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TMI Tax Updates - e-Newsletter January 19, 2023 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles ON DEATH OF DIRECTOR OF ASSESSEE COMPANY HIS LEGAL HEIRS CANNOT BE SUBSTITUTED TDS on year end provisions…When applicable, when not Supply of sharpeners along with pencils amounts to ‘Mixed Supply’ taxable at the higher rate among all the supplies Afforestation of plants carried out by charitable trust is exempted from the levy of GST News Directorate General of Foreign Trade (DGFT) simplifies Composition Fee for Export Obligation Extension under Advance Authorization Scheme DFS organises symposium on preparing for Cyber Security Measures and readiness in Financial Services sector First G-20 Infrastructure Working Group (IWG) Meeting IN Pune concludes Notifications GST - States 02/GST-2 - dated 12-1-2023 - Haryana SGST Amendment of Notification No. 36/GST-2, dated 30.06.2017 under the HGST Act, 2017 01/GST-2. - dated 12-1-2023 - Haryana SGST Amendment of Notification No. 35/GST-2, dated 30.06.2017 under the HGST Act, 2017. 13/2022-State Tax (Rate) - dated 10-1-2023 - Tripura SGST Amendment in Notification No. 2/2017-State Tax (Rate), dated the 29th June, 2017 12/2022-State Tax (Rate) - dated 10-1-2023 - Tripura SGST Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017 SEBI SEBI/LAD-NRO/GN/2023/118 - dated 17-1-2023 - SEBI Securities and Exchange Board of India (Settlement Proceedings) (Amendment) Regulations, 2023 SEBI/LAD-NRO/GN/2023/116 - dated 17-1-2023 - SEBI Securities and Exchange Board of India (Stock Brokers) (Amendment) Regulations, 2023. SEBI/LAD-NRO/GN/2023/115 - dated 17-1-2023 - SEBI Securities and Exchange Board of India (Change in Control in Intermediaries) (Amendment) Regulations, 2023 Circulars / Instructions / Orders DGFT 52/2015-2020 - dated 18-1-2023 Amendments in Para 4.42 of the Handbook of Procedures 2015-2020 TRADE NOTICE No. 25/2022-23 - dated 17-1-2023 Streamlining of Halal Certification Process for Meat and Meat Products Highlights / Catch Notes GST Refund of amount of tax deposited by the petitioner - Detention of vehicle alongwith the goods - Once demand has been raised against the petitioner after passing of the order by the competent Authority, no question arises for refund of the amount unless the order is set aside - HC Visit to Get Source Cancellation of registration of petitioner - non-application of mind - time limitation - e concerned officer should carefully pen down the orders, and not rely on the system generated orders. - those who are willing to be part of the tax regime should be given, as far as possible, an opportunity to do so. - Matter restored back - HC Visit to Get Source Income Tax Taxable capital gain on sale of detachable warrants - according to the appellant itself some value has to be ascribed to the detachable warrants and when such cost was accepted rather agreed to an extent of Rs. 2.175/- which led the C.I.T. (Appeals) to pass the order has been rightly affirmed by the Tribunal - HC Visit to Get Source Rectification u/s 154 - Credit for Tax Deducted at Source (TDS) as deducted in respect of the Transferor Company - scheme of arrangement of amalgamation - respondent no.1 shall consider whether it is feasible to modify its software to show the credit of TDS in similar cases where schemes of amalgamation, demerger or arrangement are sanctioned by the concerned authority. - HC Visit to Get Source Accrual of income - Income from interest on securities - When an instrument or an agreement stipulates interest to be payable at specified date, interest does not accrue to the holder thereof on any date prior thereto. Interest would accrue or arise only on the date specified in the instrument. - HC Visit to Get Source Reopening of assessment u/s 147 - Validity of notice issued u/s 148 and 148A(b) - the notice issued under Section 148A(b) of the Act should have clearly brought out the allegations against the petitioner. - Notice and orders are set aside, with liberty to the AO to issue a fresh notice u/s 148A(b) of the Act - HC Visit to Get Source Deduction claimed u/s 54 - oint owners of the house property having 50% right, title and interest over the property - Since the assessee and her son have jointly invested the house property and are the joint owners of the house property having 50% right, title and interest over the property, the Assessing Officer is, therefore, correct in restricting the claim of the assessee u/s 54 by making an addition to the total income of the assessee.- AT Visit to Get Source TDS credit - refund of TDS reflected in his Form-26AS - tax liability was created against the firm but crediting in the account of partner / individual - no dispute that the TDS was deducted on the sale consideration of the asset, which was owned by partnership firm - there is no dispute that the assessee is partner in the said firm and signed the sale deed on behalf of partner in fiduciary relationship. It is also admitted fact that the TDS was credited in the account of (PAN) of assessee - AO directed to verify the claim - AT Visit to Get Source Deduction u/s 54B - Capital gain on transfer of land used for agricultural purposes - The crucial point of controversy thus, needs to be restored to the files of Ld. CIT(A) to allow the additional evidences of the assessee and to let the assessee establish that the land falling in the share of assessee which was sold by the impugned sale deed was not converted to non-agricultural purposes by any order of revenue authorities - AT Visit to Get Source Reopening of assessment u/s 147 - What information is available with the Assessing officer is neither stated nor enclosed with the reasons so recorded by him and thus not discernable from the reasons so recorded. Merely the fact that the assessee has sold certain shares with certain value on the stock exchange cannot by itself be held as tangible material. - AT Visit to Get Source Addition u/s 68 - the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions - AO simply harped on the non production of directors of the assessee and share subscribing companies to make the addition which is not correct - Additions deleted - AT Visit to Get Source Weighted deduction u/s.35(2AB) - research & development expenses incurred on laboratory & Clinical Trial - based on the binding effect of the various judicial rulings discussed herein above we are inclined to take a view that prior to 1.7.2016 Form 3CL does not certify the amount of deduction and therefore the same cannot be the reason for restricting the amount eligible for weighted deduction. - AT Visit to Get Source Revision u/s 263 - bad debts written off - assessee had not even reflected under the head “bad debts” in the relevant column of ITR - though it was mistakenly omitted, however, the assessee company had given the due disclosure of the amount written off in the audited profit and loss account. The issue has not only been brought to the notice of the assessing officer, but the same has also been examined and verified by the AO - Revision proceedings are not valid - AT Visit to Get Source Selection of cases for scrutiny - Addition u/s 68 or 69A - it shall be worthy to note that, for the impugned year the appellant has made no investment in her individual capacity so has to trigger any basis for scrutiny assessment on the prescribed criteria of investment, thus the very basis of initiation of scrutiny in the appellant’s case fails, consequently the impugned assessment stand with no legs in the eyes of law - AT Visit to Get Source Scope of limited scrutiny - AO has not taken any such approval of the concerned authorities - Once, the international transactions reported in Form 3CEB have been verified by the TPO and no adjustments were suggested, it has to be accepted that assessee has reported the transactions correctly. Therefore, then, the purpose of limited scrutiny gets sub-served and the matter should have ended there. However, the Assessing Officer exceeding his jurisdiction has ventured into recheracterizing the nature and character of a particular item of income, which in our view, is beyond the scope of limited scrutiny. - AT Visit to Get Source Revision u/s 263 - limited scrutiny assessment - there is no such credible material or information which would justify widening the scope of limited scrutiny. Therefore, Ld. Pr. CIT, in our considered opinion, could not term the assessment order as erroneous or prejudicial to the revenue since the flagged issues, could otherwise be not examined by Ld. AO during the course of regular assessment proceedings. - AT Visit to Get Source Customs Classification of imported Automatic Data Processing Machines (ADP) - Desktop Computer - to be classified under Tariff Item 8471 50 00 or under Tariff Item 8471 30 10? - Whether mere factum of weighing less than 10 kilograms would be sufficient to classify the Concerned Goods as ‘portable’ or not? - he Concerned Goods are not portable for the reasons that Firstly, the diagonal dimension of the Concerned Goods being minimum of the length of 18.5 inches and the same needs to be transported along with the power cable as well as the applicable stand in most cases if it is to be mounted and; secondly there being no protective case designed by the markets for daily transport for these Concerned Goods. - It is directed that valuation of the Concerned Goods for levy of the duty be determined under the initially declared - SC Visit to Get Source Payment of demurrage detention and any other charges - the petitioner has not responded to the various letters and summons issued by the respondent. Therefore, it cannot be said on the basis of the record available in the present proceedings that the respondents were solely responsible for the delay caused. - No relief - HC Visit to Get Source Dismissal of appeal - alleged defect, for non-compliance of mandatory pre-deposit in terms of Section 129E of the Customs Act - the appeals filed by them have been rightly dismissed as non-maintainable for non-fulfillment of mandatory condition of pre-deposit. - HC Visit to Get Source Revocation of petitioner’s Customs Broker License - Question of law - Period of limitation - whether time prescribed under the said Regulation for completion of the proceedings and passing of the final order within 90 days from the date of receipt of inquiry report is directory or mandatory - The imagined order of revocation of petitioner’s license dated 11th July, 2022 shall remain stayed till 30th April, 2023 or until further order, whichever is earlier. - HC Visit to Get Source Corporate Law Waiver of late filing fee - non filing of Form AOC-4 and MGT-7 in time - the Petitioner was not ready to upload these documents either on 31st December, 2020 or even within the extended period of 31st March, 2021 - this Court does not see any merit in the prayer of the Petitioner for permitting to file the form AOC-4 or Form MGT-7 in respect of its AGM dated 28th September, 2019 without additional fee and penalty. - The present writ petition is without any merit and is, accordingly, dismissed. - HC Visit to Get Source Indian Laws Inviting tenders - violation of the operating guidelines - Inviting tenders from the entities mentioned in paragraph 4(vi)(b) is the most transparent and non-arbitrary method of allocation that can be undertaken. Hence, the appellant must henceforth purchase Ayurvedic medicines only through a free and transparent procedure such as tenders. - SC Visit to Get Source Dishonor of Cheque - Effect of moratorium to non-corporate debtor/debtors dealt under Section 141 of the Negotiable Instruments Act - vicarious liability - The twin contentions raised by the learned counsel for the petitioners to quash Annexure-A complaint, found to be not sustainable. However, the prosecution against the 1st petitioner, the corporate debtor shall stand deferred subject to the outcome of moratorium proceedings, while allowing continuance of prosecution against petitioners 2 to 7, the non-corporate debtors/natural persons. - HC Visit to Get Source IBC CIRP - Recovery of outstanding Electricity dues - Since no such nexus has been proved by the licensee in the present case, mere subsistence of the licensee’s right to claim outstanding dues from the erring consumer cannot justify shifting of such burden on the auction-purchaser and, for all practical purposes, there is no statutory provision to claim the amount from the writ petitioner. - The impugned claim of the DVC is not tenable in the eye of law - HC Visit to Get Source Central Excise Demand of interest on late payment of National Calamity Contingent Duty (NCCD) - taking judicial notice that the appellant was prevented from deposit of dues, due to glitch on the portal, which is wholly attributable to inaction on the part of Revenue. Thus, Revenue cannot take advantage of its wrong doing, by levy of interest. - AT Visit to Get Source Case Laws: GST 2023 (1) TMI 733 Detention of vehicle alongwith the goods - refund of amount of tax deposited by the petitioner - stand taken in the counter affidavit filed by the respondents is that the petitioner had failed to furnish any explanation - HELD THAT:- Nothing survives in the present petition at this stage as the order having been passed against the petitioner way back on February 18, 2018, the petitioner had appropriate remedy to challenge the same by filing appeal. Once demand has been raised against the petitioner after passing of the order by the competent Authority, no question arises for refund of the amount unless the order is set aside - the present petition is dismissed. 2023 (1) TMI 732 Cancellation of registration of petitioner - non-application of mind - time limitation provided under Section 107(1) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The orders cancelling registration are a serious matter, they impact the registrants, and therefore, the concerned officer should carefully pen down the orders, and not rely on the system generated orders. In this case, it appears that the order dated 16.09.2019 was framed without due application of mind - those who are willing to be part of the tax regime should be given, as far as possible, an opportunity to do so. The matter is remitted to the Appellate Authority to examine the same on merits. 2023 (1) TMI 731 Seeking reopening of portal to file TRAN-1 and TRAN-2 - Transition of unutilized credit in respect of Input Service Distribution (ISD) - HELD THAT:- Since this position was recognized, the prayers made in the writ petition were allowed, not as a matter of concession, but because of the position of law as declared by the judgments referred to in paragraph 4 of M/S HERO MOTOCORP LTD. VERSUS UNION OF INDIA ORS. [ 2022 (9) TMI 1409 - DELHI HIGH COURT] where it was held that the issue stands covered by UNICHEM LABORATORIES LIMITED, CASTROL INDIA LIMITED AND ANR. NIVEA INDIA PRIVATE LIMITED, PFIZER LIMITED AND SIEMENS HEALTHCARE PVT. LTD. VERSUS UNION OF INDIA AND 5 ORS [ 2022 (9) TMI 258 - BOMBAY HIGH COURT] , COLGATE PALMOLIVE (I) LIMITED VERSUS UNION OF INDIA ORS. [ 2022 (8) TMI 1282 - BOMBAY HIGH COURT] and M/S BODAL CHEMICALS LTD. VERSUS UNION OF INDIA [ 2022 (2) TMI 846 - GUJARAT HIGH COURT] where it was held that The Hon ble Apex Court, to aid the assessees to overcome the procedural/technical hurdles, by the order UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER] directed the GST Network to open the common portal to file/rectify TRAN-1 and TRAN-2 for a period of two months, i.e., with effect from 1st September, 2022 to 31st October, 2022 to enable the different private parties to avail Transitional Credit. Since, we were in agreement with the ratio of those judgments, we allowed the relief prayed for by the writ petitioner. Petition allowed. Income Tax 2023 (1) TMI 730 Notice u/s 201 - failure to deduct or pay - period of limitation - HELD THAT:- As considering the fact that the liability of the recipient in the subject-matter of Appeal before the High Court and to avoid any further question, which may arise on limitation, we confirm the impugned judgment and order passed by the High Court [ 2022 (2) TMI 345 - BOMBAY HIGH COURT ] quashing and setting aside the order u/s 201 we also direct that the matter be remitted to the AO(TDS) at the stage of issuance of show cause notice u/s 201 so that after the decision of the High Court in the pending Appeal, the same can be proceeded further in accordance with law and on merits. 