TMI Tax Updates - e-Newsletter
January 29, 2021

Case Laws in this Newsletter:

GST Income Tax Corporate Laws Securities / SEBI Insolvency & Bankruptcy Law of Competition PMLA Wealth tax

Articles

1. COMPANIES (CORPORATE SOCIAL RESPONSIBILITY POLICY) AMENDMENT RULES, 2021 – AN OVER VIEW

   By: DR.MARIAPPAN GOVINDARAJAN

2. APPEALS AND REVISIONS UNDER INCOME TAX ACT, 1961

   By: Laxminarayan WritersandPublishers

3. UNDERSTANDING THE BASIC MEANING AND CONCEPT OF MONEY LAUNDERING

   By: CAPushpkumar Sahu and Laxminarayan WritersandPublishers

News

1. Rajasthan becomes the 5th State to complete Urban Local Bodies (ULB) reforms

2. Cabinet approved Minimum Support Price of Copra for 2021 season

3. Central Board of Indirect Taxes and Customs celebrates International Customs Day, 2021 and holds ceremony for World Customs Organisation Certificate of Merit Award

Notifications

Customs

1. 9/2021-Customs (N.T./CAA/DRI) - dated 25-1-2021 - Cus (NT)

Appointment of CAA by DGRI

DGFT

2. 56/2015-2020 - dated 28-1-2021 - FTP

Amendment in import policy of Coal and incorporation of Policy Condition No. 7 in Chapter 27 of ITC (HS), 2017, Schedule - I (Import Policy)

GST - States

3. G.O. (Ms) No.1 - dated 4-1-2021 - Tamil Nadu SGST

Tamil Nadu Goods and Services Tax (First Amendment) Rules, 2021

4. 04/XI-2-21-9(47)/17-U.P. Act-1-2017-Order-(170)-2021 - dated 15-1-2021 - Uttar Pradesh SGST

Seeks to bring in to force sections 3, 4, 5, 6, 7, 8, 9, 10 and 13 of the Uttar Pradesh Goods and Services Tax (Third Amendment) Act, 2020

Highlights / Catch Notes

GST

• Restaurant Overcharged GST, Violates CGST Act Section 171(1), Denies Customers Tax Benefit by Profiteering Excess Amounts.

  Case-Laws - NAPA : Profiteering - supply of restaurant service - The Respondent was legally not required to collect the excess GST and therefore, he has not only violated the provisions of the CGST Act, 2017 but has also acted in contravention of the provisions of Section 171 (1) of the above Act as he has denied the benefit of tax reduction to his customers by charging excess GST. Had he not charged the excess GST the customers would have paid less prices while purchasing food items from the Respondent and hence the above amount has rightly been included in the profiteered amount as it denotes the amount of benefit denied by the Respondent. - NAPA
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• Court Rules on Writ Application: Natural Justice in Focus; Applicant to Reapply u/s 30 of CGST Act for Quick Decision.

  Case-Laws - HC : Principles of Natural Justice - cancellation of registration - This writ application is disposed off, asking the writ applicant to prefer an application under Section 30 of the CGST Act at the earliest. Once such application is filed, the authority concerned shall pass appropriate order within 3 (three) days - HC
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• Court Orders Expedited Action on Provisional Release of Goods u/s 67(6); Decision Due in One Week.

  Case-Laws - HC : Release of goods alongwith conveyance - It is expected that the writ applicant to file his reply to the showcause notice and appear before the authority in the confiscation proceedings. However, we direct the authority concerned to immediately look into the application filed by the writ application under Section 67(6) of the Act for the provisional release of the goods and the conveyance and pass an appropriate order in accordance with law, within a period of one week from the date of this order is presented before the authority. - HC
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• Temporary Structures with Iron or Steel Pillars on Company Premises Deemed Immovable by AAR, Affects GST Tax Treatment.

  Case-Laws - AAR : Movable or Immovable property? - Temporary Structure (i.e. hall or pandal or shamiana or any other place) built up with Iron/Steel Pillars tight up with Nuts and Bolts (as shown picture enclosed) specially created for functions - Since, the premises where the structure has been erected is company's own premises, it suggests that the shamiana/ tent/pandal has been constructed/ erected for permanent enjoyment. It is not the case of applicant that it plans to dismantle and move the structure to some other place. - the structure in question is an immovable property. - AAR
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Income Tax

• Income Misclassification: Section 263 Invoked to Correct Staffing Income Mistaken as Software Export Income by Assessing Officer.

  Case-Laws - HC : Revision u/s 263 - The income of the assessee from staffing, which was not an income from export of computer software was also allowed by the Assessing Officer without any application of mind and without any enquiry. Therefore, the Commissioner of Income Tax has rightly invoked the powers under Section 263 of the Act in the fact situation of the case. - Decided against assessee.C
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• Notice u/s 143(2) Issued Without Proper Jurisdiction Invalidates Entire Tax Assessment Proceedings.

  Case-Laws - AT : Validity of notice u/s 143(2) - Assuming wrong jurisdiction by issuing notice u/s 143 (2) by a non-jurisdictional AO and then framing the assessment by jurisdictional AO is an illegality which is not curable under the law and makes the entire assessment proceedings void ab initio. - AT
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• Court Deletes Additions After Clients' Compliance with KYC Norms and Acknowledgment of Transactions in Tax Returns.

  Case-Laws - AT : Suppression of profit made by way client code modification - none of the clients has been found to be bogus and all of them have complied with KYC norms, meaning thereby the identity of all the clients stand proved. None of them has disowned the transactions and all of them have also declared the income in their respective returns of income. All these factors, in our view, support the contentions of the assessee - Additions deleted - AT
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• Section 68 Not Applicable for Returns Filed u/s 44A Due to Non-Maintenance of Books of Accounts.

  Case-Laws - AT : Addition u/s 68 - unexplained cash deposits - Non maintenance books of accounts - where the returns are filed on the basis of income declared under section 44A of the Act, there cannot be any application of section 68 of the Act. - AT
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• Assessing Officer Accepts Cash Credit u/s 68; No Further Inquiry Needed on Share Warrants Issuance.

  Case-Laws - AT : Addition u/s 68 - cash credit in the books of accounts - issue of shares warrant - As assessee has submitted the complete details before the assessing officer and therefore the initial onus cast on the assessee has been discharged. Further, the learned assessing officer has also not made any enquiry with respect to the above depositors. The inquiries made in the subsequent years clearly show that assessing officer is satisfied with respect to the creditworthiness and the genuineness of the transaction - AT
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• Assessee Fails to Provide Evidence, Disputed Additions Made by Assessing Officer Based on Search Material.

  Case-Laws - AT : Assessment u/s.158BC - Assessing Officer as well as Ld. CIT(A) has given full opportunity to the assessee for substantiating his claim on legal as well as on merits, but the assessee remained non-cooperative before the revenue authorities, hence, Assessing Officer has made the additions in dispute on the basis of the search material, after confronting the same to the assessee, but the assessee has not substantiated his claim by filing any evidence before the authorities below. - AT
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• CIT(A) Upholds 8% Profit Rate for Joint Venture; Additions Deleted Following Appellate Precedent u/s 143(3).

  Case-Laws - AT : NP rate determination - net result of trading operations of assessee JV - CIT(A) while upholding this exorbitant profit rate has observed that in the case of M/s KIEL the profit rate of 8% is applied in its assessment completed u/s 143(3) of the Act and failed to appreciate the fact that such a high rate of profit as applied was deleted in appellate proceedings in the case of M/s KIEL. - Additions deleted - AT
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IBC

• Court Rules Liquidation Focuses on Assets, Not Company Sale; IBC Procedures Must Be Followed for Closure Without Dissolution.

  Case-Laws - Tri : Seeking relief asking for closure of the liquidation process without dissolving the Corporate Debtor - When procedure itself is part of the enactment, the Regulating Authority cannot rewrite the procedure obliterating the provisions of IBC. Yes, the Regulating authority may bring in subordinate procedure for full implementation of the sections of the Code. What could be liquidated is the assets of the debtor company, this concept of liquidation of assets shall not be construed as inclusion of sale of the company - Tri
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PMLA

• High Court Invalidates Summons Due to Legal Deficiency under PMLA; Offenses Not Specified in Order by Special Judge.

  Case-Laws - HC : Validity of summons issued under PMLA - A reading of the complaint (Annexure-A) indicates that it was filed under section 45(1), 3 and 4 of the PML Act. It is alleged therein that accused Nos.1 to 4 have committed offence under section 3 of the PML Act and liable to be punished under section 4 of the PML Act. But the impugned order does not reveal as to the offences for which the accused have been summoned to appear before the court - As the order passed by the learned Special Judge taking cognizance and issuing summons to the petitioner does not satisfy the basic legal requirements, the impugned order to that extent has turned out to be ex-facie perverse and bad in law. - HC
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SEBI

• SEBI Cannot Enforce Penalties for Non-Disclosures During IBC Moratorium or After Resolution Plan Approval.

