TMI Tax Updates - e-Newsletter
October 12, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise

Articles

1. LATEST CHANGES IN GST LAW

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Repayment of ‘3.96% GS 2022’

2. Shri Piyush Goyal co-chairs 10th Meeting of the India-UAE High Level Joint Task Force on Investments along with His Highness Sheikh Hamed bin Zayed Al Nahyan, Member of the Executive Council of the Emirate of Abu Dhabi

3. Auction for Sale (re-issue) of (i) ‘6.69% GS 2024’, (ii) ‘7.10% GS 2029’, (iii)‘7.54% GS 2036’ (iv) ‘7.40% GS 2062’

4. Commerce Minister reviews the functioning of the GIFT Special Economic Zone

5. Union Commerce and Industry Minister invites businesses to locate to modern industrial townships like Aurangabad Industrial City

Notifications

Customs

1. 88/2022 - dated 10-10-2022 - Cus (NT)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver.

Highlights / Catch Notes

GST

• Real Estate Developer Violates CGST Act by Not Passing Input Tax Credit Benefits to Buyers, Faces Penalties u/s 171(1.

  Case-Laws - NAPA : Profiteering - purchase of a Flat/supply of construction service - The Respondent has denied the benefit of ITC to the buyers of his flats/shops/units in contravention of the provisions of Section 171 (1) of the CGST Act, 2017. The Authority holds that the Respondent has committed an offence by violating the provisions of Section 171 (1) and therefore, he is liable for imposition of penalty - NAPA
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Income Tax

• Income from Land Sale to Builder Classified as Long Term Capital Gains; Assessee Retains 26.67% Land, Gains Flats.

  Case-Laws - AT : Correct head of income - business profit or Long Term Capital Gains - GPA was restricted to the extent of builder’s right at 73.33% of the land and that portion allotted as builder’s share and the balance 26.67% was retained by the assessee. In our view, the entire above transaction is purely sale of plot to the builder and in turn received monetary consideration and balance 4 Flats valued - Hence, according to us, this is a transaction of capital gains and assessee’s transaction is that of Long Term Capital Gain. - AT
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• Section 148A Order Annulled: Notice Issued Post-3-Year Limit with Income Escapement Under Rs. 50 Lakh.

  Case-Laws - HC : Validity of order passed u/s 148A - The impugned order is bad and not sustainable in law and is liable to be quashed for the reason that the impugned notice under Section 148A(b) under the newly amended Act was issued after expiry of three years from the end of relevant assessment year and the alleged escapement of income is below Rs.50 lakh. - HC
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• Assessee Challenges Duplicate Capital Gains Entry for Property Sale in Income Tax System.

  Case-Laws - AT : Capital gains - treating information contained in ITS as related to transaction of sale of immovable property - Assessee had pointed out how the two transactions reflected in the ITS pertained to one transaction of purchase of immoveable property, pointing out the same registration no. mentioned against the two transactions in the ITS and also pointing out that based on the stamp duty paid by the assessee on the property purchased ,the value of the second transaction reflected the stamp duty value of the said transaction and hence the two transactions were nothing but one transaction reflected twice in the ITS. - AT
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• Penalty Denied: Section 271(1)(c) Embezzlement Loss Claim Justified; Cheque Absence Doesn't Invalidate Assessee's Explanation.

  Case-Laws - AT : Penalty u/s 271(1)(c) - denial of claim of embezzlement loss - The fact that the cheque does not figure in the bank account of other party does not by itself prove the explanation of the assessee as wrong, as long as cheque stands reflected as issued in the bank statement of the assessee, which was not proved to be false by the Revenue. - No penalty - AT
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• Clarifying "Prejudicial to Revenue" in Section 263: Not All AO Errors Are Harmful to Revenue Interests.

  Case-Laws - AT : Revision u/s 263 by CIT - The phrase prejudicial to the interest of revenue has to be read in conjunction with an erroneous order passed by the A.O. Every loss of revenue as a consequence of an order of AO, cannot be treated as prejudicial to the interest of revenue, for example, when an ITO, adopted one of the course permissible in law and it has resulted in loss of revenue, or where two views are possible and the ITO has taken one view with which the PCIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of revenue. - AT
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• Collection Charges from AAI Not Considered Aircraft Operation Income Under Article 8 of India-Germany DTAA.

  Case-Laws - AT : Income deemed to accrue or arise in India - Income from the operation of aircrafts for the international traffic i.e. transportation of passengers and cargo - the collection charges received by the assessee from AAI are not income derived from operation of aircraft falling under Article 8 of DTAA between India and Germany - AT
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• Court Reviews Section 40(a)(i) Disallowance Due to Marginal TDS Deposit Delay for Non-Resident Payments; Seeks Contextual Interpretation.

  Case-Laws - AT : Disallowance u/s 40(a)(i) - marginal delay in deposit of TDS - TDS deducted from payment to non-residents - Only marginal delay in deposit of tax deducted at source has attracted hundred percent disallowance of the concerned expenditure which is not in accordance with context of provisions of section 40(a)(i) of the act. - AT
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• Assessing Officer's error in enhancing book profits u/s 115JC not suitable for rectification u/s 154.

  Case-Laws - AT : Rectification u/s 154 - mistake apparent on record warranting rectification u/s 154 - debatable issue - enhancement of income for the purpose of section 115JC - the AO is not correct in enhancing the book profits u/s.115JC by passing an order under Section 154 of the Act. - AT
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Customs

• Customs Duty Dismissed: No Pilferage Case as Inspection Reveals Only Packing Material in Bonded Premises.

  Case-Laws - AT : Demand of Customs Duty - goods allegedly pilfered from Customs Area bonded premises - bonded warehoused goods - The packages were admittedly opened for the first time by the Police Officer, wherein the packing material was found instead of ‘Nutritional Supplements’ as purportedly imported. From the reports submitted by the local Commissioner appointed by the Hon’ble High Court, it is evident that he visited the site and thereafter reported that no goods were in existence at the place - customs bonded premises. - no case of pilferage is made out against the appellant. - AT
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• Appellant entitled to customs duty exemption for mobile phone microphones; denial due to late claim is incorrect.

  Case-Laws - AT : Benefit of exemption from customs duty - Import of Microphone for Cellular Mobile Phone - even the appellant does not claim the benefit under a particular Notification at the initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage - The benefit of said Notification has to be extended in favour of the appellant. Such benefit has wrongly been denied on the ground it being claimed belatedly. - AT
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• Fire TV Stick 4K Max Classified u/r 3(b) as HDMI Receiver Provides Essential Function for Device Classification.

  Case-Laws - AAR : Classification of goods - HDMI Digital Media Receiver with Alexa Voice remote - Following Rule 3(b) of the General Rules of Interpretation, the classification of Fire TV Stick 4K Max, a kit comprising HDMI Digital Media Receiver [Model Number K2R2TE] with Alexa voice remote 3rd Generation [Model No. L5B83G] would be the classification of HDMI Digital Media Receiver that imparts the essential function to the device - AAR
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• Tariff Classification for GPON ONT Devices Confirmed Under Entry 8517 69 50 for Import Purposes.

  Case-Laws - AAR : Classification of imported goods - Gigabit Passive Optical Networks Optical Network Termination (hereinafter referred to as GPON ONT) - the impugned good is a combination of devices performing different tasks which are intended to contribute together to a clearly defined function covered by sub-heading 8517 69 50. Accordingly, the appropriate classification for said goods is under Tariff Entry 8517 69 50. - AAR
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IBC

• Financial Creditors Can Jointly Meet Rs. 1 Crore Threshold to Initiate CIRP Under IBC Section 7, Amended 2020.

  Case-Laws - HC : Initiation of CIRP - threshold limit for triggering CIRP - joint application - The statute i.e., Section 7 of the IBC as amended vide Gazette Notification dated 05.06.2020, admits no other interpretation except that a group of financial creditors can converge and join hands to touch the financial limit of Rs.1 crore stipulated under Section 7 so as to initiate a CIRP under the IBC. - HC
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Service Tax

• Claim for Abatement Denied Due to Appellant's Failure to Prove Non-utilization of CENVAT Credit on Contract Inputs.

  Case-Laws - AT : Work Contract Service - claim for abatement - The benefit of abatement shall be available only if the Appellant are able to substantiate that they have not taken any CENVAT credit of the inputs used in or in relation to the said work contract. Commissioner order denying the benefit of abatement cannot be faulted to this extent. - AT
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Central Excise

• Witness Statements in Excise Cases Require Cross-Examination for Reliability; Cannot Alone Lead to Adverse Conclusions.

  Case-Laws - AT : Clandestine Removal - reliability on statements of witnesses - It is well settled law that though the statements carry good persuasive value but such untested statements cannot be made stand-alone basis for arriving at an adverse conclusion against the assessee. Though an admission or a statement is one of the important piece of evidence but the same has to bear the test of veracity through the tool of cross examination. - AT
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Case Laws:

• GST

• 2022 (10) TMI 371
  Issuance of summons - statement recorded under Section 70 of the Central Goods and Service Tax (CGST) Act - inspection proceedings issued under Section 67 of the CGST Act - HELD THAT:- Petition has been signed and verified by Mr. Ushik Gala and the said Mr. Ushik Gala has also verified on oath that the contents of paragraphs 1 to 30 of this Petition are true to his knowledge. Therefore, Mr. Ushik Gala certainly would be aware of the facts and circumstances. Hence he shall not be exempted from appearing. Mr. Ushik Gala shall appear before the concerned authorities as and when summoned and fully co-operate. If the concerned authorities feel presence of CFO or anyone is required, they may issue appropriate summons at the appropriate time. All to whom summons is issued and served including Mr. Ushik Gala shall attend at the time and date fixed without fail - Petition disposed off.

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• 2022 (10) TMI 370
  Refund claim - denial of refund on the ground of time limitation - HELD THAT:- In view of the notification dated 05.07.2022, Mr Aggarwal cannot but accept that the impugned order has to be set aside - the matter is remitted to the authority, who will re-examine the refund application and pass an order in that behalf - writ petition disposed off.

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• 2022 (10) TMI 369
  Profiteering - construction service - blocking of ITC - it is alleged that Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in price of the shop - contravention of Section 171 of CGST Act - Interest - penalty - HELD THAT:- It is clear from the plain reading of Section 171 (1) that it deals with two situations: - one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP s Report that there has been no reduction in the rate of tax in the post-GST period; hence the only issue to be examined is whether there was any net benefit of ITC with the introduction of GST. It is observed from the report that the ITC, as a percentage of the turnover, that was available to the Respondent during the pre-GST period (April 2016 to June 2017) was 0.84%, whereas, during the post-GST period (July 2017 to March, 2019), it was 2.58% for the project U-FARIA . This confirms that post-GST, the Respondent has benefited from additional ITC to the tune of 1.74% (2.58% - 0.84%) of his turnover for the project U-FARIA and the same was required to be passed on to the customers/shop buyers/recipients. The DGAP had calculated the total profiteering amount as Rs. 24,78,383/- in respect of 90 shop buyers including the Applicant No. 1. The Authority finds no reason to differ from the computation of profiteering in the DGAP s Report dated 24.09.2019 and 29.10.2020 or the methodology adopted. The Authority finds that the Respondent has profiteered by Rs. 24,78,383/- during the period of investigation i.e. 01.07.2017 to 31.03.2019. The Authority determines an amount of Rs. 24,78,383/- (including 12% GST) under section 133(1) as the profiteered amount by the Respondent from his 178 /shop buyers/customers (as per Annexure A to this Order), including Applicant No. 1, which shall be refunded by him along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment as per the provisions of Rule 133 (3) (b) of the CGST Rules 2017. The amount profiteered is Rs. 37,107/- (including GST) in respect of Applicant No. 1 - this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the shop buyers/customers commensurate with the benefit of ITC received by him. Interest - HELD THAT:- The Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 24,78,383/-, for the project U- FARIA . Hence the Respondent is directed to also pass on interest @18% to the customers/ Shop buyers/ recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the CGST Rules, 2017. Penalty - HELD THAT:- It is also evident from the above narration of facts that the Respondent has denied the benefit of ITC to the customers/flat buyers/recipients in his Project U-Faria in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. Section 171 (3A) of the CGST Act, 2017 has been inserted in the CGST Act, 2017 vide Section 112 of the Finance Act, 2019, and the same became operational w.e.f. 01.01.2020. As the period of investigation was 01.07.2017 to 31.03.2019, therefore, penalty cannot be imposed on the Respondent retrospectively, i.e. for the period of investigation. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules 2017 - Application disposed off.

