1) TMI 341
  Maintainability of Section 9 application - pre-existing dispute - Appellant claims that the Adjudicating Authority allowed the CIRP under Section 9 application despite pre-existing dispute with respect to the outstanding amount and quality of work rendered by Operational Creditor - HELD THAT:- The Adjudicating Authority has rightly concluded that there is a debt, which is more than Rs. 1,00,000/- and due and has not been paid and the Appellant had defaulted in making full payments against the services rendered by the Operational Creditor. Therefore, it has rightly proceeded for CIRP proceedings under Section 9 of the Code. There are no error in the order of the Adjudicating Authority - appeal dismissed.

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• 2024 (1) TMI 340
  Maintainability of section 9 application - time barred claims or not - HELD THAT:- Undeniably the purchase orders have been placed by the Corporate Debtor and the goods have been supplied by the Petitioner. Invoices have been raised by the Petitioner, part payment have also made by the Corporate Debtor and there is also a confirmation of balance in the shape of statement of accounts, which is duly acknowledged and signed by the authorised signatory of the Corporate Debtor. Further, there is evidence to prove the supply of the material to the Corporate Debtor and it has also availed ITC of GST on the goods received by it. Based on these facts, the Adjudicating Authority has come to a conclusion, that all the issues raised by the Corporate Debtor have been duly noted and findings have been returned on all the issues raised in the Corporate Debtor, basis the documentary evidence available with it. After hearing both the parties the Adjudicating Authority has come to a conclusion that the petition is admissible and accordingly it has passed the Section 9 proceedings for CIRP against the Corporate Debtor namely, M/s Kevin Ventures LLP. The Adjudicating Authority has on the basis of all the documents come to a conclusion that CIRP proceedings should be initiated against the Corporate Debtor under Section 9 of the Code, and for the above-mentioned reasons, there are no error in the findings. Appeal dismissed.

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• 2024 (1) TMI 339
  Maintainability of section 7 application - initiation of CIRP - impugned order passed by the Adjudicating Authority without considering the written submissions of the Corporate Debtor thus rendering the impugned order perverse - violation of principles of natural justice - failure to recognize that the Financial Creditor had failed to produce incontrovertible and unimpeachable evidence to prove the debt - OTS offers made on more than one occasion clearly constitute acknowledgment of debt and default or not - time limitation - Bar under Section 10A. Opportunity of hearing - HELD THAT:- The matter having been heard on 8 occasions and permission having been granted to file written submissions even after the matter was reserved for orders and this opportunity had also been availed by the Corporate Debtor, the contention of having been denied opportunity to be heard before the Adjudicating Authority lacks foundational basis. Contention that Adjudicating Authority had failed to recognize that the Financial Creditor had failed to produce incontrovertible and unimpeachable evidence to prove the debt - HELD THAT:- It was clearly indicated in the letter that the FDR amount of Rs. 50 lakh was required to be restored. This replenishment was however not done by the Corporate Debtor and therefore there is substance in the contention of the Financial Creditor that EMI appropriation from the FDR cannot be treated as automatic regularization of the loan account and that this was clear evidence of debt and default. Whether OTS offers made on more than one occasion clearly constitute acknowledgment of debt and default? - HELD THAT:- In the face of multiple communications wherein the Corporate Debtor has admitted debt and default, the Adjudicating Authority did not commit any error in holding that these OTS proposals constitute acknowledgement. Whether the Section 7 application was filed on time or whether it was barred by limitation? - HELD THAT:- Clearly the OTS proposals, which undisputedly fall within the three- year period from the date of default, clearly provided for a fresh period of limitation of three years - it is found that the Adjudicating Authority did not commit any error in holding that the OTS proposals dated 24.08.2020 and 11.11.2022 constitute acknowledgement under Section 18 of the Limitation Act, 1963 and hence the Section 7 application filed on 24.01.2023 was correctly held to be within the limitation period. Bar under Section 10A - HELD THAT:- A bare reading of Section 10A shows that what is barred is initiation of CIRP proceedings when the Corporate Debtor commits any default during the Section 10A period. However, if the default is committed prior to the Section 10A period and continues in the Section 10A period, this statutory provision does not put any bar on the initiation of CIRP proceedings. The present is a case where the default has been committed by the Corporate Debtor prior to commencement of Section 10A period. The default having been committed before the bar of Section 10A came into play, the Corporate Debtor was clearly not entitled to claim that the Section 7 application was not maintainable. Thus, no error has been committed by the Adjudicating Authority in allowing the Section 7 application and admitting the Corporate Debtor into the rigours of CIRP - appeal dismissed.