  Case-Laws - AT : Levy of penalty for Non disclosures as required under the LODR Regulations - What could not done by SEBI when the moratorium under section 14(1) of the IBC was in force cannot certainly be done after a resolution plan is approved and becomes binding on all creditors including government and local authority under section 31 of the IBC. - AT
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Case Laws:

• GST

• 2021 (1) TMI 1015
  Movable or Immovable property? - Temporary Structure (i.e. hall or pandal or shamiana or any other place) built up with Iron/Steel Pillars tight up with Nuts and Bolts (as shown picture enclosed) specially created for functions - Input Tax Credit - Iron/Steel Pillars tight up with Nuts and Bolt used for the creation of Temporary Structure (i.e. hall or pandal or shamiana or any other place) especially for functions - section 16 of the CGST Act, 2017 - CBEC through its Circular No. 58/1/2002-CX dated 15.01.2002 - HELD THAT:- As per the definition of goods some movable property is excluded from the category of goods whereas at the same time, some immovable properties are treated as goods. But the terms movable and immovable property have not been defined under the GST Act. In laymen terms, any goods that can moved is a movable property and which cannot be moved is immovable property. The General Clauses Act 1897 and the Transfer of Property Act defines both these terms. Section 3 (26) of the General Clauses Act says: immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth . Whereas, Section 3(36) defines movable property as property of every description, except immovable property . So as per this definition, any property which does not qualify to be immovable property, is a movable property. This definition of immovable property under the General Clauses Act is affirmative in nature as against the definition contained in the Transfer of the property Act 1882, which is negative in nature. As per TPA, immovable property does not include standing timber, growing crops or grass. It further says that attached to the earth means: (a) rooted in the earth, as in the case of trees and shrubs; (b) imbedded in the earth, as in the case of walls or buildings; or (c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached. As per the definition of immovable property contained in the General Clauses Act and the Transfer of Property Act, it is clear that things attached to the earth or permanently fastened to anything attached to the earth is immovable property. Anything imbedded in the earth or attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached, qualifies to be attached to the earth. In the case of applicant, it is an admitted fact that the structure (shamiana, pandal or tent) constructed/ erected by the applicant is fixed to the foundation by nuts and bolts. But the applicant holds that this affixation of pillars and pre-fabricated shelter to the earth is not permanent. So, in essence, the question which needs to be dealt with by this Authority is whether this affixation of the structure with the earth or pillar imbedded in the earth is permanent or temporary - The THE COMMISSIONER TRADE TAX UP. LUCKNOW VERSUS TRIVENI NL. LTD. [ 2014 (4) TMI 842 - ALLAHABAD HIGH COURT] has observed that permanently fastened to anything attached to the earth has to be read in the context for the reason that nothing can be fastened to the earth permanently so that it can never be removed. If the article cannot be used without fastening or attaching it to the earth and it is not removed under ordinary circumstances, it may be considered permanently fastened to anything attached to the earth. In this case, the applicant company is in the business of organizing wedding and other functions from its own premises at Ambience Golf Drive, Gurugram Haryana. Since, the premises where the structure has been erected is company s own premises, it suggests that the shamiana/ tent/pandal has been constructed/ erected for permanent enjoyment. It is not the case of applicant that it plans to dismantle and move the structure to some other place. The pictures attached with the application also depict that the civil work has been undertaken on a very large scale at the premises and this also indicates the permanent nature of the construction/ erected. Further, the concretionary base and the pillars used as platform and support to the structure is also of large dimensions and the platform or the structure cannot be put to beneficial use without the existence of the other. Merely because the walls and roofs have been replaced with pre-fabricated structure (an Engineering marvel), an immovable property cannot be categorized as movable property. Since, both the degree and nature of annexation/ attachment of the structure to the earth is strong and permanent, the structure in question is an immovable property. The applicant is not entitle to the credit of input tax in view of the provisions of Section 17(5)(d) of the CGST/ HGST Act, 2017.

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• 2021 (1) TMI 1014
  Release of goods alongwith conveyance - Section 130 of CGST Act, 2017 - HELD THAT:- It appears from the materials on record that the matter is at the stage of MOV-GST 10 issued under the provisions of the Central Goods and Services Tax Act, 2017. Thus, the writ applicant has been issued with the showcause notice under Section 130 of the Act, 2017 calling upon him to show cause as to why the goods and conveyance should not be confiscated for the contravention of the provisions of the Act and the Rules as alleged in MOV 10. It is expected that the writ applicant to file his reply to the showcause notice and appear before the authority in the confiscation proceedings. However, we direct the authority concerned to immediately look into the application filed by the writ application under Section 67(6) of the Act for the provisional release of the goods and the conveyance and pass an appropriate order in accordance with law, within a period of one week from the date of this order is presented before the authority. The confiscation proceedings also should be concluded with an appropriate order latest by 28.02.2021 . The writ applicant shall be given an adequate opportunity of hearing in the confiscation proceedings - Application disposed off.

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• 2021 (1) TMI 1013
  Provisional attachment of Bank Accounts - no notice under Sections 73 74 of the CGST Act has been issued to the petitioner as yet - Section 83 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- This writ petition is disposed off directing the respondents to, on or before 29th January, 2021, issue instructions to the banks aforesaid, of lapsing of the attachment earlier affected and impugned in this petition. However if there is any other order of attachment of the same bank accounts, the same be served on the petitioner, through the counsel, on or before 29th January, 2021. It is clarified that even if the respondents, on or before 29th January, 2021 do not issue the instructions as aforesaid to the banks or do not serve on the petitioner through advocate any other order attaching the said bank accounts, the attachment effected on 9th January, 2020 of accounts shall stand quashed and the banks shall allow the petitioner to, after 29th January, 2021, operate the accounts - petition disposed off.

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• 2021 (1) TMI 1012
  Detention of goods alongwith conveyance - Section 129(1) of the GST Act - HELD THAT:- It appears that this writ application was filed at the stage of MOV10 and coordinate Bench of this Court thought fit to pass the order releasing the detained goods together for the conveyance. The matter is still at the stage of adjudication of the showcause notice issued in MOV-10. It is expected that the writ applicant now to appear before the authority concerned and participate in the confiscation proceedings. It shall be open for the writ applicant to file his reply, if not yet filed, and make submissions for the purpose of getting the notice in MOV10 discharged. The authority concerned shall take appropriate decision in accordance with law bearing in mind the principle of law explained by this Court in the case of Synergy Fertichem Pvt. Ltd. Vs. State of Gujarat [2019 (12) TMI 1213 - GUJARAT HIGH COURT] . Application disposed off.

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• 2021 (1) TMI 1011
  Principles of Natural Justice - cancellation of registration - opportunity of personal hearing not provided - HELD THAT:- This writ application is disposed off, asking the writ applicant to prefer an application under Section 30 of the CGST Act at the earliest. Once such application is filed, the authority concerned shall pass appropriate order within 3 (three) days in accordance with the statement made by Mr. Gandhi, learned Standing Counsel for the respondents.

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• 2021 (1) TMI 1010
  Speaking to minutes is filed for inclusion of the captioned case - HELD THAT:- The speaking to minutes note is not required to be allowed. The captioned matter was already de-tagged at the relevant point of time. The matter be listed in the week commencing after the regular physical Courts are resumed.

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• 2021 (1) TMI 1009
  Profiteering - supply of restaurant service - Applicant had alleged that the Respondent had increased the base prices of his items and did not pass on the benefit of reduction in the GST rate by way of commensurate reduction in prices - contravention of Section 171 of the CGST Act, 2017 - Penalty - HELD THAT:- It is revealed from the record that the Respondent has been operating a total of 133 multiplexes in 18 states and dealing with 1650 items while supplying restaurant services after 15.11.2017. It is also revealed from the plain reading of Section 171 (1) of the CGST Act, 2017 that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the case record that there has been a reduction in the rate of tax from 18% to 5% w.e.f. 15.11.2017, on the restaurant service being supplied by the Respondent, vide Notification No. 46/2017-Central Tax (Rate) dated 14.11.2017 without the benefit of ITC. Therefore, the Respondent is liable to pass on the benefit of tax reduction to his customers in terms of Section 171 (1) of the above Act. It is also apparent that the present investigation has been carried out w.e.f. 15.11.2017 to 30.04.2019. It is also evident that the Respondent has been dealing with a total of 1650 items during the period from 15.11.2017 to 30.06.2019. Upon comparing the average selling prices as per the details submitted by the Respondent for the period from 01.08.2017 to 14.11.2017 and the actual selling prices post rate reduction w.e.f. 15.11.2017 to 30.06.2017 the DGAP has reported that the GST rate of 5% has been charged w.e.f. 15.11.2017. however, the base prices of 1434 products have been increased more than their commensurate prices w.e.f. 15.11.2017 which established that because of the increase in the base prices the cum-tax prices paid by the consumers were not reduced commensurately, inspite of the reduction in the GST rate - While comparing the average pre rate reduction base prices with the post rate reduction actual base prices the DGAP has duly taken in to account the impact of denial of ITC in respect of the restaurant service being supplied by the Respondent as a percentage of the taxable turnover from the outward supply of the products made during the pre-GST rate reduction period by taking into consideration the period from 01.07.2017 to 31.10.2017 and not up to 14.11.2017. It is further revealed from the analysis of the details of item-wise outward taxable supplies made during the period from 15.11.2017 to 31.03.2018 that the Respondent had increased the base prices of the items supplied as a part of restaurant service to make up for the denial of ITC post GST rate reduction. The pre and post GST rate reduction prices of the items sold during the period from 01.08.2017 to 14.11.2017 (Pre-GST rate reduction) and 15.11.2017 to 31.03.2019 (Post-GST rate reduction) have been compared and it has been found that the Respondent has increased the base prices by more than what was required to offset the impact of denial of ITC in respect of 1434 items (out of a total of 1650 items) sold during the above period. Thus, it is apparent that the Respondent has resorted to profiteering as the commensurate benefit of reduction in the rate of tax from 18% to 5% has not been passed on by him. However, there was no profiteering in respect of the remaining items on which there was either no increase in the base prices or the increase in base prices was less or equal to the denial of ITC or these were new products launched post-GST rate reduction. Based on the pre and post-reduction GST rates, the impact of denial of ITC and the details of outward supplies (other than zero-rated, nil rated, and exempted supplies) during the period from 15.11.2017 to 30.04.2019, the amount of net higher sale realization due to increase in the base prices of the products, despite the reduction in the GST rate from 18% to 5% with denial of ITC or the profiteered amount has come to 3, 85, 30, 314/- including the GST on the base profiteered amount. The details of the computation have been given by the DGAP in Annexure-22 of his Report. However, the DGAP vide his Supplementary Report dated 08.10.2020 has partially accepted the objection of the Respondent regarding under-reporting of the eligible ITC allowance - The DGAP has computed the input tax credit as a percentage of the total taxable turnover of the Respondent for the period July 2017 to October 2017 for the reasons cited in paras 26 27 of the DGAP report dated 31.01.2020. Further, with effect from 15.11.2017, Respondent was not allowed to avail ITC in terms of Notification No. 46/2017-Central Tax (Rate) dated 14.11.2017, Therefore, in terms of provisions of Section 16 (2) (a) Respondent was not eligible to take ITC w.e.f. 15.11.2017 on the strength of invoices received post 15.11.2017 when the aforesaid notification debarred the Respondent from ITC availment. As Respondent has received the taxable invoices post 15.11.2017 when he was ineligible to avail ITC in terms of Notification No. 46/2017-Central Tax (Rate) dated 14.11.2017, therefore the same cannot be considered for computation of denial of Input Tax Credit to net turnover ratio. The office of the DGAP has been charged with the responsibility of conducting a detailed investigation to collect the evidence necessary to determine whether both the above benefits have been passed on or not in terms of the provisions of Section 171 of the CGST Act, 2017 and the Rule 129. The above Rule has been framed by the Central Government under Section 164 of the CGST Act, 2017 read with Section 171 (3) which has the approval of the Parliament and all the State Legislatures and of the GST Council which is a constitutional body established under 101st Amendment of the Constitution and also has the approval of the Central Government and the State Governments. There is no provision in the above Act or the Rules which provides that the investigation shall be limited to the products against which complaint has been received. On the contrary, every product on which the rate of tax has been reduced is required to be investigated by the DGAP and report submitted to this Authority to determine whether the above benefits have been passed on as per the provisions of Section 171 of the above Act - The Respondent cannot get away by appropriating the benefit which he is legally bound to pass, on the ground that no complaint has been made in respect of the other products. Moreover, the benefit is not to be paid by him out of his own pocket, since it has been granted from the public exchequer to benefit the common consumers. Therefore, the above claim of the Respondent is not correct and hence the same cannot be accepted. The Respondent is trying to deliberately mislead by claiming that he was required to carry out highly complex and exhaustive mathematical computations for passing on the benefit of tax reduction which he could not do in the absence of the procedure framed under the above Act. However, no such elaborate computation was required to be carried out as the Respondent was to maintain the base price of the product which he was charging as of 14.11.2017 and then add 10.22% of the base price on account of denial of ITC and charge GST @5% w.e.f. 15.11.2017. Instead of doing that he has raised his prices by adding more than 10.22% of the base prices as is evident from the above discussion. It is clear from the above narration of facts and the law that no procedure or elaborate mathematical calculations are required to be prescribed separately for passing on the benefit of tax reduction. The Respondent cannot deny the benefit of tax reduction to his customers on the above ground and enrich himself at the expense of his buyers as Section 171 provides a clear cut methodology and procedure to compute the benefit of tax reduction and the profiteered amount. Therefore, the above plea of the Respondent is wrong, and hence, it cannot be accepted. The profiteered amount is determined as Rs. 3, 10, 56, 9391- as has been revised vide the DGAP s Supplementary Report dated 08.10.2020. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. Further, since the recipients of the benefit, as determined above are not identifiable, the Respondent is directed to deposit an amount of Rs. 3, 10, 56, 939/- in two equal parts of Rs. 1, 55, 28, 470/- each in the Central Consumer Welfare Fund and the State Consumer Welfare Funds as mentioned in the Table F Revised, as per the provisions of Rule 133 (3) (c) of the CGST Rules 2017, along with interest payable @ 18% to be calculated from the dates on which the above amount was realized by the Respondent from his recipients till the date of its deposit. The above amount of Rs. 3, 10, 56, 939/- shall be deposited, as specified above, within a period of 3 months from the date of passing of this order failing which it shall be recovered by the concerned CGST/SGST Commissioner. Penalty - HELD THAT:- The Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and hence he has committed an offence under section 171 (3A) of the CGST Act. 2017, and therefore, he is liable to penal action under the provisions of the above Section. However, a perusal of the provisions of Section 171 (3A) under which penalty has been prescribed for the above violation shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 15.11.2017 to 30.04.2019 when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, notice for the imposition of penalty is not required to be issued to the Respondent.

