TMI Tax Updates - e-Newsletter
October 13, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax CST, VAT & Sales Tax

Articles

1. Faceless assessment notice u.s. 133.6 of Income-tax Act:

   By: DEVKUMAR KOTHARI

2. APPEAL TO FIRST APPELLATE AUTHORITY UNDER GST LAWS – ISSUES ON LIMITATION

   By: DR.MARIAPPAN GOVINDARAJAN

3. STAKEHOLDERS’ CONSULTATIVE COMMITTEE UNDER LIQUIDATION PROCESS – A REVISIT

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. CCI issues cease and desist order against Kraft Paper Manufacturers and their four associations for indulging in anti-competitive practices

2. CCI issues cease and desist order against firms found guilty of bid rigging and cartelization in tender floated by Eastern Railway

Notifications

GST - States

1. 38/1/2017-Fin(R&C)(238)/832 - dated 30-9-2022 - Goa SGST

Goa Goods and Services Tax (Second Amendment) Rules, 2022.

2. 38/1/2017-Fin(R&C)(237)/831 - dated 30-9-2022 - Goa SGST

Seeks to bring in force provisions of sections 2 to 15, except section 13, of the Goa Goods and Services Tax (Amendment) Act, 2022

Money Laundering

3. S.O. 4827(E) - dated 7-10-2022 - PMLA

Special courts for Anti corruption - trial of offences punishable u/s 4 of the Prevention of Money laundering Act, 2002 - Seeks to amend Notification No. S.O. 4603(E), dated the 3rd November, 2021

SEZ

4. S.O. 4636 (E) - dated 22-9-2022 - SEZ

Multi-Sector Free Trade Warehousing Zone - SEZ Area of 53.81 hectares area comprising the Survey numbers notified.

Circulars / Instructions / Orders

GST - States

1. TRADE CIRCULAR No. 09/2022 - dated 29-9-2022

Withdrawal of Trade Circular No. 27/2019 dated 12.07.2019

DGFT

2. 29/2015-2020 - dated 12-10-2022

Extension of Validity regarding Export of Raw Sugar to USA under Tariff Rate Quota (TRQ) for the fiscal Year 2022 from 30.09.2022 to 31.12.2022

Highlights / Catch Notes

Income Tax

• Faceless assessments u/s 144B invalidated for missing notices; can be rectified by issuing notices now.

  Case-Laws - HC : Validity of Faceless assessments framed u/s 144B - Though failure to issue the notices as provided in Section 144B would certainly vitiate the proceedings as being in violation of the principles of natural justice, it is an infirmity that may be cured by permitting such SCN/DAO to be issued now. The impugned assessments are set aside and liberty granted to the respondents to complete the assessments de novo, in accordance with law. - HC
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• Self-Certified Copies Sufficient for Section 11 Income Tax Exemption Under Amended Rule 17A; Originals Not Required for Verification.

  Case-Laws - AT : Exemption u/s 11 - evidences were not filed in original - as per amended Rule 17A of the Income Tax Rules which are applicable in the case of the assessee, the assessee was not required to fulfill any original copy of the documents rather self certified copy/instrument was sufficient for the purpose of verification by the ld. CIT(E), - AT
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• Court Adjusts Income Estimation: 6% Addition on Disputed Purchases to Prevent Revenue Leakage, 5% Disallowance Insufficient.

  Case-Laws - AT : Estimation of income - bogus purchases - Disallowance to the extent of 5% is on lower side particularly when the assessee has shown negligible net profit. The assessee has shown net profit @.03 only, on the turnover - Thus, in order to meet out the possibility of revenue leakage 6% of the addition of aggregate of disputed purchase will meet the end of justice. - AT
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• Limitation for revision under Income Tax Act's Section 263 starts from original assessment date, not re-assessment.

  Case-Laws - AT : Revision u/s 263 - period of limitation - to be computed from the date of original assessment order or re-assessment order - the period of limitation prescribed under section 263(2) of the Act would run from the original assessment order. - AT
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• Cash Payments Allowed u/s 40A(3) for Genuine Transactions Due to Business Expediency; Additions Deleted.

  Case-Laws - AT : Disallowance u/s. 40A(3) - business expediency in payment of cash towards genuine transaction - The contention of the assessee from the day one is that the sellers demanded the assessee to pay in cash which is part and parcel of total sale consideration.There is no dispute with regard to identification of the sellers as well as their confirmations in respect of payment in cash from the assessee. - The sellers also admitted the payment of cash before the registering authority under due process. - Additions deleted - AT
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• Validity of Final Assessment Order u/s 144C(13) Challenged Over Transfer Pricing and Limitation Period Issues.

  Case-Laws - AT : Transfer pricing - Validity of the final assessment order passed u/s 144C(13) - Period of limitation - In the instant case, the manual final assessment order is dated 24.01.2017. The final assessment order has dispatch seal also. There is nothing on record to show that the final assessment order has not been dispatched on the said date. The demand was uploaded to CPC portal on 13.03.2017, so the CPC shows the date as the date of order. The CPC will always show the date on which the demand is fed into. The entire order is not uploaded, but only the demand was uploaded in the CPC. - AT
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• Tax Exemption Reinstated: Assessee-Society's Section 12AA Registration Approved After Meeting Procedural Requirements Despite Initial Rejection.

  Case-Laws - AT : Exemption u/s 11 - registration u/s 12AA rejected - The activities of an institution though genuine at the time of grant of registration may not remain so during its life span and the registration granted to it cannot be ‘life time guarantee’ that it would remain so, that is why the law prescribes procedure for withdrawal of registration once granted. Considering the totality of the facts, circumstances and legal position, we are of the view that the application submitted by the assessee-society is in consonance with the procedural requirement prescribed in this regard. - Registration allowed - AT
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• Income Tax Commissioner to Review Incorrect PAN Use in ITR Filings, Address Challenges and Determine Correct PAN for Future Use.

  Case-Laws - HC : Filling of ITR quoting wrong PAN - this complex issue is liable to be examined by the Income Tax Commissioner / respondent No.1 considering the practical problem which is being faced by the petitioner and also the complications which may arise in future while filing Income Tax Returns and quoting the wrong PAN. The Commissioner shall also decide the issue as to which PAN is to be used by the petitioner for future transactions and Income Tax Returns. - HC
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• Equalization Levy Not Applicable u/s 40(a)(ib) When Ad Targeting Has No Connection to India.

  Case-Laws - AT : Addition u/s. 40(a)(ib) - non-charging of Equalization levy - when the intention of levy is related to the targeted audience and party paying the online advertisement has no relation in India, EL is not attracted in the set of present facts and circumstance placed before us - AT
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• Appellant Fails to Justify Post-Demonetization Cash Deposits; AO Confirms 30% Addition to Bank Account.

  Case-Laws - AT : Cash deposited post demonetization period - AO making the addition of 30% of the cash deposited in the bank during post demonetization period - addition made by the AO as the appellant assessee had failed to prove the source of cash deposit in the bank account during the post-demonetization period - additions confirmed - AT
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• Reassessment u/s 147 of Income Tax Act overturned; evidence of creditor repayment deemed credible.

  Case-Laws - AT : Reopening of assessment u/s 147 - Reassessment after expiry of four years and just prior to expiry of six years from the end of the relevant assessment year - outstanding sundry creditors - Assessee had demonstrated that in case of the present creditor also, repayment has been made. That being the factual position emerging on record, addition made by the assessing officer is unsustainable. - AT
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• Assessee Escapes Penalty for Non-Compliance Due to Sufficient Cause u/s 271(1)(b); Default Considered Bona Fide.

  Case-Laws - AT : Validity of penalty levied u/s 271(1)(b) - non-compliance - The assessee has shown sufficient cause for non-compliance, moreover, such non-compliance was done by granting adjournment by the AO himself. - the assessment was framed u/s 143(3) - the penalty u/s 271(1)(b) of the Act cannot be imposed on the assessee for such bonafide default due to reasons beyond his control - AT
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• Interest from Fixed Deposits Tied to Business Activities, Classified as Business Income, Not Other Sources.

  Case-Laws - AT : Correct head of income - interest income on FD - Income From Other Sources v/s income from business - The said interest income has been earned by the assessee in the course of its business and also to raise funds for running the said business, hence, the said interest income is linked to the business activities of the assessee.- AT
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• Transfer Pricing Adjustment on AMP Expenses Disallowed Due to Lack of Written Agreement with Associated Enterprise.

  Case-Laws - AT : TP Adjustment - international transaction - in the absence of no written agreement exists between the assessee and its AE requiring the assessee to incur AMP expenses, the same cannot be regarded as an international transaction at all. Thus we delete the transfer pricing adjustment made by the TPO on account of AMP expenses incurred by the assessee. - AT
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• Court Rules Cash Deposits During Demonetization Period Not Additional Income if Recorded in Books.

  Case-Laws - AT : Addition of cash deposit made into the bank account during demonetization period - Addition made in the hands of the assessee is not justified, since the said deposits have been made from the cash balance available in the books of account. - AT
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• Income Tax Assessment Reopened u/s 147: Jurisdiction Held by Wrong Commissioner, Section 12AA Deductions Allowed from Application Year.

  Case-Laws - AT : Exemption u/s 11 - Reopening of assessment u/s 147 - whether jurisdiction was vested on the ld. CIT(E) and not with the Territorial Commissioner? - the registration U/s 12AA is in action from the year of application. So, the year of application is considered as deemed registration and the claim of deduction u/s 11 and 12 should be applicable accordingly. Accordingly, the assessing authority had acted beyond jurisdiction. - AT
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Customs

• High Court Awards 6% Interest on Delayed Refund After Three-Year Verification and Six-Year Delay in Payment Completion.

  Case-Laws - HC : Seeking interest on delayed refund of principal amount - There is no explanation as to why the verification took three years. - There is also no explanation, as to why even after verification, the principal amount was refunded only six years thereafter i.e., on 12.08.2022. - Interest granted @6% - HC
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IBC

• Applicant's Status as Financial Creditor Denied: No Interest on Loan in Balance Sheet Entries for CIRP Initiation.

