Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 31, 2020
Case Laws in this Newsletter:
GST
Income Tax
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Articles
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
-
Rate of CGST and SGST - Namkeen duly packed & sealed in printed pouches - if the applicant voluntarily foregoes the brand name (Name of the manufacturer in this case) used by them subject to conditions as in the Annexure of the said notification, the applicant shall be eligible for reduced rate of from duty under the said notification.
-
Classification of goods - rate of GST - Milk Powder - 'lnstant Tea Whitener' - the said product cannot be manufactured without milk and all other ingredients are ancillary in nature - the impugned product shall be aptly classifiable under Chapter Heading 0402 - GST rate applicable accordingly.
-
Supply of services or not - amount recovered from the employees towards parental insurance premium payable to the insurance company - pure agent services or not - The recovery of premium amount from employee and subsequent deposit it with insurance company cannot be treated as supply of service in the course of furtherance of business.
-
Levy of GST - intermediary services or not - The pre-sale and marketing service provided by the Appellant of the products of the overseas client - Infinera US, is in the nature of facilitating the supply of the products of the overseas client and is appropriately classified as an ‘intermediary service’ as defined under Section 2(13) of the IGST Act.
Income Tax
-
Assessment u/s 153A - the proposition made by the revenue towards making addition on the basis of the figures mentioned on the said loose dumb document cannot be considered to be valid evidence in the absence of any enquiry made by the authorities which ought to have done in the manner as already dealt with us hereinabove. No authority acting judicially would have acted on the basis of a loose paper having no evidentiary value had there been minimum application of mind.
-
Deduction u/s 10B - products namely CT/PT manufactured or not? - Assessee during the year has paid the job worker the labour charges to its associated concern as evident from the copies of the ledgers. Therefore, the finding of the AO that there was no labour charge paid by the assessee is based on wrong assumption of facts.
-
Unexplained cash credit u/s 68 - income of the assessee is accepted u/s. 44AD - the bank statements supplied by the bank to the assessee in the present case could not be regarded as a book of the assessee, nor a book maintained by the assessee or under his instructions.
-
Validity of Search and seizure action carried out u/s 132 - stock-in-trade (jewellery) was seized - Denial of release of jewellery - No hesitation to observe that the officer in this case has completely ignored the mandate of law. It is also to be mentioned that despite the unlawful action, the Petitioner has been denied release of the jewellery, regardless of his repeatedly representations made to the department.
-
Correct head of income - interest income on fixed deposits in Banks - assessee is under the process of setting up of infrastructure facility of Expressway - The assessee reduced the interest from its work-in- progress - so the interest earned could not be treated as income from other sources.
-
Amortization of investment “held to maturity”- allowable expenditure u/s 37(1) or not? - it cannot be denied by the authorities under the pretext that it was showing as investment in the balance sheet.
-
MAT applicability to the assessee Banking Companies u/s 115JB - the provisions of Section 115JB(2) of the Act do not apply to the Banking companies.
Indian Laws
-
Dishonor of Cheque - Where the proceedings under Section 138 of the Act had already commenced and during the pendency, the company gets dissolved, the directors and the other accused cannot escape by citing its dissolution. - Where the company continues to remain even at the end of the resolution process, the only consequence is that the erstwhile directors can no longer represent it.
Service Tax
-
Demand of service tax on Notice pay - Though normally, a contract of employment qua an employer and employee has to be read as a whole, there are situations within a contract that constitute rendition of service such as breach of a stipulation of noncompete. Notice pay, in lieu of sudden termination however, does not give rise to the rendition of service either by the employer or the employee.
Case Laws:
-
GST
-
2020 (1) TMI 1125
100% EOU - Levy of GST - intermediary services or not - software development services for the products developed by Infinera Corporation - HELD THAT:- There does not seem to be any difference between the meaning of the term intermediary under the GST regime and pre-GST regime. In the pre-GST regime, an intermediary referred to a person who facilitates the provision of a main service between two or more person but did not include a person who provided the main service on his account. Similarly, in the GST regime, an intermediary refers to a person who facilitates the supply of goods or services or both between two or more persons but excludes a person who supplies such goods or services or both on his own account. The phrase such goods or services used in the definition of intermediary implies that the person should not be supplying on his risk and reward entirely, the very goods or services whose supply he is arranging or facilitating, In the instant case, the Appellant is facilitating the supply of the products of Infinera US between the Principal in USA and the Principal s customer in India. He is not supplying the products of Infinera on behalf of the Principal. He is only arranging the contact between the Principal and the Principal s customer and the actual supply of the products is done by the Principal directly to the customer. The service of facilitating a supply of goods between the Principal and the customers is provided by the Appellant to the overseas client. The Appellant is not supplying such goods on his own account. The pre-sale and marketing service provided by the Appellant of the products of the overseas client - Infinera US, is in the nature of facilitating the supply of the products of the overseas client and is appropriately classified as an intermediary service as defined under Section 2(13) of the IGST Act. The ruling of Advance Ruling authority upheld.
-
2020 (1) TMI 1124
Classification of supply - supply of services or not - amount recovered from the employees towards parental insurance premium payable to the insurance company - pure agent services or not - input tax credit. HELD THAT:- The recovery of premium amount from employee and subsequent deposit it with insurance company cannot be treated as supply of service in the course of furtherance of business. Providing insurance facility to employees' parents is no where connected with the business of the applicant - we are in unison with the applicant that facilitating insurance services for employees' parents is definitely not an activity which is incidental or ancillary to the activity of developing software, nor can it be called an activity done in the course of or in furtherance of development of software as it is not integrally connected to the business in such a way that without this the business will not function.
-
2020 (1) TMI 1123
Classification of goods - rate of GST - Milk Powder - 'lnstant Tea Whitener' which would be used like any milk powder used in hotels, restaurants, etc. as well as households for making instant tea and coffee and known as milk powder - HELD THAT:- The product in question i.e., 'Instant Tea Whitener' is a product made out of standard liquid milk which undergoes various processes and added with some other additives. Even after addition of other additives, it remains to be milk powder and in common parlance, it would be known as 'Instant Tea Whitener/milk powder'. In the present case, the main ingredient/ essential character of the product in question is given by liquid milk. We are in unison with the contention of the applicant that the said product cannot be manufactured without milk and all other ingredients are ancillary in nature - the impugned product shall be aptly classifiable under Chapter Heading 0402 and accordingly liable to such GST rate as prescribed under Notification No. 01/2017-Central Tax (Rate), dated 28-6-2017 (as amended).