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• 2024 (1) TMI 338
  Approval of Resolution Plan - whether the Adjudicating Authority went into the details of the deliberations of the 6th CoC meeting to find out whether there was sufficient substance in the plea of the Appellant in IA 2304 of 2022 to seek more time to consider the resolution plan? - HELD THAT:- There was no modification in the resolution plan of DK except on the BSP issue and exclusion of wooden flooring in the Master bedroom and this modification was communicated to all CoC members well before the 6th CoC meeting. In any case, both these modifications, at best, would have had a direct bearing on the interests of the home-buyers and not of the Appellant. Further it is noticed that resolution applicant categorically submitted that their plan is final and members may vote on that plan only. The RP infact allowed more time to the Financial Creditors other than the Home-buyers for voting by keeping it open for them for 72 hours instead of 24 hours. In this backdrop, it is not found that the RP committed any error in concluding that the Appellant had failed to substantiate that there was sufficient ground for claiming additional time to study the modified plan. Present is not a case where the Appellant has been able to successfully point out any breach of procedure or manifest error in the conduct of the CIRP proceedings which deserve rolling back of the e- voting results. It needs no emphasis that unwarranted delays in resolution lead to depletion in the value of the assets of the Corporate Debtor. This is neither in the interest of CIRP nor in the interest of the Corporate Debtor. In the present case, extension of CIRP was already granted by the Adjudicating Authority on 24.05.2022 on the expiry of 180 days. The maximization of the value of the Corporate Debtor is admittedly an object of the CIRP and the said maximization has to be achieved within the timeline provided in the scheme. Thus, when a resolution plan is approved by the CoC with more than 66% vote share and submitted before the Adjudicating Authority for approval, it follows therefore that this process cannot be allowed to be frustrated on flimsy grounds. Hence, further delay in CIRP cannot be countenanced. The RP and the CoC cannot be faulted for disallowing further time to the Appellant to study the resolution plan of DK. The Adjudicating Authority cannot interfere on merits with the commercial decision taken by the CoC unless it is found not to conform to Section 30(2) of the IBC - there are no error in the decision of the Adjudicating Authority to approve the resolution plan. Appeal dismissed.

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• FEMA

• 2024 (1) TMI 337
  Power of search and seizure conferred on the Directorate of Enforcement as per FEMA - validity of seizure/confiscation made by the respondents - seeking a direction to return/release the money, currency illegally confiscated/seized - HELD THAT:- The provisions of Section 132B of the Income Tax Act, 1961 inter alia provides for application of seized and requisitioned assets which provides that the assets seized may be dealt with in the manner provided therein, whereby, the amount of any existing liability and the amount of liability determined on completion of the assessment may be recovered out of such assets, however, such power is, thereafter, governed by two provisos A bare look at the first proviso would reveal that on an application made for release of the assets while indicating the source of acquisition of such assets, after adjusting the liability, remaining portion of the assets has to be released. The second proviso indicates that such asset or any portion thereof shall be released within a period of 120 days from the date on which the last of the authorizations for search was executed. The proviso are not without reason inasmuch as the same have been incorporated only with a view that to ensure that determination of liability has to take place expeditiously and in case the same does not take place the assets have to be released. In the present case, search took place on 14/3/2019 and despite repeated representations made in the year 2019 and 2020, neither the assets have been released nor the representations have been rejected indicating any reason. Further, even when a show cause notice was issued on 16/10/2020 and a response was filed on 19/3/2021, despite passage of over 02 years and 09 months, no determination has taken place. So far as the source of acquisition is concerned, as required by the first proviso (supra), a specific submission has been made that the books of account have been seized along with currency and everything is recorded therein and, therefore, the source is very much reflected and available with the respondents. Thus plea raised by respondents pertaining to attempt to challenge the show cause notice is concerned, the adjudication/determination of the show cause notice is well within the powers of the respondents and none prevented them from determining the same expeditiously, however, the respondents have chosen not to make the determination and continue to sit over the various representations made for release of assets, which action cannot be countenanced. Respondents despite release of the seized currency are free to make the determination of the show cause notice, qua which no relief has been claimed presently. Action of the respondents in not releasing the seized assets of the petitioners is essentially in violation of Section 132B of the Act, 1961, which is applicable in terms of Section 37(3) of the FEMA, 1999 and, therefore, the inaction of the respondents in this regard cannot be sustained. Petition is partly allowed. The respondents are directed to pass appropriate orders for release of the seized assets pursuant to the search conducted on 14/3/2019 within a period of four weeks from today.