2023 (1) TMI 729 Disallowance u/s 36(1)(va) being employee's contribution to provident fund and ESI - same were not deposited in the respective fund within the stipulated time - HELD THAT:- As appellant submits that the issue involved in this appeal is squarely answered in favour of the Revenue by a three Judge Bench of this Court in Checkmate Services Private Limited vs. Commissioner of Income Tax-I)[ 2022 (10) TMI 617 - SUPREME COURT] In view of the above, the impugned judgment passed by the High Court of Judicature at Bombay is set aside and the Appeal is allowed in terms of the cited decision. 2023 (1) TMI 728 Taxable capital gain on sale of detachable warrants - Whether detachable warrants attached with Part 'C' of debentures of Deepak Fertilizers and Petrochemicals Ltd. had no conceivable cost of acquisition? - HELD THAT:- In the case on hand, it was observed clearly by C.I.T. (Appeals) and the view of it was affirmed by learned Tribunal is on the basis that the appellant itself has clearly stated that it was agreeable to accept the valuation of Assessing Officer at Rs.2.175/- only and it is under such circumstances the Assessing Officer was directed to accept the said valuation and calculate the capital gain accordingly. As such, when the assessee itself has accepted the cost as indicated above, we are of the view that both the authorities have rightly come to the conclusion since the same is based upon the appellant s representation itself. Under the circumstances whether matter was required to be remanded back or not was an issue and not required to be gone into since there appears to be a clear stand of the appellant itself, which has led the authority below to proceed and pass an order now under challenge. Present appellant has tried to rely upon the decision delivered by the Hon ble Apex Court in B.C.Srinivasa case 1981 (2) TMI 1 - SUPREME COURT there was a reference with regard to a goodwill, which was a selfgenerating asset as distinct from the detachable warrant. Hence, the said issue also having been examined by the learned Tribunal before passing the order. We see no error committed by the Tribunal. Conclusions arrived at by the Tribunal as also by the C.I.T. (Appeals) do not require any interference. Undisputedly, according to the appellant itself some value has to be ascribed to the detachable warrants and when such cost was accepted rather agreed to an extent of Rs. 2.175/- which led the C.I.T. (Appeals) to pass the order has been rightly affirmed by the Tribunal - substantial question of law in favour of revenue against assessee. 2023 (1) TMI 727 Rectification u/s 154 - Credit for Tax Deducted at Source (TDS) as deducted in respect of the Transferor Company - scheme of arrangement of amalgamation - specified undertakings of the companies were demerged in the three petitioners and the residual Transferor Company was amalgamated with petitioner no.1 - grievance of the petitioners stems from the fact that the Income Tax Authorities have not devised any procedure for immediately providing credit for Tax Deducted at Source (TDS), which was deducted in respect of the Transferor Company - HELD THAT:- Insofar as the petitioners prayer for rectification of the order is concerned, this Court is informed that rectification orders under Section 154 of the Act have already been passed and the said prayer does not survive. Petitioners states that petitioner no.1 continues to be aggrieved as the income tax portal reflects an outstanding demand of ₹1,24,97,631/-. He states that petitioner no.1 is unaware as to how the said amount has been computed. This Court considers it apposite to dispose of the present petition by issuing the following directions:- (a) respondent no.1 shall communicate the computation of the amount of the tax demand which is reflected as outstanding against petitioner no.1 within a period of two weeks from date; and (b) respondent no.1 shall consider whether it is feasible to modify its software to show the credit of TDS in similar cases where schemes of amalgamation, demerger or arrangement are sanctioned by the concerned authority. 2023 (1) TMI 726 Reopening of assessment u/s 147 - second notices under Section 148 of the Income Tax Act, 1961, relating to the same assessment years instead of completing the assessment on returns filed in response to the first notices under Section 148 - whether a second notice u/s 148 issued by the assessing officer after the expiry of one year as per Section 153(6)(i) is valid without disposing the return filed to the first notice issued under Section 148 of the Income Tax Act for the very same assessment year - HELD THAT:- Relevant provision of law under Section 153(6)(i) of the Income Tax Act, 1961, and the judgment of the Division Bench of this Court in the case of INDIAN TUBE CO. LIMITED. VERSUS INCOME-TAX OFFICER. [ 2004 (6) TMI 18 - CALCUTTA HIGH COURT] respondent assessing officer concerned was not justified in law in issuing impugned second notices u/s148 relating to the same assessment years instead of completing the assessment on returns filed in response to the first notices under Section 148 of the Act after disposing the objection filed by the petitioner by passing a reasoned and speaking order as per earlier order/direction of this Court in earlier writ petition remanding the matter back to the assessing officer. Action of the assessing officer allowing the expiry of period of limitation of one year to complete the assessment as per Section 153(6)(i) from the date of order of this Court in earlier writ petition on the first notices under Section 148 of the Act relating to same assessment year and issuing second notice in respect of the very same assessment year is not legal and valid. In view of the reasonings and discussion made above the impugned second notices under Section 148 of the Income Tax Act, 1961, relating to assessment years 2012-13 and 2013-14 and all subsequent proceedings are quashed. 2023 (1) TMI 725 Accrual of income - Income from interest on securities - Whether computed on accrual basis or on due basis? - HELD THAT:- As held that interest can be said to have accrued only on the date on which it was due as per the terms and conditions of the security. When an instrument or an agreement stipulates interest to be payable at specified date, interest does not accrue to the holder thereof on any date prior thereto. Interest would accrue or arise only on the date specified in the instrument. Learned counsel for the appellant fairly submits that though in the body of the judgment there is no discussion on the issue as to the finding of the Bombay High Court that the interest income on securities has to be taxed on due basis, nonetheless, by the aforesaid decision, the appeals preferred by the revenue were dismissed. As in Commissioner of Income Tax v. State Bank of India [ 2016 (8) TMI 963 - BOMBAY HIGH COURT] one of the substantial questions of law which was considered by the Bombay High Court was whether Tribunal was right in law in accepting the plea of the assessee that the interest income on the securities had to be taxed on due basis only instead of accrual basis as per the mercantile system of accounting followed by the assessee. Insofar this question is concerned, Bombay High Court referred to its previous decision in Credit Suisse First Boston (Cyprus) Limited [ 2012 (8) TMI 17 - BOMBAY HIGH COURT] and held that issue stands concluded against the revenue and in favour of the assessee. We concur with the view expressed by the Bombay High Court in M/s. Credit Suisse First Boston (Cyprus) Ltd [ 2012 (8) TMI 17 - BOMBAY HIGH COURT] followed by the decision in State Bank of India (2 supra). Decided in favour of the assessee. 2023 (1) TMI 724 Reopening of assessment u/s 147 - Validity of notice issued u/s 148 and 148A(b) - petitioner had entered into transactions with Kisna Traders Pvt Ltd in the relevant period, through a broker going by the name Varun Capital Services Ltd., in respect of shares of companies - HELD THAT:- All that the communication dated 15.05.2018 shows, is that a survey report was generated vis- -vis Varun Capital Services Ltd. The said communication also alludes to the fact that assessee had entered into share transaction with Kisna Traders Pvt Ltd in the Financial Years(FY) 2014-15 and 2015-16 in respect of the shares referred to in the table. As to how this transaction led the AO to conclude/form an opinion that there was escapement of income is not articulated in the notice issued under Section 148A(b) of the Act. Petitioner, says that this was an online trading and related to a genuine transaction between the petitioner and Kisna Traders Pvt Ltd. In our opinion, the notice issued under Section 148A(b) of the Act should have clearly brought out the allegations against the petitioner. The impugned notices, both under Section 148 and 148A(b) of the Act, as also the order passed under Section 148A(d) of the Act, are set aside, with liberty to the AO to issue a fresh notice under Section 148A(b) of the Act, wherein the AO will clearly articulate as to how, according to him, the income chargeable to tax has escaped assessment. 2023 (1) TMI 723 Deduction u/s 80-IB - sub-licence fee - reallocating expenditure/income on account of royalty from Jammu Unit to Corporate Division - HELD THAT- As decided in 2018 (9) TMI 1629 - DELHI HIGH COURT Montage Enterprises Pvt. Ltd matter requires reexamination by the Tribunal on the question, whether the Jammu Unit had utilized the technical know-how provided to the respondent assessee company under the MoUs. Till this core and important aspect and question is decided, we cannot proceed and decide, the other question whether the expenditure on royalty was incurred by the Jammu Unit or the Corporate Office. In view of the aforesaid finding in the appeal filed by the Assessee, the Tribunal did not decide the cross appeal filed by the Revenue challenging order passed by Commissioner of Income Tax (Appeals), allowing netting of royalty received from royalty paid for computation of deduction under Section 80-IB of the Act. As we have remanded the issue of deduction under Section 80-IB, it will be open to the Assessee to press their cross appeal before the Tribunal in case of an adverse finding against the assessee on the first issue. The directions contained in Montage Enterprises Pvt. Ltd. will apply mutatis mutandis in respect of the instant appeals as well. The matters are, thus, remitted to the Tribunal for a fresh adjudication. 2023 (1) TMI 722 Reopening of assessment u/s 147 - re-assessment were initiated pursuant to a Tax Evasion Petition (TEP) uploaded by one of the Income Tax officials on the portal of the Assessing Officer - As argued all material as available with the Assessing Officer as Information was not provided to the petitioner - respondent, has handed over several documents including the ledger accounts, which were available with the AO as Information for initiating the re-assessment proceedings, Concededly, the said documents were not provided to the petitioner and the petitioner had no occasion to respond to the same. HELD THAT:- This Court is of the view that it would be apposite to set aside the impugned notice and the impugned order and to direct the AO to reconsider the matter after affording the petitioner to respond to the material relied upon by the Assessing Officer. This Court directs as under: (i) The Assessing Officer shall provide all documents considered by him as Information for initiating the re-assessment proceedings to the petitioner within a period of two weeks from today. (ii) The petitioner is given an opportunity to respond to the same within a period of one week thereafter. (iii) The Assessing Officer shall pass such order as it considers fit on receipt of the response of the petitioner, within a period of four weeks thereafter. This Court has not expressed any opinion as to the merits of the petitioner s contention that income chargeable to tax had not escaped assessment and nothing stated in this order should be construed as such. 2023 (1) TMI 721 Penalty u/s 271C - Proceedings as time barred - non deduction of tax at source on the transaction under provisions of Section 194C - Counsel submitted that penalty proceedings have been initiated 14 years after the assessment year concerned - HELD THAT:- Firstly, penalty proceedings have been initiated after 14 years and the same is belated and beyond reasonable limitation period of time and this proposition is supported by the decision of NHK Japan Broadcasting [ 2008 (4) TMI 182 - DELHI HIGH COURT] and Bharti Airtel vs. UOI [ 2016 (12) TMI 1601 - DELHI HIGH COURT] As in terms of jurisdictional Delhi High Court in CIT vs. Mahesh Woods Products (P) Ltd. [ 2017 (5) TMI 433 - DELHI HIGH COURT] and PCIT vs. Rishikesh Buildcon Pvt. Ltd. [ 2022 (11) TMI 1038 - DELHI HIGH COURT] when the date of initiation for the purposes of Section 275 is 27.03.2019 and, therefore, order ought to have been passed within six months i.e. by 30.09.2019, whereas order has been passed on 31.10.2019. Hence, beyond limitation. Thus we hold that the penalty levied in this case deserves to be deleted. Hence, we set aside the orders of the authorities below and delete the penalty. - Decided in favour of assessee. 2023 (1) TMI 720 Deduction claimed u/s 54 - assessee and her son have jointly invested the house property and are the joint owners of the house property having 50% right, title and interest over the property - Whether required under law that the house should be purchased in the name of the assessee only? - HELD THAT:- The property has been acquired jointly by the assessee and her son further the sale proceeds from the old house were received by the assessee on 10/09/2013 whereas the payment were made to JP Greens in two installments on 30/08/2013 and on 07/09/2013. The amount have been paid from the joint account of the assessee along with her son. The assessee did not had any source of income to pay Rs. 1,00,00,000/- before she receives the sales proceeds from the old assets, there have been credit entries in the Joint Bank Account, which obviously was the income of assesse s son and the amount of Rs. 1,00,00,000/- has been paid from the income of the son. Since the assessee and her son have jointly invested the house property and are the joint owners of the house property having 50% right, title and interest over the property, the Assessing Officer is, therefore, correct in restricting the claim of the assessee u/s 54 by making an addition to the total income of the assessee. Therefore, we do not find any error or legal infirmity in the orders of the Lower Authorities. Thus, the grounds of appeal of the assessee dismissed. 2023 (1) TMI 719 TDS credit - refund of TDS reflected in his Form-26AS - tax liability was created against the firm on transfer of such asset, which was owned by firm - CPC denied such refund in its intimation dated 08.10.2018 - HELD THAT:- Claim of credit can only be considered in the hand of firm as the income is assessable in the hand of partnership firm. The assessee executed the sale deed on behalf of the firm in the representative capacity as a partner. The assessee has not filed any declaration that as per Rule 37BA the credit be given to the partnership firm. We find that there is no dispute that the TDS was deducted on the sale consideration of the asset, which was owned by partnership firm - there is no dispute that the assessee is partner in the said firm and signed the sale deed on behalf of partner in fiduciary relationship. It is also admitted fact that the TDS was credited in the account of (PAN) of assessee. From the fact of the present case, it is not clear that any tax liability was created against the firm on transfer of such asset, which was owned by firm. Thus, we deem it appropriate to restore the case to the file of assessing officer, with the direction to adjudicate the issue afresh. The assessee is also directed to move appropriate application under section 199 read with Rule 37BA for claiming the credit of such TDS with required declaration, undertaking of other condition prescribed therein. On filing such application with required declaration, the assessing officer shall decide the same in accordance with law. Needless to direct that before passing the order afresh the assessing officer shall grant proper and fair opportunity to the assessee. Appeal of the assessee is allowed for statistical purpose. 