-
2020 (1) TMI 1122
Classification of goods - Rate of CGST and SGST - Namkeen duly packed sealed in printed pouches - sale under the brand name - whether taxable at the rate of 5% or not? - HELD THAT:- The impugned goods are more appropriately classifiable under Heading 2106 90, from the details provided by the applicant such as picture of the covering of the package, ingredients of the product etc. - As per current Tariff 12% IGST or (6% CGST 6% SGST) is applicable on 2106 90. Whether their proposed plan to sell the said final product on payment of tax @ 5% is proper/ legal or not? - HELD THAT:- In the instant case, the applicant is packing their product in unit containers/retail pouches with the details of the manufacturer on the packaging for supply of Products. Since, namkeens, bhujia mixture, chabena and similar edible products packed in unit containers/ retail pouches are taxed at the rate of 12% GST under the said notification - it is clear that if the applicant voluntarily foregoes the brand name (Name of the manufacturer in this case) used by them subject to conditions as in the Annexure of the said notification, the applicant shall be eligible for reduced rate of from duty under the said notification.
-
2020 (1) TMI 1097
Territorial Jurisdiction - permission to avail CENVAT Credit on the closing stock of input footwear - rectification of TRANS-I - respondent submits that the Nodal Officer is located in Nungambakkam namely, Principal Commissioner of GST at Nungambakkam who can decide as to whether the credit can be allowed - HELD THAT:- The petitioner is given liberty to make appropriate representation to the Nodal officer namely Principal Commissioner of GST at Nungambakkam. If such application is made by the petitioner, the said Nodal officer shall consider and pass appropriate orders within a period of 30 days from the date of receipt of this order. Needless to state, before passing any order, the petitioner shall be heard. Petition disposed off.
-
Income Tax
-
2020 (1) TMI 1121
Liability to deduct TDS on discount/commission made u/s 194H - sale of SIM Cards - Trade discount for bulk sales within the scope or not - assessee M/s Bharti Airtel Limited is a Public Limited Company engaged in the business of telecom operations - Relationship of assessee or distributor or not - Scope of term income u/s 2(24) Survey conducted for verification of compliance of TDS provisions - HELD THAT:- Appellant(s), on instructions issued by the Department of Revenue, Ministry of Finance vide F.No.390/Misc./116/2017-JC dated 22.08.2019, seeks permission to withdraw these appeal(s) along with pending application(s) therein due to low tax effect. Permission granted, subject to just exceptions. The appeal(s) and pending application(s) are dismissed as withdrawn, leaving question(s) of law open.
-
2020 (1) TMI 1120
Tribunal dismissing the appeal of the revenue - roving inquiry - set-aside matter is pending with the Commissioner of Central Excise for fresh adjudication and findings of the Central Excise department regarding under invoicing is not negated or quashed till dated by any higher appellate authority - HELD THAT:- Special leave petition is dismissed.
-
2020 (1) TMI 1119
Deduction of interest on borrowed fund when the same is utilised to give interest free loan/share application money to subsidiary companies - HELD THAT:- SLP dismissed.
-
2020 (1) TMI 1118
Rectification of mistake - appellant has argued before this Court as there was audit objection in the matter the appeal could not be disposed of as done by this Court - HELD THAT:- Revenue has not pointed out that the audit objection has been accepted by department nor any record has been place before us. As decided in Haridas Das case [2006 (3) TMI 686 - SUPREME COURT] rehearing of a case can be done on account of some mistake or an error apparent on the face of the record or for any other sufficient reason. In the present case, there is no error apparent on the face of the record and the petitioner infact under the guise of review is challenging the order passed by this Court, which is under review The petitioner has not been able to point out any error apparent on the face of the record, on the contrary this Court has decided the case on merits. Apex Court again dealing with the scope of interference and limitation of review in the case of In derchand Jain (dead) Through LRs Vs. Motilal (dead) Through LRs [2009 (7) TMI 1029 - SUPREME COURT] while dealing with the scope of review has held that re-appreciation of evidence and rehearing of case without there being any error apparent on the face of the record is not permissible in light of provisions as contained u/s 114 and Order 47 Rule 1 of Code of Civil Procedure, 1908. This court does not find any reason to review the order
-
2020 (1) TMI 1117
Rectification of mistake - deduction u/s 80P - petition for rectification of mistake u/s 154 of the Income Tax Act, 1961, which is pending before the 3rd respondent meanwhile, coercive steps are initiated to recover the disputed tax amount from the petitioner - HELD THAT:- Rectification applications as per Exts.P-8, P-15 P-21 will be taken up for consideration by R-3 without much delay, and affording reasonable opportunity of being heard to the petitioner through authorised representative/counsel, if any, may pass orders thereon without much delay preferably within a period of 4 to 6 weeks from the date of production of a certified copy of this judgment. Until orders are passed on Exts.P-8, P-15 P-21 as aforestated, further coercive steps for enforcement of the impugned orders shall be kept in abeyance by the respondents concerned.
-
2020 (1) TMI 1116
MAT applicability to the assessee Banking Companies u/s 115JB - HELD THAT:- The machinery provisions provided in Sub- Section (2) of Section 115JB of the Act would be rendered wholly unworkable in case of a Banking company. It is also pertinent to mention here that the Companies Act, 1956 has excluded insurance, banking companies or the companies engaged in the generation or supply of electricity from the purview of Section 211(1) of the Companies Act, 1956 and resultantly from the purview of Section 115JB of the Act. To align the provisions of the Income Tax Act, 1961 with the Companies Act, 1956, it was decided to amend Section 115JB of the Act to provide that companies which are not required under Section 211 of the Companies Act, 1956 to prepare profit and loss account in accordance with Schedule VI of the Companies Act, 1956. Profit and loss account prepared in accordance with the provisions of their Regulatory Act shall be taken as basis for computing book profit under Section 115JB of the Act. We agree with the view taken inUNION BANK OF INDIA, MASHREQ BANK PSC, BANK OF INDIA, M/S THE NEW INDIA ASSURANCE CO. LTD., CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK [ 2019 (5) TMI 355 - BOMBAY HIGH COURT] on the common substantial question of law involved in these appeals. For the foregoing reasons, it is held that the provisions of Section 115JB(2) of the Act do not apply to the Banking companies. Amortization of investment held to maturity - allowable expenditure under Section 37(1) or not? - HELD THAT:- substantial question of law is squarely covered by instruction No.17/2008 dated 26.11.2008 issued by the Central Board of Direct Taxes/RBI and is covered by Clause (vii) provided therein. The decision in the case of SOUTHERN TECHNOLOGIES [ 2010 (1) TMI 5 - SUPREME COURT] was considered by a division bench of this court in KARNATAKA BANK LTD. [ 2013 (7) TMI 656 - KARNATAKA HIGH COURT] and it has been held that where the assessee maintains the accounts in terms of Reserve Bank of India Regulations, the assessee is entitled to deductions and it cannot be denied by the authorities under the pretext that it was showing as investment in the balance sheet. Accordingly, the common questions of law are answered in favour of the assessee
-
2020 (1) TMI 1115
Under invoicing of exports of iron ores - addition on the basis of the report of Inquiry Commission of Justice M.B. Shah - HELD THAT:- Tribunal has taken into consideration the applicability of the report of the Justice M.B. Shah Commission so as to make addition of the alleged amount under-invoicing by the Assessing Officer. We are in agreement with the findings recorded by the Tribunal, referred to above, and, therefore, no question of law, much less the substantial question of law arises.