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• 2022 (10) TMI 368
  Profiteering - construction services - allegation is that the benefit of ITC has not been passed by way of reduction in the prices - contravention of section 171 of CGST Act - Interest - penalty - HELD THAT:- Section 171 (1) deals with two situations: one relating to the passing on the benefit of reduction in the rate of tax and the second on the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP s Report that there has been no reduction in the rate of tax in the post-GST period; hence, the only issue to be examined is whether there was any net benefit of ITC with the introduction of GST. On this issue, it has been revealed from the DGAP s Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 0% and during the post-GST period (July, 2017 to November, 2020), it was 5.92% for the Project at Kamayani Nagar at Rau, Indore. This confirms that post-GST, the Respondent has benefited from additional ITC to the tune of 5.92% [5.92% (-) 0%] of his turnover for the said Project, and the same was required to be passed on to the customers/flat buyers/recipients. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers/customers/recipients as Rs. 26,33,536/- for the Project of the Respondent at Kamayani Nagar at Rau, Indore, the details of which are mentioned in Annexure-16 of the Report, which includes the amount of Rs. 52,873/- of the Applicant No. 1. The Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP s Report or the methodology adopted and hence, the Authority determines the profiteered amount for the period from 01.07.2017 to 30.11.2020, in the instant case, as Rs. 26,33,536/- for the Project of the Respondent at Kamayani Nagar at Rau, Indore. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him. Interest - HELD THAT:- The Authority finds that the Respondent has profiteered by Rs. 26,33,536/- for the Project at Kamayani Nagar at Rau, Indore during the period of investigation i.e. 01.07.2017 to 30.11.2020. The above amount that has been profiteered by the Respondent from his home buyers/customers/recipients in the above said Project shall be refunded/returned/passed on by him, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, under the provisions of Rule 133 (3) (b) of the CGST Rules, 2017 - Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 26,33,536/- for the Project at Kamayani Nagar, Rau. Indore. Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per the provisions of Rule 133 (3) (b) of the CGST Rules, 2017. Penalty - HELD THAT:- The Respondent has denied the benefit of ITC to the customers/flat buyers/recipients in his Project at Kamayani Nagar at Rau, Indore in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. Section 171 (3A) of the CGST Act, 2017 has been inserted in the CGST Act, 2017 vide Section 112 of the Finance Act, 2019, and the same became operational w.e.f. 01.01.2020. As the period of investigation was 01.07.2017 to 30.11.2020, therefore, the Respondent is liable for imposition of penalty under the provisions of the above Section for the amount profiteered from 01.01.2020 onwards. Accordingly, notice be issued to him for such purpose. Application disposed off.

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• 2022 (10) TMI 367
  Profiteering - project Ruparel Orion - contravention of provisions of Section 171 of the CGST Act, 2017 - HELD THAT:- The Authority has carefully examined the Report of the DGAP and the case records and it has been observed that the Respondent had developed only single project named as Ruparel Orion under the GSTIN 27AAECK9069N1ZQ which had already been investigated by the DGAP and the Authority had passed Order No.57/2022 dated 05.08.2022 under Section 171 of the CGST Act, 2017 in the instant project.

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• 2022 (10) TMI 366
  Profiteering - purchase of a Flat/supply of construction service - it is alleged that the Respondent had not passed on the commensurate benefit of input tax credit (ITC) to him by way of commensurate reduction in price - contravention of provisions of section 171 of CGST Act - Penalty - HELD THAT:- In the instant case, there is no reduction of rate of tax during the relevant period and the only issue which is required to be decided by the Authority is as to whether Respondent is required to pass on the benefit of input tax credit. As mentioned in earlier paragraphs, the DGAP has carried out investigation in the subject matter and collected relevant information/evidences from the Respondent and after the analysis of the same the DGAP has come to a conclusion that the Respondent has gained benefit of ITC on the supply of Construction services after the implementation of GST w.e.f. 01.07.2017 and the Respondent was required to pass on such benefit to the buyers by way of commensurate reduction in prices in terms of Section 171 of the CGST Act, 2017 during the period 01.07.2017 to 31.05.2020. The Respondent has not been able to provide any methodology whereby such amount of Rs.15,48,92,888/- was passed on whereas the DGAP has calculated amount of Rs. 9,03,74,981/- in scientific manners as mentioned in the Annexure-24 of said Report. Hence, this Authority determines that the Respondent has realized an additional amount of Rs. 9,03,74,981 /- which includes both the profiteered amount @ 5.69% of the taxable amount (base price) and GST @ 12% on the said profiteered amount from the 395 buyers/recipients [including the amount of Rs.2,72,720/- (including GST @12%) from the Applicant No. 1] during the period from 01.07.2017 to 31.05.2020 which was required to be passed on such home buyers/customers/recipients of supply of his impugned project - this Authority agrees with the methodology adopted by the DGAP in its Report to calculate the profiteered amount. This Authority has taken note of claim of the Respondent regarding transfer of benefit of Rs.15,48,92,888/- and also findings of the DGAP in Table D in para 22 supra, that an amount of Rs. 9,03,74,981/- was to be transferred out The Respondent has claimed to pass on excess benefit to some buyers at the expansion of other buyers as mentioned in the said Table D. The Respondent has not been able to provide any methodology whereby such amount of Rs.15,48,92,888/- was passed on whereas the DGAP has calculated amount of Rs. 9,03,74,981/- in scientific manners as mentioned in the Annexure-24 of said Report. The Respondent has denied the benefit of ITC to the buyers of his flats/shops/units in contravention of the provisions of Section 171 (1) of the CGST Act, 2017. The Authority holds that the Respondent has committed an offence by violating the provisions of Section 171 (1) and therefore, he is liable for imposition of penalty under the provisions of Section 171 (3A) of the Act. As the said provision which has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019, the Respondent is liable to penalty for the amount profiteered by him from 1.01.2020 onwards. Accordingly, notice be issued to the Respondent for such purpose.

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• Income Tax

• 2022 (10) TMI 377
  Reopening of assessment u/s 147 - Necessity to issue reasons of notice u/s 147 - HELD THAT:- The impugned order [ 2022 (1) TMI 1280 - BOMBAY HIGH COURT] it has been rightly contended, is a non-speaking and cryptic order. However, we are not inclined to issue notice in the present special leave petition and leave it open to the petitioner to file return of income under protest within one month, without prejudice to the rights and contentions, and ask for the reasons for issue of notice under Section 147 of the Income Tax Act, 1961. The procedure as prescribed in GKM Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT ] would be followed by the assessing officer. In case of an adverse order, it will be open to the petitioner to challenge the same. Special leave petition is dismissed.

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• 2022 (10) TMI 376
  Validity of reopening of assessment proceedings - unexplained loan receipts - as argued notice received prior to finalisation of the impugned assessment had granted only two days for filing of reply - HELD THAT:- The assessment made in the hands of the company for the earlier year had come to be challenged . [ 2022 (4) TMI 1456 - MADRAS HIGH COURT] a learned Single Judge of this Court dismissed the writ petition, granting liberty to the petitioner company to file a statutory appeal within a time frame fixed by the Court. All the matters relating to determination of the issue as to whether the cash credits resulting from the loans allegedly given by R.Srinivasan, are genuine. It is appropriate that the aforesaid issue be decided by the appellate authority, who would have the requisite mechanism to call for various relevant details and determine the facts in a proper manner. Petitioners draws attention to the fact that the notice received prior to finalisation of the impugned assessment had granted only two days for filing of reply. The notice is dated 24.12.2019 and calls for a reply to be filed on 26.12.2019. On 26.12.2019, the petitioner has written to the Department asking for various documents relied upon in notice dated 24.12.2019 and seeking more time to respond to the same. The impugned order of assessment has come to be passed on 26.12.2019, without reference to the petitioner s request. Though the above position might be construed as a violation of principles of natural justice, we are not inclined to set aside the impugned order merely on this score, bearing in mind the facts and circumstances as noted above. The appeals of the company as well as R.Srinivasan involving identical issues are before the Appellate authority and thus, it would stand to reason that the case of the petitioners is also taken up in appeal. In my considered view, a violation of natural justice is not fatal in all situations and a wholistic view should be taken of the issue, such that the interests of all parties are properly balanced. The powers of an appellate authority are co-terminus with that of an assessing authority and the details sought for by the petitioner may well be supplied to the petitioner by the appellate authority to ensure that the petitioner is granted full opportunity to put forth his case in appeal. In fine, the impugned assessment orders are upheld and the petitioner is granted liberty to file appeal, if he so desires, within a period of two (2) weeks from today.

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• 2022 (10) TMI 375
  TP Adjustment - Selection of MAM - rejection of internal TNMM applied by the assessee company - HELD THAT:- We find that similar issue on similar facts has been decided by the Coordinate Bench of the Tribunal in the case of Majorel India Pvt. Ltd. [ 2021 (11) TMI 1101 - ITAT DELHI ] wherein the Tribunal directed the TPO/A.O. to adopt internal TNMM for benchmarking provision of ITes. Thus we direct the TPO/A.O. to adopt internal TNMM for benchmarking provision of ITeS. Accordingly, the grounds of appeal of the assessee company are allowed.

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• 2022 (10) TMI 374
  Additions of commission income u/s 44AD or 68 - assessee failed to establish commission agency business and treated the same to be unaccounted money u/s 69A read with section 115BBE - assessee has himself volunteered to offer the amount for taxation to be written back as an income - HELD THAT:- In this case, the Assessing Officer on the one hand has taken advantage of the ignorance of the assessee in offering the income on presumptive basis and taxed the receipts where the assessee was not supposed to pay the taxes, however, picked the other income whereupon the Assessing Officer found that the same was exigible to higher taxes. This, cannot be held justified at all. It has been held time and again that the Assessing Officer should help the assessee in computing and assessing the true and correct taxable income of the assessee and further that the income tax authorities should charge legitimate taxes from the assessees and they should not punish the assessees for their bona fide and ignorant mistakes. In this case, the AO has adopted pick and choose manner to fasten high tax liability upon the assessee which cannot be allowed at all. The impugned order of the CIT(A) is set aside and the matter is restored to the file of the Assessing Officer with a direction that the AO will assess the income of the assessee under different heads as per the provisions of the Act, after considering the submissions of the assessee in this respect and after giving adequate and proper opportunity to the assessee to present his case and necessary details and evidences. It is made clear that the Assessing Officer will not be influenced by the fact that the assessee himself has offered/returned any of the receipts/income under wrong head or has himself offered higher taxes in respect of certain income. The Assessing Officer will determine the true and correct income of the assessee under different heads as per the provisions of the Act. The appeal of the assessee is treated as allowed for statistical purposes.

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• 2022 (10) TMI 373
  Correct head of income - surplus arising from Joint Development Agreement (JDA) - business profit or Long Term Capital Gains - assessee is holding this ancestral land and sold by her and in return got new flats in 4 Nos. for a consideration and monetary consideration - HELD THAT:- GPA s supplementary agreement and construction agreement entered into between the assessee and the developer company, it shows only the intent of the assessee and purpose of the assessee in all the above to get the new residential house in lieu of old without any outflow of money. According to us, as per records assessee neither had any knowledge or capability about the business or property development nor had any intention to do so as the assessee gave a general power of attorney in favour of the builder accordingly. All the activities were done by builder through GPA whereby builder was authorized to do all such things as is necessary to enable construction of flats and also to sell the same. GPA was restricted to the extent of builder s right at 73.33% of the land and that portion allotted as builder s share and the balance 26.67% was retained by the assessee. In our view, the entire above transaction is purely sale of plot to the builder and in turn received monetary consideration and balance 4 Flats valued - Hence, according to us, this is a transaction of capital gains and assessee s transaction is that of Long Term Capital Gain. Hence, we direct the A.O to treat the transaction as LTCG and assess the same accordingly. Whether the assessee is entitled to claim of deduction u/s. 54 or 54F? - Because the assessee has been allotted 4 residential Flats against the sale of her ancestral land or in lieu of development of her ancestral land. We noted that this issue has been considered by the Hon ble Madras High Court in the case of Tilokchand Sons [ 2019 (4) TMI 713 - MADRAS HIGH COURT] wherein a residential house as occurring in s. 54(1) of the Act can include more than one or plural residential house. The Hon ble High court has considered even the amendment which is effective from 01.04.2015 and applicable far and from assessment year 2015-16 and the relevant assessment year before us 2014-15. Hence, the amendment will not apply in this case. We direct the A.O to allow the claim of deduction u/s. 54 and allow the claim of the assessee.

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• 2022 (10) TMI 372
  Deduction u/s 80C - Whether the unclaimed deduction can be claim before the assessing authority without filing the revised return and whether the power of the appellate authority can allow the claim of deduction which was not claimed in the return of income. We adjudicate the second issue? - HELD THAT:- Appellate authority has coterminous power to accept the deduction which was not claimed in ITR. So, the entire claim under section 80C is eligible claim of deduction. During the hearing the assessee had submitted all relevant documents which are also considered by the appellate authority. We accept the claim of assessee related to deduction u/s 80C. We set aside the order of the ld. CIT(A) with a direction to allow the deduction, claimed by the assessee. Appeal of assessee allowed.