  Case-Laws - AT : Initiation of CIRP - Financial Creditors - For an applicant to be a financial creditor, a debt along with interest should be disbursed against the consideration time value of money, whereas in the present case the entries in the balance sheets by which the acknowledgment of debt claimed to be in limitation, do not show any interest accruing on the claimed loan amount- AT
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Service Tax

• Court Denies Abatement Claim; Assessee's Calculation Dismissed; Appellant Liable for 50% Service Tax per Notification 30/2012-ST.

  Case-Laws - AT : Levy of service tax - abated portion of turnover or incorrect calculation along with penalty - The rejection of the claim of abatement for material component by the court below is against Valuation Rules and facts on record. - The calculation as submitted by the assessee has been rejected on flimsy ground - liability to pay tax has been correctly calculated as per notification no.30/2012-ST, under which the appellant is required to pay only 50% of the service tax liability and the balance 50% is payable by the recipient of the service being Corporate entity. - AT
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VAT

• Court Questions Assessment Order Validity Over Time Limits and Non-Supply of Vigilance Report, Citing Natural Justice Principles.

  Case-Laws - HC : Validity of assessment order - time limitation - non-supply of vigilance report - when the Order of assessment came to be passed on the report submitted by Regional Vigilance and Enforcement Department, the Authorities ought to have supplied a copy of the same, inviting objections to the report. Therefore, the argument of the learned Counsel for the Petitioner that the authorities have relied on a material, which was not supplied to him is a violative of principles of natural justice, cannot be brushed aside. - HC
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Case Laws:

• GST

• 2022 (10) TMI 410
  Liability to commercial taxes post the onset of Goods and Services tax, with effect from 01.07.2017 - HELD THAT:- The turnover from contract was liable to VAT at the rate of @ 2% prior to 01.07.2017 and 12% post 01.07.2017 under the Goods and Services enactment. It is the petitioners case that the difference in tax liability must be met by the respective purchasers as per the government orders - it is to be noted that the aforesaid Government orders are being applied consistently in the computation of liability in cases of contracts entered into prior to 01.07.2017. Admittedly, been no challenge to the aforesaid Government orders and in such circumstances, the same are liable to be applied to the instant transactions/contract without demur - Upon determination of the liability by the petitioner and the respondents conjointly and as above, any recovery affected from the petitioner contrary to the methodology set out under the aforesaid G.O. s shall be refunded to the petitioner. The Writ Petitions are allowed.

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• 2022 (10) TMI 409
  Inspection/search and seizure - Section 74 of the Delhi Goods and Services Tax Act, 2017 - HELD THAT:- The matter was listed on 11.05.2022, when liberty was given to the counsel for the parties to file their written submissions. The respondent/revenue will have to commence de novo proceedings, bearing in mind the modification Guidelines given in the aforementioned Circular i.e., the Circular dated 20.09.2022 - the impugned order dated 11.03.2022 is set aside. The writ petition is disposed off.

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• 2022 (10) TMI 408
  Profiteering - purchase of shops in the Respondent s project - benefit of Input Tax Credit (ITC) not passed on by way of commensurate reduction in prices after implementation of GST w.e.f. 01.07.2017 - contravention of section 171 of CGST Act - penalty - interest - 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 0.80%, whereas, during the GST period (July 2017 to October 2020), it was 7.78% for the project JKG Palm Court . This confirms that during the GST period, the Respondent has benefited from additional ITC to the tune of 6.98% (7.78% - 0.80%) of his turnover for the project JKG Palm Court and the same was required to be passed on to the customers/flat buyers/recipients. The Authority finds that, neither the Applicant no.1 nor the Respondent has contested the said Report in spite of several opportunities being given to them. They, also, did not attend the personal hearing on the scheduled date - The Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP s Report. Interest - HELD THAT:- The Authority finds that the Respondent has profiteered by an amount of Rs. 5,14,06,920/- during the period of investigation i.e. 01.07.2017 to 31.10.2020. The Authority determines an amount of Rs. 5,14,06,920/- (including 12% GST) under section 133 (1) as the amount profiteered by the Respondent from his home buyers/shop buyers/customers/recipients of supply in the impugned Project (as per Annexure-A to this Order), including Applicant No. 1, which shall be refunded by him along with interest @18% thereon, as prescribed, 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 GCST Rules 2017. The amount profiteered is Rs. 1,99,182/- in respect of Applicant No.1 - Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 5,14,06,920/-, for the project JKG Palm Court . Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients of supply, 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 has also been found that the Respondent has denied the benefit of additional ITC to his customers/buyers/recipients of supply in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and resorted to profiteering and hence, committed an offence under section 171 (3A) of the COST Act, 2017. As the said provision was inserted only with effect from 1.01.2020, therefore, the Respondent is liable for the imposition of penalty for the period from 01.01.2020 onwards under the provisions of the said Section. Application disposed off.

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• Income Tax

• 2022 (10) TMI 422
  Validity of Faceless assessments framed u/s 144B - As argued final orders of assessment in terms of Section 144B have been passed without being preceded by a show cause notice (SCN)/draft order of assessment (DOA) - HELD THAT:- Requirement of SCN/DAO is mandatory and cannot be sidestepped by the respondents. The Supreme Court, in the case of Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] was concerned with non-issue of a notice under Section 143(2) within the period prescribed. The High Court had held that failure to issue a notice u/s 143(2) was only a procedural irregularity, and one that could be dispensed with. In the case of faceless assessments as well, the procedure for scrutiny commences with the issuance of a statutory notice in terms of Section 143(2). The notices to be issued thereafter are part of the procedure for faceless assessments and cannot be equated to a notice under Section 143(2) of the Act. Reliance upon Section 144C is also of no assistance to the petitioners as Section 144C provides for a separate and distinct scheme of assessment and the issuance of a DAO is part of that scheme. Though failure to issue the notices as provided in Section 144B would certainly vitiate the proceedings as being in violation of the principles of natural justice, it is an infirmity that may be cured by permitting such SCN/DAO to be issued now. The impugned assessments are set aside and liberty granted to the respondents to complete the assessments de novo, in accordance with law. We find overwhelming support from the following cases wherein the failure to issue a SCN/DAO has been construed as a procedural irregularity. The impugned orders of assessment are set aside and respondents granted liberty to issue SCN/DAO within a period of four (4) weeks from date of receipt of copy of this order.

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• 2022 (10) TMI 421
  Reopening of assessment u/s 147 - suspicious bank transactions - HELD THAT:- Communications/responses of the petitioner during the original assessment do not reveal the existence of the bank account at ICICI, R.S.Puram Branch. In this regard, mere reference to the aforesaid bank account in the communication addressed to the ITO (ICI) will be of no aid to the petitioner. The criminal investigation wing is separate and distinct from the assessment wing and disclosure made before one wing will not exonerate the petitioner from the requirement of making a full and true disclosure before the assessing officer in assessment. The apparent difference in the communications addressed to the assessing authority on the one hand and the ITO (ICI) on the other, would itself illustrate the difference in the disclosures made before the two authorities. Records have been summoned and produced by the standing counsel, that confirm the averment in counter to the effect that there was no disclosure of the account in ICICI bank R S Puram at the time of assessment. In the absence of a full and true disclosure by the petitioner at the first instance, the assumption of jurisdiction by the assessing authority beyond the period of four years is not barred by limitation, and cannot be faulted. The impugned order is confirmed and the writ petition is dismissed.

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• 2022 (10) TMI 420
  Exemption u/s 11 - seeking registration u/s. 12AA denied as per Rule 17A r.w.s 12AA(1)(b) of the Act original instrument establishing the trust and other evidences were not filed in original - HELD THAT:- CIT(E) is factually incorrect and unjustifiable where the ld. CIT(E) has failed to observe that the activities carried out by the trust is genuine in nature. We observed that the assessee carried out a charitable activities in accordance with law with main objects and amended objects of the trust deed. A letter which was sent by the assessee on 28.08.2020 which was not considered by the CIT(E). Relevant documents which are also available on record it was produced before the ld. CIT(E) and before us also, the assessee deserves registration u/s. 12AA. Assessee submitted that additional written submissions along with affidavit submitted the audited balance sheet, income and expenditure accounts for A.Ys. 2017-18, 2018-19 and 2019-20, temple photographs, certified copy of trust deed before the ld. CIT(E) along with application form 10A and thereafter also with letters submitted through the ld. AR during the course of hearing. In considered view that as per amended Rule 17A of the Income Tax Rules which are applicable in the case of the assessee, the assessee was not required to fulfill any original copy of the documents rather self certified copy/instrument was sufficient for the purpose of verification by the ld. CIT(E), therefore, ground No. 1 and 2 of the assessee is allowed.

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• 2022 (10) TMI 419
  Validity of notice under section 143(2) - assessee has raised dispute that the said notice under section 143(2) was not served to assessee - HELD THAT:- We find that the notice under section 143(2) itself contains the Speed Post Registration No - No such objection was raised by assessee about the non-service of notice under section 143(2). Besides, service of notice, the objection of assessee is that the signature of AO is differ from the signature appeared on assessment order. The assessee is failed to show the basic difference in the signature on the notice viz a viz the assessment order. Moreover, the assessee has not disclosed as to what prejudice is caused to the assessee in mere difference in the signature. It is not the case of assessee that the assessment order or the notice under section 143(2) is not signed by competent officer. Further, the assessee or his AR nowhere took the plea that the signature either at the notice under section 143(2) or on the assessment is forged or the revenue is relying on some fabricated or forged signature. It is not the plea that this notice under section 143(2) was not at all issued by the assessing officer. The assessee want favourable order only from the bench without asserting such contention. In our view, the assessee has raised objection only for the sake of technical reasons, which we reject. Estimation of income - bogus purchases - Disallowance restricted to the extent of 5% - As per AO entire purchase from alleged concerns were bogus and was only to suppress the profit of the beneficiaries which is substantiated by the statement on oath given by the entry provider - HELD THAT:- It is matter of common knowledge that PK Jain was well known bogus entry provider, who has provided entry of several thousand crores of rupees. During the search action on PK Jain no stock of any goods was found by search team. In the statement he admitted that he is mere entry provider. The assessee has not disputed that he has not transacted with the entity of PK Jain. CIT(A) restricted the addition to the extent of 5% of aggregate of purchases shown from the entity of PK Jain. Disallowance to the extent of 5% is on lower side particularly when the assessee has shown negligible net profit. The assessee has shown net profit @.03 only, on the turnover of Rs. 70 Crore. The assessee has shown return income of Rs. 1,25,638/- only. Thus, in order to meet out the possibility of revenue leakage 6% of the addition of aggregate of disputed purchase will meet the end of justice. We may refer that this combination, where the assessee is beneficiary of similar disputed purchases, either from Rajender Jain, Bhanwar Lal Jain, Gautam Jain or PK Jain, we have consistently restricted or increased the similar addition to 6% of such purchases. Therefore, taking the consistent view, the disallowance restricted by ld. CIT(A) @ 5% are increased to 6% of the total aggregate of impugned/bogus purchase. In the result, the grounds of appeal raised by the revenue is partly allowed.