2023 (1) TMI 718 Deduction u/s 54B - Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases - basis of situation of the disputed land outside the municipal limits the land has not been considered to be capital land for the purpose of Section 2(14) - assessee as primarily submitted that only on the basis of high stamp duty levied by the registration authority, AO has concluded the land is a capital asset being non-agricultural land - Whether land falling in the share of assessee which was sold by the impugned sale deed was not converted to non-agricultural purposes? - HELD THAT:- Primarily it is on the basis of the fact that in the sale deed, land was mentioned to be sold for residential purpose and that it has been assessed to stamp duty as a non-agricultural land, the land was considered to be of capital in nature - matter of fact is that in the revenue record copies filed before AO it was mentioned that land is under use for agricultural purposes. It has standing crops and irrigated by tubewell. There is report of the concerned revenue officer Lekhpal that Khasra no. 175 of which the land sold is part is situated at distance of 9 kilometer away from Nagar Palika. However, the matter of fact is that there is a copy of revenue record in the form of Kisan bahi and Khatauni for the Falsi year 1414 to 1422 i.e. assessment year 2008-09 to 2012-13. There it is mentioned that in proceedings u/s 143 of the UP Jamindar abolition of Land Reforms Act, 1950 which authorizes Sub Divisional Magistrate / Assistant Collector to change the type and nature of any land from agricultural land to residential proceedings was initiated under a petition title Vinay and Kedar vs. State and by order dated 05.11.2004 land forming part of Khasra no. 175/ 0.619 Hectare stood converted for non-agricultural purposes. Ld. AO has specifically taken note of it in the assessment order. Thus, there was the change of land use before it was sold by the assessee. AO has not taken any inquiry to ensure that when there were various co-sharers holding different title in a survey number to which assessee was also a co-sharer, then if the whole land in the survey number was converted to non-agricultural purpose or land falling in the share of assessee was not converted to non-agriculture purpose. Ld. AO seems to have fallen in error in reading the revenue records without seeking its due clarification from the assessee. At the stage of appeal, Ld. CIT(A) has fallen in error in not allowing assessee to produce further evidences to show that of land falling in the share of assessee of which he was also co-sharer was not converted, before its transfer by the assessee. The crucial point of controversy thus, needs to be restored to the files of Ld. CIT(A) to allow the additional evidences of the assessee and to let the assessee establish that the land falling in the share of assessee which was sold by the impugned sale deed was not converted to non-agricultural purposes by any order of revenue authorities. If that stands establish the mere fact that it was sold for the purpose of residence of the vendor or that it was valued for the purpose of stamp papers by the registered authority as a non-agricultural land would not be material and assessee will be entitled to benefit of Section 54 - Appeal of assessee is allowed for statistical purposes. 2023 (1) TMI 717 Reopening of assessment u/s 147 - bogus purchases - Scope of intimation received from ITO, Ward- 9(2), New Delhi - HELD THAT:- While passing this reassessment order AO of the assessee was having in hand the information in the form of intimation received from ITO, Ward-9(2), New Delhi about suspicious purchases from M/s. Stans Networking Pvt. Ltd. But the Ld. AO of assessee restricted the reopening and reassessment to the issue of share capital and share premium only and without any indulgence to the information in hand the available about purchases from Stans Networking Pvt. Ltd. Thus, when the first reassessment order was passed on 19.06.2014, as Ld. AO was aware of the fact of scrutiny of the issue of purchases and the assessment concluded u/s 143(3), so quite likely for that reason, there was no action on the intimation letter dated 01.04.2013. AO quite arbitrarily seems to have resurrected the issue by recording reasons available wherein without referring to letter dated 01.04.2013 from ITO, Ward- 9(2), New Delhi. Ld. AO merely reproduced the intimation by referring to the intimation as now, information is received from ITO, Ward-19(3), New Delhi . This astuteness of Ld. AO in not mentioning the date of the intimation makes the reopening reasons tainted with arbitrainess and the satisfaction recorded cannot be considered to be based on any new information. CIT(A) while passing the impugned order sought a remand report with regard to ledger accounts, copy of invoices, copy of bank statements and the physical evidences in the form of photographs of the goods purchased from Stans Networking Pvt. Ltd. and Ld. AO forwarded report to Ld. CIT(A) that in remand proceedings after taking into consideration the evidences, the purchases from Stans Networking Pvt. Ltd. were found to be in order. Still, Ld. CIT(A) preferred to rely the intimation received from ITO, Ward- 9(2), New Delhi to give finding that as that assessing officer has held M/s. Stans Networking Pvt. Ltd. to be accommodation entry provider the reopening was valid. The Bench is of considered opinion that the findings of Ld. ITO, Ward-9(2), New Delhi were not so sacrament so as to brush aside the inquiry and remand proceeding report dated 30.03.2019 submitted by the Ld. AO of the assessee. When the present impugned order was passed on 15.07.2019 the appellate order in the case of M/s. Stans Networking Pvt. Ltd. was already there and that may have been possible reason for the ld. AO of the assessee to have submitted in the remand report dated 30.03.2019 that the purchases from M/s. Stans Networking Pvt. Ltd. are found to be an order. Ld. CIT(A) whimsically ignored the same. Thus, findings of Ld. CIT(A) sustaining the addition on merits is not sustainable.- Decided in favour of assessee. 2023 (1) TMI 716 Reopening of assessment u/s 147 - information received from Pr. DIT (Investigation) Kolkata regarding entry of bogus LTCG at platform of Calcutta Stock Exchange - Borrowed satisfaction by AO - HELD THAT:- As in case of RMG Polyvinyl ltd [ 2017 (7) TMI 371 - DELHI HIGH COURT] has held that the information received from the Investigation wing cannot be said to be tangible material per se without further enquiry being undertaken by the AO and there is no live link between the tangible material and formation of reasons to believe that income had escaped assessment. Similarly, in case of M/s Century Fiscal Services Ltd [ 2020 (11) TMI 766 - ITAT CHANDIGARH] held that on perusal of the reasons recorded by the AO, it is very much evident that he has mainly relied on the information passed to him by the Investigation wing regarding accommodation entry taken by the assessee without even applying his mind to it and verifying the same. AO has formed his belief solely on the information without even verifying and cross-checking the same with the facts on record available with him. The belief of escapement of income as recorded in the reasons is clearly not that of the Assessing officer but a borrowed relief and reassessment proceedings were thus held to be vitiated and not sustainable in law. Applying the aforesaid legal proposition in the present case, we refer to the reasons recorded by the Assessing officer before issuance of notice u/s 148 of the Act. What information is available with the Assessing officer is neither stated nor enclosed with the reasons so recorded by him and thus not discernable from the reasons so recorded. Merely the fact that the assessee has sold certain shares with certain value on the stock exchange cannot by itself be held as tangible material. Further we find that the Assessing officer has not just recorded a reason to belief rather recorded a conclusive finding that assessee is involved in manage trading of penny stock to convert his undisclosed income into exempt income. How the Assessing officer has reached such a conclusive finding and basis thereof is again not borne out from the reasons so recorded by him. In the second part of the reasons, AO stated that certain investigation has been conducted by the Principal Director of Income tax (Investigation), Kolkata in respect of accommodation entry of long-term capital gains and a report has been received in his office and then it goes about discussing the type of penny stock companies, the entities involved in the transaction and the different legs of the transaction and survey conducted at the premises of Ashok Kumar Kalyan where he has named some nine companies including Access Global Limited as penny stock company which is used for providing accommodation entry in form of long term capital gains. We find that these are general descriptions and how the same are relevant in the case of the assessee is not borne out from the reasons so recorded. Even the contents of the investigation report so stated to be received by the Assessing officer doesn t form part of the reasons so recorded and has thus not been shared with the assessee. How Access Global Limited which is a listed entity has been held as penny stock companies and whether any investigation/verification carried out by the Assessing officer is not borne out of the reasons so recorded. In third and fourth part of the reasons so recorded, the AO talks about the fact that M/s Access Global Ltd is a Calcutta Stock Exchange listed company having paid-up capital a generic information wherein three companies have been said to be amalgamated with M/s Access Global Ltd under the scheme of amalgamation approved by the Hon ble Calcutta High Court and merely the fact that the assessee has sold shares of M/s Access Global Ltd, how the same can lead to reasonable belief that its assessee s undisclosed income which has been routed back in form of sale consideration and income has escaped assessment is not borne out of the reasons so recorded. We find that the whole focus of the Assessing officer is on M/s Access Global Ltd and he has infact failed to carry out even preliminary enquiry that the assessee had originally purchased shares of M/s Maple Good Ltd and on its amalgamation, was allotted shares of M/s Access Global Ltd in exchange for its existing holding and there is thus no finding that the purchases so made were bogus and therefore, where the purchases have not been doubted, how the sale have been held to be bogus is again not borne out of the reasons so recorded. In part six of the reasons so recorded, the Assessing officer has stated that the assessee has filed its return of income on 28.09.2013, which has been processed under section 143(1) on 31.12.2013 wherein the assessee has shown exempt income of Rs.99,13,946/- on account of long-term capital gains from the transaction on which securities transaction tax is paid and the case has not been taken up for scrutiny earlier. Merely the fact that the return of income has not been selected for scrutiny earlier cannot be a reason sufficient enough to hold that the income has escaped assessment - he whole focus of the Assessing officer is on M/s Access Global Ltd whose shares have been sold and sale consideration thereof has been shown in the return of income and he has infact failed to carry out preliminary enquiry and examine the return of income that the assessee had originally purchased shares of M/s Maple Good Ltd and on its amalgamation, was allotted shares of M/s Access Global Ltd in exchange for its existing holding and whose cost of acquisition has been claimed as eligible deduction and net sale consideration has been claimed as exempt as long term capital gains. Assessing officer has started off with conclusion, as we have noted in the first part of the reasons, that the assessee is involved in manage trading of shares of penny stocks in order to convert its undisclosed income into exempt income and in last part of the reasons, again concluded that the assessee has taken bogus long term capital gains through managed trading of shares. The whole exercise thus shows a pre-determined mind on part of the Assessing officer to issue notice u/s 148 of the Act and complete lack of application of mind on receipt of information from the Investigation Wing without carrying out any further examination/verification and that too, at the fag end of the limitation period as evident from the fact that the notice u/s 148 was issued on 30/03/2017. In the instant case, AO has simply relied upon the report and conclusion drawn upon by Investigation Wing Kolkata without carrying out any preliminary enquiry and investigation and establishing the necessary nexus between material and formation of belief that income has escaped assessment. There is clearly no independent application of mind by the AO as can be discernable from the reasons so recorded and in view of the same, we are of the considered view that that the AO doesn t have the legal basis to acquire jurisdiction for reassessment u/s 147 and thus, the notice issued under section 148 and consequent reassessment proceedings are liable to be set-aside. Appeal of assessee allowed. 2023 (1) TMI 715 Revision u/s 263 by CIT - Nature of expenditure - expenditure in respect of the NPV - Revenue or Capital expenditure - Net Present Value (NPV) being the charges paid by the assessee to the Government for restoration mining area to its original status was liable to be treated as capital expenditure as revenue expenditure - HELD THAT:- There is a categorical finding of the coordinate bench of this Tribunal [ 2012 (5) TMI 862 - ITAT CUTTACK] that the said expenditure is liable to be treated as revenue expenditure - clearly the expenditure in respect of the NPV, can be treated only as revenue expenditure. Consequently, the revisionary proceedings initiated by the ld. Pr.CIT on this issue is unsustainable and, therefore, the same is quashed. Difference in the valuation of the iron ore as per the Form H1 and as shown in the return filed by the assessee - Here what evident is that it is in respect of the valuation of the fines that is being proposed to be revised. There is no difference in the quantity or quality of the iron ore fines. It is an admitted fact that the figures more so the valuation as per the Form H1 is as at the mine head being the Ex-Mine Prices of the Fines/Ore. The turnover as disclosed in the return can in no way be compared with the Form H1 price. If admittedly there was a difference in the quantification of the stock then there was case of revision but that is not so in the impugned assessment year. This being so, as the method of accounting followed by the assessee is identical for the earlier assessment years, in view of the principle of consistency, we are of the view that the revisionary proceedings on this issue is unsustainable and consequently the same is hereby quashed. Inclusion of the value of the closing stock in the computation of the assessee - Admittedly, the adjustment to the closing stock for the relevant assessment year would require the identical adjustment in respect of the opening stock in the relevant assessment year also. CIT has not given such direction. The Tribunal is not competent to include an issue which has not been considered by the CIT in the revisionary proceedings. The ld. Pr.CIT has only directed for closing stock to be adjusted. This admittedly is not admissible in any case. The adjustment of the closing stock would only result in the shifting of the profits of the subsequent years to the current year and the rate of tax is the same. There is also no direction nor any method by which the accounts of the subsequent year can now be adjusted when the time limit of the same has also expired. This is not a case where the income has escaped assessment. This being so, the direction of the CIT in respect of the revision of this issue is found to be unsustainable and, therefore, the same is quashed. Opening and closing stock of the same figure - This issue of opening and closing stock of Rs.5.69 crores as appearing in the accounts of the assessee, was due to the case of the judgment of the Arbitration Tribunal and the stock has been carried forward since 2009 and the same has not been sold out. The assessee has not got the required clearance from the mining authority to sell the same due to some technical issues. This submission of the assessee has not been dislodged by the ld. Pr.CIT. This issue is an issue coming from the earlier assessment years. Admittedly for the relevant assessment year this issue is nothing but an issue of opening balance. Consequently, we are of the view that this issue is not an issue which can be considered for revision u/s.263 of the Act for the impugned assessment year. Consequently, the revisionary proceedings initiated by the ld.Pr.CIT on this issue stand quashed. In view of the above, the impugned order passed by the ld. Pr.CIT u/s.263 of the Act is hereby quashed. Appeal of the assessee stands allowed. 