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• 2022 (10) TMI 365
  Reopening of assessment u/s 147 - Addition u/s 68 - Unexplained share capital HELD THAT:- Considering the fact that earlier the AO had called upon the petitioner(s) to produce the evidence in support of increase of authorised share-capital, produce the evidence of share allotment and names and addresses of the parties from whom share-premium was received, among other things and thereafter, the AO finalised the assessment and passed Assessment Order, the subsequent re-opening can be said to be change of opinion. Under the circumstances, the re-opening is rightly set aside by the High Court. We see no reason to interfere with the same. Special Leave Petition stands dismissed.

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• 2022 (10) TMI 364
  Order passed by President, Income Tax Appellate Tribunal (ITAT) to constitute a special Bench to decide the appeal preferred in the case of the respondents - SLP preferred against the impugned judgment and order passed by the High Court of Judicature by which the High Court has set aside the Order passed by Income Tax Appellate Tribunal (ITAT) - as submitted that the issue touches the jurisdiction and/or authority of the President to constitute a special Bench in exercise of the powers under Section 255(3) of the Income Tax Act, 1961 HELD THAT:- As the appeal which was to be heard by the Special Bench has already been now decided and disposed of by the ITAT, Hyderabad and, as such, the present Special Leave Petition has become infructuous and/or academic. Therefore, without expressing anything on merits on the legality and validity of the impugned judgment and order passed by the High Court and the powers of the President to constitute a Special Bench in exercise of powers under Section 255(3) of the Income Tax Act and keeping the question of law open, we dispose of the present Special Leave Petition as having become academic. However, the strictures passed against the Vice- President, ITAT in the impugned judgment and order are expunged.Special Leave Petition stands disposed of accordingly.

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• 2022 (10) TMI 363
  Minimum Alternate Tax (MAT) - Applicability of section 115JB on electricity company - As per HC fiction fixed under section 115JB cannot be pressed into service against the appellant while making the assessment of the tax payable under the Income-tax Act - Applicability of section 43B in respect of the electricity duty collected - As held Section 43B cannot be invoked in making the assessment of the liability of the appellant under the Income-tax Act with regard to the amounts collected by the appellant pursuant to the obligation cast on the appellant under section 5 of the Kerala Electricity Duty Act, 1963 - HELD THAT:- We have gone through the circumstances on record and considered the rival submissions. In our view, no interference is called for. We, therefore, dismiss this appeal. Addition u/s 43B - Electricity duty payable under section 3(1) of the Electricity Duty Act, 1963 and surcharge payable to Government - Applicability of section 115JB on electricity company - Addition on electricity duty and short provision of interest on Government loan made u/s 43B - HELD THAT:- The view taken by the High Court [ 2010 (11) TMI 127 - KERALA HIGH COURT] and connected matters was relied upon by the High Court in the instant matters and the issue was answered against the Revenue. Having confirmed the view taken by the High Court, the logical consequence is that the instant matters deserve dismissal. Applicability of Section 115JB to the assessee Electricity Company - Since the issue involved in the instant matters stand covered by the dismissal of Civil Appeal in this case the instant matters are also dismissed.

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• 2022 (10) TMI 362
  Reopening of assessment u/s 147 - HELD THAT:- We have gone through the impugned judgment and order passed by the High Court by which the High Court [ 2019 (1) TMI 1345 - BOMBAY HIGH COURT] has quashed and set aside the re-assessment proceedings and re-opening of the assessment in exercise of powers under Sections 147/148 of the Income Tax Act. From the material on record, it can be seen that the re-opening of the assessment was solely on change of opinion of the Assessing Officer and therefore, the High Court has rightly set aside the same. We see no reason to interfere with the impugned judgment and order passed by the High Court. As such, we are in complete agreement with the view taken by the High Court setting aside the re-assessment proceedings/re-opening of the assessment.

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• 2022 (10) TMI 361
  Validity of reopening of assessment - assessment has been set aside by the High Court by specifically observing that the reassessment proceedings were on change of opinion and after taking into consideration the fact that at the time of original assessment under Section 143 specific queries were raised which were answered by the Assessee and, therefore, thereafter it was not open for the Revenue to re-open the assessment proceedings on the same ground and thereafter when the re-assessment proceedings have been set aside, it cannot be said that the High Court has committed any error. The Special Leave Petition stands dismissed. Pending application(s) shall stand disposed of.

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• 2022 (10) TMI 360
  Validity of order passed u/s 148A - Order challenged on the ground that the same being without jurisdiction and contrary to the provision of Section 149(1)(a) and (b) by contending that admittedly the impugned notice has been issued after the expiry of three years from the end of relevant assessment year and it is also an admitted position which appears from the conclusion of the assessing officer himself in the impugned order that the alleged escapement of income which is below Rs.50 lakh - HELD THAT:- Considering the submission of the parties and admitted factual and legal position which appears on perusal of the impugned order dated 28th July, 2022, impugned order is bad and not sustainable in law and is liable to be quashed for the reason that the impugned notice under Section 148A(b) under the newly amended Act was issued after expiry of three years from the end of relevant assessment year and the alleged escapement of income is below Rs.50 lakh. In view of the discussion made above, this writ petition is disposed of by quashing the aforesaid impugned order dated 28th July, 2022 under Section 148A(d) of the Act.

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• 2022 (10) TMI 359
  Validity of Reopening of assessment u/s 147 - Reliance on information collated during a survey action carried out - unexplained share capital - HELD THAT:- This Court finds that the petitioner has not brought on record any material on record to establish that the reassessment proceedings are being undertaken in an arbitrary manner. The petitioner was provided with letter of the Deputy Director of Income Tax (Investigation), New Delhi, along with the Notice issued u/s 148A(b) of the Act. The said letter identified the petitioner herein with reference to information collated during a survey action carried out on the BDR Group and enclosed the survey report for the review of the AO The present reassessment proceedings have been initiated in pursuance of the aforesaid letter and survey report, which, as per the AO, shows that the funds received by the assessee as share capital from M/s BDR Builders Developers Pvt. Ltd. are not genuine. As regards the petitioner s contention that this precise issue of source of its share capital was examined during original assessment proceedings prima facie appears to be incorrect. In fact, a perusal of the order of CIT(A) reveals that while examining and verifying the veracity of the source of funds received by the petitioner herein from Rajesh Gupta HUF and Shri Sanchit Gupta, as share capital, the CIT(A) presumed that the funds received by the said shareholders from M/s BDR Builders and Developers Pvt. Ltd. were genuine and on the said assumption, the said additions were deleted. CIT (A), in fact, relied upon the confirmations issued by M/s BDR Builders and Developers Pvt. Ltd. as valid to arrive at the aforesaid finding in respect of Rajesh Gupta (HUF). This Court therefore does not find any merit in the submission of the petitioner that the doubt cast on the genuineness of the amount of Rs.17.70 Crores infused by the shareholders of the assessee from their receipts from M/s BDR Builders and Developers Pvt. Ltd., which is alleged to be an entry provider of bogus capital, is not new information. During the course of earlier assessment proceedings, the authorities did not suspect the funds received by assessee s shareholders in its transactions with M/s BDR Builders and Developers Pvt. Ltd. and relied upon the confirmations issued by the said company to hold it as genuine. The contention of revenue that M/s BDR Builders Developers Pvt. Ltd. uses layered transactions and banking channels to provide bogus share capital from bogus companies and the assessee and its shareholders are beneficiaries of the said transactions is factual and the same will have to be examined by the AO. The petitioner does not dispute that the funds received by it as share capital were raised by its shareholders from M/s BDR Builders and Developers Pvt. Ltd. and therefore the genuineness of the said transactions cannot be determined in these proceedings. The allegation of the petitioner, that its reply was not considered by the AO, is incorrect. The said reply has been noted and dealt with in the impugned order. This Court is of the view that the petitioner is challenging the impugned order on merits. The veracity of the contention of Revenue that M/s BDR Builders and Developers Pvt. Ltd. has provided bogus/fictitious capital to the petitioner herein cannot be examined in the writ proceedings. The Supreme Court in Commissioner of Income Tax and Ors. v. Chhabil Das Agarwal [ 2013 (8) TMI 458 - SUPREME COURT] ] has held that the Act of 1961 provides complete machinery for assessment/reassessment of tax, the assessee is not permitted to abandon that machinery and invoke writ jurisdiction of High Court under Article 226. The present case does not fall under the exceptional grounds on which the writ jurisdiction of this Court can be invoked. Accordingly, the present writ petition along with the pending application is dismissed.

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• 2022 (10) TMI 358
  Validity of order of assessment passed u/s 147 r/w Section 144B - time given to the Petitioner for fling the reply to the show cause notice was not sufficient - argument of gross violation of principles of natural justice - HELD THAT:- When the Petitioner tried to upload the reply to the show cause notice, it was found that the submit button on the e-Filing Portal had been disabled. Petitioner also placed reliance upon a screen shot of the e-Filing Portal to suggest that at 22:18 hrs., the submit button shaded in gray had been disabled. It was also stated that the Petitioner immediately thereafter registered her grievance on the e- Filing Portal in this regard on 29th March, 2022 itself, a copy whereof has also been placed on record. Not only this, the Respondents also stood informed via email on the same date regarding the said fact. A copy of the email is also a part of the record. We are satisfied that the order impugned and notice of demand are not sustainable on account of violation of principles of natural justice. Be that as it may, impugned order and notice of demand are set aside. Petitioner is granted three weeks time to file her reply to the show cause notice with the National Faceless Assessment Centre, Delhi. The Respondents shall be at liberty to pass appropriate orders within ten weeks thereafter in accordance with law.

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• 2022 (10) TMI 357
  Unexplained cash deposit in the bank - only contention of the appellant is that the amount deposited in the appellant s account is the sale value of land belonging to the appellant s wife which was sold in favour of Shri.Sajeev Mathai - HELD THAT:- Merely by producing the sale deed which shows the sale consideration and trying to connect it with the deposit in the account on the very same day of the same transaction will not discharge the onus from the shoulder of the assessee. Only if the assessee discloses the source of income (the entire amount) then only the burden under Section 106 of the Evidence Act stands discharged and the onus then shifts to the AO. In the case on hand, the amount deposited whereas the document shows only the value - Thus, the appellant though disclosed the source of the cash deposit in the bank, he has not discharged the burden of proof on him. Hence the decision reported by the counsel for the appellant has no application. Tribunal looked into all the aspects and found that the AO as well as the first appellate authority failed to give credit to the amount which was shown in the sale deed and thereby it was partly allowed reducing the total income - we are of the opinion that the substantial questions of law are answered against the appellant.

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• 2022 (10) TMI 356
  Reopening of assessment u/s 147 - Non disclosure of reasons for reopening of assessment - Denial of natural justice - HELD THAT:- No doubt, under Section 148 notice, the minimum statement is enough, where, the detail as to how the Assessing Officer concerned has reason to believe that there has been an escaped assessment, need not be disclosed. But, in the communication giving reasons for re-opening, it should have been stated. Moreover, in the rejection order when this reason was specifically objected to, that should have been also dealt with by giving reasons as to why the objection raised by the petitioner against the limitation i.e., beyond four years up to six years has to be rejected. In the absence of any such reasons stated in the rejection order on the specific objection raised in this regard by the petitioner, this Court feel that even that rejection order may not be justifiable as it is not in the expected line within the meaning of the provisions of law as well as the decision made by the law Courts. Therefore, this Court feels that in order to rectify these violations or mistakes before proceeding further in the Section 147 proceedings, the matter can be remitted back to the respondent. This Court is inclined to dispose of this writ petition with the following order: That the impugned order is set aside and the matter is remitted back to the respondent for reconsideration. While reconsidering the same, the objection given by the petitioner shall be considered objectively by the respondent / assessing authority within the parameters as has been indicated especially in the context of first proviso to Section 147 and also the law laid down in Schwing Stetter India (P) Ltd. [ 2015 (6) TMI 497 - MADRAS HIGH COURT ] case. After having considered the same, a reasoned order shall be passed meeting this point discussed above and any other possible ground to be raised or urged by the petitioner. Depending upon such order to be passed considering the objections and still the assessing authority believes that he has reason to proceed under Section 147, it is open to them to act accordingly.