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• Income Tax

• 2021 (1) TMI 1008
  Additions made u/s 68 read with Section 115BBE - LTCG in penny stocks - HELD THAT:- It is recorded that There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels. The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. Lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order.

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• 2021 (1) TMI 1007
  Revision u/s 263 - assessee is not eligible to claim deduction under Section 10A for Assessment Year 2008-09 as the period of 10 years in the case of assessee expired with Assessment Year 2007-08 and the Assessment Year in case of assessee has to be reckoned from Assessment Year 1998-99 - HELD THAT:- In the instant case, the period of 10 consecutive years would start from Assessment Year 1995-96 and would end with Assessment Year 2008-09. It is pertinent to mention here that the period of 10 year commences from 1995-96 irrespective of the fact that whether or not the assessee has claimed benefit in between the Assessment Years and the period of 10 consecutive years therefore, in view of the plain language of the enactment cannot be extended. The Assessing Officer without examining the aforesaid aspect of the matter granted the benefit of deduction Section 10A of the Act to the assessee. The view taken by the Assessing Officer cannot but be said to be erroneous and prejudicial to the interest of the revenue. The view taken by the AO cannot be said to be a plausible view. It is also pertinent to mention here that no reasons have been assigned by the Assessing Officer for holding the assessee eligible for benefit of deduction under Section 10A - Since, the issue with regard to eligibility of the assessee for deduction under Section 10A of the Act for Assessment Year 2008-09 beyond a period of 10 consecutive years was not subject matter of order of assessment itself. Therefore, the same could not have been the subject matter of the appeal before the Commissioner of Income Tax (Appeals) and thus, in the fact situation of the case there was no bar in invoking the powers under Section 263 - The income of the assessee from staffing, which was not an income from export of computer software was also allowed by the Assessing Officer without any application of mind and without any enquiry. Therefore, the Commissioner of Income Tax has rightly invoked the powers under Section 263 of the Act in the fact situation of the case. - Decided against assessee.

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• 2021 (1) TMI 1006
  Assessment u/s 153A - Addition u/s 68 - Bogus LTCG - CIT(A) deleted the addition holding that the assessee has discharged the onus cast on it by proving the identity and creditworthiness of the share applicants and the genuineness of the transaction - HELD THAT:- A bare perusal of the assessment order shows that the addition is not based on any incriminating material found as a result of search but is based on the verification of the balance sheet of the assessee. The Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] has held that in absence of any incriminating material found as a result of search, no addition can be made in a completed assessment. Since the addition in the instant case is not based on any incriminating material found as a result of search in case of the assessee and it is a completed assessment, therefore, we are of the considered opinion that no addition could have been made by the AO in the instant case - Decided in favour of assessee.

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• 2021 (1) TMI 1005
  Addition u/s 14A - Non recording of satisfaction by AO - HELD THAT:- A.O while dislodging the claim of the assessee that as no part of the expenses debited in the profit and loss account was relatable to earning of the exempt dividend income, thus no disallowance under Sec. 14A was called for in its hands, had failed to record his satisfaction as regards the correctness of such claim, having regard to the accounts of the assessee. Rather, we find that the A.O had dislodged the claim of the assessee that no disallowance under Sec. 14A was liable to be made in its hands by holding a conviction that it was beyond comprehension that no expense incurred by the assessee could be related to earning of exempt dividend income. We are of the considered view that in the backdrop of the judgment in the case of Godrej Boyce Manufacturing Co. Ltd. [ 2017 (5) TMI 403 - SUPREME COURT] it was obligatory on the part of the A.O to have recorded his satisfaction, having regard to the accounts of the assessee, as to why the latter claim that no expenditure was attributable to earning of the exempt dividend income was not to be accepted. - Decided in favour of assessee.

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• 2021 (1) TMI 1004
  Rectification u/s 154 - Exemption u/s 11 denied - audit report in Form no.10B of the Act was filed belatedly - as per assessee since 85% out of the income received has been applied for the objects of the Trust, exemption u/s 11 of the Act is available - HELD THAT:- As decided in KASTURI FOUNDATION [ 2020 (11) TMI 962 - ITAT MUMBAI] the claim of the assessee that it has obtained the audit report prior to the date of filing of return of income and has filed audit report before the due date of return of income under section 139(1) of the Act has not been controverted by the learned Departmental Representative. Commissioner (Appeals) has also upheld the disallowance of exemption by simply stating that it is not a rectifiable mistake under section 154 of the Act. In our view, when the assessee has complied with the statutory provisions in terms of the CBDT Circular, the delay if any, in filing the audit report should have been condoned. In view of the aforesaid, we delete the disallowance made and allow assessee s claim of exemption under section 11 of the Act. Grounds raised by the assessee are allowed.

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• 2021 (1) TMI 1003
  Unexplained cash credit u/s 68 - loan taken from M/s. Annapurneshwari Rice Industries a partnership firm and one Mr. Nagaraj is a partner of this firm - HELD THAT:- Without examining Mr. Nagaraj, it is not possible to conclude that the sum which was added as unexplained cash credit in the hands of the assessee is unexplained cash credit. If on examination of Mr. Nagraj, admits having given Rs. 20 lakhs then the addition in question cannot be sustained. In such an event the assessee should be considered to have explained the source of the credit. In the set aside assessment it will not be permissible to examine the source of Mr. Nagaraj as that would amount to examining source of source. With these observations, we set aside the order of the CIT(A) and allow the appeal of the assessee for statistical purposes.

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• 2021 (1) TMI 1002
  Estimation of income - bogus purchases - CIT-A restricted addition at 12.5% being profit earned by assessee on unexplained/unverified purchases - HELD THAT:- We noticed that the CIT(A) has applied profit rate at 12.5% by following the decision in the case of CIT vs. Simit P. Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] wherein as held that where purchases were not bogus but were made from parties other than those mentioned in the books of account, not entire purchase price but only profit element embedded in such purchases can be added to income of the assessee. As the CIT(A) has applied a reasonable profit rate, we do not want to interfere in the same. Hence, the order of CIT(A) is upheld in both the years and appeals of assessee are dismissed.

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• 2021 (1) TMI 1001
  Validity of notice u/s 143(2) - assumption of jurisdiction by the AO/ACIT, Circle International Tax 2(2)(2) -curable defect u/s 292BB or not? - assessee is a non-resident Indian residing in the USA - HELD THAT:- Undisputedly, assessee being non-resident Indian has been filing her return of income as a non-resident Indian and in any case, assessment is required to be framed by the ITO (International Taxation) - notice in this case u/s 143(2) has never been issued by the jurisdictional ITO to the assessee. Perusal of the notice issued u/s 143 (2) goes to prove that the same has been issued by the Income-tax Officer, Ward 52(5), New Delhi who had no jurisdiction to issue the same. On the basis of notice issued u/s 143 (2) (supra) by the non-jurisdictional AO, the subsequent assessment proceedings on the basis of which assessment order dated 30.12.2018 was framed by the jurisdictional ITO are void ab initio and bad in law. Particularly when AO in para 3 of the assessment order has himself admitted that assessee is a non-resident Indian living in USA. Assuming wrong jurisdiction by issuing notice u/s 143 (2) by a non-jurisdictional AO and then framing the assessment by jurisdictional AO is an illegality which is not curable under the law and makes the entire assessment proceedings void ab initio. As per instructions issued by the Central Board of Direct Taxes (CBDT), ITO, International Taxation, Ward 2(2)(2) have the jurisdiction u/s 143 (2) and not the ITO, Ward 52 (5). When notice issued by non-jurisdictional ITO, Ward 52 (5) being quasi-judicial authority and assessment framed by jurisdictional ITO, Ward 2(2)(2) is not a mere regularity curable u/s 292BB of the Act because issuance of notice u/s 143 (2) is a foundational step to initiate and complete the assessment proceedings, so when foundation is missing subsequent assessment framed in this case is not sustainable in the eyes of law being void ab initio, hence liable to be quashed. - Decided in favour of assessee.