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• PMLA

• 2024 (1) TMI 336
  Money Laundering - provisional attachment order - economic offences can be quashed at the investigation stage on the ground that the matter had been settled between the parties as they were public wrongs committed against the society? HELD THAT:- In the case of Ram Kishan Fauji [ 2017 (3) TMI 1780 - SUPREME COURT] , the Apex Court had not accepted the view expressed by a full Bench of the Andhra Pradesh High Court, wherein it held that, when the power was exercised under Article 226 of the Constitution for quashing of a criminal proceeding, there was exercise of criminal jurisdiction. A distinction was sought to be made between proceedings for quashing of the FIR under Section 482 of the Criminal Procedure Code and the powers exercisable by the High Court under Article 226 of the Constitution for quashing of criminal proceedings. The present writ appeals are not maintainable and are accordingly dismissed.

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• Service Tax

• 2024 (1) TMI 335
  Classification of services - mining services or Cargo Handling Services/Site Formation Services? - client has issued an work order on 06.06.2005 wherein excavation work in lime-stone mines, transportation of the same and all other related jobs are given to them on a composite contract basis - HELD THAT:- The scope of work given therein consists of various connected activities with the Mining Services pertaining to lime-stone mining. The consideration given is on a lump sum basis without any specific bifurcation towards site formation, excavation, over-burden charges, cargo handling charges etc.. Therefore, there are no justification on the part of the Department to arrive at and assume vivisection and bifurcation of the rates, to issue the demand notice. From the show cause notice itself it is seen that for the period till 31.05.2007 they have vivisected the contract and issued the show cause notice under the heading Cargo Handling Service and Site Formation Service and after 01.06.2007 they have no qualms to accept that the same composite service falls under category of Mining Service heading only and demand is made under that heading. Since the Department itself admits that the above carried out by the appellant is that of Mining Services w.e.f. 01.06.2007, the demand for the earlier period has been made only to fasten excess Service Tax demand on the appellant. After clearly holding that the Department s case of breaking of Mining Service into several services is not legal, still he has gone ahead and held that they are liable to pay Service Tax prior to 06.06.2007 under the category of Cargo Handling Services . The impugned order set aside - appeal allowed.