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• 2022 (10) TMI 355
  Property [plot] purchased in the name of partners for the benefit of the Partnership Firm out of Partnership Firm funds - Whether property/plot in question was purchased out of the Partnership Firm funds and not out of the funds by the individual partners and no investment have been made by the individual partners for purchase of property in question? - assessee as partner is having 1/3rd equal share on par with other co-partners in the partnership firm on its profit and losses - HELD THAT:- Funds are not utilized out of the individual partner s and the entire sum has been paid by the partnership Firm through banking channel and duly shown in it s audited accounts and balance-sheet which is also not disputed by the authorities below. After deducting the cost of acquisition and other expenses out of sale proceed received by the Partnership Firm on the total surplus amount on sale of property Plot Noida, the Partnership Firm viz., M/s. Delhi Plastic Industries has shown the said sum in the P L A/c for the F.Y. 2009-10 as noted by the Ld. CIT(A) in his order which is also included in the returned income of assessee and had paid taxes thereon. This factual matrix has not been disputed or controverted by the Ld. D.R. In this situation, if addition is sustained, then it would amount to double taxation. D.R. could not point out any defect in the short term capital gain calculation shown by the Partnership Firm in it s P L A/c. Since, no profit accrued/earned by the assessee/coowners on the reason that no investment made by the partners, the impugned addition [being 1/3rd equal share amongst partners] made in the hands of assessee without considering the other expenses like brokerage, stamp duty etc., is hereby deleted. Accordingly, appeal of the assessee is allowed.

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• 2022 (10) TMI 354
  Nature of expenses - Repair Maintenance Expenses - assessee treating the entire expenditure incurred on constructing a weather shed as revenue in nature as opposed to the Revenue treating it as capital in nature - HELD THAT:- Taking note of the fact that temporary structures are entitled to depreciation at the rate of 100% as per the depreciation rates under Income Tax Rules,1962, as per Rule 5, Appendix-I, as pointed by the for the assessee before us, and not controverted by the Revenue , we see no infirmity in the claim of the assessee to the entire amount of expenditure on construction of temporary weather shed as revenue in nature. Such claim of the assessee, we have noted, is in accordance with provisions of law, as prescribed under the Act read along with Rules made thereunder. Revenue has been unable to controvert the assesses claim either on facts or in law. Therefore, finding merit in the contentions of the ld.counsel for the assessee, we allow entire claim incurred on construction of temporary weather shed as revenue in nature, and accordingly direct deletion of addition of made by the Revenue by treating the same as capital in nature. Addition made to the income of the assessee on account of Transfer Pricing adjustment made to the transaction of purchases of components by the assessee entered into with its Associate Enterprise(AE) - HELD THAT:- The entire exercise of determining ALP of an international transaction by comparing profitability ratio of the assessee-company with that of a comparable entity indulging in the same type of transactions, requires the comparison of the correct profits of both the entities, after making all necessary adjustment to arrive at the correct profits. Now since the assessee has clearly demonstrated that it had booked excess purchases in the impugned yearthe same needed to be reduced for the purpose of arriving at the correct profit, and only thereafter profitability ratio of the assessee was required to be calculated. The contentions of the assessee in this regard, we find is correct. The authorities below i.e. both the AO and the CIT(A) have given no reason absolutely for dismissing this contentions of the assessee. We find merit in the contention of assessee and noting the working given by the assessee after making this adjustment to the profitability ratio of the assessee, resulting in the same being comparable with the comparable case, we hold that the assessee has fairly demonstrated its international transactions of purchases of parts/spare parts with its AE to be at ALP requiring no adjustment at all to be made to the same u/s 92 of the Act. We direct deletion of adjustment made to the international transactions of parts/spare parts and allow ground no.3 of the appeal.

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• 2022 (10) TMI 353
  Deduction u/s 80P(2)(a)(i) being interest income received from Cooperative Bank - assessee submitted that the assessee is a co-operative credit society and its main activity is providing credit facilities to its members by accepting deposits, savings etc. and providing loan and advances to its members only - HELD THAT:- The decision of Hon ble Apex Court in the case of Totgars Co-operative Sale Society Limited [ 2010 (2) TMI 3 - SUPREME COURT] the issue was related to interest income earned from Nationalised Bank which is taxed under the income from other sources. But in case of co-operative credit societies/cooperative banks which has different setup altogether where deduction under Section 80P(2)(a)(i) of the Act is allowable when the interest is derived from credit provided to its members. The same cannot be equated with Nationalised Bank which has dealt by the Apex Court. In the present case the assessee society had received interest income from co-operative banks only and the assessee is a credit society and funds received from its members only thus the deduction is properly claimed by the assessee. The decision of Hon ble Gujarat High Court [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] and the ratio laid down by the Hon ble Jurisdictional High Court is applicable in assessee s case. In fact, the decision of Hon ble Apex Court has also not debarred for claiming deduction under Section 80P wherein the credit facilities are given to the members and is directly related to the business while deriving interest. Thus, the appeal filed by the Revenue is dismissed.

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• 2022 (10) TMI 352
  Revision u/s 263 by CIT - As per CIT, AO has not applied his mind and allowed the capital gain offered by the assessee with a lessor consideration and without ascertaining the correct cost of acquisition and cost of indexation adopted - How assessment order is neither erroneous nor prejudicial to the interest of revenue? - HELD THAT:- There is no prejudicial to the interest of Revenue as for the present assessment year, as the assessee paid tax under the MAT provisions u/s. 115JB only and no tax payable under the normal provisions of the Income Tax Act because of carry forward losses. In our considered view, the present Revision proceedings itself is unjustifiable. It is not the case that the assessee declared the details during the assessment proceedings. The assessee has given the break-up of the entire sale consideration by its e-mail reply dated 27.07.2020. Similarly the Cost of Indexation of the property and the working thereon was also given by the assessee and the Cost Inflation Index is pertaining to the Financial Year 1997-98. After considering the above details, the Assessing Officer passed the assessment order which is neither erroneous nor prejudicial to the interest of Revenue. Therefore the Revision proceedings initiated by the Ld. PCIT u/s. 263 is hereby quashed. Thus the grounds raised by the assessee are hereby allowed.

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• 2022 (10) TMI 351
  Penalty levied u/s. 271B - assessee not getting its account audited u/s. 44AB - consistent stand of the assessee is that he has not maintained any books of account and no question of Audit Report u/s. 44AB and consequently penalty cannot be levied u/s. 271B - HELD THAT:- The imposition of penalty u/s 271B of the Act is not mandatory, rather it is discretionary, because if the assessee proves that there was a reasonable cause for the said failure, then the AO ought to have considered the same and then proceed with levying penalty. A careful reading of Section 273B encompasses that certain penalties shall be imposed in cases where reasonable cause is successfully pleaded. It is seen that penalty imposable u/s 271B is also included therein. By the said provisions, the Parliament has unambiguously made it clear that no penalty shall be imposed, if the assessee proves that there was a reasonable cause for the said failure . As noticed, if the statutory provision shows that the word shall has been used in Section 271B, then the imposition of penalty would have been mandatory. Section 271B as extracted above further throws light on the legislative intent as it specifically provides that no penalty shall be imposed if the assessee proves that there was reasonable cause for the said failure . In the facts of the present case, it is seen that the explanations offered by the assessee have been ignored by the Assessing Officer as well as Ld. CIT(A) and levied penalty u/s. 271B - The discretion available u/s. 273B is not exercised by the Lower Authorities. We have no hesitation in deleting the penalty levied u/s. 271B of the Act. - Decided in favour of assessee.

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• 2022 (10) TMI 350
  Penalty levied u/s. 271(1)(b) - Non compliance of notices u/s. 142(1) - HELD THAT:- The service of notice and its non-compliance is not denied by the assessee. We therefore confirm the levy of penalty u/s. 271(1)(b) of the Act. Further we find that the so called medical certificate was not filed before the A.O. and A.O. was being forced to pass a best judgment assessment order u/s. 144 r.w.s. 147 - Therefore there is devoid of merits in the claim of the assessee. Therefore the same is rejected and the findings of the CIT(A) does not require any interference and levy of penalty u/s. 271(1)(b) is hereby confirmed. Appeal filed by the Assessee is hereby dismissed.

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• 2022 (10) TMI 349
  Capital gains earned on purchase and sale of immoveable property - treating information contained in ITS as related to transaction of sale of immovable property - HELD THAT:- We find that the assessee had repeatedly admitted to having entered into in only one transaction of purchase of immoveable property with her share in the same being 20%.The assessee had duly substantiated this investment with necessary documentary evidence by way of furnishing copy of purchase deed of the said property. The assessee s explanation with regard to this investment was examined and duly accepted by the Revenue authorities as the source of investment in the same being explained. With respect to this transaction reported in the ITS of the assessee, the Revenue, we have noted, is satisfied with the assesses explanation of source of investment. With respect to the other transaction reported in the ITS of value which the Ld.CIT(A) has interpreted to relate to sale of the property purchased by the assessee, we find that other than the ITS information the Revenue had no other basis for treating the said information so. Even inquiries conducted by the AO from the sub Registrars office revealed no information relating to this transaction.Assessee on the other hand we find repeatedly asserted that the two transactions reported in the ITS were relating to one and same transaction of purchase of immoveable property - The other transaction being different has all along being denied by the assessee. CIT(A) s inference that the second transaction related to sale of the immoveable property was also demonstrated by the assessee to be incorrect who had pointed out that the said property had in fact been sold in A.Y 2012-13 and not the impugned year ,and capital gains earned thereon by the assessee returned to tax. The explanation was substantiated with copy of return of income for A.Y 2012-13 reflecting capital gains therein. Assessee had pointed out how the two transactions reflected in the ITS pertained to one transaction of purchase of immoveable property, pointing out the same registration no. mentioned against the two transactions in the ITS and also pointing out that based on the stamp duty paid by the assessee on the property purchased ,the value of the second transaction reflected the stamp duty value of the said transaction and hence the two transactions were nothing but one transaction reflected twice in the ITS. None of the above averments of the assessee have been dealt with by the CIT(A) while holding the second transaction to represent sale of immoveable property purchased by the assessee. The assesses contention duly substantiated that the property was sold in A.Y 2012-13 , has not been controverted by the CIT(A). Nor has the Ld.CIT(A) cared to even apply his mind to the similarities pointed out by the assessee in the two transactions reported in the ITS. The entire exercise of the Ld.CIT(A) in holding the second transaction reported in the ITS to reflecting sale of the property purchased appears to be totally adhoc,without any basis and per his own whims and fancies, in total disregard of the assesses explanation. We therefore agree with the Ld.Counsel for the assessee that there was no reason for treating the second transaction reported in the ITS as being distinct from the first transaction. Addition made to the income of the assessee on account of capital gain earned by the assessee by treating the second transaction reported in the ITS as distinct from the first and being sale of property purchased, is accordingly directed to be deleted. Appeal of the assessee is allowed.

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• 2022 (10) TMI 348
  Denial of deduction u/s 80P - claim was not made in the return but during the course of assessment proceedings - Authorities below have canvassed a view that the assessee violated section 80A(5) and hence the deduction was not available - HELD THAT:- On going through the judgments in G.M. Knitting Industries [ 2015 (11) TMI 397 - SC ORDER] in juxtaposition to Wipro Limited [ 2022 (7) TMI 560 - SUPREME COURT] the principle which emerges is that the fulfillment of requirement of making a claim for exemption under the relevant sections of Chapter III in the return of income is mandatory, but when it comes to the claim of a deduction, inter alia, under the relevant sections of Chapter VI-A, such requirement becomes directory. In the latter case, the making of a claim even after the filing of return but before completing the assessment, meets the directory requirement of making a claim in the return of income. The instant case involves deduction u/s 80P and hence, would be governed by the principle laid down in G.M. Knitting Industries (supra), as per which the making of a claim of deduction is mandatory but the timing is directory. Even if the claim is made during the course of assessment proceedings, such a claim has to be allowed. In view of the foregoing discussion, we are satisfied that the authorities below were not justified in rejecting the assessee s claim of deduction u/s 80P only on the ground that such a claim was not made in the return but during the course of assessment proceedings. The impugned order is ergo set aside and the matter is remitted to the file of the AO for examining the claim of deduction u/s 80P on merits. Appeal of assessee is allowed for statistical purposes.

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• 2022 (10) TMI 347
  Capital gain - land introduced in the firm and the same is accounted as capital and other liability of the partner of the firm - grievance of the revenue is that the assessee has introduced the land in the firm books at price more than DLC rate value and thereby the same is accounted as capital contribution as well as other liability and thereby the value is created much more than the DLC rate in the books of the firm - HELD THAT:- As we have not been the satisfactory proof whether the impugned land was an agricultural land or not? If the land is considered as nonagricultural land than the same is not accounted as capital assets in the firm s books. Whether the excess amount accounted in the books are chargeable in accordance with the provision of section 28(iv) is also not considered by the AO by passing a speaking order while making the addition in this case. All these issues require an examination of facts of the impugned land for which we believe that the opportunity is required to be given in the interest of justice to both the parties to take into consideration their respective arguments for which is necessary records to show the land was agricultural land or non-agricultural land is not clear before us. Assessee not placed on records in rebuttal of the arguments of this argument. Moreover, the arguments of the ld. DR on the provision of section 45(3) read with section 2(14) is also not examined in the absence of the evidence on record. As section 2(14) specific exclude the capital assets being agricultural land whereas section 45(3) deals with the capital assets and ld. CIT(A) have not examined this issue even though the issue was before him and it is appearing in his order. Thus, when agricultural land introduced in the firm under section 45(3) is not in capital asset then how the benefit of section 45(3) can be given to the assessee firm, there is no clear finding in the assessment order whether the land is agricultural land or not and therefore Assessing Officer is directed examine this aspect afresh and decide as to whether in the year of the transfer the land was agricultural land and thereby examine the applicability of the provision of and decided the issue after giving property opportunity to the assessee. In terms of these observation the appeal filed by the revenue is allowed for statistical purpose.