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• 2021 (1) TMI 1000
  Penalty u/s. 271(1)(c) - estimation of income - bogus purchases - CIT(A) has sustained the addition at 12.5% of the bogus purchases - HELD THAT:- Penalty u/s. 271(1)(c) cannot be levied when the income has been estimated. The Ld. DR could not controvert the observations of the Ld. CIT(A) with any cogent evidence except relying on the A.O s order. Accordingly, we are not inclined to interfere with the order of the Ld. CIT(A) who relied on the judicial decisions and passed a reasoned order in directing the assessing officer to delete the penalty. See HARIGOPAL SINGH VERSUS COMMISSIONER OF INCOME-TAX. [ 2002 (8) TMI 65 - PUNJAB AND HARYANA HIGH COURT] - Grounds of appeal raised by the revenue are dismissed.

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• 2021 (1) TMI 999
  Exemption u/s 11 - denying of registration u/s 12AA - On examination of financial statements of last three financial years, the ld. Commissioner of Income Tax, Exemption, Pune observed that the donation received towards corpus funds escaped assessment to tax and, therefore, denied the registration - HELD THAT:- The grant of registration and the issue of assessment or exemption u/s 11 of the Act are separate and distinct. The process of registration is not on occasion for deciding the issue of exemption of donation u/s 11 of the Act. The issue of exemption cannot be examined during the process of registration CIT-E had lost sight distinction between the process of registration and the exemption or assessment of income u/s 11 of the Act. Therefore, the reasoning of the ld. Commissioner of Income Tax, Exemption, Pune in denying the grant of registration u/s 12AA of the Act cannot be sustained in the eyes of law. In the circumstances, we set-aside the order of the ld. Commissioner of Income Tax, Exemption, Pune and direct the ld. Commissioner of Income Tax, Exemption, Pune to grant the registration u/s 12AA of the Act. Accordingly, the appeal of the assessee is allowed.

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• 2021 (1) TMI 998
  Addition u/s 68 - unsecured loan - HELD THAT:- We consider it just and proper to send back this issue to the file of the AO for giving one more opportunity to the assessee to prove the genuineness of the relevant loans. As rightly submitted by assessee in this regard, the total loan represented opening balance to the extent of Rs. 10,66,42,149/- and the same, therefore, cannot be added to the total income of the assessee in the year under consideration as unexplained cash credit u/s 68. As regards the balance loan amount AO is directed to give one more opportunity to the assessee to explain the same by establishing the identity and capacity of the concerned loan creditors as well as the genuineness of the relevant loan transactions by adducing the necessary supporting evidence. AO is directed to decide this issue afresh to the extent of loan after necessary verification. Ground No. 1 to 3 of the revenue s appeal are thus treated as partly allowed while ground no. 1 of the assessee s cross-objection is treated as allowed for statistical purpose Disallowance of finance cost incurred by the assessee society - as observed that the finance cost claimed by the assessee under Capital-Work-in- Progress was disallowed by the authorities below on the ground that the assessee society was not registered u/s 12AA - HELD THAT:- As claimed by the assessee society by way of raising additional ground in its cross-objection which is admitted by us, it has been granted registration u/s 12AA of the Act w.e.f. A.Y. 2012-13 by CIT(Exemptions), Kolkata vide [ 2020 (8) TMI 49 - ITAT KOLKATA] and, therefore, the finance cost in question paid on the loans utilised by assessee society for the charitable purpose cannot be disallowed being application of income. The AO is accordingly directed to verify this claim of the assessee and allow appropriate relief to the assessee on this issue. Disallowance u/s 40A(3) - HELD THAT:- Issue covered in favour of the assessee by the various decisions of the Tribunal including the decision of Hyderabad Bench of this Tribunal in the case of Sree Education Society [ 2016 (4) TMI 84 - ITAT HYDERABAD] wherein it was held that no disallowance u/s 40A(3) can be made while determining the income u/s 11 of the Act of the assessee which is registered u/s 12AA of the Act. Respectfully following the said decision of this Tribunal, we delete the disallowance made by the AO u/s 40A(3) of the Act and confirmed by the Ld. CIT(A) in the case of the present assessee society which is now duly registered u/s 12AA.

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• 2021 (1) TMI 997
  Suppression of profit made by way client code modification - stock broker who carried out the client code modification was a group concern of the assessee and therefore the contention that there occurred a punching error in large scale entering the trade is remote - CIT-A deleted the addition - HELD THAT:- As decided in M/S PAT COMMODITY SERVICES P. LTD [ 2015 (8) TMI 973 - ITAT MUMBAI] AO has mainly relied upon the report given by the MCX and has drawn adverse conclusions without bringing any material to support his view. CIT(A) has also pointed out that modifications carried out by the assessee works out to around 3% of the total transactions only and in our view, the said volume, in fact, vindicates the explanation of the assessee. Further none of the clients has been found to be bogus and all of them have complied with KYC norms, meaning thereby the identity of all the clients stand proved. None of them has disowned the transactions and all of them have also declared the income in their respective returns of income. All these factors, in our view, support the contentions of the assessee. We are of the view that the Ld CIT(A) was justified in deleting the additions - Decided in favour of assessee.

