Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 22, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Customs
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04/2022 - dated
20-1-2022
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Cus (NT)
Supersession Notification No. 02/2022-Customs(N.T.), dated 6th January, 2022 - Rate of exchange of one unit of foreign currency equivalent to Indian rupees
GST - States
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S.O. 70 - dated
21-1-2022
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Bihar SGST
Seeks to bring in force provisions of sub-rule (2), sub-rule (3), clause (i) of sub-rule (6) and sub-rule (7) of rule 2 of the Bihar Goods and Services Tax (Eighth Amendment) Rules, 2021
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S.O. 69 - dated
21-1-2022
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Bihar SGST
Seeks to bring in force provisions of sections 2, 3 and 7 to 16 of the Bihar Goods and Services Tax (Amendment) Act, 2021
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F A-3-23-2021-1-V (02) - dated
6-1-2022
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Madhya Pradesh SGST
Seeks to bring in force provisions of sections 2, 3 and 7 to 15 of the Madhya Pradesh Goods and Services Tax (Amendment) Act, 2021
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F A-3-16-2021-1-V (01) - dated
6-1-2022
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Madhya Pradesh SGST
Seeks to bring in force provisions of sub-rule (2), sub-rule (3), clause (i) of sub-rule (6) and sub-rule (7) of rule 2 of the Madhya Pradesh Goods and Services Tax (Amendment) Rules, 2021
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F A 3-13/2017/1/V (92) - dated
5-1-2022
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Madhya Pradesh SGST
Madhya Pradesh Goods and Services Tax (Amendment) Rules, 2021.
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seeking grant of Bail - illegal availment of input tax credits - True it is that offence committed under Section 132 (1) of the Act of 2017 is made compoundable under Section 138 of the Act of 2017, subject to deposit of amount assessed. Present is not the case where applicants being businessmen in the course of their business inadvertently committed any offence as defined under Section 132 (1) (b) (c) of the Act of 2017 - applicants with intention to commit economic crime, created fictitious firms in a planned manner - This is not a fit case where applicants should be enlarged on regular bail - HC
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Seeking release of provisionally attachment of Bank Accounts - seeking to unblock the Petitioner’s Electronic Credit Ledger - Petitioner undertakes to this Court that the petitioner will continue to appear as and when directed by the Investigating Authorities and will supply the documents which may be asked for. - Rule 86A(3) of the CGST Rules, 2017 - The present writ petition along with pending application is disposed of with the directions to the respondents to de-freeze the petitioner’s bank account as well as unblock the Electronic Credit Ledger within three working days - HC
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Service of proper show cause notice - Rule 142(1)(a) of GST - While the show cause notice does not even contain the brief facts of the case or the grounds alleged even the summary of the show cause notice does not contain specific facts and allegations showing evasion of payment of due tax to the Government. In the absence of the ingredients of a proper show cause notice the petitioner is being denied proper opportunity of defending himself. Such a proceeding could end up in vague result and would also not be in the interest of the revenue. - HC
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Detention of goods alongwith vehicle - gold ornaments - confiscation of goods - proceedings initiated under Section 129 as well as under Section 130 of the Central Goods and Service Tax Act 2017 - Whether the transport of gold was with an intention to evade tax or not is a matter which requires appreciation of disputed facts and hence the statutory authority will have to consider the same after appreciating the facts. - This is not a fit case for invoking the extraordinary jurisdiction under Article 226 of the Constitution of India. Hence there is no merit in this writ petition - HC
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Classification of goods - HSN Code - Interactive Flat panel with Android - the goods sold by the applicant has a Central processing unit, memory & storage with an onscreen display of output which is based on the input supply by the user. Therefore in view of the notes to Chapter 84 and also the HSN entries under 8471, the goods fall under HSN 8471. - AAR
Income Tax
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Cash deposits made post demonetization represented unaccounted income of the assessee qua AY 2017-2018 - Having regard to the extensive material which has been examined by the Tribunal, in particular, the trend of cash sales and corresponding cash deposited by the assessee with earlier years, we are of the view that there was nothing placed on record-which could have persuaded the Tribunal to conclude that the assessee had, in fact, earned unaccounted income i.e., made cash deposits which were not represented by cash sales. - HC
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Undisclosed income as assessable u/s 158 BC - Assessee submitted the amount was not received and waived as bad debts, accordingly should be excluded - Tribunal, on examination of the ledger account pertaining to G.V. Films, which was seized during the search, has concluded that the amount of ₹ 35,00,000/- were received by the assessee on various dates between 23.08.1995 and 11.01.1996 and the same were duly accounted. In view of the same, the Tribunal has come to a definite conclusion that the appellant already received the entire amount from the distributors much before the release of the film and therefore the question of waiver would not arise. Such a factual finding arrived at by the Tribunal, based on the material evidence, cannot be found fault with, in the opinion of this court. - HC
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TDS u/s 194C - Disallowance u/s 40(a)(ia) - payment of transportation contracts - the registration number of trucks/truck owner would not be relevant for the purpose of deciding the applicability of Section 194 C of the Act but it is the personnel/truck operator from whom the trucks are hired. - HC
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Deduction u/s 54 - investment in two residential property situated at different location - the same Assessee should be held entitled to the benefit of deduction u/s 54 - AT
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Penalty levied u/s 271B - delay in filing the audit report under section 44AB - reasonable cause of delay - The delay was caused due to search conducted by the Department and the books of accounts are not readily available with the assessee. Under the above facts and circumstances, the delay was occurred, in our opinion, the delay in filing the audit report was neither willful nor wanton or inadvertently, it was only beyond the control of the assessee. - AT
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Adjustment made in the intimation u/s. 143(1) - denying the benefit of deduction/exemption u/s 11 - CIT(A)'s order, justifying the adjustments on the basis of disclosure made by the assessee that it was not registered as a charitable entity, is we find taking a hyper technical view on the issue, particularly when the adjustment was made without affording any opportunity to the assessee as provided in law, coupled with the fact that the assessee had evidenced its registration u/s. 12A of the Act to the Ld. CIT(A) by producing the certificate. Also the Ld. CIT(A) has not addressed the alternative argument of the assessee that even after the adjustments its income was below the taxable limit. - AT
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Addition u/s 68 - unexplained share capital - Even though there were circumstances leading to suspicion, yet having taken an action u/s.132 and enquiries made in the assessment proceedings, the assessing authority had not brought any positive material or evidence to indicate that the share application money as such represented assessee’s own undisclosed money brought back in the garb of share capital. Merely because of his subjective satisfaction that the source of availability of money with the shareholder or their creditworthiness were not established, the AO could not treat the genuinely raised share capital as deemed income u/s.68 - AT
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Assessment u/s 153A - Addition u/s 68 - Bogus share application money - nvestors are group companies - the assessee, in the instant case, has discharged the initial burden cast on it by filing the requisite details before the AO, summons u/s 131 were replied, there was compliance to the notice u/s 133(6), the investor companies have shown huge reserves and surplus and own capital. Merely because these companies have taxable income which is less than the amount invested during the year in our opinion cannot be a ground for making the addition especially when all the investor companies have got huge net worth in shape of own capital and free reserves and are group companies and all transactions are through proper banking channel. - AT
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Condonation of delay in filing the appeal before the CIT(A) - delay of 636 days - The conduct of the assessee is such that there was clear negligence on its part and there is no equitable ground or substantial cause for condoning the delay of 636 days in filing the appeal before the CIT(A). Therefore, we are of the view that the CIT(A) is correctly dismissed the appeal in limine, without condoning the delay of 636 days in filing the appeal before him. - AT
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Reopening of assessment u/s 147 - As can safely be gathered from a perusal of the reasons to believe, we are of the considered view that the A.O holding a conviction that his predecessor while framing the regular assessment was in error in accepting the share premium received by the assessee company, which as per him was unexplained, had thus with the sole objective of substituting his view as against that of his predecessor, therein, sought to reopen the case of the assessee company. We are afraid that such a substitution of a view of a successor A.O cannot form a justifiable basis for reopening the case of an assessee. - AT
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Validity of assessment made under Section 143(1) instead of section 153C - In the facts of the present appeal, undisputedly, the books of account/documents/assets found during the search and seizure operation were received by the AO having jurisdiction over the assessee - Neither the AO has recorded any satisfaction nor issued any notice as contemplated under section 153C - The impugned assessment order passed under section 143(3) of the Act is invalid. - AT
Customs
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Rejection of applications for issuance of Duty Credit Scrips under the Merchandise Export from India Scheme (MEIS) - It is a settled proposition of law that a party has to plead the case and produce/adduce sufficient evidence to substantiate his submissions made in the petition. In the absence of the same, the Court need not entertain the pleadings and submissions so made. - In view of absence of documentary evidence, and the findings and discussion, the Petitioner cannot be granted MEIS benefit merely on the basis of pleadings which are prima facie insufficient on the face of record. - HC
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Seeking provisional release of seized goods imported by the petitioner - ‘proper officers’ - It is an admitted position that the said DYCC could not have carried out such testing at the first instance, we are inclined to direct the Respondents to draw samples of the goods imported by the Petitioner which are subject matter of these Petitions and to send to the Government Laboratory or FSSAI within one week from today - Since the Authorities have admitted that the earlier samples drawn and tested by DYCC could not have been drawn contrary to the two public notices and the said report being the basis for issuance of Seizure Memo, the Respondents is directed to release the goods in question on the Petitioner submitting P.D. bond. - HC
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Seeking grant of bail - Smuggling - high value foreign origin black pepper abusing the facilities under the Indo-Nepal Treaty on Trade and Transit. - alleged fraudulent exports - There exists live link between the alleged incidents referred in the grounds of detention, which are undoubtedly smuggling activities, with regard to the date on which the order of detention was passed the by the detaining authority who has validly recorded satisfaction for issuing the order of detention under section 3(1) of the Act - HC
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Revocation of Customs Broker License - forfeiture of the security deposit - penalty - import of Cigarettes and Food Supplement/proteins - prohibited/restricted goods - In view of the findings of the learned Commissioner (Appeals) in the main show cause notice, wherein the said Diplomat was also a co-noticee, the appellant Customs Broker have been granted clean chit with full relief. Accordingly, the cause of action under the CBLR does not survive. - AT
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Valuation of imported goods - Halani Star - rejected of declared Cost, Insurance and Freight (CIF) value value - When neither the Chartered Engineer was examined nor the appellant was not permitted to cross examine the Chartered Engineer, the second report submitted by the Chartered Engineer cannot be relied upon - the value declared by the appellant should have been treated as a transaction value and no reliance could have been placed on the second report of the Chartered Engineer for enhancing the value of the Barge. It is also not the case of the Department that any additional consideration was paid by the appellant to the seller of the Barge. - AT
Indian Laws
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Dishonor of Cheque - funds insufficient - legally enforceable debt or not - the cheque which was issued by him towards security and the same was used by the petitioner for submitting this complaint. In such circumstances, in the absence of any specific understanding arrived at between the parties enabling the appellant to collect interest at the rate of 24%, it cannot be concluded that the amount mentioned in Ext. P1 cheque reflects the actual amount of legally enforceable debt. - HC
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Dishonor of Cheque - insufficiency of funds - legally enforcement debt or not - if the consideration for which the instrument was made or drawn has failed subsequently, then also the instrument creates no obligation at all - On repossession of vehicle, the agreement stood terminated, therefore cheques in the hands of financial institution becomes instrument for which consideration has failed, even being presented and dishonoured, no offence under Section 138 of the N.I. Act would be attracted. - HC
IBC
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Eligibility of persons to be resolution applicant - The word “such creditor” in Section 29A(h) has to be interpreted to mean similarly placed creditors after the application for insolvency application is admitted by the adjudicating authority. As a result, what is required to earn a disqualification under the said provision is a mere existence of a personal guarantee that stands invoked by a single creditor, notwithstanding the application being filed by any other creditor seeking initiation of insolvency resolution process. This is subject to further compliance of invocation of the said personal guarantee by any other creditor - Ineligibility has to be seen from the point of view of the resolution process. It can never be said that there can be ineligibility qua one creditor as against others. Rather, the ineligibility is to the participation in the resolution process of the corporate debtor. Exclusion is meant to facilitate a fair and transparent process. - SC
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Review order - Maintainability of appeal - since all the impugned orders had been passed in the absence of the petitioner, who failed to avail the opportunity of being represented before the NCLT, there is extremely limited scope of entering into the nitty-gritties of such factual allegations within the constraints of the writ jurisdiction. - The order under review cannot be subjected to a review on the ground of error apparent on the face of the record, simply because there is no such apparent error in the impugned order which can be decided at the first blush without looking into the materials annexed to the writ petition and the connected records of the proceeding before the NCLT - there is no merit in the review application. - HC
Central Excise
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Entitlement of interest on delayed refund of pre-deposit - seeking interest from the date of deposit till the date of its realisation under Section 35FF - The Adjudicating Authority is directed to grant interest @ 12% per annum from the date of deposit till the date of refund. Such interest should be granted within a period of two months from the date of receipt or service of the copy of this order - AT
Case Laws:
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GST
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2022 (1) TMI 856
Refund of IGST - exports were declared as the zero rated supplies - Section 16 of the IGST Act - Simultaneous duty drawback claim - HELD THAT:- The Special Leave Petition under Article 136 of the Constitution, need not be entertained - SLP dismissed.
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2022 (1) TMI 855
Vires of Circular No. 163/19/2021-GST dated 06 th October, 2021 - scheme of classification as provided under the Notification No.1/2017-Central Tax (Rate) dated 28 th June, 2017 and Notification No. 2/2017-Central Tax (Rate) dated 28th June, 2017 - jurisdiction of the Executive - seeking direction to respondent No. 2 to clarify that para 8 does not apply to DDGS/AFS, when prepared and sold as animal feed supplement - classification of 'Dried Distillers Grain with Soluble - Classified under heading 2309 or under heading 2303? - HELD THAT:- Issue notice. List on 13th April, 2022 along with W.P.(C) 13322/2021.