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• 2022 (10) TMI 346
  Penalty u/s 271(1)(c) - denial of claim of embezzlement loss - according to the AO, since this amount was returned by H.K. Enterprise, the assessee s claim of loss on account of embezzlement to this extent was not allowable - HELD THAT:- The assessee had pointed out that Revenue s contention having been returned by the party which had committed fraud on the assessee was not correct since the amount was not reflected in the bank statement of the assessee of that year. The explanation was substantiated with copy of Bank statement of the assessee. This contention of the assessee has not been controverted by the Revenue authorities. The claim of the Revenue that amount stands reflected in the bank statement of the party which has claimed to have refunded this amount to the assessee. This one-sided evidence with the Revenue does not prove that the assessee had actually received back this amount more particularly in the light of counter evidence filed by the assessee reflecting non receipt of the said amount in its bank statement. The assesses claim of embezzlement loss in these facts and circumstances, cannot be said to have been found to be false and wholly untenable. The assessee therefore, we hold, cannot be charged with having furnished inaccurate particulars or concealed particulars of income with respect to the said claim. Therefore, as far as Asst.Year 1991-92 is concerned, wherein penalty has been levied on account of this amount which has not been allowed as embezzlement loss to the assessee, we hold that there is no case for levy of penalty at all and the impugned penalty levied is therefore directed to be deleted. Asst.Year 1999-2000 penalty levied on embezzlement loss denied to the assessee - Out of this, the assessee has admitted wrong claim made with respect to an amount of Rs.50,000/- and it had fairly admitted that considering long period of time, it had to verify various documents involved and had mistakenly made a wrong claim in this regard. The assesses explanation for the mistake appears to be bonafide considering the long period of sixteen years that it took the Revenue to verify the claim of the assessee and the documents on the basis of which the claim was made being very old, the chances of some claims having been made wrongly cannot be completely ruled out. With respect to an amount remaining however, the assessee still claimed before the Revenue authorities, even in penalty proceedings, that its claim of embezzlement loss was genuine. The assessee demonstrated that it had issued these cheques to H.K. Enterprises, who in turn had allegedly embezzled this amount after crediting to its bank account. The assessee demonstrated through its bank accounts that this cheque was issued to the concerned party by it and this contention of the assessee has remained uncontroverted by the Revenue. The fact that this cheque does not figure in the bank account of other party does not by itself prove the explanation of the assessee as wrong, as long as cheque stands reflected as issued in the bank statement of the assessee, which was not proved to be false by the Revenue. Therefore the facts on record do not make out it a clear case of an incorrect claim made by the assessee - The assessee, therefore, in this case also cannot be said to have furnished any inaccurate particulars of income or concealed any income with respect remained claimed as embezzlement loss. In the result, the penalty levied u/s 271(1)(c) of the Act in both the assessment years before us, i.e A.Y 1991-92 and A.Y 1999-00 is deleted.

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• 2022 (10) TMI 345
  Revision u/s 263 by CIT - late deposit of TDS amount in the Government Account - HELD THAT:- Assessee has deposited the TDS in the subsequent year, hence there is no loss to the Revenue, therefore the order passed by the assessing officer is not prejudicial to the interest of Revenue, however it can be erroneous order. No doubt, as per provisions of the Act, the assessee can be treated as assessee in default , but for the purpose of section 263 order passed by the AO is not prejudicial to the interest of Revenue, as the assessee has deposited the TDS amount in subsequent year, hence there is no loss of revenue. We note that AO in the assessee`s case under consideration has taken possible view, therefore order passed by the assessing officer is neither erroneous nor prejudicial to the interest of Revenue. The impugned order passed u/s. 143(3) was passed by assessing officer, after calling for relevant information and after detailed examination of the same. AO has passed the assessment order after calling for details on the issue and after considering the reply and documents and after verification of the same and after due application of mind passed the assessment order, so it cannot be termed as erroneous and prejudicial to the interest of the revenue. PCIT s finding fault, with the order of the Assessing Officer is erroneous as well as prejudicial to the interest of revenue, on account of lack of inquiry, has to fail. Based on these facts and circumstances, we quash the order passed by the ld PCIT u/s 263. Appeal filed by the assessee is allowed.

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• 2022 (10) TMI 344
  Revision u/s 263 by CIT - gain on sale of property - whether the unsold property which is held as stock in trade by the assessee can be assessed under the head income from house property by notionally computing the annual letting value from such property? - HELD THAT:- As perused the facts of the case including the findings of the ld. PCIT and other material brought on record. We find merit in the submission of ld Counsel for the assessee and observed that issue under consideration is no longer res-integra. That is, the issue raised by the PCIT is squarely covered in favour of assessee by the judgment of Co-ordinate Bench in the case of Jayprakash Khanchand Aswani, [ 2018 (12) TMI 1963 - ITAT SURAT] wherein the Tribunal has considered the judgment of Hon ble Gujarat High Court in the case of CIT vs. Neha Builders Pvt. Ltd. [ 2006 (8) TMI 105 - GUJARAT HIGH COURT] and rendered the decision in favour of assessee. The phrase prejudicial to the interest of revenue has to be read in conjunction with an erroneous order passed by the A.O. Every loss of revenue as a consequence of an order of AO, cannot be treated as prejudicial to the interest of revenue, for example, when an ITO, adopted one of the course permissible in law and it has resulted in loss of revenue, or where two views are possible and the ITO has taken one view with which the PCIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of revenue. Unless the view taken by ITO is unsustainable in law. We note that flats not sold by assessee were its stock-in-trade and income arising on its sale is liable to be taxed as business income, therefore, issue raised by ld PCIT in his revision order under section 263 of the Act, is not tenable in law. In any event, we note that the Assessing Officer has adopted one of the courses permissible in law and even if it has resulted in loss to the revenue, the said decision of the Assessing Officer cannot be treated as erroneous and prejudicial to the interest of the revenue as held by Hon ble Supreme Court in Malabar Industries Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] Since the order of the Assessing Officer cannot be held to be erroneous as well as prejudicial to the interest of the revenue, in the facts and circumstances narrated above, the usurpation of jurisdiction exercising revisional jurisdiction by the Principal CIT is null in the eyes of law and, therefore, we are inclined to quash the very assumption of jurisdiction to invoke revisional jurisdiction u/s 263 by the Principal CIT. Therefore, we quash the order of the Principal CIT dated 29.03.2022, being ab initio void. Appeal of assessee allowed.

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• 2022 (10) TMI 343
  Disallowance claimed as deduction u/s 80IB(10) - whether assessee is a Developer or Works Contractor ? - Revenue argued that assessing officer has identified the assessee as a Works Contractor , therefore assessee is not eligible to claim deduction under section 80IB(10) - HELD THAT:- The question as to whether assessee is a Developer or Works Contractor has been adjudicated by the Coordinate Bench of ITAT, Surat, in favour of assessee [ 2018 (3) TMI 1979 - ITAT SURAT] As the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench, in assessee`s own case and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench (supra). We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the binding judgment of the Coordinate Bench in assessee s own case, CIT(A) has rightly deleted the addition. Therefore, we confirm the findings of ld CIT(A) and dismiss the ground raised by the Revenue. Disallowance at 10.41% being profit on sale of unutilized FSI - HELD THAT:- Marginal under utilization of FSI certainly cannot be a ground for rejecting the claim under section 80IB(10) of the Act. It has further contended that due to certain special grounds there may be considerable under utilization and such case may stand on a different footing. It has further contented that in the judgement in the case of CIT Vs. Shreenath Infrastructure [ 2014 (4) TMI 482 - GUJARAT HIGH COURT ] the Hon ble High Court, after considering the judgment in the case of Moonstar Developers has held that it is not possible to utilize the full FSI allotted and that the under utilization in the marginal range of 25 - 30% would not be hit by disallowance of deduction u/s 80IB(10). Assessee has also placed reliance on the case of Narayan Housing Corporation [ 2016 (9) TMI 247 - ITAT AHMEDABAD ]wherein the order has been passed after discussing both the orders in the case of Moonstar and Srireenath Infrastructure. The Hon ble ITAT Ahmedabad has held that disallowance on account of unutilized FSI was restricted to 30% as against the 60% made by AO. On the basis of the above order of Hon ble ITAT, assessee has contended that in its case the disallowance of deduction may be restricted in relation to the unutilized FSI. CIT(A) directed the AO to restrict the disallowance in relation to the unutilized FSI at 10.41% of total claim of deduction u/s 80IB(10) of the Act, which comes to Rs.30,19,469/-. Accordingly, addition to the extent of Rs.30,19,469/- was confirmed out of total disallowance was deleted. We have gone through the findings of ld CIT(A) and noted that there is no infirmity in the conclusion reached by the ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.

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• 2022 (10) TMI 342
  Income deemed to accrue or arise in India - Income from the operation of aircrafts for the international traffic i.e. transportation of passengers and cargo - whether the collection charges paid by AAI to the assessee is income derived from operation of aircraft not liable to tax in India as per Article 8 of DTAA between India and Germany? - Whether CIT (A) erred in not accepting the contentions of the Appellant that collection charges allowed to the Appellant by Airport Authority of India (AAI) on payments made by them to AAI within a stipulated given period is a discount in nature and not in the nature of commission income taxable in the hands of the Appellant in India? - HELD THAT:- As decided in own case [ 2022 (3) TMI 1432 - ITAT DELHI] UDF is levied at the Indian airports as a measure to increase revenues of the airport operator. UDF is levied to brdge any revenue shortfall so that the airport operator is able to get a fair rate of return on investment. The quantum of UDF varies from airport to airport and the rate of UDF at airports is determined by the Airports Economic Regulatory Authority of India (AERA) for major airports and ministry of civil aviation for not major airports. Presently UDF collection charge at a flat rate of Rs.5/- per passenger (all inclusive) is allowed to airlines subject to payment of UDF collection to AAI within 15 days of receipt of bill. Airlines will make full payment of UDF to AAI and raise a separate invoice for the collection charges on UDF to AAI. The collection charges paid by AAI to the assessee in whatever name called i.e., either discount or commission is nothing but service charges paid, for assessee collecting UDF and passing it on to AAI. The collection charges paid by AAI to assessee cannot be said to be the income derived from operation of aircraft. In assessee s case on identical facts for the assessment year 2013-14 the Ld. DRP approved the order of the assessing officer in holding that the collection charges received by the assessee from AAI on remitting the UDF within the stipulated time as income from business taxable in India and such income is not derived from operation of aircraft falling under Article 8 of DTAA between India and Germany. In these circumstances and for the above reasons, we hold that the collection charges received by the assessee from AAI are not income derived from operation of aircraft falling under Article 8 of DTAA between India and Germany. Thus we confirm the orders of the Revenue authorities and accordingly assessee s appeal is dismissed.