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• 2021 (1) TMI 994
  Assessment u/s.158BC - limitation to complete the assessment - Reference to limitation provisions of section 158 BE - HELD THAT:- Merely because no seizure was effected on the new valuables found in the search carried out just to extend the time limit to pass the assessment order. Keeping in view of the facts and circumstances explained above, after examining the three panchnamas dated 23.3.1999; 21.5.1999 and 16.7.1999, we are of the considered view that search was validly concluded only in July, 1999 and assessment was separately framed within the time limit which expires only on 31.7.2001 being 2 years from the end of the month in which the search was conducted as the assessment order was passed on 25.7.2001. Legal grounds raised by the assessee is not supported by any valid documentary evidences, but on the contrary, revenue s case is well supported by the documentary evidences, as per the paper books filed by department also. The case laws cited by assessee are having the different facts and are not relevant to the present case. Therefore, the legal issue involved decided against the assessee and in favour of the Revenue . Unexplained investments - The assessee was the Director at that time as the audited balance sheet of M/s Esam Trading Company Ltd. as on 31.3.1993 filed with the Registrar of Companies, New Delhi. Therefore, keeping in view of the facts and circumstances as explained above, with the support of documentary evidences, we are of the view that investment of Rs. 37 lacs made by the assessee as per the documents seized from his residence during the search, hence, the addition in dispute has been rightly made by the AO as undisclosed income of the assessee which was also rightly upheld by the Ld. CIT(A). Hence, we uphold the order of the Ld. CIT(A) on this issue of undisclosed income amounting to Rs. 37 lacs on account of investments in M/s Esam India Ltd. Commission income unexplained - In response to the questionnaire dated 17.6.2001 the assessee recorded his statement dated 16.7.1999 by stating that the only investment in the share capital of M/s Esam India Ltd. has been made in 1991-92 which is a cash deposit in company account amounting to Rs. 35 lacs. This was made from his undisclosed and unaccounted income, which he was offering for taxation and he shall file the return of income declaring such amount and pay the necessary taxes on this income. We are of the view that in view of the statement made by the assessee and non-furnishing of any evidence showing that assessee has not received this commission income. The AO has rightly made this addition and Ld. CIT(A) has also rightly upheld the same, hence, we uphold the order of the Ld. CIT(A) on this issue. Addition on account of foreign travels expenditure - The assessee has not filed any evidence in support of his claim on this addition and by merely denying that assessee has not incurred any expenditure. Hence, this addition is liable to be made in the absence of any evidence filed by the assessee. Addition on account of foreign travel expense has rightly been made by the Assessing Officer and upheld by the Ld. CIT(A), because the assessee has not produced any documentary evidences supporting his claim. Addition on account of deposit in the bank - AO has provided opportunity to the assessee to explain this deposits, but the assessee has not availed the same and has not filed any evidence, even no explanation regarding this deposit has been given by the assessee. Therefore, the revenue authorities have rightly treated the same as undisclosed income of the assessee, hence, we uphold the order of the Ld. CIT(A) on this issue. Addition on account of expenditure on repair and renovation on the accommodation owned by the Central Government of India - Revenue has made this addition on the basis of the documents which were found and seized at the residential premises of the assessee and from the office premises of the company Esam India Ltd. wherein 99.98% equity shares is held by the assessee. These documents were recorded in respect of repair and renovation. Assessee has not explained the source of such expenses and hence, we are of the view that in the absence of any explanation and documentary evidences, the AO has rightly made the addition in dispute and Ld. CIT(A) has rightly upheld the same, therefore, we uphold the order on this issue and upheld the impugned order of the Ld CIT(A) on this issue. Addition of expenditure on purchase of cell phones and treated the same as undisclosed income - On the basis of Annexure A-1 seized during the search operation in the case of the assessee on 23.3.1999 for the purchase of cell phones, after giving opportunity to the assessee. The assessee has not attended the AO and not filed any reply. Therefore, in our view this addition has rightly been made and upheld by the Ld. CIT(A). Hence, we uphold the order of the Ld. CIT(A) on this issue. Addition of investments in purchase of cars and treated the same as undisclosed - No doubt the assessee has denied the ownership of these vehicles, but has not substantiated his version with the support of any evidence. On the contrary, the Rolls Royce car no. DLIC1233 and Ferrari and Contessa were found and mentioned in the documents seized from the premises of the assessee owned by the assessee and the assessee has not able to explain the source of investments in these vehicles. Therefore, we uphold the impugned order on this issue. Unexplained expenditure - CIT-A unexplained expenditureheld that opportunity given by the AO was not availed by the assessee and due to lack of evidences supporting the claim of the assessee, the Ld. CIT(A) has given the relief of Rs. 2,20,940/- and the balance of Rs. 36,53,504/- was rightly been upheld by the Ld. CIT(A) as undisclosed income of the assessee for this block period. In spite of the fact that the assessee remained non-cooperative before the revenue authorities, sufficient relief has been given to the assessee, hence, no interference is called for in the well reasoned order of the Ld. CIT(A) on this issue, therefore, we uphold the finding of the Ld. CIT(A) on this issue. Addition on account of deposits in the Bank of Maharastara and treating the same as undisclosed income - The chain of ownership and authorized signatories of each of these concerns as brought out by the AO in the assessment order clearly prove that the main person to whom all these accounts belonged is the assessee only as this chain started with the bank account of Kudos Exports Pvt. Ltd. which is a 100% subsidiary of Esam India Ltd. wherein the assessee has ownership of 99.98% equity. Ld. CIT(A) has elaborately discussed the same at page no. 55-56 of the impugned order and held that all these firms were found to be non-existence at the given address and therefore, in our view the AO has rightly been made the addition which the Ld. CIT(A) has upheld. Hence, we uphold the impugned order on this issue. Addition on transactions recorded in the diary alleged to be handed over by Ms. Asmita Aggarwal on 16.7.1999 and treated the same as undisclosed income of the assessee - This addition has been made by the revenue authorities on the basis of documentary evidences and especially to the assessee who remained non-cooperative with the revenue authorities and for lack of evidence. Assessee has not discharged his burden of his onus laid upon him to prove that this diary did not belong to him, but he failed to prove the same and in the absence of any valid explanation and evidence, the AO has rightly made the addition found recorded in the diary and which has been rightly been upheld by the Ld. CIT(A). Undisclosed investments in house hold items - Assessee was requested to explain the source of acquisition of these traveler cheques failing which an amount of Rs. 38,500/- was proposed to be treated as undisclosed income. Vide his reply dated 24.7.2001 assessee has stated that the traveler cheques were purchased out of income earned out of India. During the block assessment proceedings, assessee has not brought on record any information showing that he in fact earned income out of India during the block period. The AO as well as Ld. CIT(A) has rightly made the additions. Undisclosed foreign exchange - AO has made the addition on the basis of seized material and after giving opportunity to the assessee, which the Assessee has not availed the same and the Ld. CIT(A) has rightly upheld this addition in dispute by dismissing the ground of the assessee. Undisclosed of payment made to Ms. Rita Luther - AO has made the addition on the basis of seized material mentioned in the assessment order and the impugned order. No contrary evidence has been filed by the assessee. Therefore, the AO has rightly made this addition and Ld. CIT(A) has rightly upheld the same. Addition on account of profit of M/s Delhi Exports - In reply to the question raised by the AO the asessee has not furnished any proof of having filed the income tax return of his concern M/s Delhi Exports, hence, Assessing Officer has made the addition in dispute. Ld. CIT(A) has also upheld the impugned addition on the basis of the finding given by the AO. We have gone through the orders passed by the revenue authorities and we are of the view that assessee has not furnished any proof, which is contrary to the evidence collected by the revenue authorities therefore, in the absence of the same the addition in dispute is deserve to be upheld, hence, we uphold the same Addition on account of profit of M/s Globetrotters - To negative the version of the revenue authorities assessee has not given any explanation whatsoever the amount of Rs. 3.34 crores is verifiable from the seized documents is held to be correctly added by the AO to the undisclosed income of the assessee, which was upheld by the Ld. CIT(A). Hence, we uphold the action of the Ld. CIT(A) which has been made on the basis of the seized material. Undisclosed income on account of receipt by M/s Vino Veritas - AO is of the view that the assessee is a real beneficiary of the amount transferred to the order of Vino Veritas and added this amount as undisclosed income of the assessee. Ld. CIT(A) has also upheld the order of the Assessing Officer by holding that assessee has not able to explain the source of Rs. 7,67,30,400/- having been transferred from M/s Esam India Ltd. to Vino Veritas. After going through the orders passed by the Revenue authorities, we are of the view that revenue authorities have righty made the addition in dispute for lack of evidence and non-cooperation of the assesee, hence, there is no need to interference in the impugned order on this issue, therefore, we uphold the same Addition on account of receipts from Sh. SC Bharjatia - The assessee is a real beneficiary of this amount, hence, we are of the view that the findings given by the ld. CIT(A) is as per record and evidence and therefore, the same is upheld. Unexplained payment made by M/s Kudos Exports Ltd, deposits made with General Credits Finance Ltd., payment to Sh. Arjun Amla upheld because for lack of evidence on the issue in dispute filed by the assessee Assessing Officer as well as Ld. CIT(A) has given full opportunity to the assessee for substantiating his claim on legal as well as on merits, but the assessee remained non-cooperative before the revenue authorities, hence, Assessing Officer has made the additions in dispute on the basis of the search material, after confronting the same to the assessee, but the assessee has not substantiated his claim by filing any evidence before the authorities below. Therefore, no interference is called for in the well reasoned orders of the revenue authorities - Decided in favour of revenue.

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• 2021 (1) TMI 993
  Disallowance of depreciation of software @60% - Claim allowed by the ld AO @25% - CIT(A) allowed the claim of assessee - HELD THAT:- DR could not show us any reason that why we should deviate from the orders of the coordinate bench in assessee s own case, as far as the rate of depreciation on the software is concerned. With respect to the existence of the work in progress we have already dealt with this issue earlier wherein reading the management discussion and analysis in the director s report clearly shows that assessee has several of the software, it cannot be said that assessee does not have the asset on which depreciation is claimed. Naturally, when the software is developed in-house as stated by the assessee, there cannot be any bill for purchase of the software. The assessee has maintained the books of accounts and shown the work in progress therein which is evident from the fixed assets schedule, on which depreciation is year by year by year claimed and allowed. Though the learned assessing officer has challenged the existence of the software for the first time during the year, however, the assessee has been allowed depreciation at least at the rate of 25% on the software in earlier years also. Thus, the learned CIT A has correctly held that it is not a fictitious asset. Accordingly, we uphold the order of the learned CIT appeal while allowing depreciation on the software holding it to be an actual asset and allowing depreciation thereon at the rate of 60% following the order of the coordinate bench in assessee s own case for earlier years. Addition u/s 68 - cash credit in the books of accounts - HELD THAT:- For proving the identity of the party, the assessee submitted the permanent account number, and income tax jurisdiction of the investor company is, Bank statement of the investor company is and copies of the returns of those investors. With respect to the creditworthiness and genuineness of the investor, assessee submitted the audited financial statement of the investor company and bank statement showing the relevant entries of Davidson credits of the investor company is to show the sources of the funds. With respect to the genuineness of the transaction, assessee once again submitted the confirmations of the above parties were issued the convertible warrants. As assessee has submitted the complete details before the assessing officer and therefore the initial onus cast on the assessee has been discharged. Further, the learned assessing officer has also not made any enquiry with respect to the above depositors. The inquiries made in the subsequent years clearly show that assessing officer is satisfied with respect to the creditworthiness and the genuineness of the transaction of issue of shares warrant of Rs. 220 crores. No infirmity in the order of the learned CIT A in deleting the above addition - Decided in favour of assessee.

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• 2021 (1) TMI 992
  NP rate determination - net result of trading operations of assessee JV - applying net profit rate of 8% on contract receipts by assuming that the contract work was executed by the assessee itself and not by its lead partner M/s KIEL though the payments made to it were not doubted - two entities joined together and formed a Joint Venture (JV) for making a bid for the supply and installation, testing Commissioning of Signaling equipment - furnishing bills and supporting vouchers in respect of expenses claimed by KIEL - HELD THAT:- M/s KIEL is a separate legal entity and assessee had neither access to books of accounts of KIEL nor had authority to direct its office bearers to provide books of accounts to be produced before AO. Therefore, during the course of assessment proceedings, it was requested by the assessee before AO that direct enquiry may be made from KIEL by issuing notice u/s 133(6) of the Act and it may be directed to furnish books of accounts. No action was taken by AO and rather adverse inference was drawn against the assessee and it was presumed that assessee JV may have executed the project, which is quite contrary to the facts on record. Further without having any material in possession and also without bringing on record any comparable case, profit rate of 8% is applied. CIT(A) while upholding this exorbitant profit rate has observed that in the case of M/s KIEL the profit rate of 8% is applied in its assessment completed u/s 143(3) of the Act and failed to appreciate the fact that such a high rate of profit as applied was deleted in appellate proceedings in the case of M/s KIEL. Remedial action u/s 264 not taken by M/s KIEL - As has been observed by ld. CIT(A) making it as a ground for not following the earlier order of this bench of ITAT, in this regard, it is submitted that the return of income for AY 2010-11 was originally filed by M/s KIEL on 25.9.2010 and the same was revised on 23.3.2011 which is also available at page No. 16 of the paper book. As per Section 264 of the Act, application can be filed by the assessee within a period of one year from the communication of order in question. In the present case, since no order was passed in the case of M/s KIEL, thus there was no occasion with M/s KIEL to file any petition u/s 264 of the Act. Further the assessee has the option of filing of appeal, thus had pursued the appellate proceedings. Even under the identical circumstances, the Coordinate Bench has allowed the appeal in one of the group Joint Venture namely M/s Kiran Tirupati Mangla JV [ 2016 (5) TMI 1542 - ITAT JAIPUR] and therefore, under such circumstances, assessee was confident of getting the relief in appellate proceedings. Joint venture was entered into for getting the eligibility for participating in the tender and accordingly in the Joint Venture Agreement, specific role of the parties was defined i.e. the execution of entire contract work was to be done by KIEL that too from its own resources, manpower, equipment etc., and other party Eliop, SA would be responsible for providing the technical support. Since the receipts in the year were solely towards the execution of the work therefore, entire receipts were owned by M/s KIEL and profit earned thereon was offered by M/s KIEL for taxation in the return of income filed in due course after incorporation such income in its financial statements. Now making trading addition in the case of assessee on the same receipts again by holding the same as its income, amounts to double taxation of an income, therefore, in our view, the said act of the Revenue is contrary to the provisions of law. We allow the appeal of the assessee and direct to delete the addition so made and confirmed.