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• 2024 (1) TMI 334
  Levy of of service tax - Composite works contracts involving rendering the service - transfer or a deemed transfer of property in the material used in executing the works contracts - period 2005-06 to 2010-11 - HELD THAT:- The entire demand confirmed was under the heads Commercial or Industrial Construction Service , Construction of complex service or Management, maintenance and repair service. The charge under these headings applies only to services simplicitor and not to composite works contract services as per M/S LARSEN TOUBRO LTD. ANOTHER, ECC CONSTRUCTION GROUP VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD [ 2015 (10) TMI 612 - SUPREME COURT] . Therefore, the entire demand in the impugned order in this Appeal and interest and consequently all penalties need to be set aside. Levy of service tax - Management, Maintenance and repair service - Commercial or industrial Construction Service/Works contract service - period 2011-12 - HELD THAT:- For the period from 1.6.2007 up to 2012, works contracts could be taxed only if they fell under clause 65 (105)(zzzza) and only under this clause. The scope of this clause was limited and it did not include all composite works contracts involving supply or deemed supply of goods and rendering services but only some such services. Insofar as the construction of a building or structure is concerned, this clause applies to findings for commercial purposes - Even if the reasoning of the Commissioner, that it can also be used for commercial purposes is accepted, the essential nature of the building is not commercial. Therefore, it does not fall under section 65(105)(zzzza). The charging section of a tax statute must be strictly constructed and in case of any doubt, the benefit of doubt must go in favour of the assessee and against the Revenue. MDU is a university created by an Act of state legislature and is meant to provide education. Hence, we find that the service of construction of the auditorium in MDU is exempted during after 2012 also - the demand of service tax on this contract deserves to be set aside. Abatement towards cost of material - the demand of service tax on this contract deserves to be set aside - HELD THAT:- It is undisputed that the work was done in connection with the Central Government quarters which were outsourced by the Ministry of Housing and Urban Affairs to National Building Construction Corporation (NBCC) who, in turn, sub-contracted them to the appellant. Since the civil structure and other works in this case were clearly not meant for commerce or industry but to provide accommodation to the Central Government employees and were rendered to the Ministry of Housing and Urban Affairs, they would be clearly exempted by S.No. 12A (a) of the notification at the hands of the NBCC. The appellant, as a sub-contractor of NBCC will also be exempt by virtue of S.No. 29(h) of the notification. The demand under this contract cannot be sustained and hence needs to be set aside. Construction of Flatted Factories at Sonepat for HSIIDC - Period 2012 13 to 2013 14 - HELD THAT:- Since the dispute is only regarding the certificate that HSIIDC had paid the service tax, this a fit case to be remanded to the Commissioner to examine the certificates produced by the appellant. SCN to EIL (Renovation of Ayakar Bhawan Vaishali, Ghaziabad) - this contract was given by the Income Tax Department to Engineers India Ltd. who, in turn, sub contracted the work to the appellant - HELD THAT:- N/N. 25/2012-ST (S.No. 12A) exempts services rendered to a governmental authority on civil structures other than those meant for commerce, industry or any other business or profession. The building in this case is Income Tax building and it squarely falls under this definition. Therefore, EIL, as a contractor, will get exemption under S. No. 12A. Further, as per S.No. 29 (h) of the same notification, the appellant as a sub-contractor of EIL will get exempted. Therefore, no demand of service tax can be sustained on the services rendered in this contract. Construction of an auditorium in the Kalpana Chawla Government Medical College, Karnal on a contract received from HSCC India Ltd. - case of the appellant is that this construction is covered by notification no. 30/2012 issued under section 68 of the Finance Act according to which only 50% of the Service tax has to be paid by the service provider and the remaining 50% has to be provided by the service recipient - HELD THAT:- In the present case, by virtue of the service being rendered by the Appellant, they were liable to pay service tax in terms of provisions of Section 68. However, he did not record any findings on the question if the appellant s case was covered by notification no. 30/2012-ST and hence only 50% service tax has to be paid or if it is not covered, why - thus this matter also must be remanded to the Commissioner to examine and decide. Thus, the demands on the contracts for services rendered as sub-contractor to NBCC at Kidwai Nagar and in NOIDA SEZ are liable to be dropped. The demand regarding the contract with HSCC India must be remanded to the Commissioner to examine and record a finding on the claim of the appellant that it was covered by notification no. 30/2012-ST and hence was liable to pay only 50% of the service tax which it had already paid. Appeal disposed off.