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2022 (1) TMI 854
Seeking grant of Bail - illegal availment of input tax credits - compoundable offence or not - offence punishable under Section 132 (1) (b) (c) of the Act of 2017 - HELD THAT:- The manner in which crime is committed reveals that applicants with cool mind and deliberate design with an eye on personal profit regardless of consequence of community affecting economy of the country as whole, have committed crime in question. Act of applicants is an attempt to destroy system of the Government of collecting taxes under GST scheme. Economic offences constitute a class apart and even bail matters are required to be decided with different approach as it involves huge loss of public funds. True it is that offence committed under Section 132 (1) of the Act of 2017 is made compoundable under Section 138 of the Act of 2017, subject to deposit of amount assessed. Present is not the case where applicants being businessmen in the course of their business inadvertently committed any offence as defined under Section 132 (1) (b) (c) of the Act of 2017. From the documents collected by non-applicant Department during investigation and contents of complaint filed by non-applicant, it is apparent that applicants with intention to commit economic crime, created fictitious firms in a planned manner. This is not a fit case where applicants should be enlarged on regular bail, more so when it is stand of non applicant Department that investigation is in furtherance at different zones of the Department - bail application dismissed.
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2022 (1) TMI 853
Seeking release of provisionally attachment of Bank Accounts - seeking to unblock the Petitioner s Electronic Credit Ledger - Rule 86A(3) of the CGST Rules, 2017 - HELD THAT:- In rejoinder, learned counsel for the petitioner states that the petitioner has been cooperating with the Investigating Agencies and the relevant documents have been furnished. She assures and undertakes to this Court that the petitioner will continue to appear as and when directed by the Investigating Authorities and will supply the documents which may be asked for. . The present writ petition along with pending application is disposed of with the directions to the respondents to de-freeze the petitioner s bank account as well as unblock the Electronic Credit Ledger within three working days
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2022 (1) TMI 852
Permission for filing of declaration in form GST TRAN-1 and GST TRAN-2 - transitional credit - HELD THAT:- We are happy to learn from Mr. Shraff that the problem has been resolved. The respective applicants have received the credit. We must place on record our appreciation for the efforts put in by Mr. Devang Vyas, the learned Additional Solicitor General of India in resolving the problem. Nothing further requires to be adjudicated. All the applications are disposed of accordingly.
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2022 (1) TMI 851
Service of proper show cause notice - Rule 142 (1) (a) of the Jharkhand Goods and Services Tax Rules, 2017 - HELD THAT:- Show Cause Notice has been issued in a format without striking out any irrelevant portions and without stating the specific contravention committed by the petitioner. The summary of show cause notice in FORM-GST-DRC- 01 is to be issued in an electronic form along with a notice for the purposes of intimation to the assesse and the same by its very nomenclature cannot be a substitute to the show cause notice which if lacks in the essential ingredients of a proper show cause notice. While the show cause notice does not even contain the brief facts of the case or the grounds alleged even the summary of the show cause notice does not contain specific facts and allegations showing evasion of payment of due tax to the Government. In the absence of the ingredients of a proper show cause notice the petitioner is being denied proper opportunity of defending himself. Such a proceeding could end up in vague result and would also not be in the interest of the revenue. On being specifically as asked as to how the summary of a show cause notice as it is in its present format Annexure-2 could in itself be a substitute for the show cause notice stipulated in Section 73 of the JGST Act, seeks time to obtain instruction. Matter be listed on 17.01.2022.
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2022 (1) TMI 850
Detention of goods alongwith vehicle - gold ornaments - confiscation of goods - proceedings initiated under Section 129 as well as under Section 130 of the Central Goods and Service Tax Act 2017 - HELD THAT:- It is noticed from Ext.P8, that the respondent has given a reason for initiating proceedings under Section 130. The correctness or otherwise of the said reason is not a matter which can be considered by this Court under Article 226 of the Constitution of India, especially in the light of the fact that, petitioner was not in possession of any documents contemplated under law. Whether the transport of gold was with an intention to evade tax or not is a matter which requires appreciation of disputed facts and hence the statutory authority will have to consider the same after appreciating the facts. This is not a fit case for invoking the extraordinary jurisdiction under Article 226 of the Constitution of India. Hence there is no merit in this writ petition - Since it is submitted that the petitioner was heard sometime in the past in order to render justice to both sides, the respondent shall afford an opportunity of a fresh hearing to the petitioner on 17/1/2022 at 11 am - Petition dismissed.
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2022 (1) TMI 849
Classification of goods - HSN Code - Interactive Flat panel with Android - classified under the heading 8471 or otherwise? - HELD THAT:- The goods sold by the applicant has a Central processing unit, memory storage with an onscreen display of output which is based on the input supply by the user. Therefore in view of the notes to Chapter 84 and also the HSN entries under 8471, the goods fall under HSN 8471.
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Income Tax
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2022 (1) TMI 848
Addition u/s 68 - investment in the form of share capital/share premium in the assessee had no resources of their own - whether the statement made by Mr Arpesh Garg, Managing Director of the assessee under Section 132(4) of the Act and the photocopies of the documents found during the search and seizure action constituted incriminating material? - HELD THAT:- In this case, insofar as the assessee is concerned, it placed the evidence on record, which established the trail of the money, the mode through which the money had travelled from the assessee to the investor entities and back to the assessee, and the fact that each of the investor entities was in existence. Therefore, once the assessee claimed (and it was found as a fact) that it was its own money which was routed back to it in the form of share capital/share premium, the traditional test which is sought to be applied by the revenue, for triggering the provisions of Section 68 of the Act, which is, that the assessee had to establish the creditworthiness, genuineness and identity of the transactions would have to adapt to the circumstances obtaining in the present case. As noticed in the instant matter, the Tribunal found that it was the assessee s money which was routed back to it, albeit, through banking channels. The director of the assessee i.e., Mr Arpesh Garg retracted his statement, within 48 hours - there is no finding by the Tribunal that the money which was received by the assessee in form of share capital/share premium constituted the assessee s unaccounted income. As noted by the AO in the deviation report, in AY 2012-13, the revenue attempted to make an addition on account of share capital/share premium which was reversed by the CIT(A). The revenue did not carry the matter further, and, therefore, what is important to underscore in this case is the finding of fact returned by the Tribunal that it was the assessee s own money which was routed back to it, and not that these were paper entries, where there was no banking trail. In the context of M/s Mahalaxmi Traders, the submission advanced on behalf of the revenue that because Mr Manoj Gupta had, in his statement, said that he had not made any investment, and, therefore the addition made under Section 68 of the Act needed to be sustained is untenable, in view of the following finding recorded by the Tribunal, in this behalf. None of these findings have been assailed in the appeal preferred by the revenue as held it is not clear from the Orders of the authorities below whether copy of such statement was supplied to assessee for rebuttal or whether he was produced before A.O. for cross-examination on behalf of the assessee. Since nothing is clear from the assessment order, therefore, any statement recorded at the back of the assessee, cannot be read in evidence against the assessee unless it is confronted to assessee and right of cross-examination have been provided by the A.O. to assessee to cross-examine that statement - Decided in favour of assessee. Bogus purchases - Tribunal held that the books of accounts were rejected without crystalizing the defect in the books of accounts, which could have been done only after examining the same - HELD THAT:- According to us, the observations made by the Tribunal are pure findings of fact, which cannot be interdicted by us in appeal. The inconsistency in the approach adopted by the A.O., while preparing the deviation report and framing the assessment order with regard to purported bogus purchases is an aspect, which cannot be ignored and has been correctly highlighted by the Tribunal. If the revenue chooses to disallow bogus purchases, it would necessarily have to, in our view, ignore the corresponding sales recorded against the very same parties. As pointed out by the Tribunal, the CIT(A) could have rejected the books of accounts only, after it had examined and come to the conclusion that he was not satisfied as regards their correctness or completeness. The finding of fact returned by the Tribunal is that books of accounts were not examined by the CIT(A). If that be so, then, Section 145(3) of the Act could not have been triggered by the CIT(A), based on the mere statement of the Managing Director of the assessee. Besides this, as noted by the Tribunal, the CIT(A) had attempted to quantify the profit by resorting to a methodology, which was incomprehensible - AO has incorrectly disallowed 25% of the purchases from the alleged bogus parties without finding any evidence and ignoring the sales paid by them to the assessee. Further, the learned CIT A applied the provisions of section 145 (3) of the income tax act by rejecting the books of accounts of the assessee partially, without even looking at the books of accounts is also incorrect. Cash deposits made post demonetization represented unaccounted income of the assessee qua AY 2017-2018 - Tribunal held that it could not be said that the assessee had booked non-existing sales in its books post demonetization - HELD THAT:- In sum, it was the Tribunal s assessment of the material placed on record that cash deposits made by the assessee with its bankers, as noticed above, more or less compared with the cash sale transactions entered into by it with its customers. The Tribunal s view was that given the fact that there was no allegation made by the revenue that the assessee had backdated its entries to enhance its cash sale figures, one could only conclude that there was a growth in the assessee s business. Tribunal also took note of the fact that one of the reasons furnished by the A.O., in support of the impugned addition, was that physical stock was short by ₹ 450 crores - the stock register represented a higher figure, as against that which was found physically. This conclusion arrived at by the A.O. was found by the Tribunal to be erroneous, inasmuch as the A.O. had failed to notice the fact that part of the stock was available at the assessee s godown at Sonipat, Haryana, which had not been covered during the search action. Insofar as short-term borrowings Tribunal appears to have accepted the assessee s explanation that most of these were liabilities that were outstanding against bills payable under the letter of undertaking and cash credit, which were secured by closing stock maintained by the assessee. According to the assessee, these were available at a lesser rate of interest. Besides this, certain funds were secured by a hundred per cent margin, supported by fixed deposits. These funds bore a small rate of interest. In addition, thereto, certain advances were received also in the form of packing credit, which again bore a small rate of interest. In a nutshell, the explanation of the assessee, which found favour with the Tribunal, was that outstanding loan liabilities had no relationship with the cash held in hand by the assessee. Having regard to the extensive material which has been examined by the Tribunal, in particular, the trend of cash sales and corresponding cash deposited by the assessee with earlier years, we are of the view that there was nothing placed on record-which could have persuaded the Tribunal to conclude that the assessee had, in fact, earned unaccounted income i.e., made cash deposits which were not represented by cash sales. Therefore, in our opinion, the Tribunal correctly found in favour of the assessee and deleted the addition made by CIT(A) under Section 68 - Decided in favour of assessee.
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2022 (1) TMI 847
Rectification of mistake u/s 154 - debatable issue - apparent mistake for the assessing officer to exercise the jurisdiction u/s 154 - jurisdiction of AO u/s 154 to adjust the unabsorbed depreciation loss of earlier assessment years against the current year's business income, while computing deduction u/s 80HHC - HELD THAT:- Though appellant would agree that the issue, as to whether it is permissible to adjust unabsorbed depreciation loss of the earlier assessment year, while computing deduction under section 80HHC, stands decided against the appellant/assessee, he attempted to suggest that the said issue was debatable, when the assessing officer sought to invoke his power under section 15 on the premise that the said issue was finally resolved in favour of the Revenue in the case of Commissioner of Income Tax v. Shirke Construction Equipment Ltd. [ 2007 (5) TMI 194 - SUPREME COURT] in which, the decision rendered by the Bombay High Court, in the case of Commissioner of Income Tax v. Shirke Construction Equipment Ltd, [ 2000 (7) TMI 40 - BOMBAY HIGH COURT] was reversed. Hon'ble Supreme Court in the decision in IPCA Laboratories Ltd [ 2004 (3) TMI 9 - SUPREME COURT] had already overruled the decision of the Bombay High Court in the case of Commissioner of Income Tax v. Shirke Constructions Equipments Ltd (supra). Importantly, it is to be noted that the said decision in IPCA Laboratories Ltd. (supra) was delivered on 11.03.2004 much prior to the order of assessment dated 28.03.2006. Thus, we are of the view that the submission of the learned counsel for the appellant that the issue was debatable, when the assessing officer invoked section 154, lacks merit. An order contrary to law declared by the Hon'ble Supreme Court, would constitute an error apparent on the face of record. Therefore, the order passed by the assessing officer exercising his jurisdiction conferred under section 154 of the Income Tax Act, 1961, as affirmed by the Appellate Authority as well as the Appellate Tribunal, warrants no interference at the hands of this court. - Decided against assessee.
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2022 (1) TMI 846
Assessment solely on the basis of the statement recorded u/s 132(4) - admissibility, relevance and evidentiary value of the statement recorded at the time of search under Section 132(4) - HELD THAT:- On a careful reading of the findings rendered by the Tribunal, it could be seen that the assessing officer did not make assessment solely on the basis of the statement recorded u/s 132(4) but also placed reliance on the material evidence seized during the course of search as well as at the time of assessment. After having found that the appellant gave different explanations at different stages, none of which was supported by any cogent material evidence to dislodge the presumption u/s 132(4) and 132(4A)Tribunal rightly set aside the order of the First Appellate Authority and restored the order of the assessing officer. Therefore, the plea of the appellant that assessment was made solely on the basis of the statement obtained under Section 132(4) of the Income Tax Act, 1961, cannot be accepted by this court, as it is contrary to the facts of the case. Coming to the substantial questions of law relating to admissibility, relevancy and evidentiary value of statement obtained under Section 132(4) this court is of the view that the same are no longer res integra. As per decision of the Supreme Court in the case of Banalal Jat Constructions Private Limited [ 2019 (7) TMI 137 - SC ORDER] after referring to the judgment of Pullangode Rubber Produce Co. Ltd [ 1971 (9) TMI 64 - SUPREME COURT] we are of the opinion that once a statement is recorded, it is open to the assessing officer to rely and proceed on the basis that such statement is correct and represents the true state of affairs and the burden is on the deponent to demonstrate by letting cogent, convincing and material evidence that the statement was incorrect. Therefore, the statement made under Section 132(4) of the Income Tax Act, 1961 has a strong evidentiary value and is binding on a person, who makes it. As pointed out by the Tribunal that there was no material evidence let in by the appellant to retract the statement made under section 132(4) and the affidavits of his mother-in-law were unreliable as they were interested and self-serving testimonies. We are of the view that any retraction by the appellant should be made at the earliest point of time with sufficient, credible and corroborative evidence to support his claim and not by mere assertion as done in this case. Therefore, we do not find any reason to differ with the findings so rendered by the Tribunal. We have come to a conclusion that the case projected by the appellant is only on the facts and the same does not give rise to any question of law much less substantial question of law.