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• 2022 (10) TMI 418
  Revision u/s 263 - period of limitation - to be computed from the date of original assessment order or re-assessment order - compensation whether to be taxed in the hands of the assessee or assessee is entitled or not entitled to claim loss - Reopening of assessment as contemplated under section 147 concluded against assessee - HELD THAT:- The ratio laid down in Alagendran Finance Ltd. [ 2007 (7) TMI 304 - SUPREME COURT] and Ashoka Buildcon [ 2010 (4) TMI 152 - BOMBAY HIGH COURT] clinches the issue in favour of the assessee. Further, a reading of the original assessment order would reveal that the issue relating assessment in term of s. 2(24)(iv) of the Act, of Rs.1.16 crores was a subject matter therein. Thus, in the aforesaid scenario, the assessment order passed under section 143(3) r.w.s. 147 of the Act cannot be considered as erroneous and prejudicial to the interest of revenue to subject it to proceeding under section 263 of the Act. If, at all, any order of the subordinate authority which could have been considered as erroneous and prejudicial to the interest of revenue in allowing, either due to lack of enquiry or otherwise, is the original assessment order passed under section 143(3) of the Act and not the re-assessment order. Therefore, the period of limitation prescribed under section 263(2) of the Act would run from the original assessment order. Being conscious of the fact that the original assessment order could not be revised under section 263 of the Act due to bar of limitation, as provided under sub section (2) of section 263 of the Act, PCIT, as it appears, has proceeded to revise the assessment order passed under section 143(3) r.w.s. 147 of the Act to get over the hurdle of limitation. This, in our view, is impermissible. Thus, based on the foregoing reasoning, we hold that the impugned order of PCIT revising the order passed under section 143(3) r.w.s. 147 of the Act is unsustainable. Appeal of assessee allowed.

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• 2022 (10) TMI 417
  Reopening of assessment u/s 147 - unexplained investments in Mutual Funds and unexplained money deposited in Axis Bank, HDFC Bank and State Bank of India and also added the CPB interest - difference on account of cascading, effect of the income received and further reinvested both being added on various occasions - Admission of additional evidences - HELD THAT:- Additional evidences produced by the assessee before the CIT(A) namely the Mutual Funds statement was issued on 01.04.2014 whereas the reassessment was passed on 26.03.2014 and another reason that matured FDR receipt could not be obtained by the assessee from its bankers, before passing of the assessment order by the AO. Considering the ill health of the assessee and transfer of his residence to New Delhi. We find that the assessee is sufficiently prevented from above reasons for not furnishing the above documents to the AO - Therefore to meet the ends of justice, we deem fit it to set aside the case to the file of the Assessing Officer and give one more opportunity to the assessee to explain its case with these additional evidences as last opportunity by imposing a cost of Rs. 10,000/- as the assessee has not cooperated with the Assessing Officer. Appeal filed by the Assessee is allowed for statistical purposes.

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• 2022 (10) TMI 416
  Disallowance u/s. 40A(3) - business expediency in payment of cash towards genuine transaction - HELD THAT:- Rule 6DD is exhaustive and it is open to the assessee the exceptional and unavoidable circumstances which made the assessee to make payment in cash. The contention of the assessee from the day one is that the sellers demanded the assessee to pay in cash which is part and parcel of total sale consideration.There is no dispute with regard to identification of the sellers as well as their confirmations in respect of payment in cash from the assessee. It is also not disputed that the said cash payment is part and parcel of total sale consideration which is reflected in the purchase deed. The sellers also admitted the payment of cash before the registering authority under due process. The contention of ld. AR is that the payment vide cheque or draft is not at all practicable due to circumstances on demand of settlement of purchase consideration in cash from the sellers of the property. Therefore, the ratio laid down in the case of Attar Singh Gurmukh Singh [ 1991 (8) TMI 5 - SUPREME COURT] is applicable and the disallowance as confirmed by the CIT(A) in the hands of assessee on account of section 40A(3) of the Act is deleted. Thus, ground No. 2 raised by the assessee is allowed.

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• 2022 (10) TMI 415
  Reopening of assessment u/s 147 - Whether proceedings initiated were merely on change of opinion? - HELD THAT:- Reassessment is not a case where the assessee has not disclosed fully and truly all material facts but it is a case where the re-assessment proceedings were initiated only on a mere change of opinion by the A.O which is not permissible in law. We are of the considered view having perused the order of the ld. CIT(A) and examination of facts and circumstances in this case as well as aforestated judicial pronouncement of the Hon ble Bombay High Court [ 2022 (5) TMI 176 - BOMBAY HIGH COURT] we find that here is the case where all the material facts were fully and truly disclosed by the assessee in the original scrutiny assessment proceedings. D.R also could not refute these facts on record. He could not demonstrate by placing any material to show that whether there was even a whisper of any new evidence enabling the A.O for resorting to re-assessment proceeding. It is also admitted by the parties that such re-assessment was undertaken by the department beyond the period of four years and when the assessee has disclosed fully and truly all material facts at the time of original assessment proceedings the proviso to section 147 does not warrant the A.O to further reopen such assessment when there is no new material or evidence in his possession to warrant such reopening of the proceedings. In view thereof, we have no reason to interfere with the findings of the ld. CIT(A) on facts as well as in law whereby the re-assessment proceedings has been held to be invalid and bad in law and we uphold the same. The appeal of the revenue is dismissed.

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• 2022 (10) TMI 414
  Reopening of assessment u/s 147 - unexplained deposit - HELD THAT:- We find the gross violation of the natural justice during completion of the assessment order. The ld. AO without the reasons to believe and proper verification has passed the order u/s 148 of the Act. Considering the above submission, the notice u/s 148 is violation of legal statute and liable to be quashed. We note that the impugned addition was made by the AO purely on suspicion and there was no effective material available on record to justify the same. The assessee cannot be kept in the dark. Adverse statements or materials cannot be kept away from his eyes. If the AO intends to use it to draw adverse inference/finding, the assessee should be provided the adverse material/statements in order to rebut/cross examine the provider/maker of the adverse material. Failure to do so is a serious flaw which renders the assessment a nullity. The addition was made purely on conjecture. The impugned addition is therefore being set aside and is hence deleted. This ground stands allowed.

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• 2022 (10) TMI 413
  Transfer pricing - Validity of the final assessment order passed u/s 144C(13) - Period of limitation - HELD THAT:- The date in CPC s records is the date on which the computation is fed onto it. In the present case, the screenshot of order processing on AST dated 13.03.2017 is in the assessment records. The screenshot of rectification to the online order processing on AST dated 30.03.2017 is also in the assessment records. The system automatically calculates section 234A, 234B and 244A interest. The reference point of calculation of interest is 5th March, 2017. As a result, the computation will be different from the computation in the manual order. In most of the cases, the date of order as per the manual order is different from the date of order as per CPC till 2018. Only since initiation of e-assessment in the year 2018, the full order is uploaded in the new system with ITBA (ITBA replaced the earlier AST). In the instant case, the manual final assessment order is dated 24.01.2017. The final assessment order has dispatch seal also. There is nothing on record to show that the final assessment order has not been dispatched on the said date. The demand was uploaded to CPC portal on 13.03.2017, so the CPC shows the date as the date of order. The CPC will always show the date on which the demand is fed into. The entire order is not uploaded, but only the demand was uploaded in the CPC. For the aforesaid reasons, we reject grounds 1 to 3 raised by the assessee. DRP directed the TPO to recompute the margins of the assessee as well as the comparables to its SWD and ITE service segments after treating such foreign exchange gain / loss as operating in nature - A bare perusal of the adjustment proposed in the draft assessment order, and the adjustment that has ultimately been incorporated in the final assessment order are one and the same. Thus, it is wholly apparent that the final assessment order is, to the extent, not in conformity with the DRP s directions and is, therefore, illegal. As per section 144C(10) of the I.T.Act, every directions issued by the DRP is binding on the A.O. Further, section 144C(13) of the I.T.Act mandates that the A.O. shall complete the assessment in conformity with the directions issued by the DRP. Since the TP adjustment made in the final assessment order is not in conformity with the DRP s directions, the final assessment order is, to this extent, bad in law and thus unsustainable. Therefore, we delete the TP adjustment made in the final assessment order, which is not in conformity with the DRP s directions. In taking the above view, we are fortified by the judicial pronouncements referred supra at para 10. Since we have deleted the TP adjustment incorporated in the final assessment order, the specific grounds with regard to TP adjustment on merits is not adjudicated. Addition of suppressed income relatable to the difference in the assessee s revenues as per the invoices raised by it vis- vis its financial statements - action of the AO in making an addition which was enhanced pursuant to the DRP s directions - HELD THAT:- As per reconciliation, it is only on account where the audit adjustments were made, i.e., in order to reverse the excess revenue to the extent overstated. A similar issue was examined by the A.O. during the course of assessment proceedings, for the immediately succeeding assessment year, i.e., A.Y. 2013-2014. AO accepted the assessee s aforesaid submissions on the issue and accordingly made no addition to its returned income in the final assessment order for assessment year 2013-2014. Therefore, we direct the AO to take into account the reconciliation of revenue as per the invoices vis- -vis the financial statement and take a decision after affording a reasonable opportunity of hearing to the assessee. Therefore, grounds 4 and 5 are allowed for statistical purposes. Nature of expenditure - expenses incurred for purchase of monitors and desktops, software, computer accessories and spare parts - revenue v/s capital expenditure - HELD THAT:- After hearing the rival submissions, we direct the A.O. to examine whether the assessee is entitled to depreciation on the expenditure disallowed in past years as capital expenditure. It is ordered accordingly.