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• 2021 (1) TMI 991
  Addition u/s 68 - unexplained cash deposits - Non maintenance books of accounts - As the assessee filed return of income U/s. 44AD i.e. under presumptive tax scheme, the assessee was not maintaining books of account - HELD THAT:- The Co-ordinate Bench of the Tribunal in the case of Shri Kokarre Prabhakara vs. ITO [ 2020 (9) TMI 536 - ITAT BANGALORE ], in a similar situation where the assessee had declared income under section 44AD of the Act without maintaining books and the Assessing Officer had invoked the provisions of section 68 of the Act, the Tribunal deleted the addition by placing reliance of various decisions of the Tribunal holding that where the returns are filed on the basis of income declared under section 44A of the Act, there cannot be any application of section 68 of the Act. Thus, in the back drop of the facts, relevant provisions of the Act and case laws discussed above, no addition under section 68 can be made in the instant case. We find merit in ground raised by the assessee in appeal.

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• 2021 (1) TMI 990
  Revision u/s 263 - provision for expenses disallowable or it is provision for contingent liability - HELD THAT:- Finding of the CIT-2, Pune that the provision for expenses is contingent liability is not based on any material, it is mere ipse dixit - impugned order does not contain an allegation by the ld. Pr. Commissioner of Income Tax-2, Pune that the Assessing Officer had not enquired into this issue during the course of assessment proceedings. Thus, it is clear that it is not even case of learned CIT that AO had not enquired into this case. Therefore, the case even does not fall within ambit of Explanation 2 to sub-section (1) of section 263 of the Act inserted by Finance Act, 2015 w.e.f. 1.6.15. Considering all the above facts, it cannot be said that the assessment order is erroneous causing consequence prejudice to the interests of the revenue. - Decided in favour of assessee.

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• Corporate Laws

• 2021 (1) TMI 996
  Seeking restoration of Company s name in the Register maintained by the Registrar of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- The failure of the Company in filing the statutory returns and statements was due to inadvertence and was not intentional. Report of the RoC has been received. We are satisfied with the reasons shown by the Applicant for restoration of the name of the Company in the register of companies maintained by the Respondent. Admittedly, the relevant documents which are to be filed, are ready with the Company and the Company is willing to file the same, if so permitted - The Company has not deposited heavy cash in its Bank Account during the period of demonetization as noticed from the annexed Affidavit along with the Application. We are satisfied with the reasons shown by the Applicant for restoration of the name of the Company in the register of companies maintained by the Respondent. It is deemed to be a fit case to order restoration of the Company by RoC (H) in the interest of the Company, its shareholders and the Creditors - Registrar of Companies, the respondent herein, is ordered to restore the original status of the Company as if the name of the company has not been struck off from the Register of Companies and take all consequential actions like change of company s status from off to Active (for e-filing), to restore and activate the DINs if applicable, to intimate the bankers about restoration of the name of the company so as to defreeze its accounts - application allowed.

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• 2021 (1) TMI 989
  Approval of scheme of amalgamation - section 230-232 of Companies Act - HELD THAT:- It is noticed from the material on record that the Scheme appears to be fair and reasonable and does not violate any provisions of law and is not contrary to public policy or public interest. In the absence of anything inherently abhorrent in the Scheme, there are no reason why the Scheme should not have the imprimatur of this Tribunal. Since all the requisite statutory compliances have been fulfilled, scheme is approved absolutely - application allowed.

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• 2021 (1) TMI 988
  Approval of scheme of amalgamation - seeking for dispensation with the meeting of equity shareholders and unsecured creditor - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- The meeting of the Equity Shareholders and Unsecured Creditors of the Transferor Company be dispensed with - the Applicant Companies shall serve the notice of Application along with a copy of the Scheme upon (i) Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai; (ii) Registrar of Companies, Maharashtra, Mumbai; (iii) Income Tax Authority within whose jurisdiction the Applicant Companies assessments are made in terms to section 230(5) of the Act and as per Rule 8 Rules. If no response is received by the Tribunal from the regulatory authorities within 30 days of the date of receipt of the notice it will be presumed that the Authorities have no objection to the Scheme - the First Applicant Company is also directed to serve notice of Application along with a copy of the Scheme upon the Official Liquidator pursuant to Section 230(5) of the Act. Application allowed.

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• 2021 (1) TMI 987
  Seeking restoration of name of the Company in the Register of Companies, maintained by the Registrar of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- This Tribunal is of the opinion that it would be just and equitable to order restoration of the name of the Company in the Register of Companies. The Registrar of Companies, the respondent herein, is ordered to restore the original status of the Appellant Company, as if the name of the Company has not been struck off from the Register of Companies and take all consequential actions like change of company s status from Strike off to Active (for e-filing) and to intimate the bankers about the restoration of the name of the company so as to defreeze its accounts - Application allowed.

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• Law of Competition

• 2021 (1) TMI 986
  Scheme of amalgamation - seeking dispensation of meetings of the Equity Shareholders of the Applicant Companies, meetings of unsecured creditors of Transferor No.3 and Transferee - Applicant Companies - seeking dispensation of secured creditor of the Transferee pursuant to the receipt of the individual consent affidavits consenting to the scheme - seeking waiver of right to attend the meeting of equity shareholders and unsecured creditors and consent of the secured creditor, for the purpose of considering and if thought fit, approving, with or without modification - sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- The Applicant Companies shall in compliance with subsection (5) of section 230 and Rule 8 of the Companies (CAA) Rules, 2016, send a notice of meetings under subsection (3) of section 230 read with Rule 6 of the Companies (CAA) Rules, 2016 in Form No. CAA.3, along with a copy of the Scheme of Amalgamation, explanatory statement and the disclosures mentioned under Rule 6, wherever applicable, to (i) Central Government through the Regional Director, North Western Region, (ii) Registrar of Companies, (iii) concerned Income Tax Authorities, and (iv) the Official Liquidator (in case of First Applicant Company, the Transferor Company) stating that the representations, if any, to be made by them shall be made within a period of 30 days from the date of receipt of such notice, failing which it shall be presumed that they have no objection to make on the proposed Scheme of Amalgamation. The aforesaid statutory authorities, who desire to make any representation under sub-section (5) of section 230 shall send the same to this Tribunal within a period of 30 days from the date of receipt of such notice, failing which it shall be deemed that they have no representation to make on the proposed Composite Scheme of Arrangement. Considering the consent affidavits as received from the equity shareholders, unsecured creditors of the Transferor No.2 and Transferee and secured creditor s consent of the Transferee and upon waiving their individual rights for attending the meeting for considering and if thought fit with or without modification the scheme of amalgamation and considering the certificate of Chartered Accountant and all the consents are in order and hence the meeting of the equity shareholders of all the Companies are dispensed with. Application allowed.

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• Corporate Laws

• 2021 (1) TMI 985
  Restoration of the name of the Appellant Company in the register of the Registrar of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- That the Income Tax Department has filed its Report and has reconfirmed this fact from their records that nil taxes were paid or negative income was shown by the Appellant Company for the Assessment Years from 2012-13 to 2017-18 - That the NIL revenue from operations in Balance Sheets, NIL income shown in the Income Tax Returns and insignificant entries in bank statements - all reflect that the Appellant Company was neither in operation nor doing any significant business at the time when its name was struck off from the register of RoC. It is worthwhile to refer to the Judgement of Hon ble NCLAT in the matter of Alliance Commodities Private Limited Vs. Office of Registrar of Companies, West Bengal [2019 (7) TMI 1467 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] where it was held that A Shell Company or a Company having assets but advancing loans to sister concerns or corporate persons for siphoning of the funds, evading tax or indulging in unlawful business or not abiding by the statutory compliances cannot be allowed to invoke this expression or otherwise which would be a travesty of justice besides defeating the very object of the Company. This Bench is not inclined to interfere with the striking off action taken by the RoC against the Appellant Company under Section 248(5) of the Companies Act 2013 - Appeal dismissed.

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• 2021 (1) TMI 984
  Seeking restoration of name of the Company in the Register of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- The counsel for applicants has filed provisional balance sheet for the financial years 2017-18 and 2018-19. He has also filed provisional income tax returns for the financial year 2017-18 and 2018-19 along with memo dated 17.08.2020. As seen from the provisional profit and loss statement for the year ended 2017-18 the company is having revenue from operations at Rs. 2,20,000/-. As seen from the provisional profit and loss statement for the year ended 2018-19 the Company is having revenue from operations is shown at Rs. 2,85,000/- This shows the company is ongoing concern. The applicants complied the requirements pointed out by the ROC, in his report. Therefore there are grounds to restore the company - Further, it is also seen that the latest Balance sheet as on 31st March 2017 of the Company. The Company is having total Assets (Non-current and current) at Rs. 33,124/- and Revenue from operations is at Rs. 1,95,000/- as on 31.03.2017. After going through the provisions of Section 252 (3) of the Companies Act, 2013, this Tribunal is of the view that the Company was in existence and it is a going concern and name of Company to be restored in the Register of Companies as maintained by RoC - Registrar of Companies, the respondent herein, is ordered to restore the original status of the Applicant Company as if the name of the company has not been struck off from the Register of Companies and take all consequential actions like change of company s status from strike off to Active (for e-filing), to restore and activate the DINs if applicable, to intimate the bankers about restoration of the name of the company so as to defreeze its accounts - Application allowed.

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• 2021 (1) TMI 983
  Approval of scheme of Amalgamation - seeking directions for convening meetings of equity shareholders and unsecured creditors of Transferor Company - seeking directions to dispense with the meeting of equity shareholders and to order convening meetings of Secured and unsecured creditors of Transferee Company - HELD THAT:- This is the first stage Application seeking convening meetings of Shareholders and Unsecured Creditors of Transferor Company and further requesting for dispensation of meeting of Shareholders and convening meetings of Secured and Unsecured Creditors of Transferee Company as all the shareholders have given their consent in the form of sworn Affidavits. The proposed scheme in question prima facie satisfy fundamental requirements for its sanction, subject to approval of this Tribunal. The Applicant Companies are stated to be following all provisions of Companies Act, 2013, and rules made thereunder. In any case, dispensing with meeting of shareholders of Transferee Company would not deprive any aggrieved party to approach this Tribunal at any point of time, when the approval of scheme in question finally comes for consideration. Therefore, the Joint Company application deserves to be allowed. Application allowed - various directions issued regarding holding and convening of various meetings and also directions regarding issuance of various notices, issued.