2023 (1) TMI 714 Addition u/s 68 - unexplained cash credit in respect of share capital and share premium - HELD THAT:- Ratio laid down in the case of CIT Vs Orchid Industries (P) Ltd 2017 (7) TMI 613 - BOMBAY HIGH COURT by holding that provisions of section 68 of the Act cannot be invoked for the reasons that the person has not appeared before the AO where the assessee had produced on records documents to establish genuineness of the party such as PAN ,financial and bank statements showing share application money . In the instant case before us also, the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO as well as CIT(A) have not commented on these evidences filed by the assessee as well by the share subscribers. AO simply harped on the non production of directors of the assessee and share subscribing companies to make the addition which is not correct - we are inclined to set aside the order of Ld. CIT(A) by allowing the appeal of the assessee. 2023 (1) TMI 713 Disallowance u/s 14A r.w.r. 8D - Working of expenses attributable to exempt income as per Rule 8D - HELD THAT:- No interest disallowance is warranted under Rule 8D(2)(i) in the year under consideration. As further observed that in the immediately preceding year 2010-11, a sum of Rs. 1,71,87,853/- was disallowed under Rule 8D(2)(iii) which stands deleted by the Tribunal vide its order [ 2021 (11) TMI 1134 - ITAT DELHI] on the basis of the facts pertaining to that year. In the AY under consideration the assessee submitted working of disallowance on taxable investment under Rule 8D(2)(iii) amounting to Rs. 23,75,000/- before the Ld. CIT(A). Since the assessee had already made disallowance of Rs. 8,89,763/- suo-moto out of administrative expenses incurred, it offered disallowance of Rs. 14,85,237/- under section 14A r.w. Rule 8D which has been accepted by the Ld. CIT(A). Having gone through the facts and circumstances of the assessee s case and the decision of the Hon ble Supreme Court in Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] relied upon by the Tribunal in the preceding year and the decisions in M/s. Cheminvest Ltd. [ 2009 (8) TMI 126 - ITAT DELHI-B] AND Holcim India (P) Ltd. [ 2014 (9) TMI 434 - DELHI HIGH COURT] followed by the Ld. CIT(A), we do not find any infirmity in the order of the Ld. CIT(A) which we uphold. Consequently, we reject the appeal of the Revenue. 2023 (1) TMI 712 Weighted deduction u/s.35(2AB) - research development expenses incurred on laboratory Clinical Trial - As per AO expenses towards clinical trial conducted outside the approved facility is not included in the amount of cost of in-house Research Facilities and that weighted deduction u/s.35(2AB) is available only for in-house R D facility - CIT(A) upheld the disallowance of weighted deduction that the expenditure incurred on outsourced R D activities is not eligible for weighted deduction - HELD THAT:- The entire amount is incurred towards outsourced clinical trial activities and considering the facts of the present case in our view the impugned issue in assessee s is covered by the decision in the case of Cadila Healthcare Ltd[ 2012 (6) TMI 13 - ITAT AHMEDABAD] . Accordingly the expenses incurred towards clinical trial conducted outside the approved facilities would be eligible for weighted deduction u/s.35(2AB). Amount as mentioned separately in Form 3CL is not eligible for weighted deduction - The various benches of the Tribunal have been taking a view that prior to amendment introduced w.e.f. 01/07/2016, the deduction u/s 35(2AB) of the Act would be available to an assessee having an approved in-house R D facility by the prescribed Authority Act and that Form 3CL is only an intimation sent to the department that the facility is approved that is eligible for weighted deduction towards expenditure incurred on scientific research. Prior to 1.7.2016 there is no requirement by DSIR to certify the amount eligible for weighted deduction and the assessee cannot be denied the weighted deduction for the reason that the amount claimed is more than what is mentioned in Form 3CL. There can be merit in revenue s contention that the reason behind the requirement for the auditor to certify that the amount for the purpose of section 35(2AB) does not include expenses towards clinical trial conducted outside the approved facility mentioned in Form 3CL separately is that the said amount is not eligible for weighted deduction u/s.35(2AB). However based on the binding effect of the various judicial rulings discussed herein above we are inclined to take a view that prior to 1.7.2016 Form 3CL does not certify the amount of deduction and therefore the same cannot be the reason for restricting the amount eligible for weighted deduction. We see merit in the alternate submissions of the ld AR and accordingly we are of the considered view that the amount as mentioned in Form 3CL as expenses incurred towards clinical research outside facility would also be eligible for weighted deduction u/s.35(2AB) on this count also. Accordingly the disallowance made in this regard is deleted. 2023 (1) TMI 711 Benefit u/s 54F - Denial of benefit two houses in USA owned by the assessee had been considered by the CIT(A) for denying the deduction - HELD THAT:- A proviso must be construed harmoniously with the main statute so as to give effect to the legislative objective and the section should be read as a whole inclusive of the proviso in such manner that they mutually throw light on each other and result in a harmonious construction. The legislative intent behind granting relief to the assessee through section 54F is investments in residential house in India and therefore the proviso imposing the conditions cannot be read in isolation and should construed harmoniously with the main section. Accordingly the proviso to section 54F which contains the condition that the deduction is not available if the assessee owns more than one residential house, other than the new asset, should be interpreted to mean ownership of residential houses in India. Therefore the ground on which the deduction u/s.54F is denied that the assessee owns two residential houses in USA in our considered view is not tenable. We accordingly hold that the assessee is entitled for claiming deduction u/s.54F for investments made in India in one residential house within the time limit stipulated under the said section. In the case of DIT (International Taxation) v. Mrs. Jenifer Bhide [ 2011 (9) TMI 161 - KARNATAKA HIGH COURT] has considered a similar issue and held that to attract section 54 and section 54EC of the Act, what is material is the investment of the sale consideration in acquiring the residential premises or constructing a residential premises or investing the amounts in bonds set out in section 54EC and once the sale consideration is invested in any such manner out of the entire sale consideration that had flown from the assessee, then the assessee would be entitled to the benefit conferred under this provision. In our view the facts of assessee s case needs to be examined based on evidences. We accordingly remit the issue back to the AO with a direction to verify the documents and evidences and allow the claim of the assessee with respect to the property acquired by the assessee out of sale consideration keeping in mind the ratio laid down by the Hon ble Karnataka High Court. 2023 (1) TMI 710 Reopening of assessment - contractual receipt treated as income of assessee - addition to a reasonable profit of 8% as laid down u/s 44AD - Case of assessee was reopened on the basis of ITS data information that assessee has receipt contractual payment - HELD THAT:- It is not disputed that in response notice under section 148, the assessee neither filed return nor responded to various notices. However, before NFAC/Ld. CIT(A) the assessee in his statement of fact and in written submission submitted that assessee received gross receipt of Rs.8,96,080/- from Paras Pumps Pvt. Ltd. The assessee also stated that entire contractual receipt was declared by assessee while filing his return of income for assessment year 2010-11 and such fact are duly recorded by NFAC/Ld. CIT(A). NFAC/Ld. CIT(A) despite that while recording such fact has not directed the Assessing Officer to find out the fact, whether the assessee has filed return of income or not. The NFAC/Ld. CIT(A) confirmed the addition of entire contractual receipt. It is settled law that entire receipt cannot be treated as income and find that in the case of Commissioner of Income-tax-XII vs. Subodh Gupta [ 2014 (12) TMI 479 - DELHI HIGH COURT] held that in absence of material to show net profit rate, presumptive net profit rate of 8% as stipulated in section 44AD could be taken for estimation of income. Hence, considering all direct the Assessing Officer to restrict the addition to the extent of 8% and re-compute the assessment in terms of above condition. In further direct the assessing officer that in case no set off of TDS is given in response to the original return of income the assessee be granted set off of TDS in the credit of assessee. Appeal of the assessee is partly allowed. 2023 (1) TMI 709 Unexplained cash credit u/s.68 - onus to explain - assessee unable to prove the identity of the debtors and their creditworthiness - CIT(A) confirmed the addition by stating that all sundry debtors said to have received loans from the assessee are persons of meager means and he considered the remand report of the AO and the loan amount received is only a bogus claim and method adopted by assessee to bring his own unaccounted cash into main stream - HELD THAT:- The assessee has filed all the details in regard to debtors from whom the assessee has received back the money. The assessee has filed all the details before the AO in regard to receipt of this money, which has been loaned out to these above stated persons. According to us, the assessee realized the sum of loan amounts from the villagers as per the submitted affidavit, confirmations, source of income and details of land holding filed, the assessee has discharged his onus of proving the sundry debtors. We noted that all these details were referred by CIT(A) back to the AO to verify the veracity and in turn, the AO referred the matter to the Revenue Officer, i.e, Tahsildar on communication from the Income-tax Department, all confirmed the transaction. It is pertinent to note that all the persons admitted have returned the money. Since the assessee has discharged all initial onus and assessee was asked to prove the source of debit entries, the assessee actually proved in the present case. In the case of DCIT vs. Rohini Builders [ 2001 (3) TMI 9 - GUJARAT HIGH COURT ] held that the amount representing cash credits was not includable in the total income of the assessee as the assessee had discharged the initial onus and the assessee can be asked to prove the source of the source of credit in its books of accounts, which the AO failed to do so. In view of this finding and moreover these being only debtors who have returned their loan amount to the assessee and assessee has declared all these loan amounts in their books of accounts, which were never rejected by the Department and accepted in earlier years, now they cannot go back until that the source are not proved. Thus we are of the view that the debtors cannot be added u/s.68. The assessee has discharged the onus laid u/s.68 of the Act by filing overwhelming evidences which were examined by the AO as well as by the Revenue officials of the Tamil Nadu Government and hence, we delete the addition and allow this issue of assessee s appeal. Treating the surplus on sale of agricultural land as business income - HELD THAT:- Assessee had earned agricultural income and consistently from assessment year 2007-08 admitted agricultural income. The Revenue records also show that the same are subject to agricultural revenue and lands are agricultural lands. Even the crops are grown and agricultural activities were carried out. Hence, in the given facts, which are un-controverted, we hold that the sale proceeds are of agricultural land and not business asset as is being contended by Revenue. Hence, the same cannot be assessed to capital gains and are exempt. Accordingly, this issue of assessee in both the years is allowed. Unexplained credit being amount received temporarily from the creditor as unexplained cash credit u/s.68 - HELD THAT :- At this stage, when pointed out to ld.counsel, whether he want to file the details before AO to prove the creditor, he undertook to file complete details and to produce whatever evidence the AO wants in regard to this. On this, the CIT-DR has not objected. Hence, in view of the concession given by both the sides, we remit this issue back to the file of the AO, who will examine the creditor and then will decide accordingly. 2023 (1) TMI 708 Revision u/s 263 - bad debts written off - HELD THAT:- At one hand, CIT has noted that the AO had not made proper enquiries relating to identity of the concerned M/s. Metalmine Enterprise Pvt. Ltd., but at the same time the, ld. Pr. CIT in its question no. 3 of the show cause notice, herself, has observed that it was obvious from the given transactions that there was a regular give-and-take between the assessee and M/s. Metalmine Enterprise Pvt. Ltd., and that there was a relationship of deep trust based on which the assessee was regularly transferring such huge amounts to the concern. The aforesaid observations of the ld. Pr. CIT are self-contradictory. It is undisputed that there was a regular business transactions of the assessee with the said concern and the amount outstanding was on account of trade receivables and that there were regular business transactions, even in earlier years, between the parties. It was duly explained before the ld. Pr. CIT that the assessee had not made any fresh payment to M/s. Metalmine Enterprise Pvt. Ltd. during the Assessment Year 2017-18 and that these amounts were brought forward balances of the preceding years. It was also explained that these were the old outstanding balances on account of sales which were written off. The observation of the ld. Pr. CIT that the assessee had not even reflected under the head bad debts in the relevant column of ITR is concerned, we find that the assessee had duly replied to the ld. Pr. CIT, that though it was mistakenly omitted, however, the assessee company had given the due disclosure of the amount written off in the audited profit and loss account. The issue has not only been brought to the notice of the assessing officer, but the same has also been examined and verified by the assessing officer and under the circumstances there remains no prejudice to the revenue of not reflecting of the aforesaid amount of bad debt under the relevant column of the online ITR form. The issue is otherwise squarely covered by the decision TRF Ltd.