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• 2022 (10) TMI 412
  Penalty levied u/s 271AAB - Necessity to mention specific charge or limb as specified in clauses (a), (b) or (c) of section 271AAB under which the penalty proceeding - HELD THAT:- As evident from the show-cause notice issued under section 274 read with section 271AAB that the Assessing Officer was not clear as to on what precise charge the appellant was asked to show cause, whether the assessee shall pay by way of penalty under clauses (a), (b) or (c) of section 271AAB. The Assessing Officer has just mentioned deliberately concealed the true income . Assessing Officer without mentioning specific default of the assessee in terms of clauses (a), (b) or (c) of section 271AAB of the Act, the show-cause notice issued in routine manner cannot be considered a valid notice in the eyes of law and accordingly the levy of penalty against the assessee is held to be void ab initio. Appeal of assessee allowed.

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• 2022 (10) TMI 411
  Exemption u/s 11 - registration u/s 12AA rejected - assessee society is registered under the Rajasthan Societies Registration Act, 1958 and running a school - CIT(E) raised an issue that, on enquiry, it is seen that the assessee is showing lower tuition fee and not disclosing bus fee in the books of account - HELD THAT:- Material collected behind the back of assessee could not be utilized against assessee unless the copy of the same was supplied to the assessee and he was given an opportunity to rebut the same. The assessee furnished full explanation to the query raised. No opportunity was provided to the assessee for cross-examination. Such material cannot be used against the assessee unless he is supplied the copy of such material and is allowed an opportunity to rebut the same. Similarly, any statement recorded behind the back of the assessee cannot be used against him unless the assessee is supplied the copy of the statement and is allowed an opportunity to cross-examine. As per record, no documentary evidence of field enquiry was provided to the assesseesociety. Even it is not clear from the record as to whether such enquiry was made from parents or minor students. No statements were recorded in writing of any of the witnesses and no opportunity of cross examination was provided. In this regard, we rely upon the decision in the case of Kishinchand Chellaram [ 1980 (9) TMI 3 - SUPREME COURT] wherein the Hon ble Supreme Court has held that any material not confronted to assessee would not constitute as admissible evidence . An institute though registered u/s 12AA, would still be taxed on the income which has not been applied in accordance with section 11 or in respect of which section 13 comes into play. Thus, the registration U/s 12AA is only fait accompli to the objects of the institution. The activities of an institution though genuine at the time of grant of registration may not remain so during its life span and the registration granted to it cannot be life time guarantee that it would remain so, that is why the law prescribes procedure for withdrawal of registration once granted. Considering the totality of the facts, circumstances and legal position, we are of the view that the application submitted by the assessee-society is in consonance with the procedural requirement prescribed in this regard. From the constitution and other documents of the assessee-society which were filed before the Ld. CIT(E), the objects of the society could be ascertained. Even during the pendency of appeal before us, the assessee-society has submitted affidavits as well as balance sheets and these affidavits are in the shape of confirmations coupled with Aadhar Card of the respective persons wherein they have denied the allegations leveled upon the assessee-society. Copies of the said documents were given to the opposite party but the said documents were not rebutted by leading any evidence. Thus, in that eventuality, we also draw inference that the allegations upon the assessee could not be proved by the Revenue and thus from the same and from factual activity of running school, it is evident that the objects of the society are charitable in nature and are in tune with section 2(15) of the Act and, therefore, the order of the CIT (E) rejecting the application u/s 12AA of the Act is set aside and we allow the appeal of the assessee.

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• 2022 (10) TMI 407
  Validity of faceless assessment u/s 144B - Validity of notices issued u/s 156 and Section 274 read with Section 270A HELD THAT:- In the present case, admittedly, no show cause notice, as contemplated under Section 144B(1)(xvi)(b) of the Act was served on the petitioner, thereby depriving the petitioner of its statutory right to file a response as well as place the documents on record in support of its response and to be heard before passing of the final assessment order. We therefore, set aside the assessment order and the consequential notices issued under Section 156 and Section 274 read with Section 270A of the Act and remand the matter to the respondent No. 1 to complete the assessment proceedings within a period of twelve weeks from today, in accordance with law.

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• 2022 (10) TMI 406
  Filling of ITR quoting wrong PAN - grievance of the petitioner is that he has been filing Income Tax Returns quoting PAN-A, but now since the same has been deactivated, he is compelled to file returns by quoting PAN-B which he had already surrendered - HELD THAT:- The petitioner is an IT assessee, he has to file income tax returns for this financial year or previous financial years for which he has to have PAN. The old PAN has been deactivated and the new PAN which he got cancelled has been now activated for the proceedings of section 148 of the Act of 1961. If he uses this PAN -B he may face complications in future. We are of the considered opinion that this complex issue is liable to be examined by the Income Tax Commissioner / respondent No.1 considering the practical problem which is being faced by the petitioner and also the complications which may arise in future while filing Income Tax Returns and quoting the wrong PAN. The Commissioner shall also decide the issue as to which PAN is to be used by the petitioner for future transactions and Income Tax Returns. The petition is disposed of with a direction to the petitioner to submit detailed representation to the Income Tax Commissioner / respondent No.1, who shall consider and decide the same in accordance with law within a period of 60 days from the date of receipt of such representation.

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• 2022 (10) TMI 405
  Right to appeal u/s 260A - Addition on account of transport creditors - Tribunal setting aside the disallowance - as per revenue ITAT erred deleting addition as credit worthiness of the transport creditors was not established by the assessee and not appreciating that the assessee had not provided even the identity of the Transport Creditors in the absence of which the assessing authority was not in a position to conduct further enquiries ? - HELD THAT:- The appeal, be it of the Revenue or the Assessee, lies only if the High Court is satisfied that the case involves a substantial question of law Sub-Section (7) of Section 260A states that the provisions of Code of Civil Procedure, 1908 relating to appeals to the High Court, as far as may be, apply to these appeals. This Section is analogous to Section 100 of CPC. Noticeably, both these Sections i.e., Section 260A of 1961 Act and Section 100 of CPC do not define the expression substantial question of law . The substantial question of law on which an appeal shall be heard need not necessarily be a question of law of general importance. To be substantial , a question of law must be debatable and it must have a material bearing on the decision of the case in the sense that if answered either way insofar as the rights of the parties are concerned. The tests are stated to be illustrative and in no way exhaustive of the powers of the High Court to entertain an appeal, if there is other substantive ground of law. It hardly needs to be stated that a provision for appeal should be liberally construed and read in a reasonable practical manner. Substantial question of law - The question on which the appeal is admitted involves, in the first place, the ascertainment of facts as to the business expenditure in question, and in the second, the application of the correct principle of law to the fact so ascertained. Therefore, essentially such a question is only a mixed question of fact law as observed by the Apex Court in COMMISSIONER OF INCOME TAX vs. GREAVES COTTON [ 1967 (5) TMI 11 - SUPREME COURT] . Therefore, we are not sure if the Revenue could maintain this appeal on the subject question. Added, there is a certain difference between an ordinary question of law on the one hand and a mixed question of fact law, on the other vide JANARDHANA RAO [ 2005 (1) TMI 14 - SUPREME COURT] Ordinarily, to answer a question of law of the kind, there is no need to consult the statute book; such a question can be answered just by turning the pages of evidentiary record of the Assessment Proceedings concerned. Therefore, the said question is miles away from the precincts of Section 260A which employs the expression substantial question of law . Burden of proof and impossibility of its discharge - There is absolutely no explanation as to why the AO did not choose to invoke this provision in the fitness of things. Nothing prevented him from summoning the books of accounts/documents or at least copies thereof from the custody of CBI. AO having not done his duty, could not have recorded a finding that the claim of Assessee as to transport expenditure was not substantiated. There is yet another aspect, which merits a bit deliberation. The books of accounts documents being in the exclusive custody of the CBI Police, the Assessee except pleading this could not have done anything beyond. Arguably, in a sense, the case of Assessee was one of lack of evidence for proving the expenditure. Absence of evidence at hands is not the evidence of absence. If the Assessee fails to produce cogent evidence to prove the entirety of the claim, it is the duty of the AO to assess the allowable part of the expenditure to the best of his judgment vide CIT vs. S.P. NAIK [ 1998 (1) TMI 518 - KERALA HIGH COURT] . It is more so because the Assessment Order was made under Section 143(3) without rejecting the books of account under Section 145. This Appeal being devoid of merits, is liable to be rejected and accordingly it is, costs having been made easy.