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2022 (1) TMI 845
Undisclosed income as assessable u/s 158 BC - Assessee submitted the amount was not received and waived as bad debts, accordingly should be excluded from income - Reliance on the documents seized during the search - Computation of undisclosed income of the block period - whether the plea of waiver raised by the appellant with respect to the amount as justified or it has to be added by treating it as undisclosed income, as contemplated u/s 158BC? - Tribunal confirming the addition as undisclosed income assessable under Section 158 BC - HELD THAT:- Undisclosed amount determined by the Assessing Officer has a direct nexus with the incriminating materials seized during the search. We also agree with the findings of the Tribunal that the three agreements that had been entered into by the assessee with the distributors clearly indicate that the same have nothing to do with the flop of the film at the box office or otherwise. We have also noticed that clause 4 of the agreement between the appellant / assessee and the assignee provides a default clause that in case of default in payment, the appellant is at liberty to proceed against the defaulter. Whereas, it was stated before the lower authorities that the appellant did not proceed to recover the balance amount and that, they waived the same. Tribunal, on examination of the ledger account pertaining to G.V. Films, which was seized during the search, has concluded that the amount of ₹ 35,00,000/- were received by the assessee on various dates between 23.08.1995 and 11.01.1996 and the same were duly accounted. In view of the same, the Tribunal has come to a definite conclusion that the appellant already received the entire amount from the distributors much before the release of the film and therefore the question of waiver would not arise. Such a factual finding arrived at by the Tribunal, based on the material evidence, cannot be found fault with, in the opinion of this court. Assessee filed their returns only after the conduct of inspection by the Enforcement wing officials and the materials seized disclosed the unaccounted income of ₹ 34.25 lakhs and the appellant did not pinpoint anything by supportive material to rebut the same, we find no reason to differ with the finding so rendered by the Tribunal. The judgment of the Andhra Pradesh High Court rendered in Srinivasa Ferro Alloys Ltd [ 2014 (9) TMI 390 - ANDHRA PRADESH HIGH COURT ] relied on the side of the appellant, is factually distinguishable and not applicable to the facts of the present case. Therefore, we answer the substantial question of law raised herein, against the appellant/assessee.
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2022 (1) TMI 844
Validity of reopening of assessment u/s 147 - notices and proceedings initiated against a person who had died prior to the issuance of notice - HELD THAT:- The issue of validity of a notice and proceedings held subsequent thereto against a dead person is no longer res integra.See Savita Kapila case [ 2020 (7) TMI 441 - DELHI HIGH COURT ] In the present case also, as the notice under Section 148 of the Act was issued against a dead person, the same is null and void and all consequent proceedings/orders, including the assessment order and the subsequent notices, being equally tainted, are liable to be set aside. - Decided in favour of assessee.
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2022 (1) TMI 843
Exemption u/s 11 - cancellation of registration granted to the appellant trust u/s 12AA - anonymous donation within the meaning of Section 115BBC - Tribunal justification in holding that no proper opportunity was afforded to the assessee as required under section 12AA[3] of the Act ? - Whether the Commissioner of Income Tax, Central-III, Kolkata could have cancelled the registration granted to the appellant trust u/s 12AA on 31.10.2005 on grounds which were not contained in the show cause notice dated 30.12.2008? - HELD THAT:- The assessee stated that all the activities of the trust are in accordance with the objects of the trust as mentioned in the deed of trust dated 05.08.1999. The Commissioner while proceeding to pass the order dated 31.12.2008 and cancelling the registration took into account certain issues which were not subject matter of the allegations in the show cause notice. The question was whether the Commissioner could have done so. In our considered view, the Tribunal rightly took note of the facts and pointed out that the Commissioner exceeded his jurisdiction by making certain observations, which were not subject matter of allegations in the show cause notice. Thus, in our considered view, the Tribunal after noting the facts has granted relief to the assessee. Thus, we find no question of law much less substantial questions of law arising for consideration in this appeal. Accordingly, the appeal fails and is dismissed.
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2022 (1) TMI 842
Validity of reopening of assessment u/s 147 - scope of mandatory procedure prescribed u/s 148A - relation between Relaxation Act, 2020 and Finance Act, 2021 - enhanced/reduced time limit specified in Section 149 - initiation of reassessment proceedings prior to coming into force of the Finance Act, 2021 - onset of Covid-19 pandemic followed by nationwide lockdown in March, 2020 - Relaxation of certain provision of specified Act - scope of declaration declaring Explanations A(a)(ii)/A(b) to the Notification No.20 [S.O.1432(E)] dated 31st March, 2021 and Notification No.38 [S.O.1703(E)] dated 27th April, 2021 to the extent that the same extend the applicability of the provisions of Section 148, Section 149 and Section 151 of the Act, as the case may be, as they stood as on the 31st day of March, 2021, before the commencement of the Finance Act, 2021 to the period beyond 31st March, 2021 - whether the Government/Executive can make or change law of the land by way of Explanations to Notifications without specific Authority from the Legislature to do so and whether the Government/Executive can impede the implementation of law made by the Legislature - HELD THAT:- As relying on MON MOHAN KOHLI VERSUS ASSISTANT COMMISSIONER OF INCOME TAX ANR. [ 2021 (12) TMI 664 - DELHI HIGH COURT] we hereby quash the impugned Notice dated 29.06.2021, issued by Respondent No.1 under Section 148 of the Income Tax Act, 1961, for the Assessment Year 2015-16 (Annexure P-1 to the memo of the writ petition). Keeping in view the fact that the Division Bench in the aforementioned judgment has declared Explanations A(a)(ii)/A(b) in the Notification No. 20/2021 dated 31.03.2021 and Notification No. 38/2021 dated 27.04.2021 as ultra vires, the relief sought by the Petitioner herein in prayer (b) stands redressed and no further orders are required to be passed. If the law permits the Respondents/Revenue to take further steps in the matter, they shall be at liberty to do so and, if and when such steps are taken, which give rise to any grievance/cause of action to the Petitioner, the Petitioner shall be at liberty to resort to remedies available in law. WP allowed.
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2022 (1) TMI 841
TDS u/s 194H - Disallowing u/s 40(a)(ia) - amount of collection charges retained by the airlines on collection of passenger service fees amongst other disallowance - HELD THAT:- In the case of Additional Commissioner of Income Tax, Mumbai v. Mumbai International Airport (P) Ltd., [ 2017 (2) TMI 640 - ITAT MUMBAI] on which heavy reliance was placed by the learned counsel appearing for the appellant, the question that fell for consideration was with regard to PSF-(SC) which could not be characterized as income under Section 2(24) of the Act as the assessee merely acted in a fiduciary capacity for collection and disposal of the amount of PSF-(SC). The dispute herein is in a narrow compass with reference to 2.5% of PSF withheld by the Airlines Operators in terms of clause 1.4 of SOP. It is trite that no denial of allowance claimed under Section 40(a)(ia) of the Act could be made by the department, in the event, the Airlines Operators have offered the said 2.5% of commission, which is nothing but income to tax. In order to verify this factual aspect, the matter has been restored to the file of the assessing officer, which cannot be faulted with. Hence, the common substantial question of law No.1 is answered in favour of the Revenue and against the assessee. Addition u/s 14A r.w.r. 8D - HELD THAT:- As assessee do not have exempt income and as such no disallowance can be made under section 14A read with rule 8D The issue involved herein is squarely covered by the decision of the Coordinate Bench of this Court in the case of Commissioner of Income Tax v. M/s Quest Global Engineering Services Pvt. Ltd. [ 2021 (3) TMI 434 - KARNATAKA HIGH COURT] Recognised method of accounting - whether Tribunal is right in law in deleting addition of income by directing the assessing authority to allow it on cash basis which was made by assessing authority on accrual basis thereby recognizing mixed system of accounting for assessee-company which is not permissible as per the provisions of section 145 - HELD THAT:- It is clear that the assessee being a company has adopted the mercantile system of accounting only for the expenses relating to M/s NACIL without offering the corresponding income to tax in one year, the hybrid method of accounting in one Assessment Year is not permissible. Hence, we answer this question i.e., substantial question of law No.2 in favour of the Revenue and against the assessee. However, we confirm the order of the assessing officer inasmuch as the tax offered on receipt basis for the assessment year 2013-14 would be excluded and the same shall be given effect to in the proceedings for the assessment year 2013-14.
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2022 (1) TMI 840
TDS u/s 194C - Disallowance u/s 40(a)(ia) - payment of transportation contracts - whether the Tribunal was right in law in aggregating the payments on the basis of truck numbers for the purpose of determining the limit of ₹ 50,000/- under Section 194C (3) of the IT Act? - HELD THAT:- The action of the revenue in denying the deduction under Section 40 (a) (ia) of the Act on the premise that the aggregate of the truck amount paid by the assessee with the different truck drivers was exceeding ₹ 50,000/- cannot be countenanced as the contract cannot be with the trucks, it is with the personnel/driver of the truck/truck operators. The whole attempt made by the revenue to bring the assessee under the ambit of Section 194C to deny the deduction under Section 40(a) (ia) is not supported by the material evidence. The truck operators if not the truck owners, cannot be considered as the sub contractors for the purpose of Section 194C (2) of the Act. In the circumstances, we deem it proper to set aside the order of the Tribunal as well as the authorities and to restore the matter to the file of the Assessing Officer to reconsider the matter afresh in the light of the observations made herein above. AO shall record a finding after examining the contract if any, entered by the assessee with the truck owners/ operators and an appropriate decision shall be taken in accordance with law. In the facts and circumstances of the case, it is made clear that the registration number of trucks/truck owner would not be relevant for the purpose of deciding the applicability of Section 194 C of the Act but it is the personnel/truck operator from whom the trucks are hired. With the aforesaid observations and directions, appeal stands allowed as indicted above sans answering the substantial questions of law, directing the Assessing Officer to re-examine the matter, keeping open all the rights and contentions of the parties.
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2022 (1) TMI 839
Addition of Interest portion waived under OTS - assessee has claimed that the interest portion has been added back u/s. 43B of the Act for A.Y.2007-08 and 2008-09 - Principal portion which is part of the waiver under one time settlement, the addition has been made by AO treating the same as revenue receipt - CIT-A deleted the addition - HELD THAT:- A perusal of the balance sheet of the assessee show that the said amount represents loan from Heavy Financial Corporation and SBI. The said loan was taken for the purchase of fixed assets as per exhibit 117 and 118 of the paper book. Whether this waiver becomes part of taxable income u/s. 28 (iv) of the Act r.w.s. 41 (1) is concerned, this issue has been decided by the Hon ble Supreme Court in the case of Mahindra Mahindra [ 2018 (5) TMI 358 - SUPREME COURT ] We decline to interfere with the findings of the CIT(A) in so far as this issue is concerned.
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2022 (1) TMI 838
Deduction u/s 54 - investment in two residential property situated at different location - AO found that the assessee has invested in two residential houses to set off its LTCG - scope of amendment - HELD THAT:- We find that this controversy has been considered at length by Hon ble High Court of Madras High Court in the case of Trilok Chand [ 2019 (4) TMI 713 - MADRAS HIGH COURT] T he definition of the word Assessee under Section 2(7) of the Act means a 'person' by whom any tax or sum of money is payable under the Act. Thus, the HUF is also a 'person' and a separate assessable entity under the Income Tax Act, 1961. If the word 'a' as employed under Section 54 prior to its amendment and substitution by the words 'one' with effect from 01.04.2015 could not include plural units of residential houses, there was no need to amend the said provisions by Finance Act No.2 of 2014 with effect from 01.04.2015 which the Legislature specifically made it clear to operate only prospectively from A.Y.2015- 2016. Once we can hold that the word 'a' employed can include plural residential houses also in Section 54 prior to its amendment such interpretations will not change merely because the purchase of new assets in the form of residential houses is at different addresses which would depend upon the facts and circumstances of each case. So long as the same Assessee (HUF) purchased one or more residential houses out of the sale consideration for which the capital gain tax liability is in question in its own name, the same Assessee should be held entitled to the benefit of deduction under Section 54 of the Act, subject to the purchase or construction being within the stipulated time limit in respect of the plural number of residential houses also. The said provision also envisages an investment in the prescribed securities which to some extent the present Assessee also made and even that was held entitled to deduction from Capital Gains tax liability by the authorities below. The Assessee-HUF in the present case, in our opinion, complied with the conditions of Section 54 of the Act in its true letter and spirit and, therefore was entitled to the deduction under Section 54 of the Act for the entire investment in the properties and securities. - Decided in favour of assessee.
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2022 (1) TMI 837
Disallowance of deduction claimed u/s. 54 - As per AO nature of the property sold is an industrial plot as is apparent from the contents of the sale deed - whether the assessee has transferred a residential house or not? - HELD THAT:- The parking area has been built in the basement floor covering 15000 sq.ft. having RCC framed structure, RCC retaining walls with Tremix flooring. The office area is built on the ground floor covering 18805 sq.ft. consisting of RCC framed structure, Aluminium windows, vitrified tile flooring. The residential area is on first floor with a covered area of 15304 sq.ft. having specification of masonry structure, granite flooring, ceramic tiles in the bathrooms, wooden doors and windows. If we look at the residential area, though it talks about masonry structure, granite flooring and ceramic tiles which is more a broad specification of a built up area which could possibly be used for residential purposes, however, at the same time, it does not have all the necessary attributes of a residential house in terms of bedrooms and kitchen facility. In any case, what the law contemplates is a transfer and sale of property which is being used for residential purposes. Therefore, what is essential is that the property should necessarily and solely be a residential house and used for residential purposes only. In the instant case where on an industrial plot of land, there is an office built up area on ground floor and so-called residential built-up area on the first floor, can it be said that what has been transferred is a residential house. To our mind, the answer to the same cannot be in affirmative and what has been transferred is an industrial plot of land having mixed constructed area consisting of office-cum-residential area. We, therefore, agree with the findings of the Ld. CIT(A) that the transacted property is an industrial plot and not a residential plot which is clearly borne out from the contents of the Sale Deed to which the assessee is himself a signatory and duly acknowledges the contents thereof. In the light of the same, subsequent oral evidence in form of an affidavit cannot be accepted and we affirm the findings of the Ld. CIT(A) that merely having Aadhar Card and Bank Account showing the same address do not accord the status of a residential house to the property under consideration and claim of the assessee cannot be accepted. We have also gone through the decision of Shri Navin Jolly Vs. ITO [ 2020 (6) TMI 514 - KARNATAKA HIGH COURT] and find that the facts of the said case are distinguishable from the facts of the case in hand and the legal proposition laid down therein, therefore, does not support the case of the assessee. The grounds of appeal raised by the assessee are dismissed.