[ 2010 (2) TMI 211 - SUPREME COURT] as held that it is not necessary for the assessee to establish that the debt, income, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. Moreover, in this case, as observed above, the dishonor of cheques and thereby reversal entries, itself, show that the said debt had become bad. In this case the assessing officer had duly made enquiries and verification and showcaused the assessee in this aspect and the assessing officer has allowed the claim after being satisfied with the explanations offered by the assessee. Deduction u/s 80IC - assessee had not uploaded the audit report in Form 10CCB along with the return of income - Hon ble Supreme Court M/S WIPRO LIMITED [ 2022 (7) TMI 560 - SUPREME COURT] held that the assessee can file a revised return in a case where there is omission or wrong statement but a revised return of income u/s 139(5) cannot be filed to withdraw the claim of exemption and subsequently to claim carry forward or set off of any loss and that the revised return filed by the assessee u/s 139(5) of the Act can only substitute its original return u/s 139(1) of the Act and cannot transform it into a return u/s 139(3) of the Act in order to avail the benefit of carry forward or set off of any loss u/s 80 of the Act. We find that the Hon ble Apex Court considered the decision in the case of CIT v. G.M. Knitting Industries (P.) Ltd.[ 2015 (11) TMI 397 - SC ORDER] and held that the revised return can be filed in a case where there remains some omission or wrong statement. The ratio laid down by the Hon ble Supreme Court in the case of PCIT vs. Wipro Ltd. (supra) is of no help to the revenue. Even otherwise the ld. Pr. CIT has not found any error in the order of the Assessing Officer in this respect. The ld. D/R cannot put additional plea or ground to improvise the impugned order of the ld. Pr. CIT. The action of the ld. Pr. CIT in holding the assessment order is erroneous and thereby setting aside the order for de-novo assessment cannot be held to be justified. Hence the order passed u/s 263 of the Act is quashed. Appeal of the assessee stands allowed. 2023 (1) TMI 707 Selection of cases for scrutiny - Addition u/s 68 or 69A - investment made by the firm, the financial transactions of the appellant were scrutinised and eventually the cash deposits made into her bank accounts were brought to tax - scope of limited scrutiny proceedings under CASS selected for the reason of verification of source of investment in immovable property which was not at all, purchased by the assessee individual but by the partnership firm wherein the assessee was a partner - appellant s case was selected for scrutiny under CASS mechanism limiting the scope thereof to verification of large investment made by the assessee - HELD THAT:- In the absence of any large investment made by the appellant during the impugned assessment year under adjudication, the scope of limited scrutiny meets dead-end, however the Ld. FAA without following the CBDT instruction No. 7/2014, 20/2015 and 5/2016 and also the CBDT letter dated 13 No. 2017, plagiarized the firm s investment into the hands of assessee and opined that the said addition should have been carried out u/s 69A as unexplained money instead of bringing to tax as cash credit u/s 68 of the Act. All the more we find that, the very basis of initiation of scrutiny assessment is the large investment made by the firm wherefore the appellant is one of the signatory partners. However it shall be worthy to note that, for the impugned year the appellant has made no investment in her individual capacity so has to trigger any basis for scrutiny assessment on the prescribed criteria of investment, thus the very basis of initiation of scrutiny in the appellant s case fails, consequently the impugned assessment stand with no legs in the eyes of law, and we hold as such in the light of ratio laid down in the case of CIT Vs Best Plastics (P) Ltd [ 2006 (4) TMI 53 - HIGH COURT, DELHI ] Also it shall not be out of the box to quote the decision of Hon ble Jurisdictional Bombay High Court in Bombay Cloth Syndicate Vs CIT [ 1992 (9) TMI 7 - BOMBAY HIGH COURT ] whereby their lordship have held that, the instruction issued by the mother body i.e. CBDT undisputedly are binding on the department and any action in violation thereof renders it as untenable in law, consequently in the extant case, assessment been carried out in violation of instruction issued by CBDT deserves to be quashed, ergo we set-aside the first appellate order passed u/s 250 and quash the order of assessment passed u/s 143(3) of the Act as bad in law. Appeal of assessee allowed. 2023 (1) TMI 706 Revision u/s 263 - CIT excercising the power of revision for the purpose of directing the A.O. to hold another investigation when the A.O. had complied with the directions of the predecessor PCIT in the preceding order u/s 264 - HELD THAT:- As gone through the impugned revision order passed u/s 263 of the Act and found that the entire order of the ld. Pr. CIT is a general order and the ld. Pr. CIT has not pointed out specifically as to why he was not satisfied and to which of the details, furnished by the assessee. Pr. CIT has neither mentioned the name and details of the share subscribers nor has he mentioned why he did not believe the identity or creditworthiness of a particular share subscriber, for directing the AO to make further enquiries. Once the Ld. Pr. CIT had proceeded to make an enquiry regarding the genuineness of the claim of the assessee, he was supposed to make a prima-facie opinion which may not be a concluding opinion to hold that the order of the AO in his view was erroneous so far as it was prejudicial to the interest of Revenue. The opinion of the Commissioner that the AO had not made proper enquiries or verifications should be based on his objective satisfaction and not a subjective satisfaction from the assessment order. Merely because, the assessment order in question is not a detailed order that itself, does not mean that the AO had not made enquiries in this respect. Admittedly, the AO asked the assessee to furnish the necessary details from time to time which were duly furnished by the assessee and after considering the same the AO passed the assessment order. It is pertinent to mention here that a deeming fiction has been created in section 263 of the Act by the amendment made by Finance Act, 2015 w.e.f. 01.06.15 wherein it has been mentioned that where the Commissioner is of the opinion that the AO had passed the order without making enquiries or a claim has been allowed without enquiring into the claim or that the same is not in accordance with any order or direction or instruction issued by CBDT, that shall be deemed to be erroneous in so far as its prejudicial to the interest of Revenue. The said deeming provisions, in our view, are not applicable for the assessment year under consideration i.e., A.Y. 2012-13. A perusal of the revision order passed by the ld. Pr. CIT shows that the ld. Pr. CIT has not pointed out any error or discrepancy in the evidence furnished by the assessee and without examining such evidence and without counter questioning the assessee on the relevant points and even without considering the submission of the assessee furnished in reply to the showcause notice, the ld. Pr. CIT, in our view, was not justified in setting aside the order, simply stating that in his view more enquiries were needed to be carried out by the AO. CIT without examining the details of the share applicants and the evidence furnished by the assessee has passed a general order observing that in his view the order passed by the AO was on an incorrect assumption of facts or incorrect application of law without mentioning as to what facts were incorrect what was the incorrect law, that was applied by the Assessing Officer. Simply because the ld. Pr. CIT felt that the AO should have made further enquiries on the same issue or that the case was to be examined from some another angle, the same, in our view, cannot be a valid ground to set aside the assessment order. If such an action is allowed by the ld. Pr. CIT in revision jurisdiction then, there would be no end to litigation and there would not be any finality to the assessment. As relying on Amritrashi Infra Private Ltd. case [ 2020 (8) TMI 407 - ITAT KOLKATA ] we do not find justification on the part of the ld. Pr. CIT in setting aside the impugned assessment order which was passed by the AO on the directions of the ld. Pr. CIT issued u/s 264 - Appeal of the assessee stands allowed. 2023 (1) TMI 705 Scope of limited scrutiny - whether value of international transactions in respect of mutual agreement or arrangement have been correctly shown in Form 3CEB? - HELD THAT:- The scrutiny was only for the purpose of verifying whether the international transactions with the related parties have been correctly declared by the assessee in the audit report. It is a fact on record that the assessing officer noticing that assessee has entered into international transactions with AE had made a reference to the TPO to evaluate the arm s length nature of such transactions in the context of assessee s claim that the revenue received in respect of such transactions are not taxable in India. Undisputedly, the TPO after examining the transactions as reported in Form 3CEB, passed an order accepting the value of the transactions. Thus, the order of the TPO demonstrates that the assessee had correctly reported the international transactions with the AE in Form 3CEB. Out of the four transactions reported by the assessee, the assessing officer has accepted three and only made a deviation in respect of one transaction relating to provision of training services generating revenue of Rs.16,20,992. AO has treated it as FTS both under domestic law as well as India- Singapore DTAA. The question arising for consideration is, whether the Assessing Officer could have expanded the scope of the limited scrutiny to traversed into a completely different arena of examining whether an item of revenue received by the assessee falls in the category of FTS. Once, the international transactions reported in Form 3CEB have been verified by the TPO and no adjustments were suggested, it has to be accepted that assessee has reported the transactions correctly. Therefore, then, the purpose of limited scrutiny gets sub-served and the matter should have ended there. However, the Assessing Officer exceeding his jurisdiction has ventured into recheracterizing the nature and character of a particular item of income, which in our view, is beyond the scope of limited scrutiny. This is so because, in terms of CBDT Instruction nos. 20/2015 and 5/2016 read with DGIT(Vigilance) letter dated 30th November, 2017 before venturing into other issues outside the scope of limited scrutiny, the Assessing Officer should have taken prior approval of PCIT/CIT. Admittedly, in the facts of the present appeal, AO has not taken any such approval of the concerned authorities. Therefore, the assessment order passed is in violation of CBDT Instructions, referred to above. Therefore, the question which arises for consideration is, what will be the fate of such an order passed in violation of the extant CBDT Instructions/circulars. 2023 (1) TMI 704 Estimation of income - Bogus purchases - addition on account of estimated gross profit - HELD THAT:- None of the purchases can be held to be bogus. Therefore, no addition can be made nor any addition on account of estimated gross profit because all the purchases and corresponding sales have been fully tallied and verified and no discrepancy has been found. Hence, ground raised by the assessee are allowed and ground raised by the revenue in this regard is dismissed. Addition u/s 69 for undisclosed stock - Addition on the ground that during the survey statement of Shri Vithal Gopal Patil was recorded and the details of stock of raw materials are taken out from the tallied data which are extracted from the stock register provided by him - HELD THAT:- Non-application of mind of AO is more glaring looking to the fact and he has made the addition which he himself has noted that, it pertains to period 01.04.16 to 31.03.17. Even if same tally data is considered to be the premise for addition made by AO, then the addition could not have been added u/s 69 as the same did not pertain to AY 2018-19. Accordingly, the addition is directed to be deleted. There are various double additions as pointed out by Ld. Counsel which itself goes to show that the tally data is not reliable which is evident from the submission of Ld. Counsel as incorporated herein above. Further AO has adopted a formula by applying balance (+) purchases (-) sales. The value of the closing stock has to be arrived at after reducing the profit element from the sales made by the assessee and further the value of closing stock has to be adjusted as per the relevant accounting standard applicable for valuation of closing stock. The AO is adopting formula for calculating quantitative details and not the valuation of stocks. This itself shows the error in working of the AO. As the tally data of the stock summary of the graphite division for the period 01.04.2017 to 17.11.17, as noted above, which is also evident from the submission of Ld. Counsel that there are various defects in the entry in the said tally data or were incomplete or incorrect which has been demonstrated by him as incorporated above. Here the addition is not based on mismatch of physical stock, but purely on the basis of formula adopted by AO and thus, the entire manner in which AO has arrived at valuation for making is fully erroneous, which he has neither verified from the physical stock nor the books of accounts produced before him. Simply relying on incomplete tally data which suffers from various discrepancies, cannot be the basis for making addition. Therefore, all the addition made under the head undisclosed stock added u/s 69 is directed to be deleted. Addition u/s 69 on account of difference in physical stock of graphite - Before the AO and Ld. CIT (A), assessee contended that it is very difficult to measure actual weight and it has been done purely by taking the length, breadth and height of the blocks which cannot be accurate basis - HELD THAT:- We agree with the contention of the Ld. Counsel because even if the dimension may be accurate, however the density and the weight may vary depending on grade to grade and the quality. Nowhere it has been brought on record that these stocks was actual weighed but the weight was taken on approximation by calculating length and breadth without factoring into density and it would not be possible for physical verification of almost 18 Mt. of graphite depending upon various shapes and sizes, therefore such estimation based on approximation cannot be basis for making addition on account of unaccounted stock. Therefore, the same is directed to be deleted. Addition u/s 69C - HELD THAT:- It cannot be said that whether the details given by the Whiton pertains to labour charges only. The assessee has made payment as per the invoices raised by Whiton from whom assessee has availed services. As nothing on record or any enquiry of Whiton that assessee has made payment over and above recorded in the books nor can it be inferred that payment has been made in cash to Whiton. Another point which has been raised is that, the accounts of Whiton were not finalized and many other expenses of stock vouchers and general entries were pending to be recorded at the time of search and also due roll over GST regime w.e.f. 01.07.2017. Thus, simply relying on accounting entries in the books of Whiton, no addition can be made. Therefore, the same is directed to be deleted. Appeal filed by the assessee is allowed. 