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• 2022 (10) TMI 404
  Addition u/s. 40(a)(ib) - non-charging of Equalization levy when the conditions prescribed as per the provisions of section 165 were fulfilled - case was selected for complete scrutiny under CASS for Foreign remittance and notice u/s. 143(2) was issued - assessee is engaged in the business of providing support services of online advertisement, digital marketing and web designing and receives consultancy charges for such services rendered - AO made the disallowance of this amount contending that nowhere in the provisions of section 165 it is provided that equalization levy will not be attracted if the residential person makes a payment to non-resident for specified service out of the amount received by him from a non-resident or the targeted customers of the advertisement campaign are located outside India - HELD THAT:- Here in this case no operation are carried out in India. Only the services of id and wallet creation is rendered for which the assessee has already paid the tax in India and is rendering of the services and its reasonableness is not under dispute. Only the payment made to Google Singapore for which there is no income which accrue or arise in India based on the provision of section 9 and section 165 of EL. In view of that contention of the assessee that the consideration paid to Google Singapore is not amenable to equalization levy was rejected by the AO stating that as it is noticed from the factual matrix present in this case that the payment has been made to a Non Resident (Google Singapore) by the assessee for advertisement purposes in the digital mode on behalf of his clients and that no tax was deducted as equalization levy on the payment made to the non-resident. The above transaction carried out by the assessee clearly attract the provisions of sec. 165(1) of the Finance Bill, 2016 as the condition specified therein are clearly satisfied by the facts present in this case. Further the assessee s case does not fall within the exception provided u/s 165(2) of the Finance Act. Therefore, the facts present in the assessee case clearly lead to the conclusion that equalization levy is attracted in the payment made by the assessee to Google Singapore. Therefore, the provisions of Sec.40(a)(ib) of the Act which provide that any consideration paid or payable to non-resident for a specified service on which equalization levy is deductible under the provisions of Chapter VIII of the Finance Act 2016 and such levy has not been deducted or after deduction, has not been paid on or before the due date specified in sub section (1) of section 139 of the Act and thus he disallowed 100 % of the sum paid to Google Singapore, a non-resident having no PE in India. Whether the online advertisement which are of non-jurisdictional area for which the assessee has claimed the expense are subjected to EL or not? - To relates the client as well as cluster or area of the ultimate advertisement both are undisputedly out of India but since the assessee has made the payment outside India and claimed as expenses the ld. AO is of the view that the assessee is subjected to EL and since the levy is not collected it attract disallowance u/s. 40(a)(ib) of the Act at 100 % of the payment made. Revenue has failed to show us that how these specified services are provided to a resident in India. The ld. AR of the assessee further submitted that on this issue he has not only persuaded these facts to the CIT(A) but also to the ld. AO on the issue and there are no contrary findings placed on record by the revenue and the DR in this proceeding. Thus, when the intention of levy is related to the targeted audience and party paying the online advertisement has no relation in India, EL is not attracted in the set of present facts and circumstance placed before us and we see no reason to interfere in the reasoned findings given by the ld. National Faceless Appeal Center as revenue did not controvert any of the factual aspect related this case. Therefore, the order passed by the learned National Faceless Appellate Center could not be found fault with and therefore, we see no reason to intervene in the findings of the learned National Faceless Appellate Center. Based on these facts we hold the view of the learned National Faceless appeal Centre as correct and appeal of the revenue is dismissed.

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• 2022 (10) TMI 403
  Penalty u/s 271(1)(c) - Defective notice u/s 274 - non striking of irrelevant portion of notice - HELD THAT:- As it is settled position of law, as held in the case of Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] that where assessment order clearly records satisfaction for imposing penalty on one or other, or both grounds mentioned in section 271(1)(c), a mere defect in notice, not striking off irrelevant matter would vitiate penalty proceedings. Here in the assessee s case what the talk about striking off irrelevant limb/charge in the penalty notice, the penalty notice itself was not issued to the assessee, before imposition of penalty by ld CIT(A) - Therefore, the penalty proceedings, initiated against the assessee does not have any leg to stand. We note that Tribunal has deleted the quantum addition, vide order in case of assessee [ 2022 (5) TMI 1461 - ITAT SURAT] - We find that once, the addition made in the assessment order is deleted by Tribunal, the satisfaction of CIT(A) that the assessee has taxable income, is held be wrong. Therefore, penalty imposed on such satisfaction would not survive. Hence, penalty needs to be deleted. Therefore, we delete the penalty imposed u/s 271(1)(c) of the Act. - Decided in favour of assessee.

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• 2022 (10) TMI 402
  Cash deposited post demonetization period - AO making the addition of 30% of the cash deposited in the bank during post demonetization period - addition made by the AO as the appellant assessee had failed to prove the source of cash deposit in the bank account during the post-demonetization period during the course of assessment as well as first appellate proceedings with any cogent and sustainable evidence - HELD THAT:- Logical conclusion that the AO was right in making the addition in the hands of the assessee and the CIT(A) was also correct and justified in confirming the same. There is no ambiguity, perversity or any other valid reason to interfere with the findings arrived at by the authorities below, therefore, uphold the same. Resultantly, the grounds of the assessee being devoid of merits are dismissed.

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• 2022 (10) TMI 401
  Deduction u/s 80P(2)(d) in respect of interest income earned from deposits kept with Co-operative banks - HELD THAT:- As relying on Kaliandas Udyog Bhavan Premises Co-op Society [ 2018 (4) TMI 1678 - ITAT MUMBAI] and Rena Sahakri Sakhai Karkhana Ltd [ 2022 (1) TMI 419 - ITAT PUNE] assessee is entitled for deduction under section 80P(2)(d) of the Act in respect of interest income earned from the cooperative banks. Accordingly, set aside the order passed by learned CIT(A) and direct the Assessing Officer to allow deduction under section 80P(2)(d) of the Act in respect of interest income earned from the cooperative banks. Appeal filed by the assessee is allowed.

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• 2022 (10) TMI 400
  Disallowance of proportionate interest on interest free advances - HELD THAT:- The amount were given to players for endorsement of assessee s products/goods and there is advances given to an agent. The payment to an advocate is for attending to various legal matters concerning the assessee. Payments made to JVS Sporting and Sunridges Sporting are for the purpose of payment of taxes on their behalf as they are sister concerns of the assessee and have running accounts. As regards, the advance to Shri Vinod Sareen, it is observed, he is an old and dependable employee of the assessee to whom advance is given at the time of need. As regards, the alleged advance to Anisa Sareen, after examining the reconciliation statement filed by the assessee, Commissioner (Appeals) has given a factual finding that actually there was no such advance given to the concerned person. The aforesaid finding of fact recorded by Commissioner (Appeals) could not be controverted by the Revenue us. In view of the aforesaid, we uphold the decision of Commissioner (Appeals) on the issue. Ground raised is dismissed. Addition u/s 68 - undisclosed sundry creditors - HELD THAT:- Merely because these evidences were not produced in course of assessment proceedings, AO has stated that such evidences should not be accepted and additions made should be confirmed. To say the least, the observations of the AO are self-contradictory. On one hand, he accepts that assessee s contention regarding genuineness of sundry creditors appears to be correct, whereas, on the other hand, he terms assessee s claim to be afterthought. This, in our view, is unacceptable. When the assessing officer has not found anything adverse in the evidences furnished by the assessee and accepted assessee s claim to be correct, he cannot again reject the claim of the assessee on flimsy ground. AO cannot blow hood and cold at the same time. Addition being expenditure incurred towards distribution of free samples to players - HELD THAT:- As it may not be always possible for the assessee to keep supporting evidence, considering the fact that at times, assessee is providing free samples to national/international level players of repute and considered as celebrity. Therefore, it may not be always possible to obtain receipt from such players qua the free samples. Assessee s claim that the expenditure cannot be fully substantiated through supporting evidence, to some extent, is acceptable. The possibility of inflation of expenditure to some extent cannot be ruled out altogether. That being the case, to take care of such situation, a part of the expenditure being not supported by proper evidence has to be disallowed. In the peculiar facts of the present case, disallowance of 10% out of the expenditure claimed, in our view, is reasonable. Hence, no interference is called for. Accordingly, we uphold the decision of learned Commissioner (Appeals) we dismiss the ground raised. Unexplained unsecured loan - HELD THAT:- In the remand report filed by the assessing officer in course of first appellate authority, it is observed, though, he could not find anything adverse in the details or reconciliation filed by the assessee, however, he simply observed that this is an afterthought of the assessee. The aforesaid facts clearly indicate that in course of first appellate proceeding, the assessee did furnish supporting evidence to reconcile the discrepancy pointed out by the assessing officer in the assessment order. It is further evident, the assessing officer, in course of remand has not found anything adverse in the evidences furnished by the assessee. Once the discrepancy pointed out by the assessing officer stands reconciled, no addition can be made on account of unsecured loan. Accordingly, we uphold the decision of Commissioner (Appeals) by dismissing the ground raised. Disallowance u/s 40(a)(ia) - non deduction of TDS on Commission to partners, Commission to agents and Commission to Bank - HELD THAT:- Commission to the agents, AO has accepted that tax was duly deducted at source and paid to the government account within the prescribed time. Therefore, this addition cannot survive. Commission to bank, the assessing officer has accepted that TDS provisions are not applicable to commission paid to bank. Thus, this addition was also rightly deleted. Commission to partners as rightly observed by Commissioner (Appeals), commission paid to partners is not covered under Section 194H of the Act as there is no employer and employee or principal agent relationship between the partners and the firm. Thus, we do not find any reason to interfere with the decision of learned Commissioner (Appeals) on the issue. Ground raised is dismissed.

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• 2022 (10) TMI 399
  Undisclosed payment to the Institution - assessee has paid a sum towards capitation fee/donation for admission of his daughter - addition on the basis of statement recorded of Chairman/Director of Santosh Medical College Group recorded during the course of search and seizure operation - as argued no opportunity have been provided to him to cross-examine the person on the basis of whose statement the allegations have been made against the assessee - HELD THAT:- It is not brought on record if his statement was ever supplied to assessee or subjected to cross-examination on behalf of assessee. There is no other material available on record to justify the addition made against the assessee. The assessee since beginning of the re-assessment proceedings have denied to have paid any amount to the Medical College. The assessee in his explanation has affirmed that he has not paid any amount for admission of his daughter to MBBS Course. Thus, no material is available on record to prove that assessee made any payment on behalf of his daughter for admission to the MBBS Course. Since the Revenue alleged that the amount in question is paid by assessee for admission of his daughter to the Medical Course, therefore, the burden is very heavy upon Revenue to prove by positive evidence that assessee has in fact made the payment to the Medical College for admission for his daughter. However, no evidence is available on record to prove such contention and initial denial of the assessee itself supports the explanation of assessee that no amount is paid by assessee for admission of his daughter in Medical Course. As decided in Shri Naresh Pamnani, Delhi [ 2019 (3) TMI 1787 - ITAT DELHI] assessing officer did not record in the assessment order if statement recorded at the back of the assessee by the Investigation Wing, was allowed for cross examination on behalf of the assessee at any stage, therefore, statement of third party, cannot be used against the assessee unless assessee has been allowed a right to cross-examine such statement. A.O. in the assessment order also did not mention, if any, material found during the course of search, was confronted to the assessee. Thus, assessee was justified in denying in making any cash payment at any stage. There is no material available on record to justify the addition against the assessee on merits. In the absence of any material on record against the assessee and in the absence of cross examination to the statement of Dr P Mahalingam on behalf of the assessee, such material cannot be used against the assessee so as to make the impugned addition Addition on merit is wholly unjustified. It is well settled Law that unless the incriminating documents or statement used against the assessee are confronted to assessee and assessee have been allowed to cross-examine such statements, no such material or statement, could be read in evidence against the assessee. Thus no addition could be made against the assessee of the impugned amount - Assessee appeal allowed.