-
2020 (1) TMI 1114
Validity of Search and seizure action carried out u/s 132 - stock-in-trade (jewellery) was seized - Denial of release of jewellery - HELD THAT:- Reasons were, firstly, not recorded before undertaking the search and was, therefore, completely unauthorized and a high-handed action on the part of the Respondents. The Respondents do not state that jewellery was concealed, or was kept by the Petitioner surreptitiously. Merely because the assessee was in possession of the same, it cannot be said that the same represents income or property which has not been disclosed or will not be disclosed. Section 132(1) as noted above is a serious invasion on the privacy of the citizens, and has to be resorted to when there are pre-existing and pre-recorded good reasons to believe that the action under section 132(1) is called for. While revenue can argue that element of surprise is critical and essential for a successful operation of search and seizure, nevertheless, it has be cognizant that to balance the rights of the citizens, legislature has built in sufficient safeguards. This is to ensure that undue hardship and harassment should not be caused by the arbitrary and unfounded action of the raiding party. Moreover, as discussed above it is not imperative that every article found as a result of search has to be seized. For this purpose, the provision itself restrains and curbs the authority to make seizure of stock-in-trade. No hesitation to observe that the officer in this case has completely ignored the mandate of law. It is also to be mentioned that despite the unlawful action, the Petitioner has been denied release of the jewellery, regardless of his repeatedly representations made to the department. After the seizure, Petitioner has been endlessly writing to the Respondents for the release of the seized articles. He had furnished all the necessary documents to explain as to how the articles seized are indeed his stock-in-trade. In fact, as noted in the preceding paragraphs, we had called upon the Respondents to give a specific response by way of an affidavit to the chart giving details of books of account provisioning for the articles seized. In response thereto, the Respondents have no plausible explanation and with the intent to deny the relief to the Petitioner, they have contended that the purchase invoices of the Petitioner are of bulk goods and cannot be identified with the individual seized items. Petitioner had placed material on record to substantiate the fact that jewellery found in his possession at the time of search was his stock-in-trade. Since the Respondents did not raise any serious dispute in their counter affidavit or in the additional affidavit, therefore, in view of the mandate contained in the proviso to Section 132B(1)(i), the Respondents have no authority to retain the seized jewellery beyond the said period. The outer limit of 120 days as provided under Section 132B has also expired in the month of January 2019. The record produced before us does not show that any action has been taken under Section 131 (1) of the Act. The satisfaction note is for issuance of warrant of authorization under Section 132 (1) of the Act, and there cannot be any two views about the same. The Officer, present in the Court, vaguely submitted that certain information was received prior to interception. However, when confronted with the specific queries in this regard, he admitted that he cannot disclose even to us in confidence, as to what was the information received, and by whom, and conceded that there is no recording of such information. Te petition succeeds and is accordingly allowed. The impugned search and seizure and ex post facto warrant of authorization dated 11.09.2018 issued by Respondent No.2 under Section 132 of the Act is hereby quashed. Consequently, all the actions taken pursuant to such search and seizure are declared illegal. The Respondents shall forthwith return to the Petitioner, the jewellery seized.
-
2020 (1) TMI 1112
Estimated gross profit at 15% of deemed sales of commercial space - HELD THAT:- Matter requires re-consideration at the level of the Ld. CIT(A). A.O. had discussed the issue in detail and has given a specific finding of fact how the case of assessee was distinguishable from A.Y. 2007-2008. The Ld. CIT(A) did not discuss any of the fact brought out by the A.O. in the impugned order and merely followed assessment order for the A.Y. 2007-2008 for the purpose of deleting the addition. Order for the A.Y. 2007-2008 under section 143(3) is placed on record which is silent with regard to matter in issue. No reasons for decision have been mentioned in the assessment order. Therefore, factual finding shall have to be given by the Ld. CIT(A) while deleting the matter in issue. Though the Ld. CIT(A) may also taken into consideration the facts stated in the A.Y. 2007-2008, but, shall have to give specific finding of fact while deciding the addition on the issue. Both the parties, therefore, rightly suggested that the matter may be remanded to the file of Ld. CIT(A) for decision afresh, as per Law. In this view of the matter, we set aside the impugned order on this issue and restore the matter in issue to the file of Ld. CIT(A) with a direction to re-decide the same. Disallowance of expenses incurred on account of project and construction expenses - HELD THAT:- Admittedly, the assessee is engaged in the business of developing and promoting commercial complexes. The assessee explained that it is under obligation to make minor/major modification to suit the convenience of the lessee. Therefore, fitment charges are incurred for better occupancy by the customers. Since the cost of construction is part of stock-in-trade and income have been offered accordingly, therefore, if the fitment charges are incurred for leased-out premises, the same would be revenue in nature. No new capital came into existence and no such finding have been given by the A.O. Therefore, considering the nature of business of assessee, CIT(A) correctly deleted the addition because the expenditure is related to the business income of the assessee. Ground No.2 of the appeal of the Revenue is dismissed. Disallowance of interest - disallowance has been made on proportionate basis invoking the provisions of Section 36(1)(iii) - HELD THAT:- It is a fact that substantial advance were given in preceding assessment year which have reduced in assessment year under appeal. The assessment in preceding A.Y. 2007-2008 have been made under section 143(3) in which no disallowance out of interest have been made. Since in assessment year under appeal, the advance have reduced substantially and that assessee has sufficient funds, therefore, no such disallowance could be made against the assessee. The issue is, therefore, covered by Judgment of the Hon ble Supreme Court in the case of Reliance Industries Ltd., [ 2019 (1) TMI 757 - SUPREME COURT] . Further, A.O. has not proved any nexus with interest free funds given to sister concern out of borrowed funds. Therefore, considering the totality of the facts and circumstances of the case, we are of the view that the Ld. CIT(A) correctly deleted the addition. This ground of appeal of Revenue is dismissed.