2023 (1) TMI 703 Addition of sundry creditors - controversial statements given by the 7 sundry creditors in the statement recorded from them on oath - HELD THAT:- The Ld. AR could not justify as to why the Ld. AO questioned only 7 creditors out of the total 69 creditors where the sample is not proportionate to the total amount of outstanding creditors. It is also seen from the order of the Ld. AO that the 7 creditors has given standard replies as argued by the Ld. DR which cannot be relied upon. The onus is on the assessee to prove that the creditors are genuine with supporting evidences and confirmation from creditors. In the instant case, the assessee has failed to produce convincing replies with cogent evidences even for the random sample selected by the Ld. AO. AO is being directed to verify the 69 creditors with regard to outstanding payables from all the sundry creditors and provide one more opportunity to the assessee following the principles of natural justice. Accordingly, we remit the matter back to the file of the Ld. AO and allow this ground no.2 for statistical purposes. Allowance of telescoping against the cash deposits - HELD THAT:- We are of the considered view that the Ld. CIT(A) has rightly considered the telescoping benefit and therefore we find no infirmity in the order of the Ld. CIT (A) on this issue and hence, this ground raised by the Revenue is dismissed. 2023 (1) TMI 702 Non-speaking order passed by the Ld. CIT(A) - Assessment was completed ex parte for non-compliance of two notices issued by the Ld. AO - addition of sale consideration of Rs 2,00,00,000/- from the sale of shares u/s 68 - HELD THAT:- From the perusal of Rule 29 of ITAT rules, we note that the said Rule provides, inter alia, if the Income Tax Authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such documents to be produced and may allow such evidence to be produced. Provisions of sec. 250 of the Act which provides for procedure to be adopted by Ld. CIT(A) in disposing of any appeal, make such further enquiry as he thinks fit, or may direct the AO to make further enquiry and report the result of the same to the Commissioner Appeals. Further, sub-section (6) provides that Ld. CIT(A) shall pass an order in writing and shall set the points for determination, the decision thereof and the reasons for the decision. Principle governing the exercise of powers by the first appellate authority are contemplated u/s. 250 and 251 of the Act, breach of it has far reaching consequences on the administration of justice culminating into litigant approaching the higher appellate authority. We also take note of the decision of Tin Box Co. [ 2001 (2) TMI 13 - SUPREME COURT wherein the Hon ble Supreme Court has directed that the assessee should be given proper opportunity during the assessment proceeding and failure to do so, the matter should be remitted back. Keeping in mind the non-speaking order passed by the Ld. CIT(A) dismissing it for non-attendance, the provisions of sections 250 and 251, the decision of Hon ble Supreme Court in the case of Tin Box Ltd. (supra) and the petition filed under Rule 29 of the ITAT Rules along with paper book, all of which are referred and discussed above, we find it proper to remit the matter back to the file of Ld. CIT(A) to pass a speaking order on merits of the case by examining, verifying and analyzing the material placed on record. Appeal of the assessee is allowed for statistical purposes. 2023 (1) TMI 701 Revision u/s 263 - AO failed to satisfy Section 69C being unexplained expenditure which may attract higher tax liability as per Section 115BBE - HELD THAT:- It is pertinent to note that the AO has given a detailed finding in respect of unexplained expenses related to Sub-contract and the same has been taken into account after verifying the evidences produced during the assessment proceedings. AO has properly adjudicated the issue and made the addition. Invocation of Section 69C of the Act does not arise in the present case as the source of the expenditure was already explained by the assessee and, therefore, it does not amount to undisclosed expenditure under Section 69C but the same was related to Sub-contract expenses for which the relevant details and the explanation was not accepted by the Assessing Officer. Therefore, invocation of Section 263 of the Act which is revisionary statute cannot be exercised by PCIT as the Assessing Officer has passed just and proper assessment order by taking interest of the Revenue and thus it does not amount to erroneous or prejudicial to the interest of Revenue. Thus, appeal of the assessee is allowed. 2023 (1) TMI 683 Revision u/s 263 - case was selected for limited scrutiny under CASS cycle 2017 to examine the issue of capital gains / loss as reflected in the return of income - CIT directed Ld. AO to examine the issue of cash deposit and agricultural income earned by the assessee - HELD THAT:- The undisputed facts that emerge are that the issues which have been flagged by Ld. Pr. CIT to seek revision could not have been, otherwise, examined by AO since the case was selected under limited scrutiny to verify the genuineness of capital gains / losses. The issues lagged for limited scrutiny was duly examined and verified by Ld. AO The scope of limited scrutiny for CASS cycles 2017 and 2018 could be widened only upon receipt of credible material or information from any law enforcement / intelligence / regulatory authority or agency regarding tax-evasion by an assessee. In such a case, the issues arising from such information could also be examined during the course of conduct of assessment proceedings in such 'limited scrutiny' cases with prior administrative approval of the concerned Pr. CIT/CIT. In the present case, we find that there is no such credible material or information which would justify widening the scope of limited scrutiny. Therefore, Ld. Pr. CIT, in our considered opinion, could not term the assessment order as erroneous or prejudicial to the revenue since the flagged issues, could otherwise be not examined by Ld. AO during the course of regular assessment proceedings. The revision of the order could not be upheld in the eyes of law. By quashing the same, we allow the appeal of the assessee. 2023 (1) TMI 680 Reopening of assessment - validity of second notice issued u/s 148 - AO non-disposing of the return of income filed by the assessee in response to the first notice - whether the AO could have issued a second notice under Section 148 of the Act when the assessee had filed his return of income in response to the first notice issued under Section 148A and such return was not disposed of? - HELD THAT:- This question of law has been answered in several decisions and one of the earliest decisions is in the case of S. Raman Chettiar [ 1961 (1) TMI 82 - MADRAS HIGH COURT] wherein the Court held that when a return is furnished by the assessee in consequence of a notice issued under Section 34 of the Income Tax Act, 1922, it was not open to the Income Tax Officer to ignore that return and issue a further notice under Section 34(1)(a) on the assumption that there had been an omission or failure on the part of the assessee to make return of his income. This decision was affirmed by the Hon ble Supreme Court in the Commissioner of Income Tax, Madras vs. S. Raman Chettiar, [ 1964 (10) TMI 18 - SUPREME COURT] The underlying legal principle is that, when a notice under Section 148 of the Act is issued, the original assessment proceedings are entirely opened up or left open and the finality which had occurred in the first assessment order does not exist any longer. Therefore, without disposing of the return of income filed by the assessee in response to the first notice, the assessing officer could not have issued a second notice for reopening of the assessment which, at the relevant point of time, did not exist in the eye of law. Tribunal had rightly affirmed the order passed by the Commissioner of Income Tax (Appeals) and dismissed the appeal filed by the revenue. Customs 2023 (1) TMI 700 Classification of imported Automatic Data Processing Machines (ADP) popularly known as All in One Integrated Desktop Computer - to be classified under Tariff Item 8471 50 00 or under Tariff Item 8471 30 10? - whether the Concerned Goods are portable or not under Tariff Item 8471 30 10? - HELD THAT:- While it appears well settled that the HSN is to be normally taken as a safe guide for classifying goods under the First Schedule because it is based on an internationally recognized harmonized nomenclature COLLECTOR OF CENTRAL EXCISE, SHILLONG VERSUS WOOD CRAFT PRODUCTS LTD. [ 1995 (3) TMI 93 - SUPREME COURT] , a bare reading of the explanatory note applicable to the subheading clearly lays out the fact that there is no mandatory condition for being operable without any external source of power - the Appellants contention that only ADPs with a built-in power source is necessarily required to be classified under Tariff Item 8471 30 10 , cannot be agreed upon. Whether mere factum of weighing less than 10 kilograms would be sufficient to classify the Concerned Goods as portable or not? - HELD THAT:- The word portable should have been defined in reference to the ADPs instead of relying on dictionary meaning which contains all kinds of hues of associated meanings as held by this Court in COLLECTOR OF CENTRAL EXCISE, KANPUR VERSUS KRISHNA CARBON PAPER CO. [ 1988 (9) TMI 50 - SUPREME COURT] . The cited decision also explains the correct approach to be taken in case when a word is to be defined in context of any entry under the First Schedule. On a conjoint reading of the relevant material and inputs, it is explicitly clear that weight cannot be the sole factor to determine the factum of portability. Instead, the essential ingredients to logically establish whether an ADP is portable are twofold. The first ingredient is their ability to be carried around easily which includes all aspects such as weight and their dimensions. We must hasten to add that in appropriate cases, this assessment would also take into consideration the necessary accessories which are required for safe and efficient usage such as mounted stands or any power adapters. The second ingredient is that the ADP must be suitable for daily transit of a consumer and would include aspects such as durability to withstand frequent commute and damage protection. An example of the same would be the availability of protection cases which allows users to carry the ADPs in hand or possibility of carrying the same in normal briefcases or shoulder bags. Keeping in view the applicable understanding of the element of portable as understood in common parlance used in the trade of ADPs, we must hold that the Concerned Goods are not portable for the reasons that Firstly, the diagonal dimension of the Concerned Goods being minimum of the length of 18.5 inches and the same needs to be transported along with the power cable as well as the applicable stand in most cases if it is to be mounted and; secondly there being no protective case designed by the markets for daily transport for these Concerned Goods. Such requirements make the Concerned Goods unable to be carried around easily during daily transit. We, thus, hold that the Concerned Goods are not portable . The impugned orders which classified the Concerned Goods under Tariff Item 8471 30 10 is set aside - It is directed that valuation of the Concerned Goods for levy of the duty be determined under the initially declared Tariff Item 8471 50 00 - appeal allowed. 2023 (1) TMI 699 Seeking release of imported consignment - payment of demurrage detention and any other charges - It is contended on behalf of the petitioner that the consignment comprising of Knotted Woollen Carpets was imported by the petitioners from the United States of America on 10.08.2021 - HELD THAT:- It is not in dispute that the seizure order now stands passed on 09.02.2022. As pointed out by the parties, the request for provisional release of the consignment was also considered and an order dated 20.09.2022, has already been passed, thereby, provisionally releasing the consignment. Whether the goods are required to be confiscated pursuant to the order of seizure or any other action required to be taken will be decided on adjudication of the Show Cause Notice. Seeking direction against the respondent to either pay or waive the payment of demurrage during the time the goods were put on hold - HELD THAT:- The respondent relied upon the judgment passed by the Hon ble Apex Court in MUMBAI PORT TRUST VERSUS M/S. SHRI LAKSHMI STEELS AND ORS. ETC. [ 2017 (7) TMI 977 - SUPREME COURT ] which, in somewhat similar circumstances, held that the High Court could not in writ proceedings have directed DRI/Customs to pay the detention charges to the shipping line since these were to be paid on the basis of a contract between the respondent importers and the shipping line. In the present case also, prima facie, the petitioner has not responded to the various letters and summons issued by the respondent. Therefore, it cannot be said on the basis of the record available in the present proceedings that the respondents were solely responsible for the delay caused. Therefore, no orders can be passed directing the concerned respondent to pay the demurrage charges, as prayed. Petition disposed off. 2023 (1) TMI 698 Seeking grant of customs broker License - increase in the cut off marks after the examination process had commenced - HELD THAT:- Similar issues related to the same examination were raised in three writ petitions wherein the ld. Single Judge of this Court had, by a detailed order in RAJESH KUMAR VERSUS UNION OF INDIA ORS, PAWAN KUMAR VERSUS UNION OF INDIA ORS AND MS. PRIYANKA RAI VERSUS DIRECTORATE GENERAL OF PERFORMANCE MANAGEMENT AND ORS. [ 2022 (3) TMI 516 - DELHI HIGH COURT] , held that the cut off marks could not have been changed after the examination notice was issued. In view of the fact that the identical issue has been decided by this Court in favour of the Petitioner it is directed that the Petitioner be issued the customs broker license, subject to verifying that the Petitioner has scored 50% and above in the oral examination. The verification process shall be conducted within two weeks and the license shall be issued within four weeks. Petition allowed. 2023 (1) TMI 697 Suspension of petitioner s Importer Exporter Code - violation of Section 8 of the Foreign Trade (Development Regulation) Act, 1992 - seeking grant of reasonable opportunity to make a representation in writing before any such action (suspension of license) is taken - HELD THAT:- Learned counsel for the DGFT states that after the petitioner s IEC has been suspended, DGFT had issued show cause notice dated 15.11.2022, clearly setting out the grounds on which actions were proposed against the petitioner - A perusal of the said notice indicates that certain grounds for taking action against the petitioner have been set out. In terms of the said show cause notice, the petitioner has been called upon to show cause as to why penal action should not be taken against the petitioner under Section 13 14 for violation of Section 8 and 11 of the FTDR Act. This Court considers it apposite to set aside the order dated 31.08.2022 and direct that the petitioner s IEC be restored forthwith - Petition allowed. 