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2022 (1) TMI 836
Revision u/s 263 by CIT - Addition as income from other sources as the assessee had purchased the property at a cost less than the market value of the property and the property was received for inadequate consideration - HELD THAT:- AO has examined the entire issue during the course of assessment proceedings. It is very clear from the assessment order itself. That apart, the AO has issued a show-cause notice to the assessee and called for explanation. By considering the detailed explanation of the assessee, the AO was of the opinion that where the difference between the actual value and market value is less than 10%, the same is ignorable and does not warrant any taxation. In this case, the Assessing Officer has passed the assessment order after due verification and consideration of detailed written submissions filed by the assessee against the show-cause notice and therefore, we are of the considered opinion that invoking the provisions of section 263 of the Act does not warrant for the reason that the assessment order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue. Accordingly, we quash the revision order passed under section 263 of the Act by the ld. PCIT and allow the appeal of the assessee.
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2022 (1) TMI 835
Penalty levied u/s 271B - delay in filing the audit report under section 44AB - reasonable cause of delay - HELD THAT:- We find that the Department has conducted a search under section 132 of the Act on 11.11.2010 and the search related assessments were completed in all the cases on 28.03.2013. Department has seized the books of account and other records of the assessee and all the firms at the time of search in the middle of financial year 31.03.2011. It is also a fact that the assessee filed the return of income belatedly only on 01.01.2015 for the assessment year 2013-14. It is also a fact that the assessee is also a partner in various firms, wherein, search was conducted and books of accounts were taken under the custody of the Department. The delay was caused due to search conducted by the Department and the books of accounts are not readily available with the assessee. Under the above facts and circumstances, the delay was occurred, in our opinion, the delay in filing the audit report was neither willful nor wanton or inadvertently, it was only beyond the control of the assessee. There is a reasonable cause for the delay in filing the audit report within time by the assessee. Therefore, imposing penalty under section 271B of the Act for belated filing the audit report is unwarranted and not reasonable. We find that both the authorities below have not considered the explanations of the assessee. In view of the above, we set the order passed by the ld. CIT(A) and penalty levied under section 271B of the Act stands cancelled. - Decided in favour of assessee.
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2022 (1) TMI 834
Adjustment made in the intimation u/s. 143(1) - denying the benefit of deduction/exemption u/s 11 - CIT(A) upheld the adjustments made in the intimation stating that the assessee had not furnished the details of its registration u/s. 12A/12AA in the return of income and had in fact mentioned that it had not been registered under the said section and had in fact stated no against column in the return of income asking whether registered u/s. 12A/12AA of the Act - HELD THAT:- We find that the necessary details of registration u/s. 12A had been filed before the ld. CIT(A) and the assessee had also pointed out that in any case even if it is treated as not registered and assessed in status of AOP since its taxable income was below the limit prescribed for AOPs no tax liability arose in the case of the assessee. We have gone through the provisions of section 143(1) and we find that the said section provides, by way of proviso, that no adjustments to the income shall be made till the same is intimated to the assessee and 30 days time is given to the assessee to respond to the same. In the present case, the facts on record do not reveal any such opportunity being granted to respond. Therefore, when the assessee had responded before the ld. CIT(A), i.e., the first available opportunity, pointing out with evidence that it was a registered charitable entity and thus entitled to the deductions/exemptions claimed he was duty-bound to consider the same and accordingly adjudicate the issue. Assessee, we have noted, had also pleaded that even prima facie no tax was due as payable by it even after making the adjustments as its income was below the taxable limit. The Ld. CIT(A), we find, has not taken any cognizance of this contention of the assessee. CIT(A)'s order, justifying the adjustments on the basis of disclosure made by the assessee that it was not registered as a charitable entity, is we find taking a hyper technical view on the issue, particularly when the adjustment was made without affording any opportunity to the assessee as provided in law, coupled with the fact that the assessee had evidenced its registration u/s. 12A of the Act to the Ld. CIT(A) by producing the certificate. Also the Ld. CIT(A) has not addressed the alternative argument of the assessee that even after the adjustments its income was below the taxable limit. We consider it fit to restore the issue to the ld. CIT(A) with the direction to decide the appeal - Appeal of the assessee is allowed for statistical purposes.
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2022 (1) TMI 833
Unexplained cash deposited in the bank account - contention of the assessee that his submissions were not considered while adjudicating the issue - HELD THAT:- Despite the assessee submitting to him that a reply justifying the source of cash deposit alongwith evidence was filed to the AO, and filing copy of the same to him also, the ld. CIT(A) has, we find, passed a cryptic order dismissing the contentions of the assessee without even dealing specifically with them. Ld. Counsel has pointed out that the source of cash deposited in bank had been explained as out of land sold, and withdrawals from the account itself as also tuition fees earned in cash by his wife who was joint holder of account. As evidence copy of sale deed of land and copy of bank account was filed. But we find and agree with the Ld. Counsel that these contentions were not dealt with by the Ld. CIT(A). The assessee has also contended filing the same to the AO on the web portal of the department. An affidavit to this effect, alongwith acknowledgement of filing reply on web portal was also filed to the CIT(A). Since the contentions of the assessee clearly have remained unaddressed, we are of the view that the issue of cash deposits in the bank account of the assessee needs to be reconsidered by the AO. In view of the same, we restore the issue back to the Assessing Officer with a direction to consider the contention of the assessee and after verifying the same decide the issue in accordance with law - Appeal of the assessee is allowed for statistical purposes.
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2022 (1) TMI 832
Validity of the reassessment proceedings u/s 147 - absence of issue of notice u/s 143(2) - Addition u/s 68 - HELD THAT:- A perusal of the assessment order as well as the order of the CIT(A) shows that no notice u/s 143(2) was ever issued to the assessee before completing the assessment u/s 143(3)/147 - it is mandatory to issue notice u/s 143(2) even in reassessment proceedings and non-issuance of the same makes the assessment order illegal and null. Hon ble Delhi High Court in the case of PCIT vs. Shri Jai Shiv Shankar Traders Pvt. Ltd [ 2015 (10) TMI 1765 - DELHI HIGH COURT] has held that the failure of the AO in reassessment proceedings to issue notice u/s 143(2) prior to finalizing the reassessment order cannot be condoned by referring to section 292BB. We hold that the reassessment proceedings, in the instant case, completed u/s 143(3)/147 are not in accordance with the law in absence of issuance of notice u/s 143(2) of the IT Act. Therefore, we hold that the reassessment proceedings are invalid. The ground raised by the assessee as per Rule 27 of the Income-tax (Appellate Tribunal) Rules is accordingly allowed.
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2022 (1) TMI 831
Rectification u/s 254 - Admission of additional evidence - HELD THAT:- In view of the additional evidences filed by the assessee which were never produced before the lower authorities and were filed for the first time before the Tribunal, therefore, the additional evidences were admitted and the issue was restored to the file of the AO to examine the documents and allow the deduction as per law after verification of the completion of the project prior to 31st March, 2008. It is clearly and categorically stated that the Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. Therefore, in our opinion, the apprehension of the ld. Counsel for the assessee that the Assessing Officer may not decide the issue as per law is without any merit. The Assessing Officer is bound to follow the settled principle of law on this issue. We, therefore, do not find any infirmity in the order of the Tribunal so as to rectify the same as per provisions of section 254(2) of the Act. The Miscellaneous Application filed by the assessee is accordingly dismissed.
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2022 (1) TMI 830
Validity of Reopening of assessment u/s 147 - assessee's case was selected for scrutiny - eligibility of reason to believe - Case reopened on the basis of information received from the DDIT (Inv), Unit-IV(1), Kolkata - notice after the expiry of four (4) years from the end of the relevant assessment year - HELD THAT:- AO has to record his reason to believe escapement of income and if he intends to reopen an assessment which has been framed earlier u/s. 143(3) after the expiry of four (4) years from the end of the relevant assessment year, then he has to clearly record the additional condition precedent in the reasons recorded that the escapement of chargeable income was due to the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. And it is settled that when there is challenge to the validity of the reasons recorded in the AO to usurp the jurisdiction, then the reasons recorded by the AO should be read as it is i.e., on a standalone basis. No addition or deletion is allowed in the reason recorded. In the light of the aforesaid discussion, a plain reading of the impugned reasons recorded by the AO to reopen (supra) it nowhere mentions that there has been any failure on the part of the assessee to disclose fully and truly all material facts for assessment. Therefore relying on ratio decidendi of PHILIPS CARBON BLACK LIMITED VERSUS ASSISTANT COMMISSIONER OF INCOME TAX AND ORS. [ 2019 (3) TMI 993 - CALCUTTA HIGH COURT] and other High Courts (supra) we find force in the contention of the Ld. A.R. that the essential jurisdictional fact as necessary for usurpation of jurisdiction u/s. 147 first proviso is absent, without which the AO does not enjoy the jurisdiction to reopen the assessment which has been framed originally u/s. 143(3) of the Act. Assessee succeeds in its challenge in respect of usurpation of jurisdiction without satisfying the first proviso to Section 147 of the Act in the facts and circumstances of the case. Therefore we are inclined to quash the notice of the AO issued u/s. 148. Therefore all consequential actions fall being non-est in the eyes of law. - Decided in favour of assessee.
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2022 (1) TMI 829
Addition u/s 14A r.w.r. 8D - Suo moto addition made by assessee - CIT(A) held that the provision of Rule 8D(2)(ii) were applicable in the facts of the case - According to the Ld. AR, the assessee's investment in earning the dividend income is from interest free source meaning that assessee had its own fund for investment for earning the exempt income. Therefore, according to him, Rule 8D(2)(ii) will not be applicable - HELD THAT:- Facts as discerned from the records, we safely infer that since assessee had own fund which was sufficient to make investment fund which yielded exempt income, no disallowance of interest invoking Rule 8D(ii) of the Rules was warranted. For that we rely on case of Reliance Utilities Powers Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] wherein held that when the assessee is possessed of mixed funds which includes its own funds in sufficient quantity, the presumption is that its own funds were utilised for the advances is to be drawn. The aforesaid view of the Hon'ble Bombay High Court has been approved by the Hon'ble Supreme Court in the case of South Indian Bank Vs. CIT [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] - Therefore, Rule 8D(2)(ii) is not applicable in this case. Ergo the assessee succeeds and therefore, the disallowance made by the AO applying Rule 8D(2)(ii) is deleted.
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2022 (1) TMI 828
Addition u/s 36(1)(va) - late deposit of PF ESI - HELD THAT:- Issue decided in favour of assessee as relying on PRO INTERACTIVE SERVICE (INDIA) PVT. LTD. [ 2018 (9) TMI 2009 - DELHI HIGH COURT] and AIMIL LIMITED [ 2009 (12) TMI 38 - DELHI HIGH COURT] as held the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee s Provident Fund (EPD) and Employee s State Insurance Scheme (ESI) as deemed income of the employer under section 2(23)(x) - Decided against revenue.
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2022 (1) TMI 827
Addition u/s 68 - unexplained share capital - addition of share money regarded as undisclosed income - discharge of onus by assessee or not - HELD THAT:- Assessee has discharged burden cast upon it under section 68 of the Income-tax Act, 1961 in respect of share capital received from share capital subscribers - AO has not disputed the fact that the assessee has furnished various evidences to prove identity of the subscribers. The assessee has filed name and address of subscribers, their PAN numbers, details of amount received and allotment made to them, return of allotment filed with Registrar of companies, company master data as available on website of Ministry of Corporate Affairs, Certification of Incorporation along with Memorandum and Articles of Association, ITR acknowledgement, audited financial statements, copies of relevant bank statements and confirmation letters from share applicants along with source of funds for investment in assessee s company. The evidences filed by the assessee clearly satisfy the condition prescribed u/s.68 of the Act. The assessee not only proved identity, but also established credit worthiness of the parties which is evident from the fact that all subscriber companies financial statement shows source of income to explain investments made in Assessee Company which is further supported from the fact that all transfer of funds was through proper bank accounts. It is a well established legal principle of law by the decisions of various courts including the Hon ble Supreme Court in the case of CIT vs. Stellar Investments Pvt. Ltd[ 1991 (4) TMI 100 - DELHI HIGH COURT ] where it was clearly held that once alleged bogus shareholders details are provided to the AO then the AO is free to proceed to reopen the assessments of alleged bogus shareholders but sum received by the assessee cannot be treated as unexplained credit u/s.68 of the Act. In this case, although the assessee has filed various details, but the AO disregarded all evidences filed by the assessee and has made additions solely on the basis of investigation report without confronting those reports and statements recorded from those individuals to the assessee for rebuttal. Sole basis for the AO to draw an adverse inference against assessee is investigation report of Income Tax Department Kolkata and statements of certain persons recorded at the time of investigation - AO did not refer investigation report and its contents in his assessment order and further did not share copy of said report to the assessee. Further, even in statement of certain parties, no direct or indirect reference to the assessee. Nowhere the parties stated that the assessee is one of the beneficiaries of alleged transactions. In fact, the director of Assessee Company denied meeting any of the persons from whom statements were taken by the department. If you go through statement relied upon by the AO, except a general statement of modus operandi of entry providers, there is no direct or indirect reference to Assessee Company in any of statements. From the above, it is clear that the AO totally ignored genuine documents produced before him and passed the Assessment Order on a sweeping statement without any material evidence or fact on record. The AO has merely stated modus operandi of how, the transaction took place without considering the facts of the present case. AO instead passed a general statement on the lines of suspicion and surmises without any vital material evidence against the Assessee. From the above, it is very clear that the observations of the AO in his assessment order on the basis of report of investigation wing, Kolkata is a general observation of modus operandi of certain parties who are involved in alleged activity of entry providing, but it cannot be a conclusive evidence to draw an adverse inference against the assessee of having benefited from so called alleged hawala activity. No doubt, an alleged scam may have taken place, but, it has to be seen whether the assessee is part of an alleged activity and he had any direct or indirect role in alleged scam. Unless, evidences in the possession of the AO directly or indirectly linked to the assessee, it is difficult to implicate the assessee in the alleged scam AO has made additions solely on the basis investigation report of Income tax Department, Kolkata without providing copy of said report to the assessee for its rebuttal - not allowing the assessee to cross-examine the witnesses by the adjudicating authority, though the statements and those witnesses were made the basis of the impugned order is a serious flaw, which makes the order nullity in, as much as, it amount to violation of principle of natural justice, because of which, the assessee was adversely affected. In this case, the Director of assessee Company Shri Pankaj Agarwal, in his statement recorded during the course of assessment proceedings, has categorically denied that he does not know any persons, whose statements were relied upon by the AO and further stated before the AO that he wants to cross examine those persons whose statements is basis for the addition. However, the AO neither made available copy of statements nor allowed director of the assessee Company to avail cross examination of those witnesses. In our considered view, this a clear case of violation of principles of natural justice in view of the decisions of Andaman Timber Industries Ltd [ 2015 (10) TMI 442 - SUPREME COURT ] and thus, on this count alone the additions made by the AO cannot be sustained. Even though there were circumstances leading to suspicion, yet having taken an action u/s.132 and enquiries made in the assessment proceedings, the assessing authority had not brought any positive material or evidence to indicate that the share application money as such represented assessee s own undisclosed money brought back in the garb of share capital. Merely because of his subjective satisfaction that the source of availability of money with the shareholder or their creditworthiness were not established, the AO could not treat the genuinely raised share capital as deemed income u/s.68 - Decided in favour of assessee.