-
2020 (1) TMI 1111
Unexplained cash credit u/s 68 - income of the assessee is accepted u/s. 44AD - Scope of the term Books of account of the assessee vis-a-vis Bank Statement - HELD THAT:- The provisions of section 68 cannot be applied. Asking the assessee to prove to the satisfaction of the Assessing Officer, the expenditure to the extent of 92% of gross receipts, would also defeat the purpose of presumptive taxation as provided under section 44AD of the Act or other such provision. Since the scheme of presumptive taxation has been formed in order to avoid the long drawn process of assessment in cases of small traders or in cases of those businesses where the incomes are almost of static quantum of all the businesses. Applying the propositions of law laid down in NAND LAL POPLI VERSUS THE D.C.I.T., CHANDIGARH [ 2016 (6) TMI 883 - ITAT CHANDIGARH] to the facts of the case on hand, delete the addition in question. Even otherwise, in the present case, the Assessing Officer found certain deposits as unexplained in the bank account of the assessee with ICICI Bank, Dharwad branch at ₹ 9.16 lakh. In my opinion, when moneys are deposited in the bank account, the relationship that is constituted between the banker and the customer is one of the debtor and creditor and not of trustee and beneficiary. Applying this principle, the bank statements supplied by the bank to its constituent is only a copy of the constituent s account in the books maintained by the bank. It is not as if the bank statements are maintained by the bank as the agent of the constituent, nor can it be said that the pass book is maintained by the bank under the instructions of the constituent. Therefore, the bank statements supplied by the bank to the assessee in the present case could not be regarded as a book of the assessee, nor a book maintained by the assessee or under his instructions. As such, addition u/s 68 of the Act of the amount entered only in the bank statements was not justified -See BHAICHAND H. GANDHI [ 1982 (2) TMI 28 - BOMBAY HIGH COURT] Thus the amount found credited in the bank account of the assessee cannot be made an addition u/s 68 of the Act - Decided in favour of assessee.
-
2020 (1) TMI 1110
Penalty u/s.271(l)(c) - disallowance of consolidated tax u/s 43B - HELD THAT:- Admittedly, the amount of consolidated tax was not eligible for deduction as per the provisions of section 43B but, the same was eligible for deduction on payment basis in the subsequent assessment year as the payment made by the assessee falls in the subsequent assessment year. However, neither the assessee nor the AO has claimed/allowed the deduction in the subsequent assessment year. Claim made by the assessee in the profit and loss account was not the false claim. As such, the claim made by the assessee was disallowed by the operation of law i.e. under the provision of section 43B of the Act. Therefore, such claim of the assessee can be regarded as a wrong claim but the same cannot be equated with the concealment of income or furnishing inaccurate particular of income. Therefore, we are of the view that the assessee cannot be visited with the penalty on account of concealment of income Disallowance u/s 36(1)(v) on account of delayed payment of ESI and PF - HELD THAT:- The assessee in the present case has filed his revised return of income dated 18-04-2011 claiming the deduction of the aforesaid amount whereas the judgment of CIT vs. Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] . Thus it is evident that, the assessee was not aware of the judgment relied by the learned CIT (A) while imposing the penalty on account of concealment of income. We also note that the judgment of Hon ble Delhi High Court in the case of AIMIL Ltd [ 2009 (12) TMI 38 - DELHI HIGH COURT] was in favour of the assessee which was rendered dated 23-12-2009 i.e. before filing the return of income by the assessee. Accordingly, we find that the assessee has claimed the deduction under the bona fides believe. Hence, we hold that the assessee cannot be visited with the penalty in the given facts and circumstances on account of concealment of income. Disallowance of interest expenses being capital in nature - HELD THAT:- There is no allegation that the impugned interest expense was incurred in connection with the extension of the existing business of the assessee. Therefore, the mere claim of interest expenses as revenue in nature cannot be equated with the concealment/ inaccurate particular of income. As such, the assessee has disclosed all the material facts in the financial statements and furthermore its claim was not found to be false. Thus we hold that, the assessee has claimed deduction for such interest expenses under the bona fides believe and therefore there cannot be any penalty on account of concealment of income. Disallowance on account of penalty payment to Sales tax and Excise department - HELD THAT:- Admittedly, the penalties levied on account of contravention of the provisions of law are not allowable for deduction. But the penalty which is compensatory in nature can be claimed as business expenses. However, we note that there is no such finding given by the authorities below on such aspect. Assessee has furnished all the requisite details in its financial statements and therefore it cannot be said that the assessee has concealed particular of income. As such the assessee has claimed the deduction under the bona fides believe. We hold that the penalty can be levied where the assessee has concealed the particular of income/furnished inaccurate particular of income. However, from the preceding discussion we note that none of the deduction claimed by the assessee has been held as false. Thus at the most, the claim made by the assessee can be wrong/inaccurate claims which cannot be treated as concealment/inaccurate particular of income. In holding so we find support and guide from the judgment of Hon ble Supreme Court in case of Reliance Petro Products Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] We also note that there was no mala-fide intention of the assessee to furnish the inaccurate/ conceal the particulars of income. So there cannot be any penalty in the present facts and circumstances - Decided in favour of assessee.
-
2020 (1) TMI 1109
Deduction u/s 10B - products namely CT/PT manufactured or not? - current transformers (CT) and potential transformers (PT) - assessee is a partnership firm and engaged in the business of manufacturing epoxy cast insulators, bushing, epoxy molded components etc a 100% Export Oriented Unit approved by the Development commissioner, Kandla Special Economic Zone, Gandhidham, Ministry of Commerce Industry - HELD THAT:- Regarding the use of the machineries in the manufacturing of CT/PT products, we note that the AO has not brought anything on record evidencing that the assessee was not in possession of the requisite machineries. Though the assessee during the assessment proceedings has claimed that it is using APG machines and vacuum casting machines for the manufacture of its alleged products, but the AO has not controverted the submission of the assessee based on any documentary evidence. We also note that the list of such machineries are appearing in its financial statement as evident from the submission of the assessee. Books of accounts of the assessee were duly audited which were filed during the assessment proceedings and no defect whatsoever was pointed out by the Assessing Officer in such books of accounts. On one hand the Assessing Officer has accepted the books of account and, on the other hand, he is making the addition merely on the basis of the statement obtained under Section 132(2)/133A which was immediately retracted after the date of survey. In such facts and circumstances, the Assessing Officer should have rejected the books of account under Section 145(3) of the Act as he disbelieved the purchase bills and sales bills which were not entered in the books of accounts of the assessee as on the date of survey. But, the Assessing Officer has not done so; which implies that the Assessing Officer has accepted the books of accounts and financial statement of the assessee. Assessee during the year has paid the job worker the labour charges to its associated concern as evident from the copies of the ledgers. Therefore, the finding of the AO that there was no labour charge paid by the assessee is based on wrong assumption of facts. There was goods movement register maintained by the assessee for transferring the goods on job work basis as evident from the details maintained under Excise Act, which are placed on pages 243 to 308 of the paper book. CIT (A) has given very exhaustive finding elaborating that the assessee is engaged in the manufacturing activity of the alleged products. Therefore, we are of the view that no interference in the order of the learned CIT (A) is warranted in the given facts and circumstances. Hence the ground of appeal of the revenue is dismissed.