2023 (1) TMI 696 Dismissal of appeal - alleged defect, for non-compliance of mandatory pre-deposit in terms of Section 129E of the Customs Act - seeking grant of leave to maintain the appeals against the order of CESTAT and allow the same by quashing of the show cause notices - Levy of penalty under Section 114 of the Customs Act - HELD THAT:- As the appellants herein have failed to fulfill the pre-condition of 7.5% of the demanded duty/penalty as per the order of the Commissioner of Customs, NOIDA dated 18.10.2018, this had to necessarily result in dismissal of their appeals by the CESTAT. There was no discretion with the tribunal to condone the pre-condition of mandatory deposits on the ground of undue hardship. As far as lack of jurisdiction to issue show cause notice is concerned, the said issue could have been considered once the appellants were able to maintain their appeals by making mandatory pre-deposits before the CESTAT. The appeals before us challenging the orders of the CESTAT dated 29.8.2009 in dismissing three appeals as not maintainable on account of defect of mandatory pre-deposit under Section 129E, therefore, deserve dismissal. Jurisdiction - whether any substantial question of law arises for determination in the instant appeal? - HELD THAT:- In view of the admitted fact that the confiscated gold jewellery from the factory and residential premises of M/s Ajit Exports and factory premises of M/s Vee Ess Jewellers two SEZ units were exported by M/s Deepu Jewellers and M/s Samrah Gold Factory, the Managing Director and the Director of whom was Sri Kishore Ratilal Dhakan at the relevant point of time, we are required to examine as to whether the penalty imposed upon the appellants herein under Sections 112, 114, 114AA is without jurisdiction - A conjoint reading of Sections 112 and 114 of the Customs Act which deal with penalty for ''improper import' and ''improper export' or attempt to export goods improperly clearly shows that the penalty can be imposed on any person , not only such person who does or omits to do any act in relation to any goods liable to confiscation under Section 111 or 113, but would also include such person who abets the doing or omission of such an act. The penalty, thus, can be imposed under Section 112 or Section 114 upon not only the importer or exporter; respectively, but also upon ''any person' who commits an act of abetment, i.e. to help or aid exporters or importer in such wrong doing. In the instant case, the appellants companies incorporated in Sharjah and Dubai which were limited liability companies, 49% of share of which were held by Indian Nationals namely its Managing Director/Director Sri Kishore Ratilal Dhakan and Deepak Ratilal Dhakan were doing illegal business in India through two SEZ units namely M/s Ajit Exports and M/s Vee Ess Jewellers. Sri Kishore Ratilal Dhakan was also the share holder of M/s Vee Ess Jewellers. The permission to import gold jewellery without Customs duty and Cess was with the specific condition that the old/outdated gold jewellery imported to carry out process of assembling, refinishing, plating and remaking would be sent back to the exporters the appellants herein - the offence of improper importation and attempt to improper export by diversion of gold jewellery in the local market under mis-declaration from SEZ units had been committed within the territorial limits of India as defined in Section 2(27) of the Customs Act, 1962, the issue of jurisdiction of the Customs Authorities in India to impose penalty upon the Appellants does not arise. The appellants herein have submitted themselves to the jurisdiction of the Customs Act upon the notices issued to them under Section 108 of the said Act and filed appeals against the order of the adjudicating authority under Section 129A(a) of the Customs Act, 1962, without complying with the mandatory condition of pre-deposit under Section 129E(ii) of the Customs Act, 1962, the appeals filed by them have been rightly dismissed as non-maintainable for non-fulfillment of mandatory condition of pre-deposit. No infirmity could be found in the decisions of the Appellate Tribunal in dismissing the appeals as not maintainable - Appeal dismissed. 2023 (1) TMI 695 Revocation of petitioner s Customs Broker License - Period of limitation - whether time prescribed under the said Regulation for completion of the proceedings and passing of the final order within 90 days from the date of receipt of inquiry report is directory or mandatory - jurisdiction of the authority under the customs and Central Excise Duty Drawback Rules, 2017 relating to Duty Drawback on export transactions - ELD THAT:- Petitioner submits that adjudicating authority has usurped the jurisdiction of the authority under the customs and Central Excise Duty Drawback Rules, 2017 relating to Duty Drawback on export transactions - Such findings have been noted in the disagreement note and subsequently in the impugned order relating to Bank Realization Certificate (BRC), a certificate issued by a Bank to an exporter certifying realization of export proceeds. The Inquiry Officer in his Inquiry Report under Regulation 17(5) of the said regulation has specifically found that the allegations of violation of Regulation 10(m), (n) and (q) under CBLR, 2018 against the petitioner as not proved except allegation under Regulation 10(d) was partially proved. It also appears from record that the order of suspension of petitioner s license though it was set aside by the order of the Tribunal on 19th August, 2022 but before such order was passed by the Tribunal the respondent authority passed the impugned order of revocation of petitioner s license. The issues involved in this Writ Petition is a pure question of law with regard to interpretation of Regulation 17(7) of the CBLR, 2018 and as to whether time prescribed under the said Regulation for completion of the proceedings and passing of the final order within 90 days from the date of receipt of inquiry report is directory or mandatory and this Writ Petition on this legal issue should be heard on affidavits by the respondents. The imagined order of revocation of petitioner s license dated 11th July, 2022 shall remain stayed till 30th April, 2023 or until further order, whichever is earlier. Corporate Laws 2023 (1) TMI 692 Filing of form AOC-4 which was required to be filed within 30 days of the Annual General Meeting (AGM) as per Section 137 of the Companies Act, 2013 read with Rule 12 of the Company (Accounts) Rules, 2014 - it is prayed by the Petitioner that an extension be given to the Petitioner for uploading the said documents without any additional fee of penalty - HELD THAT:- The overdue e-forms were allowed to be deposited by 31st March, 2021 without additional payments. After perusing the said documents, it appears that the Petitioner was not ready to upload these documents either on 31st December, 2020 or even within the extended period of 31st March, 2021 - this Court does not see any merit in the prayer of the Petitioner for permitting to file the form AOC-4 or Form MGT-7 in respect of its AGM dated 28th September, 2019 without additional fee and penalty. The present writ petition is without any merit and is, accordingly, dismissed. Insolvency & Bankruptcy 2023 (1) TMI 691 Recovery of outstanding Electricity dues - non- payment of electricity dues - disconnection of electricity supply of the borrower sometime in the month of September, 2018 - HELD THAT:- In the present case, the writ petitioner purchased the property in an auction sale on as is where is basis. At the juncture when the sale took place and/or prior thereto, when the default was committed by the borrower, the writ petitioner/auction purchaser has had no possible nexus whatsoever with the defaulting consumer, that is, the borrower-company. Thus, the basic pre-requisite of Regulation 3.4.2, applicable to new and subsequent consumers or intending consumers, that is, nexus, is not established at all. In any event, Regulation 3.4.2 clearly casts the onus of proof of nexus on the licensee. The outstanding dues can be claimed from the new consumer only if a nexus between the previous defaulting consumer and a new consumer in respect of the same premises is proved. In the present case, however, neither the auction purchaser had any nexus with the defaulting consumer nor did the writ petitioner enjoy any benefit of the electricity connection, in respect of which default was committed, at any point of time. It has been held time and again that upon a CIRP proceeding having concluded, no liability remains apart from the sale price. The provisions of Regulations 3.4.2 and 4.6.4 have to be tested on the anvil of the parent right conferred under Section 56(1) of the 2003 Act and cannot be divorced from the scheme of the parent Act itself. Since there was no subsisting due from the auction purchaser, particularly since the contract had already terminated by operation of Regulation 4.6.1, the right to discontinue, which is inextricably linked with such due, did not survive. Along with the dues, the right of discontinuance had ceased at the juncture when the auction purchase and the application for new connection took place - the licensee, that is, the DVC acted de hors the law in insisting upon clearance of the outstanding dues left by the erstwhile consumer as a pre-condition for giving a new connection to the petitioner. The proceeding before the Tribunal falls within the scope of the IBC and only in respect of liabilities arising out of the CIRP. Even when the NCLT held that the claim did not arise out of the CIRP, the same issue was under consideration. The challenge before the NCLAT also revolves around the question as to whether the claims are related to the CIRP - the subject-matter of challenge in the present writ petition is confined to availability and enforcement of remedies provided by a different statute, that is, the Electricity Act, 2003 and the Regulations framed thereunder. Hence, the outcome of either of the proceedings would not operate as res judicata in respect of the other, nor does the decision of either of the forums directly affect or debar the remedy before the other. The writ petitioner cannot be said to pursue the same remedy before two parallel forums and there does not arise any question of the writ petition being stayed on the principle of Section 10 of the Code of Civil Procedure. The IBC is not applicable to the electricity dues, as the NCLT has held that the dues do not arise from the CIRP. Even then, nothing hinges on the Telengana State ratio in the facts of the present case. The question which has arisen for adjudication here is whether the writ petitioner can be held liable to pay the outstanding dues left by the erstwhile consumer for the purpose of getting a new electricity connection from the DVC - there is a specific provision in the Supply Code (Regulation 3.4.2) to entitle the licensee to claim the outstanding dues from a new or subsequent consumer if a nexus is established by the licensee between the new consumer and the erstwhile defaulter-consumer. Since no such nexus has been proved by the licensee in the present case, mere subsistence of the licensee s right to claim outstanding dues from the erring consumer cannot justify shifting of such burden on the auction-purchaser and, for all practical purposes, there is no statutory provision to claim the amount from the writ petitioner. The impugned claim of the DVC is not tenable in the eye of law and cannot survive the scrutiny of judicial review under Article 226 of the Constitution of India - Application allowed. PMLA 2023 (1) TMI 694 Money Laundering - provisional attachment order - scheduled/ predicate offence - proceeds of crime - Petitioners have been discharged in the scheduled/ predicate offence - It is submitted by petitioner that a closure report filed by the CBI has been accepted by the Trial Court in respect of the predicate offence and no criminal charges are now pending against the Petitioners - HELD THAT:- A perusal of the orders passed in Parvathi Kollur [ 2022 (8) TMI 1256 - SC ORDER] leaves no matter of doubt in the mind of the Court that if there is an acquittal/ discharge or a closure report has been filed in the predicate offence, the ECIR would not stand and the same would be liable to be quashed. For example, in ADJUDICATING AUTHORITY (PMLA) AND ORS. VERSUS SHRI AJAY KUMAR GUPTA ORS. [ 2023 (1) TMI 681 - SC ORDER] , there was acquittal in the predicate offence. In view of the said fact, the Supreme Court was of the view that the appeal filed by the Adjudicating Authority (PMLA) would not survive. Similarly, in DIRECTORATE OF ENFORCEMENT VERSUS M/S OBULAPURAM MINING COMPANY PVT LTD [ 2023 (1) TMI 682 - SC ORDER] , closure report had been accepted by the Trial Court qua the predicate offence. The Supreme Court was again of the view that proceedings under PMLA will not survive and the Court proceeded to quash the ECIR. In the facts of the present case, the Trial Court, in the complaint case which was pending before it, has clearly come to a conclusion that the closure report deserves to be accepted and no criminality is ascertainable as the documents in respect thereof were not available - the impugned attachment orders dated 14th February, 2022 and 20th June, 2022 as also the ECIRs are quashed. Petition allowed. 2023 (1) TMI 682 Grant of Regular bail - Money Laundering - siphoning of funds - the allegation is that the amount was given by RFL to entities which were, directly or indirectly, owned or controlled by the applicant, or in which the applicant otherwise had financial interest, including companies linked to RHC - HC [ 2020 (7) TMI 556 - DELHI HIGH COURT] held that There seems to be no rationale for continuing the applicant s judicial custody as an undertrial in this case - HELD THAT:- The present case relates to the predicate offence in respect of the same matter - List before a Bench of one of us (Hon. Sanjay Kishan Kaul, J.) is not a Member - Insofar as the urgent listing now is concerned, it is the prerogative of the Hon ble the Chief Justice of India. Money Laundering - public auction - the allegations are to the effect that the lands, which would fetch higher value in the public auction, were purchased by the petitioners in connivance with the other accused resulting in a huge loss - burden to prove - HC [ 2019 (10) TMI 1236 - MADRAS HIGH COURT] held that the burden of proof by discharging the presumption lies upon the persons charged. Hence, investigation by the Central Bureau of Investigation and the respondent are totally distinct and different - HELD THAT:- Learned Solicitor General fairly states that since there is a closure report in respect of the predicate offence which has been accepted, the present proceeding will not survive and consequently the ECIR No.CEZO/01/2017 stands quashed - SLP disposed off. Prevention of Money Laundering Act, 2002 - attachment orders - HC [ 2017 (8) TMI 135 - MADRAS HIGH COURT] held that Admittedly, 2nd respondent filed the case only based on the charge sheet of the CBI, who have not conducted any enquiry on their own. In fact, all the documents are original documents of the alleged proceeds of crime, which are in the custody of the CBI Court. When the entire documents are in the custody of the Court, there cannot be any reason to believe that the properties will be dealt with in any other manner - HELD THAT:- Learned Solicitor General fairly states that since the proceedings before this Court arise from an order of attachment and there is acquittal in respect of predicate offence, the proceedings really would not survive - the appeals filed by the Adjudicating Authority (PMLA) do not survive and are accordingly disposed of. 2023 (1) TMI 681 Validity of attachment order - acquittal in respect of predicate offence - HELD THAT:- The appeals filed by the Adjudicating Authority (PMLA) do not survive and are accordingly disposed of. Service Tax 2023 (1) TMI 690 Short payment of service tax - erection, installation and commissioning work service - Wrong classification of service under Works Contract Service - benefit of N/N. 1/2006 ST - circular No. B1/16/2007-TRU dated 22.05.2007 - HELD THAT:- The aforesaid exemption entry is applicable on taxable category viz. Erection, commissioning or installation, under a contract for supplying a plant, machinery or equipment or structures and erection, commissioning or installation of such plant, machinery or equipment or structures. The Learned Commissioner denied the benefit of said entry to the Appellant on the ground that Appellant is not supplying plant, machinery, equipment or structures, but carrying out thermal insulation and hence benefit of 67% abatement from gross value would not be available to appellant as the condition laid down in the said Notification are not fulfilled by appellant - it cannot be considered that the said entry is applicable only on the supply of plant, machinery or equipment or structures. Besides, it is also applicable on any other material so Learned In the present matter there is no dispute on the facts that the Appellant is Commissioning and Installation agency and for providing the taxable services appellant has provided the thermal insulating materials i.e. Hot insulation including supply of LRB and Aluminium Sheet, Cold insulation with Thermocol and Aluminium Sheet, Insulation of Pipeline with black superion sleeve providing and fixing of black superion with cellotape , insulation with black nitrile rubber foam, sheet, etc. and on supply of goods appellant also paid sales tax/ VAT. Hence, the Appellant are eligible to the benefit of the Notification No. 1/2006-S.T., dated 1-3-2006. Wrong classification of service under Works Contract Service - HELD THAT:- From the definition of Works Contract Service, it is clear that only specified categories of works contract are considered for levy of Service Tax under the said definition. These are enumerated in clauses (a) to (e). It is found that in clause (a) thermal insulation also mentioned and in the present matter appellant had also paid VAT/ sales tax on goods which is used in installation of thermal insulation. The impugned activity of the assessee was nothing but works contract service . There are no merit in the impugned order demanding service tax from appellant - appeal allowed. 