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• 2022 (10) TMI 341
  Disallowance u/s 40(a)(i) - TDS u/s 195 - marginal delay in deposit of TDS, deducted from payment to non-residents u/s 40(a)(i) - Scope of extended time limit for payment of tax deducted from payments made to non-residents - marginal delay in deposit of tax - HELD THAT:- As in respect of the amount disallowed for assessment year commencing on or before 1st day of April 2014, the deduction for the whole of the amount disallowed under section 40(a)(ia) of the Income-tax Act, shall be allowed under the first proviso to section 40(a)(ia) in the previous year in which tax deducted at source has been paid. Provisions of section 40(a)(ia) of the Income-tax Act, prior to its amendment by the Act, provided that certain payments such as interest, commission, brokerage, rent, royalty fee for technical services and contract payment made to a resident shall not be allowed as deduction for computing business income if tax on such payments was not deducted, or after deduction, was not paid within the time specified under the said section. Chapter XVII-B of the Income-tax Act mandates deduction of tax from certain other payments such as salary, directors fee, which were not specified in section 40(a)(ia) of the Income-tax Act. The payments on which tax is deductible under Chapter XVII-B but not specified under section 40(a)(ia) of the Income-tax Act may also be claimed as expenditure for the purposes of computation of income under the head Profits and gains from business or profession Respectfully following the judgment of Vatika Township Private Limited [ 2014 (9) TMI 576 - SUPREME COURT] the amendment brought in by Finance (No.2) Act of 2014 in Section 40(a)(ia), the same is held to be retrospective in nature. Violation made by the appellant is marginal delay in deposit of tax which has resulted in hundred percent disallowance of the said expenditure. However, once tax has been deposited with the due interest etc. further disallowance of hundred percent expenditure is against the intent of law. Legislative intent is to foster compliance of tax deduction provisions and inculcate discipline in the deductors. In present facts tax has been deducted and has been deposited which is not called in question. Only marginal delay in deposit of tax deducted at source has attracted hundred percent disallowance of the concerned expenditure which is not in accordance with context of provisions of section 40(a)(i) of the act. Even otherwise since the appellant is also engaged in the business of providing uplinking and down linking services, stated disallowance of expenditure pertaining to transmission and uplinking expenses, being directly and inextricably connected with the receipts being direct and overriding costs, may not be disallowed under section 40(a)(i). Further, genuineness of the expenditure is never called in question. In present facts the belief harboured by the appellant is not doubted as in genuine and same is clearly bona fide supported by similar provision in section 40(a)(ia) of the act. On the issues framed above when for resident recipients has extended time limit for deposit of tax deducted at source similar time limit should be available for non-resident recipients, on principle of equality and secondly the amendment made by Finance No. 2 Act 2014 is clearly curative and clarificatory in nature and hence applicable to present year also - also supported by decision by theory of doubtful penalisation which is highlighted below by Hon ble Delhi High Court in its decision in case of JDS Apparels [ 2014 (11) TMI 732 - DELHI HIGH COURT] Thus disallowance made by the assessing officer under section 40(a)(i) cannot be sustained. - Decided in favour of assessee. Disallowance invoking the provisions of Section 14A read with Rule 8D - HELD THAT:- We find that the Ld. CIT(A) has given a finding that the assessee has not earned or received any dividend in the year under appeal, therefore, no disallowance could be made. The finding of the Ld. CIT(A) is in accordance with the binding precedent of the Hon ble Delhi High Court rendered in the case of CIT Vs. Interglobe Enterprises Ltd. [ 2016 (9) TMI 552 - DELHI HIGH COURT] . Therefore, we do not see any reason to disturb the finding of the Ld. CIT(Appeals) and the same is hereby affirmed. Thus, Ground raised by the Revenue are dismissed.

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• 2022 (10) TMI 340
  Rectification u/s 154 - enhancement of income for the purpose of section 115JC - whether the CIT(A) is right in holding that it was not apparent from assessment order that the AO intended to enhance the adjusted total income of the assessee for the purpose of section 115JC and that based on the material available on record it cannot be said that there was a mistake apparent on record warranting rectification u/s 154? - HELD THAT:- It is a settled decision position that the scope of rectification is limited to correcting error of facts or error of law on the basis of material available on record. The Hon ble Supreme Court in the case of Appollo Tyres [ 2002 (5) TMI 5 - SUPREME COURT] has laid down the principle that the AO does not have the jurisdiction to go beyond the net profit shown in the Profit Loss Account except to the extent provided in Explanation to Section 115JB. We notice that in the case of PCIT vs. Mphasis Software and Services (India) Pvt Ltd [ 2022 (1) TMI 790 - KARNATAKA HIGH COURT] which considered in the case of J.J. Glastronics P. Ltd [ 2022 (4) TMI 1187 - KARNATAKA HIGH COURT] held that invoking section 154 would be untenable when the matter requires adjudication upon the issue which is debatable issue. In view of these discussions and considering the decisions of the jurisdictional High Court we hold that the AO is not correct in enhancing the book profits u/s.115JC by passing an order under Section 154 of the Act. We therefore see no reason to interfere with the order of the CIT(A) for both the assessment years. - Decided in favour of assessee.

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• 2022 (10) TMI 339
  Addition u/s 68 - genuineness of the transactions entered into by the appellant for purchase and sale of shares not proved - HELD THAT:- As stated by the CIT(A) that the financial capacity of Shri Manoj Aggarwal was not commensurate the transaction carried out by him. The assessee has not contradicted this by placing any contrary material on record. Therefore, do not see any reason to disturb the finding of Assessing Authority, the same are rejected. Thus, grounds raised by the assessee are dismissed.

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• 2022 (10) TMI 338
  Addition of interest u/s 36(1)(iii) - Interest paid to relatives associates of the directors @18% for the last many years related to unsecured loan creditors - AO allowed 12% interest on comparing the interest rates of banks and disallowed balance interest @6% u/s 36(1)(iii), on the plea that the bank interest was lesser - HELD THAT:- The assessee had not paid the amount to any non-income bearing fund. The entire amount was utilised for regular business transaction. The section 36(l)(iii) is not applicable for assessee. As Dr. in argument relied on order of the CIT(A). The addition is liable to quashed. Expenses related payment of freight was paid in cash by assessee which are disallowed under section 40A(3) - The freight is included in the bill amount and related with the purchase value. Also, the assessee submitted the certificate from Panchayat where it is clear that there is no bank for completing the banking transaction for payment to the transporter. This cash payment is covered under Rule 6DD(J) of the Income Tax Rule 1962. So, the addition u/s 40 A(3) is uncalled for. The claim was also made by the ld. AO that no deduction TDS u/s 194C of the Act related to payment of freight but the assessee has submitted the judgment of jurisdictional High Court and respectfully considering the order of Hon able High Court, the addition u/s 40A(3) is liable to be rejected. Loan by converting share application money was duly missed out from the tax audit report - The mistake was duly rectified by the CA and copy of the certificate are enclosed. Only tax audit report is not a sufficient for adjudicated the issue. The books of account is relevant for analysis the issue - DR had not made any strong objection in particular issue.In the ledger account of the assessee the balance of loan is reflected. Mere, observation of Tax Audit report is not serving the purpose. So, the addition made amount is liable to be quashed. Disallowance of 1/5 expenses of the car, scooter, motorcycle, telephone and depreciation on car which was used for director s personal expenses - There is no specific findings by both the revenue authorities. The disallowance cannot be done on the adhoc basis where the total expenses are .04% of the total turnover. CIT(A) is equally fallacious since the expenses are extremely useful for furtherance and growth of any business, leave aside the assessee s business. No worthwhile argument has been advanced by the CIT(A) as to why he has treated this expense as bogus. It has been held in a plethora of judgments that any expense that goes towards better understanding and/or management of one s business is an expense allowable u/s 37 of the Act. It has also been held that it is not for the AO to step into the shoes of a businessman and dictate to him how he should run his business. Therefore, the disallowance of expenses quashed.

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• 2022 (10) TMI 337
  Estimation of profit from accommodation entries - estimation made by the AO and confirmed by the CIT(A) in estimating the profit @8% of the entire impugned amount without rejecting the books of account of the assessee - HELD THAT:- As identical facts and circumstances, the coordinate Bench of ITAT Delhi, in the case of Vishnu Goel [ 2018 (10) TMI 1970 - ITAT DELHI] has held that where as the AO initially estimated income at 2% which was reduced by the ld.CIT(A) to 1% in first appeal. We take respectful cognizance of the judgement of the jurisdictional High Court of Delhi in the case JKD Brokers P. Ltd. [ 2015 (3) TMI 409 - DELHI HIGH COURT ] that the profit/commission was to be estimated at 1% of the aggregate credits. Therefore, respectfully following the judgement of the jurisdictional High Court of Delhi in the case of JKD Brokers P. Ltd. vs. CIT (supra) the estimation made by the AO is reduced to 1% of aggregate credits and the AO is directed to recompute the addition accordingly. Grounds No.5 and 6 of the assessee are, thus, partly allowed.

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• 2022 (10) TMI 336
  Reopening of assessment u/s 147 - Eligibility of reasons to believe - Long Term capital Gain on sale of shares was a bogus transactions and was only an accommodation entry - HELD THAT:- We find that there has been no independent application of mind by the AO and the satisfaction is completely based on the input by the Investigation Wing. The facts have not been correlated and there is no linkage between the documents received, sum of the quantity of shares purchased, sum of the trade value as alleged and sum of the quantity of shares purchased, sum of the quantity as entered by the assessee. AO held that the sum of the trade value of sale was Rs.66.01 lacs whereas the sum of the trade value of sale was only Rs.40.08 lacs. Similarly, the sum of the purchase value of the trade mentioned by the AO of Rs.4.71 lacs is totally different from that of the assessee of Rs.20.32 lacs and same is the case with regard to number of trade while we agree that there has to be minimal sufficiency of the primary satisfaction for reopening of the case, in the instant case, we find that even the minimal sufficiency of the fact is absolutely lacking. The quantity, value and the number of trades are also incorrect the reasons recorded. Hence, owing to the entire factual content, we hold that the reasons recorded are faulty, incorrect and not based on the facts, we hold that the notice of reopening cannot be held to be sustainable in law. The whole reassessment proceedings and the resultant order of assessment passed under Section 143(3)/148 of the Act have become vitiated entailing in nullifying proceedings - Decided in favour of assessee.

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• 2022 (10) TMI 316
  Reopening of assessment u/s 147 - addition u/s 68 - payment made towards purchase of edible oil - HELD THAT:- Cash deposit which has been assessed in the hands of the appellant alleging that R.Srinivasan who had deposited the money, did not have any means to do so, has been simultaneously considered by the first respondent in the assessment order passed in the case of the said R.Srinivasan, wherein, the said sum was accepted to the effect that a sum relates to payment made towards purchase of edible oil and the balance sum was treated as unexplained investment of R.Srinivasan and assessed in his hands. Whereas, the first respondent treated the entire sum as unaccounted income in the hands of the appellant and levied tax for the same, by the order impugned in the writ petition, which is illegal and arbitrary. When the same was brought to the notice of the writ court, the learned Judge erred in considering the same and dismissing the writ petition, by relegating the appellant to file statutory appeal before the appellate authority. Such an argument advanced on the side of the appellant, cannot be countenanced by this court, as the same involves factual aspects of the case, which have to be determined by the appellate authorities, after analysing the material evidence produced before the same. The learned Judge, upon hearing the parties, has correctly opined that any error has been committed or mistake is committed by the assessing authority in considering such reply given by the appellant is a minute factual details, which cannot be gone into by this court under Article 226 of the Constitution, because if there is any procedural violation of principles of natural justice or for want of jurisdiction, then only, the extraordinary jurisdiction of this court become invokable, challenging the assessment order directly before this court and in respect of other cases, the assessee has to go before the Appellate Authority to file quantum appeal and ultimately, dismissed the writ petition by the order impugned herein, which does not call for any interference at the hands of this court. The learned Senior counsel for the appellant would appeal to this court that the time granted by the learned Judge for filing the statutory appeal has already expired and hence, the same may be extended, for which, there is no serious objection on the side of the respondent authorities. This Court extends the time for filing a statutory appeal by the appellant by two weeks from the date of receipt of a copy of this judgment.

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• Customs

• 2022 (10) TMI 335
  Refund of sale proceeds of the confiscated goods which were later sold in public auction - betel nuts - goods sold in public auction - sale proceeds of the betel nuts is cannot be released - HELD THAT:- Appeal dismissed.

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• 2022 (10) TMI 334
  Validity of SCN - case of petitioner is that SCN could only have been issued after pre-show cause notice consultation - Section 28(1) (a) of the Customs Act, 1962 - HELD THAT:- In the facts of this case, it is not in dispute, that the pre-consultation notice is dated 14.12.2021, and therefore, 15 days would have expired only on 29.12.2021 - Admittedly, the SCN was issued prior to the expiry of the statutory time-frame. There has been a violation of not only the safeguard provided in the proviso appended to Section 28(1)(a) of the 1962 Act requiring holding pre-notice consultation with the person chargeable with tax and interest but also infraction of the right of such person, to be accorded, in the very least, 15 days under sub-regulation (2) of Regulation 3 of the 2018 Regulations to respond to any such initiative of holding such consultation - the importance of pre-show cause notice consultation is exemplified in the provisions of sub-regulation (4) of Regulation 3. As noticed in the order dated 29.08.2022, a plain perusal of the said provision would show, that it is quite possible, that after consultation, the concerned authority may decide to drop the proceedings if it is satisfied with explanation it receives during such process. The pre-show cause notice consultation, as provided, both in the 1962 Act as well as the 2018 Regulations, is necessary, as the object of having such provisions is to stem the tide of litigation between the revenue and assessee - the respondent no.2/revenue has failed to adhere to this provision, is quite evident in the instant case. Petition disposed off.

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• 2022 (10) TMI 333
  Proper officer - Jurisdiction to issue Show Cause Notice - Constitutional validity and effect of Section 28(11) of the Customs Act, 1962 - inserted by the Customs (Amendment and Validation) Act, 2011 (Validation Act, 2011) with effect from 16th September 2011 - HELD THAT:- Issue notice.