-
2020 (1) TMI 1108
TP Adjustment - upward adjustment u/s. 92C r.w.s. 92(1) in respect of sale price of plant and machinery - HELD THAT:- As gone through the judicial pronouncement in the case of ACIT vs. Koch Chemical Technology Group (India) Ltd. [ 2015 (11) TMI 16 - ITAT MUMBAI] wherein it is held that when assessee submitted a report from approved value indicating fair market value of machineries purchased, before rejecting such valuation report, TPO was duty bound to refer valuation of machineries to DVO as per procedure laid down under statute - Moreover, there being no other material brought on record by TPO demonstrating that he made enquiry of any kind to ascertain fair market value of machineries. Thus assessing officer is not justified in taking written down value without considering any comparable cases in the uncontrolled transaction and simply taken the arms length price on the basis of written down value of the machinery. Even, the TPO has not carried out any exercise to determine the arms length price of the machinery on the basis of comparable cases in the uncontrolled market. Therefore, we consider that ld. CIT(A) is not justified in sustaining upward adjustment made by the assessing officer by adopting written down value as ALP under the cup method and this ground of appeal of the assessee is allowed. Suppressed sale - difference in the quantity - unaccounted sale by taking average cost of batteries @ ₹ 4/- - HELD THAT:- The difference has arised only on account of action of the assessing officer for adding batteries distributed free of cost towards sales scheme. These submissions made by the assessee are placed at page no. 151 of the paper book and at para 5.21 of the submission it has been submitted that the batteries distributed towards sales schemes has already been considered in the excise record, therefore, further addition is not required to be made, the same are not excisable. Further these were distributed free to educational institutions and sales samples were not sold out of the books of account. As noticed that assessing officer himself has worked out the production as 23,95,42,769 pieces as against 23,83,38,363 pieces reported in the return filed with the Central Excise after duly excluding the pieces distributed free of cost towards sale samples - We consider that ld. CIT(A) is not justified in partly sustaining the disallowance, therefore, this ground of appeal of the assessee is allowed.
-
2020 (1) TMI 1107
Assessment u/s 153A - unexplained money - unexplained expenditure u/s 69C - cash found during the search proceedings - additions loose sheets and rough papers - assessee submits that same belongs to Business and kept at residence of assessee - HELD THAT:- AO has alleged that the assessee has incurred an expense in connection with the conversion of land from agriculture to NA with respect to survey numbers. However, the AO without verifying the fact from the parties in whose name the survey number was registered has treated the expenditure as unexplained u/s 69C - AO was under the obligation to carry out the necessary verification before reaching to the conclusion that the assessee has incurred unexplained expenditure. From the list of the expenditures there were mentioned several survey numbers of the land but no enquiry was conducted by the authorities below. In this respect, we would like to discuss the judgment passed by the Hon ble Delhi High Court in the matter of CIT, C-1-vs-Vatika Landbase Pvt. Ltd. [ 2016 (2) TMI 835 - DELHI HIGH COURT] . In that matter, the Assessing Officer did not make any enquiry from the employee or from buyers of flats in respect of actual price paid by them. In that circumstances of the case the impugned addition made merely on the basis of unsigned and undated seized document has been held to be unsustainable in the eye of law. Thus, the proposition made by the revenue towards making addition on the basis of the figures mentioned on the said loose dumb document, thus, cannot be considered to be valid evidence in the absence of any enquiry made by the authorities which ought to have done in the manner as already dealt with us hereinabove. No authority acting judicially would have acted on the basis of a loose paper having no evidentiary value had there been minimum application of mind. Information contained in the seized documents are just the information without any support and therefore no credentials can be given to such information until and unless it is based on some materials. As such, seized loose documents found during the search should be read in association with the other materials before reaching to the conclusion that such seized material represent the income of the assessee. We also note that the lose paper found during the course of search did hold evidentiary value unless the same is supported by cogent material in regard we find guidance and support from order of the Hon ble Supreme Court in the case of Common Cause (A Registered Society) Vs union of India [ 2007 (9) TMI 25 - SUPREME COURT] Regarding the seizure of cash we note that there was the reconciliation statement furnished by the assessee to justify the availability of cash found at his residence during the search proceedings. As such, there was no defect pointed out by the authorities below in the reconciliation statement furnished by the assessee. Therefore, we are of the view that such cash has been duly explained the assessee. Documents seized during the search proceedings is nothing but representing the dumb documents and therefore no additions based on the same can be made in the hands of the assessee. Accordingly we reverse the order of the authorities below and direct the AO to delete the addition made by him - Decided in favour of assessee.
-
2020 (1) TMI 1106
Correct head of income - interest income on fixed deposits in Banks - Income from other sources or business income - HELD THAT:- There is no dispute that assessee earned interest on deposit in Bank. Further, there is no dispute that the assessee is under the process of setting up of infrastructure facility of Expressway from Sikar to Bikaner. The assessee reduced the interest from its work-in- progress. We have noted that on identical grounds of appeal, the coordinate bench of this Tribunal in Jorabat Shillong Expressway Ltd. [ 2019 (7) TMI 1565 - ITAT MUMBAI] As decided in INDIAN OIL PANIPAT POWER CONSORTIUM LIMITED, NEW DELHI [ 2009 (2) TMI 32 - DELHI HIGH COURT] funds infused in the assessee by the joint venture partner were inextricably linked with the setting up of the plant, so the interest earned could not be treated as income from other sources - Decided in favour of assessee.
-
2020 (1) TMI 1105
Depreciation On Goodwill Resulting From Acquisition Of Business Unit - HELD THAT:- This issue is fully covered by several Tribunal decisions in assessee s own case, wherein Tribunal following the decision of Hon ble Supreme Court in the case of CIT vs. Smifs Securities Ltd. [ 2012 (8) TMI 713 - SUPREME COURT] deleted the disallowance of depreciation.