2023 (1) TMI 689 Non/Short payment of service tax - renting of immovable property (office) in respect of rent charges paid to its Director - availment of wrong or higher abatement - penalty for late filing of ST-3 Returns - interest on delayed payment of service tax - penalty - revenue neutrality - Extended Period of Limitation. Demand of Rs. 2,90,628/- have been confirmed on payment of rent for office to Director of the Company during the period April 2014 to June 2017 - Reverse Charge Mechanism - Extended Period of Limitation - revenue neutrality - HELD THAT:- Admittedly, under the facts, the appellant on payment of service tax on the rent was entitled to Cenvat Credit of the same. Thus, the situation is wholly revenue neutral - this ground is allowed and the demand is set aside. Allegation of short payment of service tax of Rs. 24,44,446/-, due to availment of wrong and higher abatement - HELD THAT:- The appellant have done execution of new work after removing the existing structure and railing etc. This ground is allowed in favour of the appellant and set aside the demand of Rs. 24,44,446/-. Imposition of penalty under Section 77 for late filing of return and u/s 78 of FA - HELD THAT:- The show cause notice have been issued by invocation of extended period of limitation. Further, prior to issue of show cause notice dated 13.07.2020 appellant have admittedly filed the service tax returns, about two years prior to it in the year 2018. In this view of the matter, the quantum of penalty is reduced to Rs. 2000 per return or a total penalty of Rs. 6000/- under Section 77 r/w Rule 7C of Service Tax Rules - penalty under Section 78 also stands set aside Demand of interest under Section 75 - It is contended that three challans deposited by the appellant for Rs. 2,241/-+ Rs. 44,008/- Rs. 5,539/- totalling Rs. 51,788/- have not been considered before computing the short payment of interest - HELD THAT:- interest under Section 75 is payable for delayed payment of service tax, as such tax has not been paid by the due date or within the prescribed period. Thus, this ground is allowed by way of remand directing the Adjudicating Authority to recalculate the interest for delayed payment of tax after giving credit, on verification of the challans produced. Appeal allowed in part and part matter on remand. Central Excise 2023 (1) TMI 693 Denial of refund claim - failure to produce proof of refund to the individual taxi owners - denial of refund on the ground that in respect of these claims appellant had failed to establish that the amount were refunded actually to individual taxi owners - applicability of N/N. 5/98-CE - HELD THAT:- On verification of documents as reflected in the remarks column above and having satisfied ourselves that the mismatches as stated are very minor in nature. Further it is also noted that there are errors in recording the engine number in the show cause notice whereby same engine number appeared twice in the show cause notice which is practically impossible. The verification as undertaken in these cases cannot be reason for denial and the verification has to be caused by referring to all other details. Having satisfied with correctness of these claims, it is held that demand made in respect of these claims needs to be set aside. It is settled law that the refund orders made in terms of the Section 11B of the Central Excise Act, 1944 are judicially determined, the same needs to be set aside in the manner as provided in law. Having not filed any appeal against the said refund orders those order had acquired finality and could not have been challenged by way of the proceedings initiated under Section 11A. In the case of M/S. EVEREADY INDUSTRIES INDIA LTD. VERSUS THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, THE COMMISSIONER OF CENTRAL EXCISE [ 2016 (4) TMI 688 - MADRAS HIGH COURT ] Hon'ble Madras High Court has held that Once an application for refund is allowed under Section 11B, the expression 'erroneous refund' appearing in sub-section (1) of Section 11A cannot be applied. If an order of refund is passed after adjudication, the amount refunded will not fall under the category of erroneous refund so as to enable the order of refund to be revoked under Section 11A(1). One authority cannot be allowed to say in a collateral proceeding that what was done by another authority was an erroneous thing. In case of M/S. HONDA SIEL POWER PRODUCTS VERSUS UNION OF INDIA THROUGH SECY. AND ANOTHER [ 2019 (12) TMI 803 - ALLAHABAD HIGH COURT ], Hon'ble Allahabad High Court has observed that once the adjudication has taken place under Section 11B cannot proceed to recover on the basis of erroneous refund under Section 11A so as to enable the refund order to be revoked, as the remedy lied under Section 35E for applying to the Appellate Tribunal for determination and not invoking Section 11A. Thus, the Show cause Notice issued to the appellant itself would be hit by the opinion expressed by the Hon'ble High Courts in the above referred decisions - the penalties imposed on the dealers of the appellant, i.e. appellant number 2, 3 and 4 are set aside - appeal allowed. 2023 (1) TMI 688 CENVAT Credit - Education Cess and Secondary Higher Education Cess under the invoice issued by the 100% EOU - appellant s submission is that the denial of Education Cess was not subject matter of show cause notice - HELD THAT:- From the proposal in the show cause notice, it can be seen that the demand of Cenvat Credit is not only in respect of basic Excise duty but also of Education Cess and Secondary Higher Education Cess. Therefore, in this fact it cannot be said that the order denying the Cenvat credit on Education Cess and Secondary Higher Education Cess is travelling beyond the scope of show cause notice. Hence, the demand was rightly made by the adjudicating authority. Accumulation of unutilized credit of Education Cess and Secondary and Higher Education Cess while switching over to the GST regime - HELD THAT:- This fact can be examined at the time of recovery of the amount confirmed in the impugned order. Hence, there are no conclusive finding on the said submission. Penalty imposed on Shri. Suresh Nair employee of the appellant s Company - HELD THAT:- The issue of correct calculation of Cenvat Credit on the invoice issued by the 100% EOU was always in dispute, therefore, malafide cannot be attributed to the employee of the Company in the facts of the present case. Moreover, he is not beneficiary of any wrong doing by the Company. Accordingly, considering the peculiar facts of the present case, the penalty Shri. Suresh Nair employee of the Company cannot be imposed under Rules 26 of the Central Excise Rules, 2002. Hence, penalty on Shri. Suresh Nair is not sustainable, accordingly, set aside. Appeal disposed off. 2023 (1) TMI 687 Demand of interest on late payment of National Calamity Contingent Duty (NCCD) - July, 2017 to July, 2019 in respect of Unit-I and August, 2017 to July, 2019 for Unit-II - HELD THAT:- The interest is payable for default in depositing the tax by the due date voluntarily or after determination of the amount of duty under Section 11A. Here both the conditions are not available to Revenue as admittedly neither there is any determination of duty liability of NCCD under Section 11A, nor there is voluntary default in deposit of the amount of NCCD. In absence of condition precedent in Section 11AA of the Act, no interest can be demanded from the appellant assessee. Further taking judicial notice that the appellant was prevented from deposit of dues, due to glitch on the portal, which is wholly attributable to inaction on the part of Revenue. Thus, Revenue cannot take advantage of its wrong doing, by levy of interest. Appeal allowed. CST, VAT & Sales Tax 2023 (1) TMI 686 Validity of assessment order - proper perusal/checking of records not done - non-application of mind in passing the impugned order - violation of principles of natural justice - HELD THAT:- The Commissioner of Taxes, respondent No.2, has not properly appreciated the documents on record and could have more vigilant while passing the order and as such, it would be appropriate to remand the matter back for fresh consideration. Petition allowed by way of remand. Indian Laws 2023 (1) TMI 685 Interpretation of statute - paragraph 4(vi)(b) of the Operating Guidelines of the National AYSUH Mission (NAM) - Constitutional Validity of proceedings under Article 136 of the Constitution - purchase of Ayurvedic drugs solely from IMPCL without inviting tenders - requirement in view of paragraph 4(vi)(b) of the Operating Guidelines of the National AYSUH Mission, that the State of Uttar Pradesh must purchase Ayurvedic medicines by adopting a transparent process after inviting tenders - violation of the operating guidelines - no involvement of State largesse and no disposal of State property. HELD THAT:- Paragraph 4(vi)(b) does not stipulate that IMPCL will have a higher standing as compared to other manufacturing units of the State Governments and cooperatives mentioned in the paragraph. The position of the Ministry of AYUSH as evidenced by the 2019 notification is that 50 percent of the grant-in-aid shall be used to procure medicines from any of the establishments specified in the paragraph. This conclusion is substantiated by the use of the phrase or in paragraph 4(vi)(b) - IMPCL or from PSUs , pharmacies under State Governments and co-operatives. Thus, on a plain reading of paragraph 4(vi)(b), it is evident that all the units mentioned in the paragraph are placed at an equal footing. The provision does not create a gradation amongst the manufacturing units mentioned in the paragraph. Nor does it evince an intent to create a monopoly. Validity of award of government contract to IMPCL - HELD THAT:- There is no material on record to support the submission that IMPCL is the only establishment among the establishments mentioned in paragraph 4(vi)(a) that manufacture good quality Ayurvedic drugs. In fact, paragraph 4(vi)(b) states that 50 percent of the grant-in-aid shall be used to purchase medicines from the units mentioned in the paragraph keeping in view the need for ensuring quality of AYUSH drugs and medicines. This would indicate that the need for ensuring quality is subserved by all the sources mentioned there. Besides IMPCL, which is an establishment of the Government of India, paragraph 4(vi)(b) includes other establishments of the State Governments or co-operative societies - The contention that IMPCL does not have any commercial interest because it is an establishment developed by the Government of India is then equally applicable to other establishments prescribed in paragraph 4(vi)(b). Inviting tenders from the entities mentioned in paragraph 4(vi)(b) is the most transparent and non-arbitrary method of allocation that can be undertaken. Hence, the appellant must henceforth purchase Ayurvedic medicines only through a free and transparent procedure such as tenders. The appellant may deviate from this rule and procure medicines by nomination only if exceptional circumstances exist. In such a situation, the appellant must demonstrate the existence of exceptional circumstances on the basis of cogent material. The intervention applications seek to enlarge the scope of the Special Leave Petition. The issue before this Court falls squarely on the interpretation of paragraph 4(vi)(b). However, the intervention applicant has prayed that in accordance with the policies of the State and the Central Government, a minimum percent of Ayurvedic drugs must be procured from MSMEs under paragraph 4(vi)(c). This is beyond the scope of the instant Special Leave Petition. SLP dismissed. 2023 (1) TMI 684 Dishonor of Cheque - Effect of moratorium to non-corporate debtor/debtors dealt under Section 141 of the Negotiable Instruments Act - emergence of vicarious liability in criminal law, in terms of Section 141 of the Negotiable Instruments Act - essentials to fasten vicarious liability. Whether the moratorium provision contained in Sec.14 (1) of IBC would apply only to corporate debtor and the noncorporate debtor/debtors mentioned in Section 141 of the N.I.Act, continuing to be statutorily liable under Chapter XVII of the N.I Act? - HELD THAT:- In view of the legal position settled by the Three Bench of the Apex Court, in P. Mohanraj's case [ 2021 (3) TMI 94 - SUPREME COURT ], holding the view that, moratorium provision contained under Section 14 (1) of IBC would apply only to a corporate debtor and the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the N.I.Act - Therefore, the complaint against the petitioners (accused Nos.1 to 7) cannot be quashed, simply on the ground of moratorium order as per Annexure-B. However, the prosecution against the 1st petitioner/1st accused being corporate debtor can be kept in abeyance till finalization of the moratorium proceedings, while allowing prosecution against petitioners 2 to 7, natural persons. As regards to the application of vicarious liability in terms of criminal law as provided under Section 141 of the N.I. Act is concerned, the same cannot be fastened because of the civil liability. Vicarious liability under sub- section (1) to S.141 of the NI Act can be pinned when the person is in overall control of the dayto- day business of the company or firm. Vicarious liability under sub-section (2) to S.141 of the NI Act can arise because of the director, manager, secretary, or other officer's personal conduct, functional or transactional role, notwithstanding that the person was not in overall control of the day-to-day business of the company when the offence was committed. Vicarious liability under sub-section (2) is attracted when the offence is committed with the consent, connivance, or is attributable to the neglect on the part of a director, manager, secretary, or other officer of the company. Thus, the twin contentions raised by the learned counsel for the petitioners to quash Annexure-A complaint, found to be not sustainable. However, the prosecution against the 1st petitioner, the corporate debtor shall stand deferred subject to the outcome of moratorium proceedings, while allowing continuance of prosecution against petitioners 2 to 7, the non-corporate debtors/natural persons. This petition stands disposed of.
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