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2022 (1) TMI 826
Penalty u/s 271(1)(c) - Defected notice u/s 274 - non specification of charge - HELD THAT:- The penalty has been imposed by the AO u/s 271 (1)(c) without mentioning the specific charge in penalty order dated 21/03/2018, whether, it was levied on account of concealment of income or furnishing inaccurate particulars of income. AO has not levied the penalty on the specific charge as mandated u/s 271(1)(c) - In such facts and circumstance the Hon'ble Jurisdictional High Court in the case of Snita Transport Pvt. Ltd. Vs. Assistant Commissioner of Income Tax [ 2012 (12) TMI 981 - HIGH COURT OF GUJARAT] has held that penalty cannot be imposed without mentioning the specific charge. AO has not mentioned the specific charge in his penalty orders whether it was levied for concealment of income or for furnishing inaccurate particulars of income. Therefore, in our considered view, the penalty levied by the AO and confirmed by the learned CIT (A) is not sustainable. Hence, the ground of appeal of the assessee is allowed.
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2022 (1) TMI 825
Disallowance of depreciation - adjustments in the intimation under section 143(1) - Whether adjustments in the intimation under section 143(1) ? - HELD THAT:- In the case on hand, the disallowance of depreciation was made in the intimation processed under section 143(1) of the Act which is not a kind of adjustment as discussed above. The issue of depreciation being debatable cannot be subject matter of disallowance in the intimation under section 143(1) of the Act. In holding so we draw support and guidance from the judgment of CIT vs. Mahesh kumar Rathod [ 2006 (11) TMI 177 - GUJARAT HIGH COURT] . Also all the details of the assets viz a viz depreciation were duly furnished in the income tax return. The major part of the depreciation claimed by the assessee in the year under consideration was pertaining to the opening written down value which cannot be disturbed in the year under consideration. CIT (A) in the immediate preceding A.Y. and immediate subsequent A.Y i.e. A.Y. 2016-17 and A.Y. 2018-19 has also allowed the depreciation claimed by the assessee with respect to the assets which were shown for the assessment year under consideration. Decided in favour of assessee.
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2022 (1) TMI 824
Assessment u/s 153A - Addition u/s 68 - Bogus share application money - CIT(A) deleted the addition - HELD THAT:- All the investor companies are group companies who were allotted shares by the assessee company during the relevant period under consideration. It is also an admitted fact that the assessee has filed the details of source of source i.e., the source of funds received by the investors. It is also an admitted fact that the assessee filed copies of bank statements and ledger accounts of the group companies which made the funds available to the investor companies which, in turn, invested such funds in the assessee company in the shape of share application money and share premium. So far as the allegation of the AO that certain funds were received in the form of accommodation entries in a layered structure and that the assessee has received undisclosed funds in the share capital in the shell companies of the group which in turn remitted the same to the operating companies are concerned and that the assessee failed to substantiate the source of funds received by its investors and that the assessee did not produce the directors or other office bearers of the investor companies are concerned, we find the ld.CIT(A) has discussed all these issues thoroughly. We find, the assessee, in the instant case, has discharged the initial burden cast on it by filing the requisite details before the AO, summons u/s 131 were replied, there was compliance to the notice u/s 133(6), the investor companies have shown huge reserves and surplus and own capital. Merely because these companies have taxable income which is less than the amount invested during the year in our opinion cannot be a ground for making the addition especially when all the investor companies have got huge net worth in shape of own capital and free reserves and are group companies and all transactions are through proper banking channel. As further find from the various details furnished by the assessee in the paper book that Shri Narendra Kumar and Shri Deepak Kumar are Directors of M/s. Veneet Capital Services Pvt. Ltd., and Shri Kishore Kargeti and Shri Pawan Kumar Bagri are the Directors of M/s. Lakhotia Impex (P) Ltd. It is seen from the assessment order that no enquiries have been conducted by issue of notice u/s. 131 or u/s.133(6) of the I.T. Act, 1961 in respect of the above Directors - these are all group companies and no incriminating material was found as a result of search to support the allegation that money invested by the investors is unaccounted money of the assessee. In the instant case, it is an admitted fact that the investors are group companies and no incriminating material was found as a result of search to support the allegation that money invested by the investor is unaccounted money of the assessee. The Hon ble Delhi High Court in the case of CIT vs. Nipuan Auto (P) Ltd.. [ 2013 (5) TMI 476 - DELHI HIGH COURT] has held that the addition is not tenable where investment has been made by group Companies. - Decided in favour of assessee.
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2022 (1) TMI 823
Disallowance u/s 14A r.w.r. 8D(2) both under the normal provisions as well as u/s 115JB of the Act - HELD THAT:- On careful reading of first appellate authority s order clearly reveals that he never directed the assessing officer to exclude strategic investments from the total investments for computing disallowance under rule 8D(2)(iii). He has only directed the assessing officer to exclude those investments, which have not given rise to tax free income as well as the investments on which the assessee had not earned any exempt income during the year. Thus, in our considered opinion, ground 1 does not arise out of the order of learned Commissioner (Appeals), hence,does not merit consideration. Accordingly, dismissed. Disallowance under section 14A r.w.r. 8D(2) while computing book profit under section 115JB - We fully subscribe to the view expressed by the learned Commissioner (Appeals), as, it is in consonance with the ratio laid down in case of ACIT vs Vireet Investments Pvt Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] . In any case of the matter, learned Commissioner (Appeals) has held that expenses directly relatable to earning of exempt income can be disallowed under Explanation 1(f) to section 115JB(2) of the Act. In view of the aforesaid, we uphold the decision of the learned Commissioner (Appeals) by dismissing the ground raised. Disallowance of legal and professional fees - HELD THAT:- The nature of new business is not a decisive test for determining whether or not there is an expansion of an existing business. What is important is that the control of all business, the existing one as well as the new venture, must be in the hands of one establishment or management or administration. The funds utilized for such business activities must have come from the common source as reflected in the balance-sheet of the company. Therefore, if separate business activities are under common management and funds utilized have come from the common management, the pre-operative expenditure is allowable. In case of CIT vs Euro India Ltd [ 2013 (10) TMI 429 - DELHI HIGH COURT] has observed, where the feasibility report is procured for expansion of existing business and where there is unity of control and common funds, then such expenditure would be treated as business expenditure. Thus, in our view, assessee s claim of deduction of legal and professional fee paid has to be considered by applying the parameters/guidelines laid down in the decisions referred to above. Accordingly, we restore the issue to the assessing officer for fresh adjudication after due opportunity of being heard to the assessee. This ground is allowed for statistical purpose. Write off of value of investment - assessee submitted that it has made investment in the subsidiary, which is treated as capital investment in the books and represented long term investment - book profit under section 115JB assessee has not added back the amount. - HELD THAT:- the language of the provision is very clear and it speaks of an amount set aside as provision for diminution in the value of asset. Whereas, it is the specific contention of the assessee that the amount written off has not been set aside as a provision in the books. The entries in assessee s books and as reflected in the profit and loss account, of course, show the amount as having been written off. However, it is a fairly well settled principle that accounting entries are not conclusive. At this stage, we may observe that in case of PCIT vs Torrent Private Ltd [ 2019 (6) TMI 709 - GUJARAT HIGH COURT] as held that if provision for diminution in value of investment is actually written off, it cannot be added to book profit under section 115JB. Admittedly, the aforesaid decision of the Hon ble Gujarat High Court was not available either before the assessing officer or before the first appellate authority. The assessee has stated that the equity investment written off related to offset business undertaken by the subsidiary, which ran into heavy loss and was subsequently discontinued. Whereas, the shares still held by the assessee aggregating to ₹ 4,12,95,000/- represents equity investment in e-retail business conducted by the subsidiary in the name and style of Tata Unistores Limited. This factual aspect needs to be verified. Further, the corresponding entries in the books of the subsidiary as regards write off of the investment has to be examined by the departmental authorities. We are inclined to restore the issue to the assessing officer for fresh adjudication after examining various aspects as discussed hereinbefore. The assessing officer must also examine the applicability of ratio laid down by the Hon ble Gujarat High Court in case of PCIT vs Torrent Private Ltd (supra). assessee s appeal is allowed, for statistical purpose.
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2022 (1) TMI 822
Condonation of delay in filing the appeal before the CIT(A) - delay of 636 days - Short deduction of TDS u/s 192 - order u/s 201(1) and 201(1A) - assessee bank had allowed the claim of its employees of LTC u/s 10(5) - reasons stated in Form No.35 was that the old bank manager was transferred and new bank manager was not aware of the order passed u/s 201(1) and 201(1A) - HELD THAT:- As rightly pointed out by the CIT(A), the reasons stated in Form No.35 is lacking substance. Even before the Tribunal, inspite of specific query, the learned AR has not produced any proof to show when the old bank manager was transferred and the new manager taken over charge. The learned AR was specifically asked when the new manager became aware of the order passed u/s 201(1) and 201(1A) of the I.T.Act. Though the learned AR had sought time and we had repeatedly granted adjournment, there is no information on the part of the AR for these queries raised by the Bench. The conduct of the assessee is such that there was clear negligence on its part and there is no equitable ground or substantial cause for condoning the delay of 636 days in filing the appeal before the CIT(A). Therefore, we are of the view that the CIT(A) is correctly dismissed the appeal in limine, without condoning the delay of 636 days in filing the appeal before him. For these reasons, the appeal of the assessee stands dismissed.
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2022 (1) TMI 821
Reopening of assessment u/s 147 - Eligibility of reasons to believe on the basis of which the case of the assessee was reopened u/s 147 - HELD THAT:- On a careful perusal of the reasons recorded by the A.O, we are of a strong conviction that in the garb of reopening the case of the assessee he had on the basis of the same set of facts as were available on record and had been deliberated upon by his predecessor at the time of framing of the original assessment tried to substitute his view as against that of his predecessor. In fact, we are unable to comprehend as to what new material or information had came to the notice of the A.O after the framing of the original assessment, which would have justified the reopening of its case. As can safely be gathered from a perusal of the reasons to believe, we are of the considered view that the A.O holding a conviction that his predecessor while framing the regular assessment was in error in accepting the share premium received by the assessee company, which as per him was unexplained, had thus with the sole objective of substituting his view as against that of his predecessor, therein, sought to reopen the case of the assessee company. We are afraid that such a substitution of a view of a successor A.O cannot form a justifiable basis for reopening the case of an assessee. Our aforesaid view is fortified by the judgment of the Hon ble Supreme Court in the case of CIT Vs. Kelvinator of India [ 2010 (1) TMI 11 - SUPREME COURT] wherein the Hon ble Apex Court had observed that merely on the basis of a change of opinion the case of an assessee cannot be . Hon ble High Court of Bombay in the case of Asian Paints Ltd. [ 2008 (7) TMI 237 - BOMBAY HIGH COURT ] had observed, that as no new information/material was received by the A.O, therefore, the fresh application of mind by him to the same set of facts and material which were available on record at the time of framing of the assessment but had inadvertently remained omitted to be considered would tantamount to review of order, which is not permissible as per law. Thus as per the mandate of law, even where a concluded assessment is sought to be reopened by the A.O within a period of 4 years from the end of the relevant assessment year, it is must that the A.O has fresh material or information with him that had led to the formation of belief on his part that the income of the assessee chargeable to tax has escaped assessment. Thus we are of the considered view that as the A.O for the reasons discussed at length hereinabove had wrongly assumed jurisdiction and reopened the concluded assessment of the assessee company without satisfying the mandate of law as required u/s 417 of the Act, therefore, the assessment framed by him vide his order passed u/s 144 r.w.s 147, cannot be sustained and is liable to be struck down - Decided in favour of assessee.