-
2020 (1) TMI 1104
Rejection of books of accounts -Trading addition by adopting GP rate at 12% - GP rate of 11.06% declared by the assessee - HELD THAT:- There is no dispute that after rejecting the books of account under section 145(3) of the Act, the income of the assessee is required to be estimated on some reasonable and proper basis. The past history of GP declared by the assessee is a proper guidance for estimation of income in pursuant to the rejection of books of account. For the assessment year 2008-09 the assessee declared GP at 11.99%, for the assessment year 09-10 the assessee declared GP at 10.79%. However, there was an addition made by the AO and after the addition sustained by the ld. CIT (A), the GP for the assessment year 2009-10 comes to 11.02%. Therefore, even if taking the average of preceding two years which comes to 11.05%, the GP declared by the assessee at 11.06% cannot be said to be at the lower side or any significant decline in GP. Accordingly in the facts and circumstances of the case, when the assessee has declared the GP in line with the past history of the assessee which has attained the finality, the adoption of GP rate by the AO without any basis cannot be accepted. Hence the trading addition made by the AO is deleted. Adhoc disallowance made by the AO on account of various expenses for want of proper supporting vouchers - Travelling Expenses disallowed - HELD THAT:- AO selected 9 (nine) visits of the partner of the assessee undertaken almost monthly basis to Jammu, Delhi, Kolkata and Mumbai. The AO has also referred that some bills were related to family tours to Mata Vaisno Devi Darshan. The assessee has not specifically disputed those facts as detected by the AO from the bills. Accordingly, in the absence of the claims duly substantiated by the assessee to prove that the expenditure was incurred wholly and exclusively for the purpose of business of the assessee, the assessee has not discharged its primary onus. Accordingly, we do not find any error or illegality in the orders of the authorities below qua the disallowance of travelling expenses. Advertisement expenses - HELD THAT:- AO has taken three entries of expenditure total amounting to ₹ 9,200/- which are not supported by any bill or voucher nor incidental to business. Although the assessee has objected to the disallowance made by the AO, however, the assessee has not furnished any supporting documentary evidence in respect of this expenditure of ₹ 9,200/-. Thus in the absence of supporting documentary evidence, the expenditure incurred on account of Advertisement cannot be allowed. Insurance Expenses - HELD THAT:- AO has made the disallowance on the ground for want of supporting receipt. The insurance premium cannot be claimed without supporting receipt as it is bound to be paid against the receipt. Even otherwise, the assessee has not furnished any other supporting evidence to show that the payment was made for taking the insurance and for the purpose of business of the assessee. Accordingly, in the absence of any supporting evidence regarding the said expenditure on insurance, we do not find any error or illegality in the orders of the authorities below. Depreciation on building - HELD THAT:- The facts pointed out by the AO that the Chowkidar quarter is in the factory premises itself on which the assessee has claimed depreciation which was allowed. Therefore, a separate depreciation on the part of the factory building cannot be allowed. In the absence of any contrary facts brought before us, we do not find any error or illegality in the orders of the authorities below. Jeep Hire charges - HELD THAT:- In the absence of any supporting evidence or other material even to prove that the Jeep was actually hired by the assessee for the purpose of business of the assessee, we do not find any error or illegality in the orders of the authorities below. Sales Tax Penalty - HELD THAT:- It is clear from the assessment order that this amount is part of the total sales tax demand arising from the sales-tax assessment order, therefore, this is not an amount of penalty separately levied by the Sales Tax Authority but it is only a charge or levy for irregularities in filing the return or late payment of tax. Therefore, this would be part of the Sales-tax demand and is an allowable claim. EMD forfeited written off - HELD THAT:- The said amount was written off by the assessee in the books and claimed as business expenditure. The AO has disallowed the claim for want of documents. However, if the amount deposited by the assessee in respect of the tender and the earnest money was finally forfeited by the Railway authorities, then the forfeiture would be an allowable business expenditure as this is the regular business activity of the assessee and the expenditure was incurred for the purpose of business of the assessee. Once the payment of the said amount is not in dispute and the forfeiture of the Earnest money by the authorities is also independently verifiable, then the claim of the assessee is an allowable business expenditure. Arbitration Fee Railways - HELD THAT:- AO has noticed that the payment was made in cash by the assessee to one Shri K.B. Mody, but since the assessee has not produced the bill, the AO has disallowed the said expenditure as non business expenditure. Once the assessee has claimed that this expenditure is towards arbitration fee and the dispute was between the assessee and railways regarding the business work of the assessee then the said expenditure is an allowable claim. Accordingly the disallowance made by the AO is deleted. Telephone expenses - HELD THAT:- AO has pointed out specific facts regarding certain telephones which were installed at the residence of the partners and some others were not related to the assessee firm. These facts have not been disputed by the assessee. Further, the assessee has also claimed purchase of Mobile set as revenue expenditure which was disallowed by the AO treating the same as capital expenditure and depreciation on the said claim was allowed. Hence in view of these facts, we do not find any error or illegality in the orders of the authorities below. Disallowance of Sales Tax Penalty - HELD THAT:- If the said amount is part of the demand arising from Sales tax assessment, then it will partake the character of Sales-tax and not the penalty. However, if the said amount is on account of penalty separately levied by the Sales Tax Authorities, then it cannot partake the character of simple Sales-tax payment. Accordingly, the AO is directed to verify the fact from the record whether the said amount of ₹ 2,52,066/- is arising from separate penalty order passed by the Sales Tax Authorities or it is only a demand under the Sales Tax assessment order. Accordingly, in view of our finding on this issue for the assessment year 2010-11, this issue is set aside to the record of the AO. Disallowance of Conveyance expenses - HELD THAT:- AO has made the adhoc disallowance @ 10% of the expenses on the ground that the reliability and genuineness of the expenses is doubted. He has also doubted the personal use of the two cars of the partnership firm by the partners. Thus it is clear that the AO has made the disallowance only on the basis of suspicion and doubt without pointing out a specific claim of expenditure is not genuine. Adhoc disallowance made by the AO is not justified, the same is deleted. Adhoc disallowance of vehicle hiring expenses - HELD THAT:- AO though doubted the correctness of the claim, however, he has not undertaken the enquiry to determine whether the payment made by the assessee is excessive in comparison to the fair market price. Therefore, in the absence of such a finding by the AO that the payment made by the assessee to the related parties is excessive in comparison to the fair market price of the services provided by the related parties, the adhoc disallowance is not justified. If the AO has tangible reasons to doubt the claim of the assessee, then either the claim should have been disallowed as bogus or to be disallowed under section 40A(2) of the Act. In the absence of any such finding on the part of the AO, the adhoc disallowance is not justified. The same is deleted. Disallowance on account of Workmen and staff welfare expenses - HELD THAT:- AO has made an adhoc disallowance of 10% of Workmen and Staff welfare expenses on the ground of self made vouchers. Since the AO has made adhoc disallowance based on suspicion of correctness and genuineness of the claim without pointing out a specific incident of bogus claim, accordingly in view of our finding in Ground No. 2 regarding disallowance of Conveyance expenses, adhoc disallowance made by the AO is not sustainable. The same is deleted. Disallowances on account of general expenses, welcome expenses and Worship expenses - HELD THAT:- AO has made an adhoc disallowance without pointing out a specific expense either found bogus or not incurred for the purpose of business of the assessee. Therefore, such an approach of the AO making disallowances without giving specific finding cannot be accepted.
-
2020 (1) TMI 1101
Availability of alternative remedy - HELD THAT:- Court is of the view that petitioner may file appeal under Section 246-A of the Act before the first appellate authority against the assessment order dated 28.12.2019 within a period of four weeks from today. It is also open to the petitioner to file an application for stay along with the appeal in which event the same shall be considered by the appellate authority in accordance with law.
-
2020 (1) TMI 1100
Addition u/s 14A r.w.r. 8D - prospectively of rule 8D - HELD THAT:- Issue raised therein has been concluded by the Supreme Court in favour of the assessee and against the revenue in the case of Commissioner of Income Tax- 5 Mumbai vs. Essar Teleholdings Ltd. [ 2018 (2) TMI 115 - SUPREME COURT] wherein it has been held that Rule 8D of the Income Tax Rules, 1962 is prospective in operation and cannot be applied to any assessment year prior to assessment year 2008-09. In so far the present appeal is concerned, the assessment year in question is 2007-08. Therefore, in view of the decision of the Supreme Court as above, provisions of Rule 8D will not be applicable. Consequently, question No.(a) does not arise. MAT applicability to assessee bank u/s 115JB - HELD THAT:- Issue covered by the decision of this Court in Commissioner of Income Tax- LTU vs. Union of India [ 2019 (5) TMI 355 - BOMBAY HIGH COURT] wherein held sub- section 115JB as it stood prior to its amendment by virtue of Finance Act, 2012, would not be applicable to a banking company. We answer the question No.2 in favour of the assessee and against the revenue.