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• Securities / SEBI

• 2021 (1) TMI 995
  Levy of penalty for Non disclosures as required under the LODR Regulations - appellant had issued non-convertible debenture securities - CIRP proceedings were ongoing - penalty imposed for violating Regulations 52(4) and 54(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ( LODR Regulations, 2015 - whether the impugned order imposing penalty upon the appellant for alleged contravention during the period prior to the approval of the resolution plan could be passed by the adjudicating officer? - HELD THAT:- In clear terms of the resolution plan, the show cause notice could not be issued to the appellant for the alleged contravention relating to the period prior to the acquisition and, consequently, the impugned order could not be passed against the appellant. What could not done by SEBI when the moratorium under section 14(1) of the IBC was in force cannot certainly be done after a resolution plan is approved and becomes binding on all creditors including government and local authority under section 31 of the IBC. We are of the opinion that once a resolution plan has been approved it becomes binding on all creditors including the government and local authorities including the respondent under section 31(1) of the IBC. It is no longer open to the respondent to issue a show cause notice or adjudicate and pass an order of penalty upon the appellant. Consequently, the impugned order cannot be sustained and is quashed. The appeal is accordingly allowed with no order as to costs.

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• 2021 (1) TMI 982
  Violator indulging in serous act of misusing client s securities - appellant was expelled from the membership of the respondent exchange and also declared as a defaulter - HELD THAT:- All the violations are admitted by him. No reply was submitted to the show cause notice issued regaring violation noted in the inspection for the year 2017-18. Considering the request of the appellant that he wanted to surrender his license afer redressing the complaints the investors, the Committee of respondent no. 1 time and again granted him time in hearing of the proceedings.Ultimately finding that the complaints were not resolved completely the impugned order was passed. As seen that after declaration of the appellant as a defaulter more complaints of the investors are pouring in with the respondent nos.1 and 2. The appellant was earlier penalized for similar violations for the financial years 2015-16, 2016-17 and 2017-18. In the circumstances in our considered view the appellant is a continuous violator much less a repeat violator. Besides respondent no 1 had already granted more than sufficient opportunity to redress the complaints of the investors, as it pleaded that it wanted to surrender the license. Therefore in our view this is not a fit case for interference in the impugned order. Hence the appeal is hereby dismissed.

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• Insolvency & Bankruptcy

• 2021 (1) TMI 981
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - outstanding sum has been claimed at Rs. 11,30,146/- and date of default has been claimed as Financial Year 2018 - HELD THAT:- In case of proceedings under Section 9 of IBC, 2016 or section 8 of IBC 2016 of significant nature. It has been observed by higher judicial forums that requirement of service of notice under Section 8(1) of IBC, 2016 is crucial so that any entity is not put into CIRP in a light manner. Rule 5 (Application to Adjudicating Authority) Rules, 2016 provides that Operational Creditor shall deliver to the Corporate Debtor. Demand notice in form-3 or copy of invoice attached with the notice in Form-4. Form No.3 and Form No.4 have been prescribed which provide for submission of all relevant information to the Corporate Debtor alongwith supporting documents so that the Corporate Debtor can raise dispute, if any, under Section 8(2) of IBC, 2016 within 10 days from the receipt of such notice. In the present case, so-called notice does not contain such details / information nor any documents which are required to be given to the Corporate Debtor alongwith such notice have been attached. In a number of cases, coordinate benches as well as Hon ble NCLAT has taken a view that such notice is necessarily to be in the prescribed forms and in absence thereof, application filed under Section 9 was liable to be dismissed. As stated earlier, neither specified form has been delivered nor contents of such notice meet the requirements of law - the present application is liable to be dismissed as it is an incurable defect. Application disposed off.

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• 2021 (1) TMI 980
  Seeking direction to the Respondent, i.e. Bank of India, to release an amount of Rs. 100 Lacs held in the No Lien Account , for the purpose of Insolvency Resolution Process - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is noted that the Corporate Debtor, to show their commitment and bonafide towards resolution plan (i.e. one time settlement proposal) has furnished a Cheque for Rs. 1 crore to the respondent/ bank on 12.07.2017 along with a letter with a request to keep the proceeds in No Lien Account and instructed that the said amount may be adjusted / utilized upon approval of resolution plan (i.e. one time settlement), however, in any case, it should not be adjusted towards interest/ other charges/ principal till then. The company is committed to bring the balance amount to the extent of 10% as per their commitment once approval is accorded by the lead bank. Before the date of commencement of CIRP, the respondent bank has not adjusted this amount in the loan account of the corporate debtor, whereas it has kept the same in a separate account as instructed by the corporate debtor. It shows that the bank has agreed for no lien to this amount till OTS proposal is approved by the bank. Hence, on initiation of CIRP, the amount kept in a separate account as No Lien Account by the respondent bank is the asset of the corporate debtor and the RP has to deal with the same as per the provisions of the IB Code. Application allowed.

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• 2021 (1) TMI 979
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of debt or not - existence of debt and default or not - Time Limitation - HELD THAT:- The date of default is 06.03.2019 and the present application is filed on 16.03.2020. Hence the application is not time barred and filed within the period of limitation - The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - present application is filed on the Performa prescribed under Rule 6 of the Insolvency and Bankruptcy Code, 2016 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 r/w Section 9 of the code and is complete. It is clear that the default has occurred and the debt is due and payable. Further, the present application has remained uncontroverted with respect to the claim of the applicant. On the contrary, the corporate debtor in its Section 10 application itself admitted the claim of the present applicant of Rs. 3.5 Lakh which is recorded vide order dated 16.12.2020. Hence the application deserves to be admitted and the applicant is entitled to claim the admitted amount which is still outstanding and has remained unpaid till date. Therefore the applicant is admitted. Application admitted - moratorium declared.

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• 2021 (1) TMI 978
  Seeking relief asking for closure of the liquidation process without dissolving the Corporate Debtor as long as Section 54 of the Code passed by the Parliament is in force - Can such a relief be passed by this Authority by looking at the liquidation Regulations issued with the power conferred upon IBBI under section 240 (Regulation making power) and Section 196 (Powers and Functions of IBBI) of the Code? - HELD THAT:- If the Code is carefully read, it could be ascertained that wherever the Code felt that IBBI assistance is required, it has been specifically stated as specified by the Board or in such manner as may be specified or prescribed we must at the cost of repetition reiterate, this clause is indicative of the fact that beyond the procedure inbuilt in the Code, if additional mechanism or paraphernalia is required to accomplish implementation of the statute, there it has been mentioned as as specified by the Board or in such manner as may be specified or prescribed . The point to remember is, it is for supplementation, not for supplantation. The purpose and object of the Regulations issued by IBBI is to carry out the provisions of the Code, not for carrying out the purpose of the Code. It is in a way carrying out the provisions of Code will tantamount to carrying out the purpose of maximization of value as well. Here IBBI cannot jump the gun and say it has changed the procedure for maximization of value. As we all know, once the CIRP period is over, CoC will not remain in existence. Exercising commercial wisdom by the CoC has its own limitations. They can decide how much they get from the Resolution plan. The financial creditors converting into stakeholders during liquidation can express their wish in the meetings, but the liquidator is not bound by such decisions - It is explicitly mentioned in sub-section -1 of section 240, Regulations are to sub-serve sections of the Code in implementation. The delegated legislation shall not overreach Sections - When the dissolution is made explicit, IBBI ought not to have ignored the mandate u/s 54 of the Code. When something is said in preamble, it shall be assumed that a whole gamut of provisions of that enactment have come into existence to fulfill that policy alone. At the time when any Bill is laid before legislature, every clause/provision is weighed to balance the same with preamble of the Bill, if that balance is disturbed by outside agencies after enactment, that too without power, the inbuilt balance will be lost - If any study is made by a recommending agency like the Law Commission or Committee set up to look into the efficacy of the enactment, it will recommend to the legislature. In this process, if any particular provision is found not workable and the result is not in conformity with the purpose and object of the enactment, it has to go back to the maker. Repairing is not the job of Regulating Authority. In fact, the Regulating Authority or Rule Making Authority shall provide a support system for effective implementation of the provisions of the Code, not to travel beyond the line of control. In section 240 (2) (y) also, IBBI is limited to regulate the manner of evaluating the assets and property of the corporate debtor under clause (c), the manner of selling property in parcels under clause (f), the manner of reporting progress of the liquidation process under clause (n), and the other functions to be performed under clause (o), of sub-section (1) of section 35. Therefore by reading all these, it is nowhere found in the Code that the corporate debtor could be alienated to the purchaser by dispensing with dissolution. If concessions are started providing, there won t be certainty, predictability, uniformity; nobody knows what decision will come tomorrow. This will lead to facelessness and discordancy - Even in Section 240(2)(zk), the regulating power is limited to the period and the manner of distribution of proceeds of sale under sub-section 1 of section 53, if it is seen juxtaposition to Section 53, it only deals with sale of the liquidation assets, it does not speak about sale of the Corporate Debtor, sale of the Corporate Debtor is altogether different from sale of assets. The only power that is given under section 53 is, to convert assets of the Corporate Debtor into sale proceeds, therefore it could not be construed that Section 53 envisages sale of the Corporate Debtor. When section itself has not conferred any right to sale of the Corporate Debtor, where is the question of IBBI setting out a new concept of sale of Corporate Debtor without any support of any of the sections of IBC. In section 240 (2), regulating power is given to bring in supplementary procedure with regard to the sections mentioned therein, but not to the sections not mentioned in sub-section 2 of section 240. Section 54 is not included in section 240 (2) of the Code In section 54 also, it has not been mentioned as specified by the Board or in such manner as may be specified or prescribed . When no discretion is given to IBBI to help out in implementation of section 54 of the Code, it should not have given an unsolicited go-by to the dissolution in the case of a business sold as a going concern - This Regulation has been newly inserted on 25-7-2019, simultaneously along with this Regulation, CIRP Regulation 39C was inserted creating a right to CoC for approving a resolution to explore sale of the Corporate Debtor as a going concern under clause (e) of Regulation 32 of Liquidation Regulations in the event the corporate debtor goes into liquidation, on this premise the liquidator shall identify and group the assets and liabilities and ought to be sold as going concern, this RP shall place it before this Adjudicating Authority. Insolvency and Bankruptcy Code is an embodiment of substantial rights laced with procedural mandates. When procedure itself is part of the enactment, the Regulating Authority cannot rewrite the procedure obliterating the provisions of IBC. Yes, the Regulating authority may bring in subordinate procedure for full implementation of the sections of the Code. What could be liquidated is the assets of the debtor company, this concept of liquidation of assets shall not be construed as inclusion of sale of the company - The procedure is already set out under the Code for rearrangement under insolvency and resolution process thereafter another window under liquidation through sec. 230 of the Companies Act, 2013, therefore there cannot be any other procedure which is militating the procedure set out under the Code. Application dismissed.