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2022 (1) TMI 820
Validity of assessment made under Section 143(1) instead of section 153C - whether the assessment under section 143(3) of the Act is void ab initio and as such bad in law as the appellant is covered under the first proviso of section 153C of the Act and the assessment ought to have been completed applying the provisions of section 153C r.w.s. 153A ? - HELD THAT:- In the search year regular assessment has to be made under section 143(3) of the Act. Whereas, for the six immediately preceding years, proceedings have to be initiated under section 153C of the Act. In the facts of the present appeal, undisputedly, the books of account/documents/assets found during the search and seizure operation were received by the AO having jurisdiction over the assessee on 21.08.2013 i.e. in the previous year 2013-14 relevant to the assessment year 2014-15. Thus, as per the provision contained under section 153C r.w.s. 153A of the Act, for assessment year 2014-15 regular assessment has to be made under section 143(3) of the Act. Whereas, in respect of the preceding six assessment years viz. assessment years 2008-09 to 2013-14 assessment proceedings have to be initiated under section 153C of the Act. Undisputedly, in case of the present assessee, assessment for assessment year 2013-14 i.e. impugned assessment year, has been completed under section 143(3) of the Act. Neither the AO has recorded any satisfaction nor issued any notice as contemplated under section 153C The impugned assessment order passed under section 143(3) of the Act is invalid. No contrary decision of a higher Court has been brought to our notice by learned Departmental Representative for enabling us to deviate from the view expressed in the aforesaid decision of JASJIT SINGH VERSUS ACIT, CENTRAL CIRCLE-11, NEW DELHI AND VICE-VERSA [ 2014 (11) TMI 1012 - ITAT DELHI] . In view of the aforesaid, we hold that the AO having wrongly assumed jurisdiction under section 143(3) of the Act to complete the assessment, the impugned assessment order is invalid, hence, deserves to be quashed. Decided in favour of assessee.
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Customs
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2022 (1) TMI 819
Rejection of applications for issuance of Duty Credit Scrips under the Merchandise Export from India Scheme (MEIS) - rejection on the ground that the transaction was between the Petitioner and the FTWZ unit in an SEZ and thus ineligible for claiming benefit under MEIS - overriding effect of SEZ Act over all provisions of all other Acts as per Section 51 of the said Act - HELD THAT:- Paragraph 3.06 of the FTP 2015-20 refers to exported goods which shall be ineligible for Duty Credit Scrips under MEIS. Clause (vi) of paragraph 3.06 states that SEZ/FTWZ products exported through DTA units shall be ineligible for benefit under MEIS. Similarly clause (xix) states that the exports made by units in FTWZ shall be ineligible for benefit under MEIS. The Competent Authority / Respondents have denied benefit to the Petitioner under the aforesaid two clauses on the premise that the transaction of the Petitioner is with the FTWZ unit (Siddhartha Logistics Co. Pvt. Ltd.). In the present case, Petitioner has pleaded that the transaction in question for supply of export goods (Single Mode Optical Fibers G642D) is with its foreign overseas buyer (Technocraft Engineering LLC, Dubai, UAE), and that it is on the instructions of the overseas buyer the Petitioner delivered the export goods to the FTWZ unit (Siddhartha Logistics Co. Pvt. Ltd.) in India - it is seen that in Paragraph 3, the reference to the Overseas Buyer is to a company called Ashteck Global FZE , which on scrutiny shows that it is located in Ajman, UAE. There is no reference to Technocraft Engineering LLC, Dubai, UAE in the written propositions and annexures to the Petition, the written propositions as well as the compilation of documents tendered across the bar. Applying the ratio of the decision in JINDAL DRUGS PRIVATE LIMITED VERSUS THE UNION OF INDIA, THE DEPUTY COMMISSIONER OF CUSTOMS, THE ADDITIONAL DIRECTOR GENERAL OF FOREIGN TRADE [ 2021 (7) TMI 1034 - MADRAS HIGH COURT] , in the absence of necessary documentary evidence as alluded to hereinabove, the Petitioner cannot claim MEIS benefit merely on the basis of pleadings. If the Petitioner claims that the export goods are delivered to the FTWZ unit and thereafter exported to Taiwan on the instructions of its Overseas Buyer, the burden of proof is on the Petitioner to produce the contractual agreement / authorization / transaction details with the Overseas Buyer to substantiate the same - In the Jindal Drugs case, though the facts are similar to the case in hand, the Madras High Court therein looked into the principal transaction between the parties to ascertain the role of the parties, it confirmed receipt of foreign exchange from Ireland and the BRC evidencing this position, it referred to the supporting documentation pertaining to onward shipment by the FTWZ unit therein to the location of choice of the overseas buyer and then concluded that the FTWZ unit therein merely offered a facility of warehousing to the Petitioner therein to facilitate the export. None of the above issues have been pleaded, and effectively proved by the Petitioner, save and except one shipping bill which does not evidence the aforesaid position in the case of the Petitioner. It is a settled proposition of law that a party has to plead the case and produce/adduce sufficient evidence to substantiate his submissions made in the petition. In the absence of the same, the Court need not entertain the pleadings and submissions so made. In view of absence of documentary evidence, and the findings and discussion, the Petitioner cannot be granted MEIS benefit merely on the basis of pleadings which are prima facie insufficient on the face of record. Hence the Petition must fail - petition dismissed.
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2022 (1) TMI 818
Seeking provisional release of seized goods imported by the petitioner - proper officers for the purpose of Section 110 of the Customs Act - It is the case of the petitioner that the respondent no.4 neither completed the assessment of the goods nor made any communication with the petitioner regarding those goods assessed for a period of 5.5 months from the date of filing of Bill of Entry - HELD THAT:- A perusal of the Affidavit-in-Reply filed by the Respondents clearly indicate that both the parties are ad-idem that the Public Notices dated 23rd October 2019 and 16th June 2021, had issued a list of goods mentioned under Chapter 8 and 21 which could not be analyzed/tested by DYCC. It is admitted by the Respondents that the goods in-question however were tested by the said DYCC Lab, which had no facility to carryout such testing. The only explanation sought to be rendered by the Petitioner in the Affidavit-in-Reply is that the Petitioner did not make any request of retesting the samples by Government Laboratory or by FSSAI. On the other hand the Petitioner has rightly contended that the Petitioner came to know about such testing by DYCC only when the Order of Seizure Memo was served upon the Petitioner. However, since after issuance of the impugned Seizure Memo, which is the subject matter of one of the Writ Petition, the Respondents passed an Order for provisional release and since the Petitioner could not get any interim Order in these Petitions till date though they are pending for quite some time, we do not propose to quash the Order of Seizure Memo unconditionally. We have not expressed any views in this matter at this stage whether the Advance Ruling relied upon by the Petitioner would cover the goods in-question or not in view of the rival contentions raised by the Respondents in respect of the process followed relating to the said goods. It is an admitted position that the said DYCC could not have carried out such testing at the first instance, we are inclined to direct the Respondents to draw samples of the goods imported by the Petitioner which are subject matter of these Petitions and to send to the Government Laboratory or FSSAI within one week from today - Since the Authorities have admitted that the earlier samples drawn and tested by DYCC could not have been drawn contrary to the two public notices and the said report being the basis for issuance of Seizure Memo, the Respondents is directed to release the goods in question on the Petitioner submitting P.D. bond. Petition allowed.
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2022 (1) TMI 817
Valuation of imported goods - Black Pepper Sri Lankan origin - invoices qua said consignment have been overvalued so as to circumvent Minimum import price (MIP) of ₹ 500/- per kilogram - prohibited goods - import of Black Pepper up to the value of ₹ 500/- per kilogram is prohibited vide notification No.21/2015-2020 dated 25.07.2018 - HELD THAT:- Hon'ble Division Bench by way of an intra-court appeal is M/S. AL QAHIR INTERNATIONAL VERSUS THE COMMISSIONER OF CUSTOMS, THE DEPUTY DIRECTOR, DIRECTORATE OF REVENUE INTELLIGENCE, TUTICORIN [ 2021 (9) TMI 369 - MADRAS HIGH COURT] . In Al Qahir case, learned Single Judge directed release of goods on execution of bank guarantee for interest, penalty or charges that may be charged. This is vide paragraph 38 (i) of the Single Judge's order. The importer carried the matter in appeal by way of intra-court appeal and a Hon'ble Division Bench in M/S. AL QAHIR INTERNATIONAL VERSUS THE COMMISSIONER OF CUSTOMS, THE DEPUTY DIRECTOR, DIRECTORATE OF REVENUE INTELLIGENCE, TUTICORIN [ 2021 (12) TMI 1160 - MADRAS HIGH COURT] order modified the conditions imposed by learned Single Judge with regard to bank guarantee alone and said bond will suffice. The second respondent i.e., the Joint Commissioner of Customs is directed to quantify the duty, bond amounts etc., communicate the same to the petitioner forthwith and release the said consignment within one week of said remittance i.e., quantified duty/bond amounts/execution of bonds by the petitioner - It is made clear that nothing contained in this order will stand in the way of an independent inquiry by the authorities in the ongoing investigation. Petition disposed off.
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2022 (1) TMI 816
Validity of levy of detention charges and ground rent charges by customs cargo service provider - goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive Officer or Examining Officer - refund of the amount sought along with interest - HELD THAT:- The issue is no longer res integra in view of a recent decision of the Bombay High Court in the case of SAHAJ IMPEX VERSUS BALMER LAWRIE CO. LTD. ANR. [ 2021 (1) TMI 821 - BOMBAY HIGH COURT] , wherein the Bombay High Court has held that It is not in dispute that respondent No. 1 is a Customs Cargo Service Provider as defined in Regulation 2(1) (b) of the Regulations. Being so, it is under a legal obligation to discharge the responsibilities as mandated under Regulation 6, more particularly in clause (l) thereof which clearly says that a Customs Cargo Service Provider shall not charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive Officer or Examining Officer as the case may be. The observations made by the Bombay High Court clinches the issue. The respondent no.3, as the customs cargo service provider as defined in regulation No.2(1)(b) of the Regulations, is not entitled in law to charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or any other authority - this position seems to have been further clarified by the Commissioner of Customs (Export) by way of a public notice No.26/2010 with the further clarification that the customs cargo service providers shall allow the goods on production of a certificate issued from the proper officer certifying such period of seizure or detention or confiscation without charging and collecting any rent or demurrage for such period. On account of the contractual relationship if the respondent no.3 wants to recover any other dues from the writ-applicant, it is open for the respondent no.3 to approach the appropriate forum for obtaining appropriate relief - Application allowed.
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2022 (1) TMI 815
Levy of Anti- Dumping Duty - imports of D cor Paper originating in or exported from China PR - possibility of a final Notification being issued by the Central Government accepting the Final Findings of the Designated Authority and imposing Anti-Dumping Duty - seeking to amend the writ petition in terms of the Draft Amendment at Annexure E thereto - seeking for interim relief to stay the Notification dated 27.12.2021 - HELD THAT:- The draft amendment as prayed for in the Civil Application No.1 of 2022 as per Annexure E is granted subject to rights and contentions of the Respondents. Such amendment to be carried out within one week from today. Pending hearing and final disposal of the writ petition, the writ applicant shall be permitted to clear the subject products exported to India on payment of USD 110 per metric tonne and upon furnishing a bank guarantee for the differential amount of USD 432 per metric tonne. Application disposed off.
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2022 (1) TMI 814
Seeking grant of bail - Smuggling - high value foreign origin black pepper abusing the facilities under the Indo-Nepal Treaty on Trade and Transit. - alleged fraudulent exports - live link between the incidents of alleged smuggling activities and the date on which the order of detention was issued or not - Subjective satisfaction for formation of opinion in issuing detention of order under Section 3(1) of the Act - Non-consideration of relevant materials by and/or non- disclosure of relevant materials before the Detaining Authority - refusal to supply additional documents and the legible copies of some relied upon documents thereby denying proper opportunity to the detenue to make effective representation - Cryptic and delayed consideration of representations of the detenue by the Central Government. HELD THAT:- The Hon ble Supreme Court in HARADHAN SAHA VERSUS STATE OF WB. [ 1974 (8) TMI 104 - SUPREME COURT] elaborately explained the concept of preventive detention to mean that the detention of a person is not to punish him of something he has done but to prevent him from doing it. The basis of detention is the satisfaction of the executive of a reasonable probability of the likelihood of the detenue acting in a manner similar to his past acts and preventing him by detention from doing the same. Further it has been held that a criminal conviction is for the act already been done which can be possible by a trial and legal evidence and there is no parallel between prosecution in a Court of Law and detention order under the Act as one is punitive action and the other is the preventive act - it has been held that Article 14 is inapplicable because preventive detention and prosecution are not synonymous as the purposes are different and the authorities are different. In prosecution, the accused is sought to be punished for a past act and in preventing detention the past act is merely the material for interference about the future course of probable conduct on the part of the detenue. The contention of the Learned Counsel for the petitioner that the cases which are basis for the detention to have no live link has to be rejected. Of the two cases black pepper case has concluded holding the detenue guilty for violating the provisions of Customs Act. With regard to illegal availments of IGST refunds it appears that it is large scale conspiracy where several persons are involved and the detaining authority was satisfied from the materials available and the statements recorded under section 108 not only from the detenue but other co-accused that the detenue was the main person in the entire illegal operation. Furthermore, the case of illegal availment of refunds of IGST is in the process of investigation - there is sufficient live link available on record so as to indicate that all the past events are sufficient to form an opinion by the detaining authority to pass the order of preventive detention against the detenue. The antecedent activities of the detenue is clearing export of goods on paper without actual physical exports of goods would undoubtedly fall within the ambit of a smuggling activity and therefore alleged illegal availment of IGST would fall within the definition of smuggling . There exists live link between the alleged incidents referred in the grounds of detention, which are undoubtedly smuggling activities, with regard to the date on which the order of detention was passed the by the detaining authority who has validly recorded satisfaction for issuing the order of detention under section 3(1) of the Act and while doing so he has taken note of the relevant material and antecedent of the detenue and his propensity to commit the same in future and the detenue has not been prejudiced in any manner as relevant documents which formed basis of the order of detention have been supplied - the Learned Counsel had contended that the bail order is a concocted document. This argument deserves to be rejected as the copy of the bail order which has been furnished to the detenue is a typed copy and that has been clearly demonstrated by the Learned Additional Solicitor General by producing both the hand written order as well as the typed order. The writ petition is dismissed.