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• 2022 (10) TMI 398
  Reopening of assessment u/s 147 - Reassessment after expiry of four years and just prior to expiry of six years from the end of the relevant assessment year - outstanding sundry creditors - HELD THAT:- On perusal of reasons recorded for reopening of assessment, it is observed that the assessing officer had no fresh tangible material in his possession while reopening the assessment under Section 147 - In the reasons recorded, AO has very clearly stated that on perusal of record, he came to know that confirmation of accounts relating to M/s. Goldplus Fabrics is not available on record. In the reasons, though, the assessing officer has alleged that assessee has not disclosed fully and truly all material facts relating to its assessment, however, it is a purely general observation without substantiating how the failure can be attributed to assessee. Only because confirmation of the sundry creditor was not available, it will not lead to believe that the income has escaped assessment. In the aforesaid view of the matter, I hold that reopening of assessment in the instant case is invalid. Even otherwise also, assessee has a strong case on merits. As could be seen, while completing the original assessment, the assessing officer had added back the outstanding sundry creditors - while deciding assessee s appeal, the Tribunal had deleted the entire addition made by the assessing officer having found that the disputed additions represent outstanding balance of creditors and the purchases from the said creditors have been accepted. The Tribunal also took note of the fact that the payment made to creditors in subsequent years was not doubted. Assessee had demonstrated that in case of the present creditor also, repayment has been made. That being the factual position emerging on record, addition made by the assessing officer is unsustainable. - Decided in favour of assessee.

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• 2022 (10) TMI 397
  Exemption u/s 11 - As per AO assessee corporation is registered u/s. 12AA where their business income which is not allowable for exempt u/s. 11 and 12 - As per DR assessee corporation does not come within the definition of section 2(15) of the Act which defines charitable purpose it comes under business income - HELD THAT:- Assessee does not driven primarily by desire or motive to earn profits but to do charity through advancement of an object of general public utility. The proviso to Sec. 2(15) of the Act is therefore not applicable to the case of the assessee. With the view of the CIT(A) and hold that the Assessee is entitled to the benefits of Sec. 11 - AO has not disputed the conditions necessary for allowing exemption u/s. 11 except the applicability of proviso to Sec. 2(15). In view of our conclusions that the said proviso is not applicable to the case of the Assessee, we hold that the Assessee s income is entitled to the benefits of Sec. 11 - With regard to the arguments of the DR, we are of the view that the same are without any merit. The proviso to Sec. 2(15) of the Act has been discussed in the case of India Trade Promotion Organization vs. DGIT(Exemption) [ 2015 (1) TMI 928 - DELHI HIGH COURT] and the dominant motive is the criteria as laid down therein. Therefore the answer to the arguments put forth by the learned DR are found in the aforesaid decision. As we have already seen, the profit of the Assessee have to be used only for road development, as in the case of the decision in the case of APSRTC [ 1988 (8) TMI 391 - ANDHRA PRADESH HIGH COURT] where the revenues have to be utilized only for the purpose of road development. Tribunal in assessee s own case, we hold that the assessee is not hit by proviso to section 2(15) - Accordingly, the A.O. is directed to grant benefit of exemption u/s. 11 for the relevant assessment year. CIT(E) has rightly and fairly allowed of the assessee.

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• 2022 (10) TMI 396
  Validity of penalty levied u/s 271(1)(b) - Whether assessee has shown sufficient cause within the meaning of Section 273B in response to reply of show cause notice? - HELD THAT:- AO finalised the assessment order on 07/06/2021. While finalizing the assessment order, no variation in the returned income was made, thus accepted the return income. The assessment was completed under Section 143(3) r.w.s. 153C - AO before levying penalty issued notice u/s 274 r.w.s. 271(1)(b) dated 23/01/2021. In response to said show cause notice, the assessee specifically submitted that there is Covid-19 pandemic and everybody is doing work with safety measures and that his Accountant were busy in audit work. The reply of assessee was not accepted. AO levied penalty for non-compliance of notice dated 03/12/2020. The assessee has shown sufficient cause within the meaning of Section 273B in response to reply of show cause notice, therefore, no penalty u/s 271(1)(b) of the Act was leviable and the assessee is liable to succeed on this ground alone. The notice dated 03/12/2020 was issued to the assessee. In response to said notice, the assessee sought adjournment on 28/12/2020. The adjournment was allowed to assessee and on the request of assessee, the hearing of the case was fixed on 04/01/2021. Once the AO himself allowed adjournment, the cause of action for non-compliance was waived on that moment itself. CIT(A) while confirming the action of AO proceeded one step further and held that the assessee committed two defaults. In our view, the observation of ld. CIT(A) is contrary to the record and with the contents of order of penalty u/ 271(1)(b) of the Act. The assessee has shown sufficient cause for non-compliance, moreover, such non-compliance was done by granting adjournment by the AO himself. Considering the decision in various case laws relied by assessee wherein it was held that when the assessment was framed u/s 143(3), merely because the assessee could not make compliance for single hearing due to bonafide reason on the penalty u/s 271(1)(b) of the Act cannot be imposed on the assessee for such bonafide default due to reasons beyond his control - we direct the AO to delete the impugned penalty. In the result, ground of appeal raised by assessee is allowed.

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• 2022 (10) TMI 395
  Addition of sundry creditors - whether the cash deposit has been made from disclosed sources? - Case was selected for limited scrutiny through CASS - CIT-A deleted the addition - HELD THAT:- Merely because the persons have appeared before the Assessing Officer during the remand proceedings and stated to have given the loan to the assessee cannot be the basis for deleting the addition in absence of proper substantiation of their sources. Merely because they are deriving income from agriculture cannot be accepted in absence of substantiation of the same with cogent evidence. The entire amount has been paid in cash and it is unbelievable that some of the persons who have given the money to the tune of more than Rs.90 lakhs each do not have any bank account to give such money through banking channels. Further, the property has not been registered in the names of the business associates except in the case of one business associate. In our opinion, persons investing huge amounts of money in purchase of property in the name of the assessee only instead of getting registered in their name is unbelievable. Since in the instant case, CIT (A) in a very cryptic order has deleted the addition and since the powers of the Assessing Officer during the remand proceedings are very limited, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to give one final opportunity to the assessee to substantiate his case and decide the issue as per fact and law. We hold and direct accordingly. The grounds raised by the Revenue are accordingly allowed for statistical purposes.

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• 2022 (10) TMI 394
  Addition u/s 69A - income from undisclosed sources - assessee has received the mines sales advances - HELD THAT:- The assessee has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No.1 of the assessee is dismissed. Long term capital gain - sale of residence plot - CIT(A) treating Plot sold as commercial and revised DLC value as adopted by subregister has been upheld - HELD THAT:- Where neither there was any revisionary order in the assessee s favour, nor did he show the capital gains in his return of income or the sale of other plots against which he could claim capital loss, the matter decided by the SVA in the second valuation remains finally adjudicated. As the assessee has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground of the assessee is dismissed. Loss incurred on account of plots as claimed - A.O not allowed any set off against the capital gains related sale receipts -HELD THAT:- As the assessee has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 3 of the assessee is dismissed.

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• 2022 (10) TMI 393
  Correct head of income - Income From Other Sources v/s income from business - interest income arising from Bank Fixed Deposit (F.D) - HELD THAT:- We find that in Total Commodities India Pvt. Ltd. [ 2017 (4) TMI 1603 - ITAT MUMBAI] after taking note of various judicial precedents held that where out of business necessity, if funds are deployed by the assessee in fixed deposits for opening Letter of Credit / procuring Bank Guarantee / margin money, etc., as a necessity of business, then, in that eventuality, the interest earned on such funds is to be taxed under the head Income From Business and not under the head Income From Other Sources In the present case, it has not been disputed by the Revenue that overdraft facility availed by the assessee was for the purpose of its business. The said interest income has been earned by the assessee in the course of its business and also to raise funds for running the said business, hence, the said interest income is linked to the business activities of the assessee. Therefore, we are of the considered view that interest earned on Bank F.D. is in the nature of income from business - Assessee appeal allowed. Disallowance of remuneration paid to the partners - HELD THAT:- AO treated the interest earned on Bank F.D. as Income From Other Sources and accordingly, excluded the same for the purpose of working of book profit of the firm. As a result, the Assessing Officer disallowed remuneration and added the same to the total income of the assessee. Since we have allowed ground raised in Assessee s appeal and have held that the interest on Bank F.D. is in the nature of Income From Business, therefore, the Assessing Officer is directed to delete the disallowance out of remuneration paid to the partners. Assessee appeal allowed. Disallowance of expenses to 10% in the absence of any supporting material - HELD THAT:- We find that even now, the assessee has not substantiated by way of any cogent evidence that these expenses were entirely incurred for the purpose of business. Accordingly, we find no infirmity in the impugned order passed by the CIT(A). As a result, ground in assessee s appeal are dismissed.

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• 2022 (10) TMI 392
  Delay in payment of employees contribution of provident fund ( PF ) and ESI - scope of amendment in section 36(1)(va) as well as 43B - HELD THAT:- As assessee had not deposited the employee s share of EPF and ESI etc. within due date prescribed under respective Statutes, but paid before due date for filing Return of Income under the provisions of section 139(1) we hold that the position of law as set out by various Hon ble High Courts decisions including Ghatge Patil Transports Ltd [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] and Nipso Polyfabrics Ltd [ 2012 (11) TMI 592 - HIMACHAL PRADESH HIGH COURT] squarely applies to the facts and circumstances of the instant cases thereby not warranting any disallowance since the amounts in question were admittedly deposited before the due date u/s 139(1) of the Act and also pertains to prior assessment years prior to A.Y. 2021-22. We direct the A.O to delete the additions made u/s 36(1)(va) of the Act from the hands of the above mentioned assessees - Decided in favour of assessee.