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• 2022 (10) TMI 332
  Demand of Customs Duty - goods allegedly pilfered from Customs Area bonded premises - defence taken by the appellant that the overall management and supervision of all imported warehousing including bonded warehouses, where the goods of importer were warehoused, was done by M/s. Asian Cargo Movers - violation of Regulation 5(1)(ii) read with Regulation 6(1)(i) of HCCAR, 2009 - levy of penalty under Regulation 12(8) read with Regulation 11 of the HCCAR, 2009 - HELD THAT:- Admittedly, the imported packages have never been opened either by the Customs Authorities for inspection nor any sample was drawn. Simply based on the declaration of the importer the goods had been allowed to be warehoused by the Customs Authorities. The same were accepted without any inspection by the appellant being sealed packages/pallets. Further, admittedly, the appellant, pursuant to order for release of the goods, had offered sealed packages/pallets to the importer for delivery. However, the importerhave disputed the goods without any evidence of pilferage - The packages were admittedly opened for the first time by the Police Officer, wherein the packing material was found instead of Nutritional Supplements as purportedly imported. From the reports submitted by the local Commissioner appointed by the Hon ble High Court, it is evident that he visited the site and thereafter reported that no goods were in existence at the place - customs bonded premises. The Commissioner also indicated that the FIR has been lodged with the Police, which is under investigation. The conduct of the importer also to be dubious as initially he filed bill of entry for warehousing on 4.7.2016. Thereafter, after about 15 days, he has filed request for converting the warehousing bill of entry into a bill of entry for home consumption, which was allowed on 22.07.2016, still importer did not take the delivery and again requested on 1.8.2016 for reconversion of the bill of entry to that of warehouse, which was allowed on 02.08.2016 and immediately thereafter on 5.8.2016 intimated the Customs that he has found a buyer and requested that the goods may be allowed for third country export. Further, such request was repeated on 24.05.2017 stating that they have received purchase order from a buyer at Dubai. No case of pilferage is made out against the appellant - Appeal allowed.

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• 2022 (10) TMI 331
  Classification of imported goods - rate of BCD - Microphone for Cellular Mobile Phone - Classified under CTH 85181000 or not - benefit in terms of Entry No. 6A of Notification No. 57/2017 dated 30.06.2017 as amended by 06.07.2019 - applicability of benefit of entry No. 427 / list 20 in Notification No. 50/2017 dated 30.6.2017 - period 02.02.2018 to 06.07.2019 - Penalty - HELD THAT:- All kinds of microphones irrespective of being the part of PCBA or being the part of cellular mobile phones, are subject to nil rate of duty. The Notification was applicable during the entire period in question, hence it becomes clear that even without dwelling into controversy about PCBA or cellular mobile phones, we observe that microphones are eligible to 100% exemption from the duty liability. The benefit of said notification in alternative was available to the appellant. No question of confirmation of duty demand otherwise at all arise. The benefit of Entry No. 427 has been denied by the Adjudicating Authority below for the reason that the appellant had not claimed the said benefit and ignorance of law is not a ground to claim the benefit as that of exemption - Hon ble Apex Court in the case of Share Medical Care vs. Union of India [ 2007 (2) TMI 2 - SUPREME COURT] has held that where the appellant is entitled to benefit under two different Notifications, he can claim more benefit and it shall be the duty of the authorities to grant such benefit provided. Hon ble Apex Court also clarifies that even if applicant does not claim benefit under a particular notification at initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage - It was held that even the appellant does not claim the benefit under a particular Notification at the initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage - The benefit of said Notification has to be extended in favour of the appellant. Such benefit has wrongly been denied on the ground it being claimed belatedly. The order under challenge is not sustainable on this count. Levy of penalties - HELD THAT:- Penalties can be imposed only in the case where there had been intentional malafide on the part of the assessee - there was no liability upon the appellant to pay any Customs duty while importing microphones during the relevant period. The question of non payment thereof that too with an intent to evade, does not at all arise. Penalties imposed under section 112 (b)(ii) read with section 117 of the Customs Act, 1962 does not at all arises. Appeal allowed.

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• 2022 (10) TMI 330
  Refund of SAD - service tax levied in lieu of sales tax, by way of equalisation levy under the Customs Tariff Act - Rejection on the ground that appellant have not complied with condition no. 2(b) of the said Notification r/w CBEC Circular No. 6/2008-CUS Circular No. 16/2008-CUS. - N/N. 102/2007-Cus - HELD THAT:- The issue herein is squarely covered by the interpretation of the Larger Bench of this Tribunal in the case of CHOWGULE COMPANY PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE [ 2014 (8) TMI 214 - CESTAT MUMBAI (LB)] in favour of the appellant-assessee, where it was held that A trader-importer, who paid SAD on the imported goods and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of the duty paid, would be entitled to the benefit of exemption under Notification 102/2007-Cus, notwithstanding the fact that he made no endorsement that credit of duty is not admissible on the commercial invoices, subject to the satisfaction of the other conditions stipulated therein. The Adjudicating Authority is directed to grant the refund within a period of 60 days from the date of receipt of the copy of this order, alongwith interest as per rules - Appeal allowed.

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• 2022 (10) TMI 329
  Classification of goods - HDMI Digital Media Receiver [Model No. K2R2TE] with Alexa Voice remote 3rd Generation Model No. L5B83G as a kit (Fire TV Stick 4K Max) - classifiable under sub-heading 8517 62 or not - Section 28H of the Customs Act, 1962 - HELD THAT:- Following Rule 3(b) of the General Rules of Interpretation, the classification of Fire TV Stick 4K Max as a kit shall be determined by the classification of HDMI Digital Media Receiver [Model Number K2R2TE] - the applicant has claimed HDMI Digital Media Receiver [Model Number K2R2TE] to be classifiable under CTH 8517 62 90 since it is a device that transmits/receives RF signals and converts it into a format readable by the system and transmits the same which is displayed on the screen. HDMI Digital Media Receiver [Model Number K2R2TE] is also a reception apparatus for voice, image and other data in a wireless network such as LAN/WAN. It is a reception apparatus with an inbuilt PCB and software containing many applications which run on Over the Internet (OTT) platform and media is streamed to television sets for display. These devices do not receive signals from satellite/cable/terrestrial to convert them in the form suitable for display on the television screen. These devices are, therefore, correctly classifiable under sub-heading 8517 62 90. Following Rule 3(b) of the General Rules of Interpretation, the classification of Fire TV Stick 4K Max, a kit comprising HDMI Digital Media Receiver [Model Number K2R2TE] with Alexa voice remote 3rd Generation [Model No. L5B83G] would be the classification of HDMI Digital Media Receiver that imparts the essential function to the device, and that is Heading 8517 and more specifically sub-heading 8517 62 90.

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• 2022 (10) TMI 328
  Classification of imported goods - Gigabit Passive Optical Networks Optical Network Termination (hereinafter referred to as GPON ONT) for the purpose of trading - classifiable under sub-heading 8517 69 50 or under sub-heading 8517 69 30 of the Customs Tariff Act, 1975 - eligibility for a nil rate of duty as per Sr. No. 13P of Notification No. 24/2005-Customs, dated 1-3-2005 - HELD THAT:- FTTH is a technology that delivers communication signals from a central point to the individual customer over optical fibre. A Gigabit Passive Optical Network (GPON) is a point-to-multipoint FTTH network architecture in which unpowered optical splitters are used to enable a single optical fibre to serve multiple customers. The network topology of GPON is as follows: an Optical Line Terminal (OLT) at the provider s central office, Optical Network Terminals (ONTs) at the end user s premises and an Optical Distribution Network (ODN) in between the OLT and ONT to split and distribute the signal travelling along the GPON. Therefore, ONT is the access node in FTTH architecture for network termination installed within user premises. The applicant has proposed sub-heading 8517 69 50 (Subscriber end equipment) and sub-heading 8517 69 30 (Routers) for the classification of these devices. However, it is to be noted that the import tariff of Customs Tariff Act, 1975 does not have sub-heading 8517 69 30 as a router. Routers are covered under sub-heading 8517 62 90. Note 4 of Section XVI states that where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function - the impugned good is a combination of devices performing different tasks which are intended to contribute together to a clearly defined function covered by sub-heading 8517 69 50. Accordingly, the appropriate classification for said goods is under Tariff Entry 8517 69 50. Whether the impugned devices are classifiable as routers under sub-heading 8517 69 30? - HELD THAT:- The device is covered under 8517 69 50, therefore, it is not classifiable under sub-heading 8517 62 90 as routers. In respect of applicability of Sr. No. 421 of Notification No. 50/2017-Customs, it is observed that the impugned device is not a standalone router. It is a settled position of law that notification should be read and construed strictly. It is apparent that notification benefit is only available to routers - the said goods are not eligible for the benefit under Sr. No. 13N of Notification No. 24/2005-Customs, dated 1-3-2005, as amended. In regards to the question type of products covered under Heading 8517 69 50 Chapter 85 of the Customs Tariff Act, 1975, the Telecom Regulatory Authority of India issued a document dated 22-4-2020 containing recommendations on network testing before commercial launch of services for wireline access services is refereed. As per this document, the subscriber end equipment covers, inter alia, customer premises equipment that is required in wireline access services, including landline telephone set, ONT (Optical Network Terminal), ISDN TA (Terminal Adapter), Broadband modem, PABX, etc. Therefore, Entry 8517 69 50 covers abovementioned devices, unless there is a specific entry for such device elsewhere. The imported goods are classifiable under sub-heading 8517 69 50 of the First Schedule to the Customs Tariff Act, 1975 and would be eligible to avail benefit of Sr. No. 13P of the Notification No. 24/2005-Customs as amended - benefit under Sr. No. 421 of the Notification No. 50/2017-Customs, dated 30-6-2017 would not be available as a router.

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• Corporate Laws

• 2022 (10) TMI 327
  Initiation of Voluntary Liquidation proceedings - section 59(7) of IBC - HELD THAT:- On examining the submission made by the counsel appearing for the petitioner and the documents annexed to the petition it appears that the affairs of the company have been completely wound up, and its assets have been completely liquidated. The Company deserves to be dissolved - application allowed.

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• Insolvency & Bankruptcy

• 2022 (10) TMI 326
  Acceptability of Resolution Plan - HELD THAT:- If the submission on behalf of the appellants, as canvassed before the NCLAT and before this Court is accepted in that case, the Resolution Plan shall not be workable at all. At this stage, it is also required to be noted that the appellants are the erstwhile Promoters and therefore they cannot be continued to be in the Company in any capacity may be as shareholders as rightly observed by the NCLAT. The Appeal stands dismissed.

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• 2022 (10) TMI 325
  Initiation of CIRP - threshold limit for triggering CIRP - joint application - validity of Section 7 of the Insolvency and Bankruptcy Code, 2016 - requirement of default threshold of Rs.1 crore in individual capacity - HELD THAT:- On a plain reading of Section 7, it becomes clear that there is no ambiguity in the provision which requires any interpretation other than what is conveyed in its literary sense. The section clearly stipulates that the application for triggering CIRP may be initiated by a financial creditor either individually or jointly with other financial creditors. Previously the threshold default limit for filing the CIRP application was only Rs.1 lakh and it has been drastically increased to Rs.1 crore vide Gazette Notification dated 24.03.2020. It can easily be envisaged that in cases of MSMEs, there may not exist financial creditors whose individual debt is Rs.1 crore or above. If the threshold limit was to be fixed at Rs.1 crore qua each individual financial creditor, then there was no reason whatsoever for allowing joint applications by financial creditors. The statute i.e., Section 7 of the IBC as amended vide Gazette Notification dated 05.06.2020, admits no other interpretation except that a group of financial creditors can converge and join hands to touch the financial limit of Rs.1 crore stipulated under Section 7 so as to initiate a CIRP under the IBC. Petition dismissed.

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• 2022 (10) TMI 324
  Seeking a direction for admitting the Appellant s Claim in the Resolution Plan - seeking to declare that the Applicant is an Operational Creditor of the Petitioner to the extent of Rs.25,52,08,897/- as set out in Form B dated June 11, 2018 filed by the Applicant before the Resolution Professional - HELD THAT:- It is evident that the Commercial Wisdom of the CoC is non-justiciable except when there is any material irregularity or error apparent on the face of record, which in the instant case is absent. We do not find any material irregularity to warrant our interference or exercise our powers under Section 30(2) of the Code. in the decision of the Adjudicating Authority in dismissing the Applications preferred by the Appellant herein based on the findings of the A M Report. It is significant to mention that the Resolution Plan was approved by the Adjudicating Authority on 28.11.2019 and has since been implemented. The contention of the Learned Sr. Counsel appearing for the Appellant that the addendum is unfair and discriminatory and hence ought to be set aside - the submissions of the Learned Sr. Counsel for the Appellant that there are no reasons for the specific addendum to have been added in the Resolution Plan, the reason being the final Report of A M and the categorical findings of the Adjudicating Authority cannot be agreed upon. Appeal dismissed.