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• 2021 (1) TMI 977
  Seeking stay on the process of finalization of the Approval of the Resolution Plan - seeking direction to Mr. B.C. Ganesh (RIO), who is common witness in all agreements should submit all Bank Statements and Income Tax Returns for last five Financial Years and disclose true identity - HELD THAT:- Since the Applicant has not brought on record any fact or evidence to show that the successful Resolution Applicant falls within any of the categories of the ineligibile persons under Section 29A of the Code, the prayer made for declaring the successful Resolution Applicant as ineligible cannot be acceded to and is therefore negated.The Applicant s prayer for passing an order to consider its Resolution Plan with the consideration for Rs. 27.00 Crores when it was the H1, is against the one of the prembled objectives of the IBC 2016, namely maximisation of value of stressed assets for resolving insolvency. In fact, the Applicant itself has been submitting revised Resolution Plans for Rs. 30.20 Cr. on 15.06.2019 and for Rs. 37.21 Cr. on 25.06.2019 respectively. Further, the Applicant also participated in inter se bidding with the successful Resolution Applicant wherein the Applicant itself made a bid for Rs. 42.71 Cr. It withdrew only after the successful Resolution Applicant made a bid for Rs. 42.96Cr. Therefore, seeking a direction to consider it s Resolution Plan for Rs. 27 Cr. at this stage is both unreasonable and against the tenets of IBC 2016. Therefore, this prayer is also negated. Seeking stay on process of finalization of the approval of the Resolution Plan submitted by the R 7 till the disposal of this IA - HELD THAT:- According to the provisions of IBC, 2016 once a CIRP application is admitted, it is the duty of RP to constitute CoC and thereafter publish Eol, Information Memorandum and evaluation matrix on the basis of decisions taken in CoC meetings. Thereafter, upon receipt of Eol by potential Resolution Applicants, various Resolution plans are examined by the RP and the same are put up before the CoC for deliberations about each of those plans for considering their feasibility and reliability. In this regard, it is pertinent to note here that under the provisions of the Code, the commercial wisdom of the CoC has been given paramount status without any judicial intervention. In the instant matter, the CoC have approved the Resolution Plan submitted by the successful Resolution Applicant as per their commercial wisdom in terms of Section 30(4) and the same is pending before this Adjudicating Authority for determination under Section 31 of the Code - the Applicant s prayer for staying the process of approval/determination of the CoC approved Resolution Plan by this Adjudicating Authority cannot be acceded to. Application dismissed as not maintainable.

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• 2021 (1) TMI 976
  Approval of Resolution Plan - sections 30(6) and 31 of the I B Code, 2016 r/w Regulation 39(4) of CIRP Regulations, 2016 - HELD THAT:- It appears that the Resolution Plan dated 26th February, 2020 as duly approved by the Committee of Creditors on 28th February, 2020 for Badami Sugars Limited, submitted by M/s. Sri Sai Priya Sugars Limited, satisfies all the requisite conditions for its approval under section 31(1) of the Code. Details of the fund infusion, and the sources from which the Resolution Applicant shall arrange the same have been provided in the Resolution Plan. The same provides for the creditors in the distribution table filed with the Plan, and provides adequate details of the infusion of funds required as working capital as well as for payment of the debts. Details of projected profits and cash flows have also been provided. Considering also the past experience in similar business and credentials of the Directors and Promoters of the Resolution Applicant, as mentioned in the Resolution Plan, we are satisfied about the viability of the same. The Resolution Plan also provides for the appointment of a Monitoring Professional, to oversee the implementation of the Resolution Plan. The Resolution Plan is approved by the CoC with 100% in accordance with law. No prejudice would be caused to any party, if the same is approved. The said Resolution Plan is fit to be approved under section 31 (1) of the Code. The Resolution Plan dated 26th February, 2020 submitted by M/s. Shri Sai Priya Sugars Limited as approved by the Committee of Creditors at their 5th meeting held on 28th February, 2020 with 100% voting is hereby approved by declaring that the Resolution Plan will be binding on the Corporate Debtor (Applicant) and its employees, members, creditors including the Central Government, any State Government or any local authority to whom a debt in respect of payment of dues arising under any law for the time being in force, as authorities to whom statutory dues are owed, guarantors, and other stakeholders involved in the Resolution Plan - Moratorium shall cease to have effect.

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• PMLA

• 2021 (1) TMI 975
  Provisional attachment of immovable properties - Validity of summons issued under PMLA - Jurisdiction of Director/Deputy Director to attach the immovable properties which were acquired prior to coming into force of the PML Act - properties in possession of the petitioner, proceeds of the predicate crime or not - HELD THAT:- The petitioner does not dispute the authority of the Deputy Director to pass the impugned provisional order of attachment. The constitutional validity of section 5 of PML Act is also not under challenge. The said order as well as the records indicate that a report has been forwarded to the Magistrate under section 173 of Cr.P.C. in relation to the scheduled offences i.e., under section 13(1)(e) read with 13(2) of the PC Act on 28.02.2013. The order reflects the application of mind and also the elaborate reasons to arrive at the conclusion that the property in question was the proceeds of crime within the meaning of section 2(1)(u) of the PML Act. The said order therefore is beyond challenge in a writ proceeding as no error of law and fact is reflected in the impugned order. Even otherwise, the PML Act has provided for adequate safeguards to protect the rights of the accused by providing that the order of attachment shall cease to have effect after the expiry of the period specified in the said section or the date of order made under sub-section (3) of section 8 of PML Act - More importantly, an adjudicatory mechanism is provided under section 8 of the PML Act and the petitioner has availed the said remedy and has participated in the proceedings before the Adjudicating Authority. Considering the contentions urged by the petitioner, the Adjudicating Authority has come to the conclusion that the petitioner has committed the scheduled offences, generated proceeds of crime and laundered them vide Annexure- E . As adequate and efficacious remedy is available to the petitioner against the said order, petitioner is not entitled for the relief (v) claimed in the petition. A reading of the complaint (Annexure-A) indicates that it was filed under section 45(1), 3 and 4 of the PML Act. It is alleged therein that accused Nos.1 to 4 have committed offence under section 3 of the PML Act and liable to be punished under section 4 of the PML Act. But the impugned order does not reveal as to the offences for which the accused have been summoned to appear before the court - As the order passed by the learned Special Judge taking cognizance and issuing summons to the petitioner does not satisfy the basic legal requirements, the impugned order to that extent has turned out to be ex-facie perverse and bad in law. To this extent, petitioner is entitled for the relief claimed in the petition. Petition allowed in part.

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• Wealth tax

• 2021 (1) TMI 974
  Wealth tax assessment - assessee has challenged inclusion of residential property at Mc Nichols Road on the ground that said property was used for the purpose of residence and hence the same is exempted u/s.5(1)(vi) - assessee has also challenged valuation adopted by the AO on the ground that the AO ought to have followed the method of valuation prescribed under Schedule III to Wealth Tax Act, whereas he has arrived at the value on the basis of market value which is incorrect - HELD THAT:- In this case, on perusal of facts, we find that although assets have been distributed among the family members in pursuant to MOU cum Deed of family settlement, but the contention of the assessee before the Hon ble High Court is that he did not receive said assets. We, therefore, considering facts and circumstances of the case, are of the opinion that AO as well as CWT(A) were erred in assessing the value of residential house property and diamonds for taxation for the impugned assessment years without taking into account the dispute pending before Hon ble High Court of Madras. Residential property at Mc Nichols Road, the claim of assessee that said property was used for own residence and consequently outside the purview of definition of asset as defined u/s.2(ea) of the Act. Although, the assessee claims that said property was used for own residence, but no evidence has been placed before the authorities or even before us to prove that said property was used for own residence. No doubt, in case the property is used for own residence then the same is exempt u/s.5(1)(vi) of the Act. But, it is for the assessee to prove with necessary evidence that said asset is used for own residence. In this case, the assessee has not placed any evidence on record to justify his stand. Therefore, we are of the considered view that the issue needs to be reexamined by the AO in light of claim of the assessee that said property is used for own residence. Appeals filed by the assessee allowed for statistical purpose.

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• 2021 (1) TMI 973
  Wealth tax assessment - additions in the valuation of jewellery - gross weight of jewellery as on 31.02.2012 declared in the wealth tax return was different from the gross weight of jewellery as on 31.03.2013 - HELD THAT:- As during the course of search and subsequent opening of lockers the jewellery of all the family members were mixed up and valued, therefore, for the adjudication of this quarrel, we have considered the gross weight of jewellery of all the family members taken together as declared by them in their respective Wealth Tax Returns and as found at the time of search. No suppression in the valuation of jewellery and, therefore, enhancement made by the CIT(A) on this account is bad in facts and deserves to be deleted. We direct the WTO to delete the impugned enhancement in the value of jewelery from the hands of all the appellants. Enhancement in the valuation of property - Denial of exemption u/s.5(vi) of the Wealth Tax Act - It would be pertinent to mention here that the claim of exemption is being allowed to the appellants in earlier assessment years and it is only in the orders under consideration, the CIT(A) thought that the appellants are not eligible for the claim of exemption. The basis of reasoning given by the CIT(A) is that D-6/5, Vasant Vihar and E-27, Vasant Marg, New Delhi consists of more than one residential unit and, therefore, the appellants are eligible for exemption for only one residential unit. We find that D-6/5, Vasant Vihar and E-27 Vasant Marg, New Delhi are multi storey building. At this point we would like to refer to the decision of the Hon ble Kerala High Court in the case of CIT Vs. Nazima Nizam 64 taxman 375 wherein the Hon ble High Court allowed the exemption in respect of assessee s building which consisted four shop rooms. In the property D-6/5, Vassant Vihar, Lata Goyal is the owner of ground floor and first floor belongs to Monila Goyal and second floor belongs to Lata Goyal and Kanti Kumar Goyal E-27, Vasant Marg is owned by Lata Goyal. Lata Goyal has claimed exemption in respect of E-27, Vasant Marg and has included the value D-6/5, Vasant Vihar in her Wealth Tax Return. Treating a multi floor house as separate units is incorrect and, therefore, denial of the claim of exemption by CIT(A) thereby enhancing the value of property is bad in law and deserves to be deleted. Direct the WTO to delete the impugned addition of enhancement in the valuation of property from the hands of the appellants.

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