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• 2022 (10) TMI 391
  Validity of reopening notice u/s 148 issued in the name of the non existing company - merger procedures concluded - notice in the name of company amalgamating - HELD THAT:- Respectfully following the above decision of the Hon ble Apex Court in the case of Maruti Suzuki Limited[ 2019 (7) TMI 1449 - SUPREME COURT] we consider the fact that the jurisdiction invoked under section 148 of the Act was against the legal principle as the amalgamating entity ceases to exist on merger by way of the approved scheme of the Hon ble High Court. Assessing Officer has failed to consider the judicial precedents laid down by the Hon ble Supreme Court and has also not considered the submission of the assessee in spite of the fact that it was within the knowledge of the assessing officer. The Ld.CIT(A) has also failed to consider that the notice ought to have been issued in the name of the assessee company pursuant to the merger. Appeal filed by the assessee is allowed

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• 2022 (10) TMI 390
  TP Adjustment - international transaction - Advertisement Marketing and Promotional Expenses (AMP) - assessee did not consider incurring of AMP expenses as an international transaction and did not file any transfer pricing analysis benchmarking the AMP expenses - TPO held that there has been an agreement to incur AMP expenses, and therefore, incurring of AMP expenses was an international transaction - HELD THAT:- Tribunal in assessee s own case for assessment year 2015-2016 [ 2022 (7) TMI 1329 - ITAT BANGALORE] had held that the assessee is a full-fledged distributor of NIKE product and on examination of royalty agreement, it was held by the Tribunal for assessment year 2015-2016 that there is no clause which mandated incurring of any AMP expenses. It was held by the Tribunal that in the absence of no written agreement exists between the assessee and its AE requiring the assessee to incur AMP expenses, the same cannot be regarded as an international transaction at all. Thus we delete the transfer pricing adjustment made by the TPO on account of AMP expenses incurred by the assessee. Payment of outsourcing commission - additional evidences filed are certain email correspondence to explain the nature of services rendered by NGTPS to the assessee - HELD THAT:- In view of the above order of the Tribunal [ 2022 (7) TMI 1329 - ITAT BANGALORE] for the assessment year 2015-2016, we restore the matter back to the files of the TPO to consider the issue de novo. The TPO shall analyse the evidence on record and the additional evidence which is now filed by the assessee before the Tribunal to determine whether NGPTS had rendered services to the assessee for receipt of sourcing commission. Reimbursement of expenses - HELD THAT:- As decided in own case for AY 2013-2014 . [ 2021 (6) TMI 1120 - ITAT BANGALORE] and 2015-2016 [ 2022 (7) TMI 1329 - ITAT BANGALORE] on the issue of payment of cross charges of expats costs and contractor charges claimed as reimbursements to the parent compan we are of the considered opinion that the TPO has been right in holding thatthe nature of these expenses are such that they cannot be attributed to have been solely and exclusively for the distribution business of the assessee, the claim of the assessee that it had derived tangible benefit from the expenditure has not been substantiated with evidence - there is no evidence or likelihood of any independent entity dealing in similar circumstances bearing such expenditure. We, therefore, uphold the finding in the orders of the authorities below in making the T.P. adjustment and dismiss the grounds raised by the assessee. Disallowance of Trade Samples - HELD THAT:- Respectfully following the aforesaid order of the Tribunal rendered in assessee s own case for assessment year 2013- 2014 [ 2021 (6) TMI 1120 - ITAT BANGALORE] we reject grounds 1 to 6. AR, however, submitted that disallowance on purchase of trade samples was also subject matter of TP adjustment by the TPO and to that extent there should be direction to ensure that there is no double taxation of the same income. We accept the prayer of the learned AR and direct the AO / TPO to consider the plea of the learned AR in this regard and allow necessary relief in the event the same income gets doubly taxed. Nature of expenses - Retail Fixtures for Stores - HELD THAT:- We hold that since the facts are identical and the expenditure incurred are with reference to refurbishment of the showroom, we hold that the expenditure claimed by the assessee is on the revenue front. It is ordered accordingly. Interest u/s 244A of the I.T.Act on the refund determined - HELD THAT:- We have heard rival submissions and perused the material on record. We direct the A.O. to examine the issue and follow the directions of the DRP. It is ordered accordingly.

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• 2022 (10) TMI 389
  Addition of cash deposit made into the bank account during demonetization period - HELD THAT:- Addition made in the hands of the assessee is not justified, since the said deposits have been made from the cash balance available in the books of account. Accordingly, set aside the order passed by CIT(A) on this issue and direct the Assessing Officer to delete the addition - Decided in favour of assessee.

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• 2022 (10) TMI 388
  Additions in relation to belated remittance to PF and ESI - Delayed payments made but prior to the due date of filing of the return of income u/s 139(1) - HELD THAT:- On identical facts, the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down by the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] had held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1). Therefore, the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment year under consideration. By following the binding decision of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee and the disallowance made by the Assessing Officer is deleted. Disallowance u/s 40(a)(ia) - assessee has not deducted tax at source on some payments made by it - assessee submitted before the CIT(A) that income has already been offered to tax by the payee and certificate has been collected by the assessee in this regard - HELD THAT:- It is clear that when the payee has paid the taxes, the benefit of proviso to section 201 of the I.T.Act is extended even for claiming deduction of expenses wherein the assessee had failed to deduct tax at source. The assessee in the instant case had provided certificates to the effect (Form 26A) that the amount paid to the payee have been offered to tax. CIT(A) has rejected the claim of the assessee, since it had not complied with Rule 31ACB of the I.T.Rules, 1962. The compliance of Rule is directory and same can be done at later point of time. Therefore, in the interest of justice and equity, we are of the view the matter needs to be examined by the A.O. de hors the observations of the CIT(A). If the assessee can prove that the payee has included the receipt from the assessee as part of his income and filed return disclosing the same, then the benefit of proviso to section 201 of the I.T.Act will be extended to also section 40(a)(ia) of the I.T.Act. For the above said purpose, the issue is restored to the files of the A.O. The assessee shall cooperate with the A.O. and shall furnish the necessary details proving its case.

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• 2022 (10) TMI 387
  Disallowance of unsecured loans u/s. 68 - HELD THAT:- AO has made the addition of unsecured loans based on his finding that assessee has not filed any document in support of the above unsecured loans. We observe that Ld.CIT(A) has deleted additions with the finding that assessee has filed all the relevant information and gave the finding that loans are from the Shareholders / Directors and related concerns. Therefore, the relevant interest payment on the above said loans are considered to be genuine as well. Therefore, we do not find any reason to interfere with the findings of the Ld.CIT(A). Bogus purchases - addition as non-genuine purchases on the sole ground that in response to notice u/s. 133(6) of the Act he has not received any replies from all the three parties - AO issued notices u/s. 133(6) to all the three parties since he has not received any response from these parties AO treated the same as non-genuine - HELD THAT:- CIT(A) has deleted the additions with the finding that these parties are regular parties, regularly supplying and servicing the assessee in the past as well as in the subsequent AY. The same parties were supplying the material as well as providing services to the assessee in earlier AY, none of the AO disallowed or found any discrepancies in these parties. Therefore, we are inclined to accept the findings of the CIT(A) and we do not find any reason to disturb the findings of the CIT(A). Appeals of the revenue are dismissed.

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• 2022 (10) TMI 386
  Exemption u/s 11 - Reopening of assessment u/s 147 - whether jurisdiction was vested on the ld. CIT(E) and not with the Territorial Commissioner? - trust has claimed the exemption under section 11 12 in the return after filing the application of registration u/s 12AA - Whether assessment beyond jurisdiction and the assessment orders are nonest ? - assessee computed capital gain tax by ascertaining the cost of acquisition on basis of the valuation of property through registered valuer - HELD THAT:- Jurisdiction point is explained in this way that the territorial jurisdiction is overruled by the concurrent jurisdiction which is covered by the said notification of the CBDT. Furthermore, the registration U/s 12AA is in action from the year of application. So, the year of application is considered as deemed registration and the claim of deduction u/s 11 and 12 should be applicable accordingly. Accordingly, the assessing authority had acted beyond jurisdiction. The grounds of related to the jurisdictional issue are in favour of the assessee. Applicability of section 11(1A) of the Act and exemption of capital gain arising out of compulsory acquisition of assessee s land - In adjudication of valuation of cost of acquisition it is very clear that a land was purchased before 01.04.1981. The base rate of index is started from 01.04.1981 as per the Act. The valuation of the property should not be the same on the date of acquisition beyond 01.04.1981 on the date 01/04/1981. We relied in the judgment Govindaraju vs. ITO Ward 8-(2) Bangalore [ 2015 (8) TMI 271 - KARNATAKA HIGH COURT] Where assessee determined fair market value of property according to valuation report of a registered valuer, Assessing Officer could not have arrived at fair market value of property ignoring valuation report on record. So, the report drawn by the Government Valuer is very much accepted. Mr. Sehgal also mentioned that both the revenue authorities did not take contingence of any other valuation report from any of the authority. So, this particular report is accepted. As the benefit of section 12A is applicable in both the years. Mr. Sehgal specially mentioned the judgment in the case of Prem Prakash Mandal vs. ITO [ 2021 (8) TMI 744 - ITAT RAIPUR] with following observation: Where assessee-trust, engaged in social and religious activities, was denied exemption under section 11 on ground of non-registration under section 12A, however, during pendency of appeal filed by assessee before CIT (A) against same, assessee obtained registration under section 12A, assessee s case would be covered under deemed registration and, thus, assessee would be entitled to claim exemption under section 11. Assessee appeal allowed.

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• Customs

• 2022 (10) TMI 385
  Seeking interest on delayed refund of principal amount - HELD THAT:- There is no explanation as to why the verification took three years. - There is also no explanation, as to why even after verification, the principal amount was refunded only six years thereafter i.e., on 12.08.2022. It would be both just and fair, if interest is paid to the petitioner, by the respondents, at the rate of 6% (simple) per annum, from 05.12.2013 i.e., after expiry of three months from the date when the petitioner made a request for reassessment. Thus, the interest will run from 05.12.2013 till 12.08.2022, when the principal amount was refunded - the writ petition is disposed off.