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• 2024 (1) TMI 333
  Refund of accumulated Cenvat credit - input services or not - scope of Rule 5 of CENVAT Credit Rules, 2004 - time limitation - proceedings in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 73 of the Finance Act, 1994 not initiated - HELD THAT:- It is observed that impugned orders have gone beyond the scope of Rule 5 of CENVAT Credit Rules, 2004, which provide for the refund of the accumulated credit in respect of export of the goods and services. This rule do not provide for denial of any credit while examining the refund claim filed under this Rule. If any credit was to be denied it could have been done in an appropriate proceedings that were to be initiated under Rule 14 of the CENVAT Credit Rules, 2004 - there are no proceedings initiated against the appellant in terms of the denial of the credit held as in admissible under the said Rule 14. Tribunal/ Courts have constantly held that denial of refund claim mad in terms of Rule 5 without initiating any proceedings under Rule 14 is no tenable. Suffice to say that without initiating the proceedings in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 73 of the Finance Act, 1994, CENVAT credit cannot be denied during the refund proceedings under Rule 5 ibid. Applicability of Rule 5 of CCR - HELD THAT:- Even if the contention of the revenue was to be accepted then also the credit should have been denied by initiating the proceedings under Rule 14 and not in proceedings of refund under Rule 5 of CENVAT Credit Rules, 2004. There are no merits in the impugned order to the extent it has sought to disallow the CENVAT Credit to the extent of Rs.4088/- + Rs.1,09,63,679/- + Rs.6,60562/- + Rs.54,20,341/- = Rs.1,70,48,670/- for determining the Net Cenvat Credit , in the formula prescribed under Rule 5 of the CENVAT Credit Rules, 2004. Thus the Net Cenvat Credit for the application of this formula should have been Rs.3,82,73,665/- and eligibility to refund determined ACCORDINGLY. The difference of the amount allowed as refund and the amount debited from the CENVAT Account on 19.02.2013 should be allowed as credit in the account books of the appellant. Adjudicating authority should have allowed back the credit of entire amount of refund denied, to the appellant by his order and the appellant could have utilized the same for his domestic clearances. Having not done so adjudicating authority has gone beyond the provisions of CENVAT Credit Rules and Notification No.27/2012-CE (NT) dated 18.06.2012. As the law exists now the entire amount which was debited by the appellant at the time of filing this refund claim should be allowed as cash refund to the appellant in terms of the above provisions of CGST Act, 2017. Appeal allowed.

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• Central Excise

• 2024 (1) TMI 332
  CENVAT Credit - Stock transfer - disallowance of ineligible credit transferred by Unit-II to Unit-I - HELD THAT:- The very same issue came up for consideration before the Tribunal in appellant s own case in M/S. INDO SHELL CAST PVT. LTD. (UNIT I) VERSUS THE COMMISSIONER OF GST CENTRAL EXCISE, COIMBATORE [ 2023 (7) TMI 429 - CESTAT CHENNAI ], the Tribunal has held that the credit availed by Unit-I on account of the excess duty paid by Unit II cannot be denied. The excess duty happened to be paid because of the practical difficulties of arriving at the actual production cost at the time of clearance of goods. Further, the situation is completely revenue neutral. It also requires to be stated that when the duty has been paid by Unit-II as per the invoices, the credit cannot be denied by the department at the recipient s unit. Following the decisions in the appellant s own case for the period from April 2007 to September 2011, the demand and penalties cannot sustain and requires to be set aside. The impugned orders are set aside. The appeals are allowed.

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• 2024 (1) TMI 331
  CENVAT Credit - input services - Manpower Supply Services - denial on the ground that the Manpower supply was in relation to Depot management, Sales and other activities which are not directly connected to manufacturing activity - Time limitation - HELD THAT:- The Adjudicating Authority has taken a very narrow view holding that the Manpower Service should be relatable only to the manufacturing activity and not to any other activities outside the factory premises - this view is found to be grossly erroneous. Had he taken care to go through the definition of input service in a harmonious way, he would have found that there are many services which are provided by the service provider outside the manufacturing factory premises, which are all eligible for Cenvat Credit. Therefore, the OIO set aside on merits and the Appeal allowed. Time Limitation - HELD THAT:- The Department has been accepting their ER 1 Returns wherein the Cenvat Credit taken by them would have been shown on a regular basis. After the audit had taken an objection on this issue in 2006, the Appellant has filed their reply after which no further action was taken up by the Department. As a matter of fact, since Audit has raised this issue in 2006, the Department should not have waited for more than four years to issue the Show Cause Notice. Therefore, the Show Cause Notice issued is hopelessly time barred. The Appeal stands allowed both on merit as well as on account of time bar.