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2022 (1) TMI 813
Revocation of Customs Broker License - forfeiture of the security deposit - penalty under Regulation 18 of the CBLR, 2018 - import of Cigarettes and Food Supplement/proteins - seeking clearance of goods declared as Food Stuff (Chocolate etc.) Cigarettes and Cosmetics - prohibited/restricted goods - benefit of N/N. 03/57-Cus. dated 08.01.1957 - Customs Circular No. 13/2007 dated 02.03.2007 - HELD THAT:- It is incorrectly held that the appellant have violated the provisions of Regulation 10(d) of CBLR, 2018. Further, the appellant has exercised due diligence in carrying out his duties. The appellant knew that in case of diplomatic consignment etc. cigarette are exempt from payment of customs duty under Notification No. 3/57-Cus. dated 08.01.1957, when the same are imported for their personal use or use in the Diplomatic Mission. In the instant case, importer was First Secretary in the Embassy of Republic of Senegal and therefore they are eligible for the aforesaid exemption in so far as import of cigarettes is concerned. Further, the appellant did declare in the Bill of entry details of cigarette as per the import documents. Further, the importer has produced the exemption certificate dated 16.08.2018 in form 10A Customs Duty Exemption Certificate in respect of quota items (liquor/ Cigarettes/ flood stuff) imported for the personal use of entitled members of Diplomatic Mission. Thus, the finding of the Commissioner in the impugned order is erroneous that there is violation of Regulation 10(d)(e) and (f). Penalties under Section 114AA and 117 of the Customs Act, 1962 - HELD THAT:- It is inconceivable that a CHA, whose job is only to file bill of entries, making the proper declarations as per the information given by the importer and to assist an importer for clearance of the goods, would be aware of the technical laws of production of various licences for an import of a particular item, so as to invoke penal action against him. In view of the findings of the learned Commissioner (Appeals) in the main show cause notice, wherein the said Diplomat was also a co-noticee, the appellant Customs Broker have been granted clean chit with full relief. Accordingly, the cause of action under the CBLR does not survive. Appeal allowed - decided in favor of appellant.
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2022 (1) TMI 812
Valuation of imported goods - Halani Star - rejected of declared Cost, Insurance and Freight (CIF) value value - redetermination of value under rule 9 of the 2007 Valuation Rules - opportunity of cross examination - confiscation of goods - redemption fine - penalty - HELD THAT:- What has to be seen under section 14(1) of the Customs Act, as amended in 2007, is the transaction value of the goods imported or exported for the purpose of customs duty and transaction value is stated to be the price actually paid or payable for the goods when sold for export to India for delivery at that time and place of importation. Sub-section (1) of section 14 of the Customs Act also makes it clear that the price actually paid or payable for the goods will not be treated as transaction value where the buyer and the seller are related to each other - As per the first proviso to the amended section 14 (1), certain charges are to be added to the transaction value of the imported goods. It is, therefore, clear that while there was scope for addition of notional charges in the assessable value under the un-amended section 14 of the Customs Act, but after the actual sale price concept was introduced in the year 2007 on the basis of GATT guidelines and section 14 of the Customs Act was amended in 2007, any inclusion of notional charges seems to have lost its relevance and only actual cost incurred by the buyer is required to be considered. In the present case, the Barge was earlier on charter to M/s. Afcons Gunanusa Joint Venture who had imported it under a Bill of Entry dated October 22, 2010 with the declared value of ₹ 23.41 crores, which value was accepted by the Department. The declared value of the Barge in the Bill of Entry dated August 25, 2011 is US Dolla₹ 6,000,000.00, freight US Dolla₹ 5,000 and insurance US Dolla₹ 29,657.00 totaling US Dolla₹ 6,034,657.000 (CIF) equivalent to ₹ 26,97,49,167/- - contention of the appellant is that it had correctly declared the transaction value as the assessable value for the purposes of customs duty and it is also not the case of the Department that the assessable value declared by the appellant is not the transaction value since the entire case of the Department is based on the valuation report submitted by the Chartered Engineer. The second report submitted by the Chartered Engineer states that during their re-inspection, they had gathered complete vessel particulars regarding capacities and other technical specifications, which were not made available during the initial inspection. The description of the Barge and its equipment is same in both the valuation reports and the Chartered Engineer had also inspected the Barge before the first report was submitted - What also needs to be noted is that the appellant had purchased the Barge at US Dolla₹ 6,000,000.00 (FOB) and earlier the same Barge was imported by M/s. Afcons Gunanusa Joint Venture under a Bill of Entry dated October 22, 2010 for ₹ 23.41 crores, which value was accepted by the Department. The value of the Barge was mentioned as ₹ 26.82 crores in the Bill of Entry dated August 25, 2011 submitted by the appellant. The cross examination is a valuable right available to an assessee and it cannot be denied in an arbitrary manner. In the present case, as noticed above, the Commissioner has rejected the request made by the appellant for cross examination of the Chartered Engineer only for the reason that the appellant had stated that the Barge may be re-inspected by the same Chartered Engineer. If the report was found to be faulty by the appellant, the Department should have recorded the statement of the Chartered Engineer and also permitted the appellant to cross examine him, so as to determine the correct facts. When neither the Chartered Engineer was examined nor the appellant was not permitted to cross examine the Chartered Engineer, the second report submitted by the Chartered Engineer cannot be relied upon - the value declared by the appellant should have been treated as a transaction value and no reliance could have been placed on the second report of the Chartered Engineer for enhancing the value of the Barge. It is also not the case of the Department that any additional consideration was paid by the appellant to the seller of the Barge. The order passed by the Commissioner cannot be sustained and is set aside. The declared value of the Barge cleared through the Bill of Entry dated August 25, 2011, therefore, deserves to be accepted - Appeal allowed.
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Insolvency & Bankruptcy
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2022 (1) TMI 811
Eligibility of persons to be resolution applicant - Interpretation of Statute - Section 29A(h) of the Insolvency and Bankruptcy Code, 2016 - time limitation - HELD THAT:- Section 29A is a facet of the Code, and therefore, this provision has to be read with the main objective enshrined thereunder. The objective behind Section 29A of the Code is to avoid unwarranted and unscrupulous elements to get into the resolution process while preventing their personal interests to step in. Secondly, it consciously seeks to prevent certain categories of persons who may not be in a position to lend credence to the resolution process by virtue of their disqualification. Section 29A(h) of the Code creates one more category of persons not being eligible to be a resolution applicant. Other than the persons mentioned thereunder, there may not be any disqualification. The word person is of a wider import to include a promoter or a director, as the case may be. The definition of person as mentioned under Section 3(23) of the Code includes certain categories of persons and thus, there is no such exclusion. It is merely illustrative/inclusive in nature and therefore, the persons mentioned in Section 29A alone are ineligible to be resolution applicants - Once a person executes a guarantee in favour of a creditor with respect to the credit facilities availed by a corporate debtor, and in a case where an application for insolvency resolution has been admitted, with the further fact of the said guarantee having been invoked, the bar qua eligibility would certainly come into play. What the provision requires is a guarantee in favour of a creditor . Once an application for insolvency resolution is admitted on behalf of a creditor then the process would be one of rem, and therefore, all creditors of the same class would have their respective rights at par with each other. The word such creditor in Section 29A(h) has to be interpreted to mean similarly placed creditors after the application for insolvency application is admitted by the adjudicating authority. As a result, what is required to earn a disqualification under the said provision is a mere existence of a personal guarantee that stands invoked by a single creditor, notwithstanding the application being filed by any other creditor seeking initiation of insolvency resolution process. This is subject to further compliance of invocation of the said personal guarantee by any other creditor - Ineligibility has to be seen from the point of view of the resolution process. It can never be said that there can be ineligibility qua one creditor as against others. Rather, the ineligibility is to the participation in the resolution process of the corporate debtor. Exclusion is meant to facilitate a fair and transparent process. Having understood the provision and the objective behind it, as well as the Code, it is clear that, if there is a bar at the time of submission of resolution plan by a resolution applicant, it is obviously not maintainable. However, if the submission of the plan is maintainable at the time at which it is filed, and thereafter, by the operation of the law, a person becomes ineligible, which continues either till the time of approval by the CoC, or adjudication by the authority, then the subsequent amended provision would govern the question of eligibility of resolution applicant to submit a resolution plan. The resolution applicant has no role except to facilitate the process. If there is ineligibility which in turn prohibits the other stakeholders to proceed further and the amendment being in the nature of providing a better process, and that too in the interest of the creditors and the debtor, the same is required to be followed as against the provision that stood at an earlier point of time. Thus, a mere filing of the submission of a resolution plan has got no rationale, as it does not create any right in favour of a facilitator nor it can be extinguished. One cannot say, what is good today cannot be applied merely because an applicant was eligible to submit a resolution plan at an earlier point of time. It is only a part of procedural law. Admittedly, the Respondent No.3 has executed personal guarantees which were invoked by three of the financial creditors even prior to the application filed. The rigor of Section 29A(h) of the Code obviously gets attracted. The eligibility can never be restricted to the aforesaid three creditors, but also to other financial creditors in view of the import of Section 7 of the Code - In the case at hand, in pursuance to the invocation, an application invoking Section 7 indeed was filed by one such creditor. It was invoked even at the time of submitting a resolution plan by the Respondent No.3. Thus, in the touchstone of interpretation of Section 29A(h), it is held that the plan submitted by the Respondent No.3 ought not to have been entertained. Time limitation - HELD THAT:- The delay of 106 days has been rightly condoned and excluded by the adjudicating authority by invoking Section 12(3) of the Code. It was done only on one occasion. The adjudicating authority was right in holding that there is a marked difference between extension and exclusion. Exclusion would come into play when the decision is challenged before a higher forum. Extension is one which is to be exercised by the authority constituted. The ultimate object of the Code, which is to put the corporate debtor back on the rails should be remembered. Incidentally, it is also noted that no prejudice would be caused to the dissenting creditors as their interests would otherwise be secured by the resolution plan itself, which permits them to get back the liquidation value of their respective credit limits. Thus, on the peculiar facts of the present case, the resolution plan leading to the on-going operation of the Respondent No.1, need not be disturbed. Appeal disposed off.
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2022 (1) TMI 810
Review order - Maintainability of appeal - appeal maintainable against the orders challenged in the writ petition under Section 61 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the Code ) and not under Section 421(1) of the Companies Act, 2013 - HELD THAT:- There is no scope of review of the order merely on the basis of the finding that an appeal lay under Section 421(1) of the 2013 Act. It is well-settled that allegations on fact as to what transpired in Court on certain particular dates have to be levelled, for the ends of propriety, before the said Court itself, where the irregularity allegedly occurred, preferably before the same Presiding Officer. A challenge before a superior forum, including under Article 226 of the Constitution of India, is illusory in nature, since it is most appropriate that the forum concerned itself, being in the best position to ascertain the veracity of such factual allegations, adjudicates such factual disputes - the mere allegation of violation of Rule 44 of 2016 Rules could not be sufficient justification for this Court to invoke the writ jurisdiction. An appeal, either under Section 421(1) of the 2013 Act or under Section 61 of the Code, would be a more efficacious and exhaustive remedy available to the petitioner in comparison to the writ petition - In the present case, however, the entire gamut of the petitioner s allegations in the writ petition revolved around specific factual allegations which ought to have been decided by the NCLT itself. Moreover, since all the impugned orders had been passed in the absence of the petitioner, who failed to avail the opportunity of being represented before the NCLT, there is extremely limited scope of entering into the nitty-gritties of such factual allegations within the constraints of the writ jurisdiction. The order under review cannot be subjected to a review on the ground of error apparent on the face of the record, simply because there is no such apparent error in the impugned order which can be decided at the first blush without looking into the materials annexed to the writ petition and the connected records of the proceeding before the NCLT - there is no merit in the review application. Application dismissed.
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Service Tax
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2022 (1) TMI 809
Rejection of VCES scheme - rejection on the ground that the Voluntary Compliance Encouragement Scheme (VCES) did not have provision for a statutory appeal against the order of rejection of declaration under Section 106 (2) of the Finance Act by the Designated Authority - HELD THAT:- The Hon ble jurisdictional High Court of Judicature at Madras in the case of THE NARASIMHA MILLS PRIVATE LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE (APPEALS) , THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE [ 2015 (6) TMI 787 - MADRAS HIGH COURT] , has clearly held that an order of rejection of benefit under the impugned scheme is appealable under Section 85 of the Finance Act, 1994. The impugned communication by the Commissioner (Appeals) cannot sustain and therefore, the same is set aside. The Commissioner (Appeals) is directed to take up the appeal preferred by the appellant and dispose of the same on merits and in accordance with law, after affording reasonable opportunities to the appellant - Appeal allowed by way of remand.
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Central Excise
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2022 (1) TMI 808
Penalties under section 11AC of Customs Act, 1962 and rule 173Q of Central Excise Rules, 1944 - mandate for inclusion of amortized cost had not been complied with in computing the assessable value for discharge of duty liability - HELD THAT:- There is no doubt that the computations leading to the confirmation of demand during the first round of litigation were revised substantially during the second round indicating lack of certainty when proceedings were initiated by the central excise authorities. A higher measure of certainty cannot be expected of an assessee. It is also seen from the records that guidelines on proportionate allocation of costs were covered in circular no. 170/4/96-CX dated 23rd January 1996 of Central Board of Excise Customs whereas the demand pertains to a period prior to that also. Reliance can be placed in the case of UNIFLEX CABLES LTD. VERSUS COMMISSIONER, CENTRAL EXCISE, SURAT-II [ 2011 (8) TMI 63 - SUPREME COURT] where it was held that Penalty not imposable when issue involved is of interpretational nature - the case renders a finding that is equally applicable insofar as the ingredients permitting the extended period in section 11A of Customs Act, 1962 to be invoked; it is settled law that one cannot exist without the other. Appeal allowed - decided in favor of appellant.