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• Insolvency & Bankruptcy

• 2022 (10) TMI 384
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - discrepancy in the debt amount which is payable - pending litigation due to family dispute between two groups of the Data Family and after division in the family assets, the issue of this loan is being used to settle scores - demand notice was issued by the Appellant after assignment of the loan in 2007 till 2018 - HELD THAT:- Part-IV of section 7 application filed by the financial creditor Deepak Vegpro Pvt. Ltd., the amount of financial debt claimed to be default is Rs.412.52 crores, which according to the Appellant is the amount due to it by way of principal amount, interest, penal interest and liquidated damages. It is quite clear from a note in the balance sheets for the FY 2008-09 onwards that even the principal amount of Rs. 4.50 crores which is the loan taken by the corporate debtor from IDBI is settled by the assignee Deepak Vegpro Pvt. Ltd. and thereafter a loan amount of Rs.1.35 crores is shown in the balance sheets for the successive years but significantly no interest amount pertaining to the debt is shown as being outstanding and liable to the purported financial creditor. Quite obviously the principal amount of loan gets changed due to the settlement entered into by the corporate debtor with its secured creditors including Deepak Vegpro Pvt. Ltd. When there is discrepancy between the amount appearing in the balance sheets itself from one year to another, and in addition, there is a huge discrepancy between the amount claimed in default in section 7 application and the amount appearing as purported debt, the existence of debt as claimed and the jural relationship are very much doubtful - In the present case, it is found that the amount of loan given by IDBI, which was in default in the year 1998. This loan was taken over by SASF for a total consideration of Rs.2.50 crores by an Assignment Deed executed on 17.1.2007, the alleged loan was assigned by SASF to Deepak Vegpro Pvt. Ltd., after a no objection by the corporate debtor. The claim of the appellant that the loan was due and payable by the corporate debtor is contested by the Respondent by stating that after the assignee of IDBI/SASF loan to Deepak Vegpro Pvt. Ltd., the remaining amount of Rs. 1.35 crores is considered as an investment and not any loan transaction. For an applicant to be a financial creditor, a debt along with interest should be disbursed against the consideration time value of money, whereas in the present case the entries in the balance sheets by which the acknowledgment of debt claimed to be in limitation, do not show any interest accruing on the claimed loan amount, even the Assignment Agreement dated 17.1.2007 executed between SASF and Deepak Vegpro Pvt. Ltd. makes the procedure full and absolute legal owner and the only person legally entitled to financial assets or any part thereof - A plain reading of the above-stated provision under section 7 and the use of the word may in clause (a) of sub-section (2) of section 7 makes it clear that the Adjudicating Authority has the discretion to either admit it or reject the application, of course depending on the facts of the case and whether such facts and circumstances call for admission of the section 7 application. The language of section 7 can be contrasted with the language of section 9 where no word such as may is used in sub-section (5) of section 9 and an exhaustive list of conditions given in clause (i) of sub-section (5) of section 9 are satisfied. The said loan or its part thereof is not proven to be a financial debt, and the section 7 application is also barred by limitation since the acknowledgements do not provide for unequivocal and unambiguous acknowledgement of the alleged debt as claimed in the section 7 application - the Impugned Order does not suffer from any error in holding that section 7 application does not deserve to be admitted. Appeal dismissed.

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• 2022 (10) TMI 383
  Review of a final order passed by NCLAT - Section 151 of the Civil Procedure Code - HELD THAT:- Section 151 of the Civil Procedure Code (CPC) deals with inherent powers and the statute of CPC provides inherent powers to a civil court to advance the cause of justice and undo any wrong in administration of justice. On the contrary, the IBC does not contain any provision providing inherent powers to the tribunal and it is only rule 11 of the NCLAT Rules, 2016 which provides inherent powers. The wordings of rule 11 are also noteworthy in that it contains that nothing in the rules shall be deemed to limit or otherwise affect the inherent powers of tribunal. This inherent power extends to the extent that they do not limit the exercise of power by NCLAT in meeting the end of justice or preventing the abuse of the process of the tribunal - in the instant case, the Applicant is aggrieved by a certain portion of the order dated 20.7.2022, which is in the nature of substantive order and is not connected with use or abuse of the process of the tribunal. This tribunal is limited in its jurisdiction to review or recall an order using inherent powers under rule 11 of the NCLAT, Rules, 2016, if such an action is to make substantive change/modification in the relevant order. In the present case, the prayer of the Applicant is to make substantive change in the order of this tribunal dated 20.7.2022 - Application rejected.

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• 2022 (10) TMI 382
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - threshold limit involved in the appeal - HELD THAT:- The Applicant has placed on record the invoices which are due to be cleared by the Corporate Debtor. Further, the Applicant had issued a demand notice, as mandated by Section 8 of the Code, 2016. Such notice had been received and replied to, by the Corporate Debtor. A certificate issued by the HDFC Bank, Jalna Branch, certifying that the account of the Applicant held in the said bank has not received the sum of Rs. 97,65,235 or any part thereof, from the Corporate Debtor, between 08.06.2017 to 10.05.2019, is also attached. Further, the Applicant has complied with all the requirements as stipulated under the provisions of the Code, 2016, for the purpose of initiating the CIRP against the Corporate Debtor. In these circumstances, it is satisfying that the Applicant has proved its case by placing evidence with regard to the debt owed by the Corporate Debtor and its default. Threshold limit of amount involved in the appeal - HELD THAT:- It may be of some significance to note here that the total amount of debt that is due in the instant Application is below the current threshold amount of Rupees One Crore, which is mandatory for the initiation of the CIRP - The instant Application was filed in the year 2019, when the threshold amount for the initiation of CIRP was only Rupees One Lakh. It has been judicially settled that the increase in the threshold amount will have a prospective effect and not a retrospective one. The National Company Law Tribunal, New Delhi Bench in its judgment in BLS Polymers Ltd. v. RMS Power Solutions (P) Ltd. [ 2021 (7) TMI 1331 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI ] held that the notification, dated 24.3.2020, numbered as CG-DL-E-24032020-218898, which enhanced the threshold limit from Rupees One Lakh to Rupees One Crore to initiate insolvency proceedings under the Code, 2016 is only applicable in respect of defaults that occurred on or after the date of notification, i.e., 24.3.2020 and not prior to that - In the case at hand, as per the invoices, the amounts were due and payable prior to the issuance of the said notification, dated 24.03.2020. Hence, the notification increasing the threshold amount has no application here. The instant petition is, hereby, admitted and this Adjudicating Authority orders the commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed within the timelines stipulated in the Code, 2016, reckoning from the date of this order - Application admitted - moratorium declared.

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• Service Tax

• 2022 (10) TMI 381
  Levy of service tax - abated portion of turnover or incorrect calculation along with penalty - HELD THAT:- The rejection of the claim of abatement for material component by the court below is against Valuation Rules and facts on record. Further, it is found that the appellant had provided calculation of their admitted tax at Rs.2,24,763/-, which has been taken notice of, in para 12 of the impugned order-in-appeal. However, calculation has been rejected on flimsy ground. This calculation of tax payable at Rs.2,24,763/-, which has been calculated as per Service Tax (Determination Value) Rules, 2006, as amended from time to time, is accepted. Further, liability to pay tax has been correctly calculated as per notification no.30/2012-ST, under which the appellant is required to pay only 50% of the service tax liability and the balance 50% is payable by the recipient of the service being Corporate entity. The appeal is allowed.

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• 2022 (10) TMI 380
  Maintainability of appeal - HELD THAT:- Since the appellant case has been settled under NCLT and it is already decided in JAIHIND PROJECTS LIMITED VERSUS C.S. T-SERVICE TAX-AHMEDABAD. [ 2022 (3) TMI 1431 - CESTAT AHMEDABAD] where it was held that there is no dispute that the approved resolution plan by the committee of secured creditors has been accepted by the NCLT in its order dated 19 th March, 2020 and same was upheld by the NCLAT, Delhi, vide order dated 23.12.2020, and the appeal dismissed as infructuous. Since, on the basis of the NCLT order the appeal was dismissed as infructuous, following the same, the present appeal is also dismissed as infructuous.

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• CST, VAT & Sales Tax

• 2022 (10) TMI 379
  Levy of tax - transfer of goods involved in works contract - Input Tax Credit (ITC) - Rule 8(5) of the Tamil Nadu Value Added Tax Rules, 2007 - HELD THAT:- Learned Government Pleader agrees that the proper method for assessing the turnover from works contract is as per Rule 8(5) and that there is no statutory basis to justify the methodology adopted in the impugned assessments - In light of the same, the impugned assessments are set aside and remanded to the assessing authority to be redone de novo, applying the methodology set out under Rule 8(5) of the Rules. Seeing as the assessments relate to the periods 2011-12 to 2013-14, the petitioner will appear before the assessing authority on 12.10.2022 at 10.30 a.m. without awaiting any further notice and make its submissions. The assessments shall be completed within a period of eight (8) weeks from the date of receipt of copy of this order - Petition allowed by way of remand.

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• 2022 (10) TMI 378
  Validity of assessment order - time limitation - violation of principles of natural justice - tax periods 2009-10 to 2011-12 under A.P. VAT Act, 2005 - non-supply of vigilance report - time limitation - HELD THAT:- In NALLANA SAMBASIVA RAO VERSUS STATE OF ANDHRA PRADESH AND ORS. [ 2015 (2) TMI 1377 - TELANGANA HIGH COURT] , a Division Bench of the composite High Court for the State of Telangana and the State of Andhra Pradesh, has categorically held that, when the order of assessment is passed on material report submitted by Regional Vigilance and Enforcement, it is obligatory on the part of authorities to supply material along with the notice of assessment and invite objection from the petitioner, before passing the revised assessment order. Thus, it is clear that, when the Order of assessment came to be passed on the report submitted by Regional Vigilance and Enforcement Department, the Authorities ought to have supplied a copy of the same, inviting objections to the report. Therefore, the argument of the learned Counsel for the Petitioner that the authorities have relied on a material, which was not supplied to him is a violative of principles of natural justice, cannot be brushed aside. The matter is remanded back to the Assessing Authority to deal with the same in accordance with law, after furnishing the report submitted by Regional Vigilance and Enforcement Department, which was made the basis while assessing the case of the Petitioner - Insofar as the issue of limitation is concerned, since the matter is remanded back on above issue, the Petitioner is at liberty to raise the ground of limitation as well before the concerned authority. Petition disposed off.

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