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• CST, VAT & Sales Tax

• 2024 (1) TMI 330
  Refund of the Central Sales Tax (CST) amounts deposited by the petitioner - rejection of refund without assigning any reasons - violation of principles of natural justice - HELD THAT:- It was necessary for the Assessing officer/Deputy Commissioner of State Tax to have addressed the issue of refund as claimed by the petitioner in a more elaborate manner. He ought to have furnished adequate reasons on the case which was put up by the petitioner for his consideration, in taking a decision on such refund claim of the petitioner. It is noted that the refund application of the petitioner dated 20 June, 2017 have raised substantive grounds which were required to be dealt with reasons. However, considering the meager reasons, as recorded by the Deputy Commissioner of State Tax, it is opined that such reasons are surely not sufficient so as to amount to an appropriate adjudication of the refund claim of the petitioner, as the law would mandate. The Assessing Officer/Deputy Commissioner of State Tax needs to de novo consider the proceedings and pass appropriate assessment orders, which may be a consolidated order or otherwise, however, by furnishing appropriate reasons on the refund application of the petitioner in accordance with law. Petition disposed off.

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• 2024 (1) TMI 329
  Violation of principles of natural justice - prior to the filing of reply, the impugned order was passed by the respondent without providing any opportunity of personal hearing to the petitioner - calling for the details of the imported goods from the petitioner - HELD THAT:- In the present case, it appears that the petitioner is in the business of supplying bone meal and they had not at all imported any materials at any point of time. However, the notice was issued by the 1st respondent as if the petitioner had imported timber and the said information is said to have been obtained by the 1st respondent from the Customs Department. Further, according to the 1st respondent, the petitioner had received the show cause notice and they had not filed any reply for the said notice. This Court is of the view that even assuming that the petitioner had received the notices and not filed any reply, the 1st respondent is supposed to have provided the opportunity of personal hearing to the petitioner before the passing of impugned order, which is mandated in terms of Section 75(4) of the Goods and Services Tax Act, 2017 and the same has not been done in the present case. Therefore, this Court is of the considered view that any order has to be passed only after providing an opportunity of personal hearing. Further, in the present case, the petitioner had passed the impugned order under the misconception that the petitioner had imported timber, which is totally contrary to the business of the petitioner. Hence, for the interest of justice, the impugned order is liable to be set aside. Accordingly, the impugned order dated 13.10.2021 is set aside. The attachment notice dated 02.08.2022, which was issued based on the said impugned order, shall stand lifted. While setting aside the said order, this Court remits the matter back to the 1st respondent - Petition disposed off.

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• Indian Laws

• 2024 (1) TMI 328
  Persistent disregard for judicial directives and a lackadaisical approach to legal and financial obligations - High Court took a firm stance against the appellant s continued failure to fulfil his financial obligations, culminating in the cancellation of his bail and suspension of sentence - HELD THAT:- The complainant was entitled to receive a total amount of Rs. 4,63,50,000/-. The undertaking as also the order dated 03.07.2018 clearly mention that both of them will pay the amount equally as agreed by and between them and it further contains a stipulation that in default of the payment by either of them as per their agreed share in the settlement, they shall be held liable and prosecuted as per law. The settlement between the two directors i.e. the appellant and the intervenor is inter se these two only and the complainant is not bound by the same. Complainant s agreement or consent was only to the extent of accepting Rs. 4,63,50,000/- only. He was not a signatory to the agreement which was signed by the two parties. Admittedly, both the appellant and the intervenor were Chairman and Vice-Chairman of the company AGPL and, therefore, were convicted by the Trial Court and their conviction was affirmed by the Appellate Court. There are no illegality in the order passed by the High Court. The appeal is accordingly dismissed with costs quantified at Rs. 5 lakhs to be paid to the respondent No. 2 (Complainant) within four weeks from today. It is clarified that this amount of costs will not be adjusted against the compensation awarded to the respondent No.2 but will be in addition to it.

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• 2024 (1) TMI 327
  Granting payment of revised rates to take care of escalated cost of work executed by the claimant and the work executed beyond the originally stipulated time i.e., 6.5.1992 - It was held by High Court that the arbitrator s award being patently illegal, unreasonable, contrary to public policy, the Court below exercising the power under Section 34(2) of the Act is sustainable. At any stretch of imagination, it cannot be construed as mere re-appreciation of evidence. HELD THAT:- The appeal is allowed in terms of the signed reportable judgment.

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