-
2020 (1) TMI 1098
Addition u/s 68 - HELD THAT:- Tribunal restored the issue to the file of the AO for deciding the merits of the issue of addition u/s 68 afresh with the direction to the assessee to produce all the documents before the Assessing Officer. The order further permitted the AO to carry out enquiries which are deemed fit in the facts and circumstances of the case, including inquiries from the banks of parties transacted. The assessee was to be afforded sufficient opportunity of hearing. Appellant states that the Assessing Officer has not considered the submissions advanced by the assessee before him and statutory appeals have already been preferred before the CIT (A), which are still pending. He states that the assessee would be satisfied if the Court were to issue directions to the CIT (A) to deal with all the grounds raised by the assessee in its statutory appeals in respect of the aforesaid two assessment orders. The appeals are, accordingly, disposed of with a direction to the CIT (A) to deal with all grounds raised by the appellant while deciding the said appeals
-
2020 (1) TMI 1094
Delay in deposit of ESI and PF employee s contribution - Addition u/s 2(24)(x) r.w.s. 36(1)(va) - HELD THAT:- The contributions have been deposited before filing the return of income. Therefore, respectively, the following the decision of Hon ble Rajasthan High Court in case of CIT vs. JVVNL [ 2014 (1) TMI 1085 - RAJASTHAN HIGH COURT] the addition made by the Assessing Officer is hereby directed to be deleted. - Decided in favour of assessee. Addition u/s 37(1) by disallowing of interest on late payment of TDS - whether such interest is penal in nature or no? - HELD THAT:- As decided in M/S SAND PLAST INDIA LIMITED [ 2018 (7) TMI 1844 - ITAT JAIPUR] Assessee could not possibly claim that it was borrowing from the State the amounts payable by it as income-tax, and utilising the same as capitalization in its business, to contend that the interest paid for the period of delay in payment of tax amounted to a business expenditure. Therefore, the interest paid under section 201(1A) could not be allowed as business deduction. Contention regarding section 40(a)(ii) is also not tenable as the same is in context of taxes levied on the profits or gains of business and not in context of taxes by way of TDS on payments made by the assessee and in any case, the interest will partake the character of the principal which is not otherwise allowable. Respectfully following the decisions referred supra, interest on late deposit of TDS u/s 201(1A) cannot be allowed to the assessee and the same has rightly been disallowed by the AO. - Decided against assessee.
-
Insolvency & Bankruptcy
-
2020 (1) TMI 1113
Dishonor of Cheque - insufficient funds - section 138 of NI Act - doctrine of lex non cogit ad impossibilia - HELD THAT:- Where the proceedings under Section 138 of the Act had already commenced and during the pendency, the company gets dissolved, the directors and the other accused cannot escape by citing its dissolution. What is dissolved is only the company, not the personal penal liability of the accused covered under Section 141 of the Negotiable Instruments Act, 1881 - Where the company continues to remain even at the end of the resolution process, the only consequence is that the erstwhile directors can no longer represent it. In the case on hand, the accused company had not been dissolved. Its management has been taken over. Therefore, there is absolutely no difficulty in coming to the conclusion that the impugned prosecution against Tecpro Systems can also continue. The petitioner contends that his right to fair trial has been seriously infringed. He claims that the principles of natural justice stand violated as at the stage of evidence, he cannot lead any documentary evidence at all. According to him, that would be the resultant position since he has been totally deprived of any access to any of the company records. These petitions have been filed under Section 482 of Cr.PC. The inherent powers of this Court are meant to be exercised only to prevent the abuse of process of law or to secure the ends of justice. The facts appearing on record and the contentions put forth by the learned counsel for the petitioner do not persuade me to come to the conclusion that continuation of the impugned prosecution would constitute an abuse of legal process. Petition dismissed.
-
Service Tax
-
2020 (1) TMI 1096
Classification of services - Demand of service tax on Notice pay - facilitation of termination of employment or not - petitioner is deemed to have facilitated the termination of employment - obligation to refrain from an Act or to tolerate an Act or a situation, or to do not act - HELD THAT:- The query raised relates to a contra situation, one, where amounts have been received by an employee from the employer by reason of premature termination of contract of employment, and the taxability thereof. The Board has answered in the negative, pointing out that such amounts would not be related to the rendition of service. Equally, the employer cannot be said to have rendered any service per se much less a taxable service and has merely facilitated the exit of the employee upon imposition of a cost upon him for the sudden exit. The definition in clause (e) of Section 66E is not attracted as the employer has not 'tolerated' any act of the employee but has permitted a sudden exit upon being compensated by the employee in this regard. Though normally, a contract of employment qua an employer and employee has to be read as a whole, there are situations within a contract that constitute rendition of service such as breach of a stipulation of noncompete. Notice pay, in lieu of sudden termination however, does not give rise to the rendition of service either by the employer or the employee. Petition allowed.
-
Central Excise
-
2020 (1) TMI 1095
Service of SCN - Refund of CENVAT credit - area based exemption - benefit of N/N. 56/2002-CE dated 14.11.2002 - refund claim was rejected by the authorities below on the ground that the appellant has deposited the amount under dispute voluntarily in a bonafide manner - HELD THAT:- The appellant has intimated that they have availed credit of ₹ 36,57,968/- during the period from 16.6.1997 to 03.9.1997 on seven bills of entries for inputs imported on payment of CVD duty. It is also admitted position that the amount ₹ 18,28,984/- has been paid by the appellant under protest on various dates. It is a fact on record that that equal amount has been deducted from the refund claim sanctioned to the appellant. It is also admitted position that no show cause notice has been issued to the appellant for appropriation of the said amount paid by the appellant. On going through the facts of the case, it is admitted position that the credit was availed by the appellant during the period from 16.6.1997 to 03.9.1997 and through letter dated 25.2.2005 (which is almost after passing of more than seven and half years), the appellant was asked to reverse the Cenvat credit availed during the period 16.6.1997 to 03.09.1997. Reversal was made initially by the appellant under protest through a letter. Remaining amount has been adjusted from the refund claim but no proof has been produced by the Revenue that the adjustment of amount in refund claim has been communicated to the appellant. Extended period of limitation - HELD THAT:- As no SCN has been issued to the appellant within five years from the date of availing of credit i.e. five years after 3.9.1997, the amount of cenvat credit availed wrongly cannot be recovered from the appellant. Therefore, at this stage, if it is directed to the Revenue to issue show cause notice and time consumed in litigation between 25.2.2005 (when it was found that the appellant has taken credit wrongly) till date if the time is excluded also, no purpose will be serve if a show cause notice is issued to the appellant for appropriation of the amount of Cenvat credit as on date as the letter dated 25.2.2005 issued by the department to the appellant clearly shows that the credit has been availed by the appellant wrongly - In that circumstance, the extended period of limitation is not invokable. Admittedly, no SCN has been issued to the appellant and the amount was paid by the appellant under protest. The refund claim cannot be rejected on the ground that the appellant has vacated the issuance of the SCN. In that circumstance, the amount recovered from the appellant is required to be refunded to them - appeal allowed - decided in favor of appellant.