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• 2022 (10) TMI 323
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- After perusing the Application, it is directed that Corporate Applicant to issue notices to all Unsecured Creditors and Statutory Authorities i.e. Income Tax, Commercial Tax, Provident Fund and other Authorities vide order of this Adjudicating Authority dated 23.12.2021. Accordingly, notices were sent to unsecured creditors as well as statutory authorities on 04.01.2022. However, there was no objection from any of the stakeholders as mentioned above. It was also brought to our notice that Corporate Applicant has no secured creditors which was supported vide Certificate issued by Chartered Accountant dated 29.06.2019. The Corporate Applicant started facing heavy losses which resulted in non-fulfilment of their commitments and failed to meet its operational expenses which led to heavy debts which they are not able to meet - there was no objection from any of the stakeholders for the prayer made by the Corporate Applicant. Petition admitted - moratorium declared.

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• Service Tax

• 2022 (10) TMI 322
  Reversal of CENVAT Credit - no centralised registration - contravention of Rule 4 of the CENVAT Credit Rules, 2004, without specific mention of which sub-Rule of Rule 4 - HELD THAT:- Facts of the case therein and the present one are almost identical since in MANIPAL ADVERTISING SERVICES PVT. LTD. VERSUS CCE., MANGALORE [ 2009 (10) TMI 434 - CESTAT, BANGALORE] . Also documents in the name of Appellant therein were addressed to its other premises located at Bangalore, New Delhi and Chennai Office which was held to have contravened provision of Rule 9 of the CENVAT Credit Rules, 2004. It was held in that decision that in the event of centralised billing and centralised accounting system, when one registration is permissible under Section 4(2), discharging Service Tax liability from the registered premises would not disentitled the benefits of CENVAT Credit on the Service Tax paid by the service provider if invoices are raised in the name of Branch offices, even if the said Branch offices are unregistered one since Service Tax liability has been discharged by the main office also for service provided by the Branches. Further, when Service Tax has been paid from the main office for the input services received by the branch office, it was held that the ratio of the decision of this Tribunal in the case of STADMED PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD [ 1997 (6) TMI 224 - CEGAT, CALCUTTA] and GUJARAT HEAVY CHEMICALS LTD. VERSUS COMMISSIONER OF C. EX., RAJKOT [ 2005 (6) TMI 177 - CESTAT, MUMBAI] , though delivered in respect of MODVAT Credit on Central Excise duty, would also be applicable to the case in hand. The order passed by the Commissioner (Appeals) to the extent of denial of CENVAT Credits to the Appellant for input services availed by branch office at Delhi is hereby set aside - Appeal allowed.

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• 2022 (10) TMI 321
  CENVAT Credit - common input services used both in providing the taxable service and the exempted service - security services telephone services - non-maintenance of separate records - Rule 6(3) of the CCR - HELD THAT:- Rule 6 of CCR places several obligations upon the assessee to avail Cenvat credit. If these obligations are not fulfilled, the assessee cannot avail Cenvat credit and if an assessee avails Cenvat credit without fulfilling the obligations under Rule 6 such irregularly availed Cenvat credit can be recovered under Rule 14 of CCR. These obligations under Rule 6 can be fulfilled opting for Rule 6(1) or Rule 6(2) or Rule 6(3) of the CCR - Rule 6(3) states that if Rule 6(1) or 6(2) are not fulfilled then an amount of 5% / 6% of the value of the exempted services shall be paid. These options are available to the assessee and it is open to the assessee to chose any of the options. It is not open to the Revenue to chose one of the options and force it upon the assessee. If the obligation is not fulfilled under any of the options, the irregularly availed Cenvat credit can be recovered under Rule 14 of CCR. In this case, the appellant availed Cenvat credit and on being pointed out by the audit, reversed the entire amount of Cenvat credit so availed along with interest. The appellant could have availed Cenvat credit proportionately to the extent such common input services were used in rendering taxable services. However, to buy peace, the appellant reversed the entire amount of Cenvat credit. Therefore, no Cenvat credit on common input services remains availed by the appellant and its Therefore, the obligation under Rule 6(1) has been fully met. Further, Rule 6(2) requires separate accounts to be maintained but it does not specify in what form the accounts have to be maintained - As the appellant has fulfilled its obligation in terms of Rule 6(1) and also in terms of Rule 6(2), no case existed at all for issuance of the show cause notice in the first place nor it being confirmed by the impugned order - The show cause notice was issued and the impugned order was passed completely contrary to the law laid down by the Supreme Court in CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT] . The impugned order cannot be sustained and needs to be set aside - Appeal allowed - decided in favor of appellant.

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• 2022 (10) TMI 320
  Short payment of service tax - Works Contract Services services - Supply of Tangible Goods services - Supply of Manpower services - period 01.10.2014 to 30.06.2017 - extended period of limitation - penalty u/s 77 and 78 of FA - HELD THAT:- The transaction of input service of SOTG is duly recorded in the books of accounts. The appellant have received the service with supporting invoices and payment have been made in the regular course of business mainly through bank transfer as is evident from the copy of ledger account of the service provider maintained by the appellant in the books of account. The amount paid are also reflected in the bank account of the appellant, thus, the genuineness of the transaction is established. Admittedly, it is not the case of Revenue that appellant is claiming the credit second time. Penalty u/s 78 of FA - HELD THAT:- The penalty is not imposable under Section 78 as the transaction is found recorded in the books of account and the short payment is mainly attributable to clerical error. Penalty under Section 77 - HELD THAT:- Penalty is confirmed as there is admittedly failure on the part of the appellant to assess and pay correct duty/ tax. Appeal allowed in part.

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• 2022 (10) TMI 319
  Classification of services - Work Contract Service - Construction of Commercial Complex - claim for abatement for determination of the taxable value as per Rule 2A of Service Tax (Determination of Value) Rules, 2006 - denial on the ground that the appellant have failed to substantiate their claim to abatement - Recovery of interest with penalty - extended period of limitation - HELD THAT:- It is evident that the Commissioner has accepted the plea taken by the Appellant that the services provided by them do not merit classification under the category of Construction of Commercial Complex as defined by the Section 65 (25b) of the Finance Act, 1994, but would merit classification under the category of Work Contract Service as defined by Section 65 (105) (zzzza) of the Finance Act, 1994. Admittedly the contract in the present case involves transfer of property involved in execution of work contract, and the contract is not an service contract simplicitor. There is no dispute about the fact that the services in dispute are correctly classifiable for the period upto 01.07.2012 under the category of work contract services and should have been subjected to service tax under the category of work contract services after allowing the abatement as provided for - the revenue has not made any demand of service tax claiming the classification of the services under this category. Since show cause notice is the foundation for making the demand and same cannot be amended at later date at time of adjudication or appeal the demand made for the period upto 01.07.2012 cannot be sustained. For the period from 01.07.2012, the issue of classification of service under the taxable category had be done away with and the demand was to be made in respect of the services that are covered by the definition of service as per Section 65 B (44) of the Finance Act, 1994 and not specified in the negative list of services. Admittedly appellant also do not deny the same and have claimed that the services provided by them are exempt from payment of service tax under Serial No 13 (a) of the Exemption Notification No 25/2012-ST - Appellants have claimed that the work undertaken by them falls within the exclusive category of tunnel. However on examination of the contract Commissioner has in para 4.10 of the impugned order, found that the work undertaken by the appellants is not in relation to tunnel. The contract specifically does not provide that work undertaken falls in relation to any tunnel. It is settled principle of law that exemption notifications need to construed strictly and any ambiguity in the same needs to be resolved in the favour of the revenue. The benefit of abatement shall be available only if the Appellant are able to substantiate that they have not taken any CENVAT credit of the inputs used in or in relation to the said work contract. Commissioner order denying the benefit of abatement cannot be faulted to this extent. However in interest of justice in our view for the period for which are upholding the demand appellant should be given one more opportunity to substantiate their claim to abatement. For this purpose the matter needs to be remanded back to the original authority. Extended period of limitation to make the demand under proviso to Section 73 (1) - HELD THAT:- Non-payment of Service Tax was brought to the notice by the Commissionerate of Service Tax, New Delhi when inquiry was initiated. Noticee was under legal obligation to discharge the Service Tax liability. The Show Cause Notice is a result of investigation carried out by the Department. Therefore, there is case of suppression of material facts and contravention of various provisions of law willfully with intent to evade payment of Service Tax, warranting the demand of Service Tax for the extended period. Demand of interest - HELD THAT:- The interest liability accrues automatically from confirmation of demand as recoverable - there are no infirmity in the demand of interest as per the impugned order in respect of the amount of service tax that is required to be paid. Penalty - HELD THAT:- Since the demand made by invoking the extended period of limitation by holding the case to be clear case of suppression of facts and contravention of provisions of law leading to evasion of service tax penalty under section 78 needs to be set aside in view of the decision of Hon ble Apex Court in case of UNION OF INDIA VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS AND COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VERSUS M/S. LANCO INDUSTRIES LTD. [ 2009 (5) TMI 15 - SUPREME COURT] . In view of various decisions holding that that the penalty under Section 76 and 77 are civil liabilities and do not require the existence of mens rea the penalties imposed under Section 76 and 77 are upheld. The appeal is partially allowed.

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• Central Excise

• 2022 (10) TMI 318
  Clandestine Removal - documents recovered from a third party can be used against the manufacturer to prove clandestine removal - corroborative evidences or not - reliability on statements of witnesses - HELD THAT:- It is settled law that documents recovered from a third party can be used against the manufacturer to prove clandestine removal only when these are supported with corroborative evidences. The Revenue has alleged that huge quantity of finished products have been manufactured and cleared clandestinely without payment of Central Excise duty. The booking register/loading register recovered from the business premises of transporter, no doubt, gives rise to suspicion that these are details relating to clandestine clearance of the goods - the clandestine manufacture and clearance alleged against the appellant is a very serious charge which needs to be proved by Revenue by producing tangible and reliable evidences. For clandestine clearance of such huge quantities of finished products, corresponding quantity of raw materials ought to have been procured by the appellant. From the records recovered from the Appellant s premises, there is no evidence of any physical receipt of raw materials used in production of such a huge quantity of finished goods. In fact on the date of search, no discrepancy was recorded in respect of stock of raw materials and finished goods vis-a-vis that recorded in statutory records. No single payment detail of clandestine sale has been brought on record. Nor there is any evidence of any excessive power consumption which is one of the vital factor otherwise required for the alleged large scale production. No document in the form of receipts of any cash or kind on account of clandestine clearance and sale of goods has been seized from the parties. No evidences of removal of excisable goods or procurement of raw materials and its consumption are on record. Clearly, there is also no evidence in the form of unaccounted procurement of raw materials, fuel, labour, receipts of unaccounted cash, etc. which are some of the basic parameters which have been laid down by Courts and Tribunals over a period of time for determining whether or not the allegation for clandestine removal is established. It is well settled law that though the statements carry good persuasive value but such untested statements cannot be made stand-alone basis for arriving at an adverse conclusion against the assessee. Though an admission or a statement is one of the important piece of evidence but the same has to bear the test of veracity through the tool of cross examination. Further, as per various decisions, it is well settled law that no reliance can be placed on the deponents statements unless he is allowed to be cross examined for testing the correctness of his statement - It is well settled law that clandestine removals cannot be arrived at based upon the confessional statement of other persons or the documents recovered from the third party premises, without corroboration of the said documents. The statements itself are not sufficient for holding so. No presumptions are available in respect of such documents unless they come from the proper custody and such documents raise serious doubts about their genuineness. Department has failed to prove the allegations against the appellant. The confirmation of duty demand along with interest and penalty against the appellant is, therefore, held to have been confirmed without any cogent basis. Order under challenge is, accordingly, hereby set aside - appeal allowed - decided in favor of appellant.

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• 2022 (10) TMI 317
  CENVAT Credit - clearances of zinc dross/ ash - clearance of old plant, which consists of zinc parts - Rule 6(3)(i) of Cenvat Credit Rules, 2004 - HELD THAT:- Reversal of cenvat credit on clearance of waste product namely zinc dross/ ash, the issue is squarely covered by the ruling of the Hon ble Supreme Court in the case of UNION OF INDIA OTHERS VERSUS M/S. HINDUSTAN ZINC LTD. [ 2014 (5) TMI 253 - SUPREME COURT] . Accordingly, this issue is decided in favour of the appellant. Chargeability of duty on disposal of old plant - HELD THAT:- The duty cannot be demanded on the parts of old plant, as these are not manufactured product by the appellant. Secondly, Revenue has not led any evidence about the old plant disposed, which was acquired in the year 1995-96, that the appellant had taken modvat / cenvat credit. In this view of the matter, this ground is also allowed in favour of the appellant and against the Revenue. The appeal is allowed.

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