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2022 (1) TMI 807
Entitlement of interest on delayed refund of pre-deposit - appellant submitted that since the appellant is entitled to refund of pre-deposit, from the date of deposit till the date of its realisation under Section 35FF of Central Excise Act - HELD THAT:- Division Bench of this Tribunal in M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) [ 2021 (5) TMI 870 - CESTAT ALLAHABAD] , wherein interest on pre-deposit (made during investigation) have been enhanced from 6% to 12%, following the ruling of the Apex Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT] . The impugned order is set aside. The Adjudicating Authority is directed to grant interest @ 12% per annum from the date of deposit till the date of refund. Such interest should be granted within a period of two months from the date of receipt or service of the copy of this order - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (1) TMI 806
Input tax credit - Validity of assessment order - sale of goods without payment of tax on the strength of which the purchasing dealers availed Input Tax Credit under Section 19 of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- It is noticed that the Principal Secretary/Commissioner of Commercial Taxes has issued the Circular No.05 of 2021, LW10/12521/2016 dated 24.02.2021. It has spelt out the manner in which the issue has to be addressed and the Input Tax Credit availed has to be reconciled on the strength of the information gathered from the website of the Government. Admittedly, in this case the respondent has not followed the procedure prescribed therein. Considering the same, the impugned Assessment Order is quashed by remitting back the case to the respondent to pass a speaking order in terms of the above-said circular/guidelines of the Principal Secretary/Commissioner of Commercial Taxes - petition allowed by way of remand.
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Indian Laws
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2022 (1) TMI 805
Prayer for a decree of declaration for declaring his correct date of birth in service record - mandatory injunction against the defendants and their officers, employees, successors, and representatives, etc., to rectify and correct date of birth in the service record - decree of damages against defendants by directing the appellant / defendant No.1 to pay ₹ 3 Lacs as compensation on account of mental agony and harassment caused to him due to gross negligence and casual approach - whether the Trial Court is justified in decreeing the suit filed by the respondent No.1 / plaintiff granting relief in his favour by declaring his date of birth as October 02, 1962? HELD THAT:- The stand of the appellant / defendant No.1 is that the date of birth can be altered within five years of appointment but the said rule does not contemplate, if, an error occurs after five years how the same has to be dealt with. The appellant / defendant No.1 has relied upon the LIC, Group Insurance Policy of 1997 wherein the personal data of the employees including of the respondent No.1 / plaintiff was submitted which includes the date of birth; the seniority list issued in the year 2003 and 2010 respectively, and the salary payslips. All the documents are post 5 years of the appointment of the respondent No.1 / plaintiff and F.R. 56 also states any genuine bonafide mistake occurred in the record of the date of birth can be altered. The pages of the Service Book filed by the appellant / defendant No.1 and the respondent No.1 / plaintiff depicts the date as to when the entry of the particulars have been made in the Service Book. Though the relevant page of the Service Book at the bottom clearly states that entries on this page should be renewed / re-attested at least every five years and the signatures in volumes 11 and 12 should be dated, the date of entries / renewal or re-attested has not been mentioned. It is noted that the basis for the Trial Court to grant damages is primarily for the reason that the respondent No.1 /plaintiff was put to undue harassment by the appellant / defendant No.1, inasmuch as the appellant / defendant No.1 took 460 days to decide the representation of the respondent No.1 / plaintiff dated July 31, 2013, by rejecting it on November 03, 2014. It also kept on delaying the filing of the written statement for more than 16 months and not providing a copy of the Service Book to respondent No.1 / plaintiff. Despite respondent No.1 / plaintiff furnishing the date of birth certificate to the appellant / defendant No.1 at the time of joining showing as October 02, 1962, the officials of the appellant / defendant No.1 either made a wrong entry of the date of birth of the respondent No.1 / plaintiff or forged the same by mentioning the wrong date of birth as October 02, 1960. The Trial Court has highlighted the facts which weighed with it for awarding damages. Keeping in view the position of law as laid down by this Court, it is clear that the case of harassment of respondent No.1 / plaintiff is made out. Hence, the challenge, insofar as the grant of damages by the Trial Court in favour of the respondent No.1 / plaintiff cannot be faulted - Appeal dismissed.
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2022 (1) TMI 804
Dishonor of Cheque - funds insufficient - legally enforceable debt or not - rebuttable presumption or not - Section 139 of the Negotiable Instruments Act - HELD THAT:- It is a well settled position of law that, once the execution of the cheque is admitted, there is presumption under Section 139 of the Negotiable Instruments Act as to the existence of legally enforceable debt. However, the said presumption is a rebuttable presumption and if the accused is able to show from the evidence that the amount mentioned in the cheque does not reflect the actual amount legally due to the complainant, the said presumption shall stand rebutted. In such event, the burden to establish the existence of a legally enforceable debt shall stand shifted to the complainant. In this case, by virtue of the difference in the amount presumably due to the addition made by the appellant towards interest at the rate of 24%, there is a shifting of burden. In this case, even though the 1st respondent is admitting the business transactions with the complainant, he vehemently denied the existence of a legally enforceable debt by a specific plea that the cheque which was issued by him towards security and the same was used by the petitioner for submitting this complaint. In such circumstances, in the absence of any specific understanding arrived at between the parties enabling the appellant to collect interest at the rate of 24%, it cannot be concluded that the amount mentioned in Ext. P1 cheque reflects the actual amount of legally enforceable debt. In such circumstances, it cannot be safely concluded that the offence under Section 138 of the Negotiable Instruments Act has been made out. There are no merits in the appeal - appeal dismissed.
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2022 (1) TMI 803
Dishonor of Cheque - suit barred by time limitation or not - suit promissory note Ex.A1 is materially altered or not - failure to to disprove the signature in the Ex.A1 or not? - Section 67 of the Indian Evidence Act - respondent/plaintiff has proved the fact of execution of promissory note Ex.A1 and the payment of consideration to the appellant or not? - existence of suspicious circumstances - HELD THAT:- It is trite law that if a suit has been filed on the basis of a Negotiable Instrument, it is for the plaintiff to prove the execution. Afterwards, under Section 118 of the Negotiable Instruments Act, the burden has been shifted on the shoulder of the defendant, to prove that the said instrument is not supported with consideration. Here it is a case, when at the time the plaintiff was examined as P.W.1, in her evidence, she has narrated the time, manner and the circumstances on which, the defendant received the loan amount and about the execution of the pro-note. In respect of the execution, the evidence given by P.W.1 was fully corroborated through the evidence given by P.W.2, who is one of the attestors, signed in the pro-note as a witness - it is the stand taken by the defendant that the suit pro-note is a fabricated one and the signature found in the suit pro-note is not belonged to him. Though it was argued on the side of the defendant that the suit pro-note is a forged one, the evidence let in by P.W.1 and P.W.2 is sufficient to accept the execution of the pro-note. In respect of the signature of the defendant found in the proof affidavit filed by him and in respect of the signature found in the written statement, the defendant himself gave evidence as the signature found in those documents, are not belonged to him. Therefore, the said evidence given by the defendant is quite clear that he has not approached the trial Court with clear case. The said circumstances shows that the defendant himself having confusion with his case and therefore, it cannot be said that the plaintiff, after fabricating the false pro-note, filed a false case against the defendant - In the event that the evidence given by P.W.1 and P.W.2 in respect of the execution of pro-note is appears to be found sufficient, it is for the defendant to send those disputed documents for comparison. In fact, before the trial Court, the defendant has not produced the documents which are all signed by him in the relevant point of time for enabling the Court to come to the correct conclusion. Of course, for comparison under Section 73 of the Indian Evidence Act, being the reason that the signature found in the written statement and vakalat are not contemporary documents, it is not necessary for the plaintiff to send those documents for chemical examination. The Courts below have traversed on the same line and came to the conclusion that the plaintiff has proved her case and rejected the claim made by the defendant - the suit pro-note was executed by the defendant. The second appeal is dismissed.
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2022 (1) TMI 802
Seeking grant of regular bail - smuggling - Pseudo-Ephedrine - Cocaine - whether rigors U/s 37 of the NDPS Act applies to the case of the petitioner or not? - Section 14 of Foreigner Act and 471 of IPC - HELD THAT:- The present petitioner is facing prosecution for charges U/s 9A and 25 A of the NDPS Act and hence obviously his case would not be covered U/s 37 of the NDPS Act. Moreover, as far as Section 9A which deals with controlled substance is concerned, there is no categorization of small quantity or commercial quantity. Therefore, concept of commercial quantity is applicable only to narcotic drugs and psychotropic substances and not to controlled substance. Section 9A of the NDPS Act deals with the power to control and regulate controlled substance. Controlled substance means any substance which the Central Government may, having regard to the available information as to its possible use in the production manufacture of narcotic drugs or psychotropic substances or to the provisions of any international Convention, by notification be a controlled in the official Gazette, declare substance. The Ministry of Finance Department of Revenue vide its notification dated 28th December, 1999 has declared pseudo-ephedrine a controlled substance under the Act - the substance alleged to have been recovered from the petitioner/accused is 3.5 Kg. of pseudoephedrine which is a controlled substance. It has been rightly submitted by the Ld. counsel for the petitioner/accused that it is neither a narcotic drug nor a psychotropic substance under the NDPS Act. The alleged offences are not punishable with death or imprisonment for life. The offence falling U/s 9A r/w section 25A of the NDPS Act is punishable with imprisonment which may extend to 10 years and also fine which may also extend to ₹ 1 Lakh and the bar of Section 37 is not attracted in the present case as the substance recovered is a controlled substance within the meaning of Section 2 (viid) of the Act. The other recovery from the possession of the petitioner is 15 gm. Cocaine which is also not a commercial quantity, therefore, in the instant case, bar of Section 37 of NDPS Act is not applicable. Though the petitioner is a foreigner, there is no bar to release a foreign national on bail in the given facts and circumstances of this case. In the present case, the petitioner is married to an Indian lady and having kids with her. The factum of his marriage and kids has been verified by the state and statements of the relatives of the wife of the petitioner have already been recorded in this regard. The petitioner is admitted to bail on his furnishing personal bond in the sum of ₹ 1,00,000/- with two solvent sureties each of the like amount subject to the satisfaction of the trial Court. Being released on bail, the petitioner shall inform the IO of the case, the address at which he will reside during the period he is on bail. The application is disposed of.
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2022 (1) TMI 801
Dishonor of Cheque - CIRP under process - moratorium in effect - applicability of moratorium provisions on natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instrument Act - HELD THAT:- It is not in dispute that the cheques issued to the complainant's Company were dishonored with an endorsement Payment Stopped by the Drawers . In that regard, the 1st petitioner Company had issued a letter to the respondent through their counsel stating about the initiation of insolvency process by National Company Law Tribunal (NCLT) against the 1st petitioner Company and due to which, the 2nd accused/2nd petitioner was unable to honor the post dated cheques issued in favour of the respondent Company. Inspite of the communication of the 1st petitioner Company regarding the insolvency process, the complainant has presented the cheques for collection, which was dishonored and thereby filed the complaint against the 1st petitioner Company. In the case on hand, the insolvency process was initiated by NCLT on 10.07.2017 and moratorium has been declared under the Insolvency and Bankruptcy Code. Therefore, as held by the Hon'ble Supreme Court in P. MOHANRAJ ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [ 2021 (3) TMI 94 - SUPREME COURT] , the moratorium was only in respect of the corporate debtor and not in respect of the directors/management and therefore, the petitioners 2 and 3 as natural persons, are liable for prosecution. However, in view of declaration of moratorium by NCLT, the prosecution as against the company cannot be allowed to continue. This Court is inclined to quash the proceedings in respect of 1st petitioner and insofar as the petitioners 2 and 3 are concerned, this Court is of the opinion that the issue is a triable issue and it requires appreciation of evidence and this Court cannot decide the same in exercise of its jurisdiction under Section 482 of Criminal Procedure Code - Petition allowed.
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2022 (1) TMI 800
Dishonor of Cheque - insufficiency of funds - legally enforcement debt or not - Hire Purchase Agreement - petitioner alleges that respondent no.2 very conveniently did not produce copy of the Hire Purchase Agreement in the criminal complaint before the Judicial Magistrate - HELD THAT:- In the instant case, prior to the filing of the criminal complaint before the concerned Judicial Magistrate, the financial institution, Shriram Transport Finance Company Ltd., had admittedly got repossession of the vehicle, therefore, the agreement entered into between the parties would get determined ipso facto by such repossession - the remedy available to the owner would be in accordance to the terms and conditions decided. Thus, the Court thereby laid down that once financial institution/owner exercised option of seizure of the vehicle, the postdated Cheques obtained from the hirer cannot be presented for encashment after the seizure. Though, the owner has to take recourse to other legal remedies for recovery of the balance amount, if any, when the vehicle is sold subsequently, the owner can recover the balance amount after adjusting the sale proceeds of the vehicle. Section 138 attracts the penal provision for debts or other liabilities , which may not be legally enforceable debts or other liabilities if the instrument by way of cheque is not supported by consideration. Section 43 of the N.I. Act deals with a negotiable instrument made without consideration. If a negotiable instrument is made or drawn without consideration it creates no obligation of payment between the parties to the transaction. Similarly, if the consideration for which the instrument was made or drawn has failed subsequently, then also the instrument creates no obligation at all - After repossession of the vehicle, Shriram Transport Finance Company Ltd. had sold the vehicle and the sale proceeds admittedly would be no doubt adjusted towards loan repayment, the complainant/owner has already initiated steps to recover the liability from the hirer. In this case, the cheque dated 13.12.2018 was presented, which came to be dishonoured because of funds insufficiency and the dishonoured memo was received by the Company on 19.12.2018. Thereafter, on 28.12.2018, the vehicle was repossessed by Shriram Transport Finance Company Ltd. respondent no.2, the notice demanding payment was served on 08.01.2019 and thereafter the complaint was filed on 22.02.2019. The complainant by suppressing the fact of repossession of vehicle before the Judicial Magistrate had prayed for relief. The learned Magistrate thus, relying on the facts pleaded, had issued summons - In view of the fact that vehicle was seized and was sold thereafter, the agreement between the complainant and accused stood terminated and there was no legally enforceable debt when the complaint was filed before the learned Magistrate. On repossession of vehicle, the agreement stood terminated, therefore cheques in the hands of financial institution becomes instrument for which consideration has failed, even being presented and dishonoured, no offence under Section 138 of the N.I. Act would be attracted. The proceedings before the learned Judicial Magistrate, First Class, Vadodara, Summons dated 22.02.2019 and all the consequential proceedings initiated in pursuance thereof are quashed and set aside qua the present petitioner - Application disposed off.
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