-
Indian Laws
-
2020 (1) TMI 1103
Doctrine of merger - Pay scale of post of drivers - interpretation of G.O. Ms. No. 162 - revision of pay scale - fixation of Selection and Special Grade pay scales of certain drivers by certain local departments as per Serial No. 8 of Schedule II - HELD THAT:- The drivers concerned were not entitled to any promotional avenues. Thus, it is evident that the High Court rightly concluded that the drivers were entitled to the full benefits of the appropriate pay scale under Schedule II of the 1998 Rules. However, the persons employed in the post of drivers in various departments in the Government of Tamil Nadu are only entitled to Ordinary, Selection and Special Grade pay scales in terms of Serial No. 6 of Schedule II of the 1998 Rules, i.e. at ₹ 3200-4900, ₹ 4000-6000 and ₹ 4300-6000 respectively, we have no hesitation to hold that the High Court erred in directing fixation of such pay scales to drivers employed at the High Court in terms of Serial No. 8 of the Schedule II, fixing Selection Grade and Special Grade scales of pay of ₹ 5000-8000 and ₹ 5500- 9000 respectively. The appeals are therefore allowed partly, to the extent that the State Government is directed to fix the pay scale benefits available to the Respondents in the instant appeals in terms of Serial No. 6 of Schedule II of the 1998 Rules under G.O. Ms. No. 162.
-
2020 (1) TMI 1102
Dishonor of Cheque - restraint on plaintiffs to not to proceed with other coercive proceedings against the Defendants in respect of the dues claimed in the suit - HELD THAT:- The power to pass orders to do complete justice is undoubtedly vested in the Supreme Court of India under Article 142 of the Constitution. However, a Civil Court exercising original jurisdiction is constrained to act within the boundaries of the CPC and where it is a Court exercising the original jurisdiction of the Delhi High Court, additionally by the Delhi High Court Act,1966. A Court exercising civil jurisdiction cannot obviously pass orders in relation to the powers and jurisdiction of a Criminal Court or any other Tribunal/adjudicatory body - it is for the Courts exercising their respective jurisdictions viz., the Court of the learned Magistrate dealing with the complaint under Section 138 NI Act or the NCLT dealing with petitions before it or contempt proceedings arising from those proceedings, to deal with the submissions that the parties before those Courts may make, and pass appropriate orders. In the present matter it will be open to the Respondents to place the facts and developments in the civil suit before the Court dealing with the complaint under Section 138 NI Act and seek orders before that Court. Equally the Appellants in the present appeal would resist those pleas. All such submissions will have to be considered by the Court concerned. It is not for the learned Single Judge hearing the civil suit to anticipate what might happen in those proceedings and preventively restrain such further proceedings. This Court holds that to the extent that the impugned order of the learned Single Judge seeks to restrain the Appellants/Plaintiffs from continuing other coercive proceedings, which include the proceedings pending in the various Courts under Section 138 of the NI Act, the contempt proceedings, the proceedings before NCLT and the execution proceedings, the impugned order is entirely without jurisdiction, ex facie illegal and, therefore, unsustainable in law. Appeal allowed.
-
2020 (1) TMI 1099
Maintainability of petition - whether the petitioners having availed of the remedy of revision should be allowed to take recourse to section 482 Cr.P.C as a substitute for virtually initiating a second revisional challenge or scrutiny which is clearly barred U/s 397 (3) Cr.P.C? - HELD THAT:- The Negotiable Instruments Act, provides sufficient opportunity to a person who issues the cheque. Once a cheque is issued by a person, it must be honoured and if it is not honoured, the person is given an opportunity to pay the cheque amount by issuance of a notice and if he still does not pay, he is bound to face the criminal trial and consequences. It is seen in many cases that the petitioners with malafide intention and to prolong the litigation raise false and frivolous pleas and in some cases, the petitioners do have genuine defence, but instead of following due procedure of law, as provided under the NI Act and the Cr.PC, and further, by misreading of the provisions, such parties consider that the only option available to them is to approach the High Court and on this, the High Court is made to step into the shoes of the Metropolitan Magistrate and examine their defence first and exonerate them. The High Court cannot usurp the powers of the Metropolitan Magistrate and entertain a plea of accused, as to why he should not be tried under Section 138 of the NI Act. The offence under Section 138 of the NI Act is an offence in the personal nature of the complainant and since it is within the special knowledge of the accused as to why he is not to face trial under section 138 N.I. Act, he alone has to take the plea of defence and the burden cannot be shifted to complainant. There is no presumption that even if an accused fails to bring out his defence, he is still to be considered innocent. If an accused has a defence against dishonour of the cheque in question, it is he alone who knows the defence and responsibility of spelling out this defence to the Court and then proving this defence is on the accused - Sections 143 and 145 of the NI Act were enacted by the Parliament with the aim of expediting trial in such cases. The provisions of summary trial enable the respondent to lead defence evidence by way of affidavits and documents. Thus, an accused who considers that he has a tenable defence and the case against him was not maintainable, he can enter his plea on the very first day of his appearance and file an affidavit in his defence evidence and if he is so advised, he can also file an application for recalling any of the witnesses for cross-examination on the defence taken by him. Upon analyzing the provisions of the NI Act, it is clear that Section 138 of the Act spells out the ingredients of the offence as well as the conditions required to be fulfilled before initiating the prosecution - These ingredients and conditions are to be satisfied mainly on the basis of documentary evidence, keeping in mind the presumptions under Sections 118 and 139 of the NI Act and Section 27 of the General Clauses Act, 1897 as well as the provisions of Section 146 of the Act. This Court does not find any material on record which can be stated to be of sterling and impeccable quality warranting invocation of the jurisdiction of this Court under Section 482 Cr.PC at this stage. More so, the defence as raised by the petitioners in the petition requires evidence, which cannot be appreciated, evaluated or adjudged in the proceedings under Section 482 of Cr.PC. The petitioners, therefore, cannot be allowed to take recourse to section 482 Cr.P.C as a substitute for initiating second revision petition when there is nothing to show that there is serious miscarriage of justice or abuse of the process of law. There are no flaw or infirmity in the proceedings pending before the Trial Court. However, the Trial Court shall certainly consider and deal with the contentions and the defence of the petitioners in accordance with law - petition dismissed.
|
9911796707
