TMI Tax Updates - e-Newsletter
October 9, 2023

Case Laws in this Newsletter:

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

Articles

1. Input Tax Credit - GSTR 2A vis-a-vis GSTR 3B

   By: Rupesh Sharma

2. GST chargeable on OIDAR services by foreign firms to individuals & Govt irrespective of any usage w.e.f. October 1, 2023

   By: Bimal jain

3. LEVY OF GST ON ONLINE GAMING

   By: Dr. Sanjiv Agarwal

4. LATEST AMENDMENTS IN GST LAWS

   By: DR.MARIAPPAN GOVINDARAJAN

5. Effective GST Changes w.e.f October 01, 2023

   By: Bimal jain

News

1. Recommendations of 52nd GST Council Meeting

2. Union Commerce and Industry Minister Shri Piyush Goyal meets CEOs of leading companies of UAE, discusses their investment plans in India

Notifications

GST - States

1. 38/1/2017-Fin(R&C)(266)/3277 - dated 30-9-2023 - Goa SGST

Amendment in Notification No. 38/1/2017- -Fin(R&C)(34) dated the 23rd November, 2017

2. 38/1/2017-Fin(R&C)(265)/3276 - dated 30-9-2023 - Goa SGST

Notify supply of online money gaming, supply of online gaming other than online money gaming and supply of actionable claims in casinos under section 15(5) of Goa Goods and Services Tax Act, 2017

3. 38/1/2017-Fin(R&C)(264)/3273 - dated 30-9-2023 - Goa SGST

Seeks to notify the provisions of the Goa Goods and Services Tax (Amendment) Ordinance, 2023

4. 26/2023-State Tax - dated 1-9-2023 - Jharkhand SGST

Seeks to amend Notification No. 08/2023– State Tax, dated the 05th June, 2023

5. (22/2023) FD 20 CSL 2023 - dated 30-9-2023 - Karnataka SGST

Seeks to notify supply of online money gaming, supply of online gaming other than online money gaming and supply of actionable claims in casinos under section 15(5) of KGST Act

6. (21/2023) FD 20 CSL 2023 - dated 30-9-2023 - Karnataka SGST

Seeks to notify the provisions of the Karnataka Goods and Services Tax (Amendment) Ordinance, 2023

7. 1658-F.T. - dated 20-9-2023 - West Bengal SGST

West Bengal Goods and Services Tax (Second Amendment) Rules, 2023.

Highlights / Catch Notes

GST

• High Court Quashes YEIDA's GST Demand on Hospital Plot Premium; Exemption Upheld u/s 11 Notification.

  Case-Laws - HC : Exemption from GST - demand of GST on premium paid by the petitioner to YEIDA for allotment of Institutional Plot to set up a Hospital - The exemption made available to the petitioner by virtue of the original Notification issued u/s 11 read with order of the Authority for Advance Ruling, is unconditional. - Letter issued by the YEIDA to deposit GST is invalid - Quashed - HC
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• Petitioner Seeks Stay on Recovery Proceedings; Advised to Request Installment Payment u/s 80 of CGST Act.

  Case-Laws - HC : Seeking stay and revocation on recovery proceedings - U/s 80 of the CGST Act, there is power vested in the Commissioner to grant upto 12 installments for the payment of arrears of tax. If the petitioner wants to deposit the tax in installments, the petitioner may approach the Commissioner - HC
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• Court Rules Petitioner Entitled to GST Registration Extension Due to Pending Consideration After Cancellation on 11.05.2023.

  Case-Laws - HC : Revocation of cancellation of GST registration of petitioner - Unfortunately, the petitioner's cancellation was on 11.05.2023, had it been prior to 31.12.2022 then the petitioner would have come within the time prescribed under the said notification. But the consideration for extension was pending during that period, hence this Court is of the considered that the petitioner is entitled to the benefit. - HC
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• GST Council Proposes Rate Cuts, Simplified Compliance, and Digital Boost to Drive Economic Growth

  News : Recommendations of 52nd GST Council Meeting
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Income Tax

• Court Upholds Constitutionality of SEZ Tax Exemption Under Explanation to Section 10AA(1); No Violation of Constitutional Rights.

  Case-Laws - HC : Constitutionality of Explanation to Section 10AA (1) - Exemption to SEZ unit - As principle of legitimate expectation is not applicable to the case of the petitioner and Explanation after Sub-section (1) of Section 10AA of the Income Tax Act, 1961, inserted by amendment with prospective from 1st April, 2018, applicable in respect of the assessment year 2018-19 and subsequent years is constitutional and is a valid piece of legislation and is not arbitrary, discriminatory and is not violative of Articles 14, 19 & 265 of the Constitution of India. - HC
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• High Court Quashes Proceedings: No Evidence for Offenses u/ss 406, 420, 120B in TDS Dispute Case.

  Case-Laws - HC : Validity of prosecution proceedings against the complainant / service provider along-with the accused person who deducted the TDS - TDS was deducted but not deposited by the deductor with the income tax authority - The accused persons flatly refused to pay the said TDS amount to the complainant. - The ingredients required to constitute the offences alleged u/s 406/420/120B is clearly absent in the present case. - Proceedings against the complainant quashed - HC
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• High Court Rules Assessment Orders for 2011-12, 2012-13, and 2019-20 u/s 153A Are Time-Barred.

  Case-Laws - HC : Time limit for completion of assessment u/s 153A - The clause has been inserted with effect from 01.04.2021 and hence operates prospectively only, being a substantive provision. The benefit of the exclusion under that clause thus, would not be available to the revenue in the present assessments. The impugned orders of assessment passed on 28.01.2022 in respect of AYs 11-12, 12-13 and 19-20 are hence held to be barred by limitation qua these three assessment years and are set aside. The writ petitions challenging those notices, orders of assessment and penalties are allowed. - HC
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• Officer's Reassessment Decision Unjustified: No New Information Beyond Original Financials and Documents, Violating Proper Procedure.

  Case-Laws - HC : Reopening of assessment - reasons to believe - The officer merely refers to the financials, Form 3CD, profit and loss account, computation statement and the details furnished during original scrutiny. Thus, there is no new or tangible information that has come to the notice of the authority to justify re-assessment as all relevant information was well available with the original authority. - Further, Profit and Loss Account and the Balance Sheet are not the books of account - HC
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• Court Rules Only Deputy Director Can Initiate Tax Prosecution, Dismissing Revenue's Claim of Similar Duties with Assistant Director.

  Case-Laws - HC : Proper authority / Jurisdiction to launch Prosecution Proceedings - It is the contention of the Revenue that the Deputy Director of Income Tax is a senior officer and the Assistant Director of Income Tax is a junior officer and both were doing the same duties, the said contention cannot be taken into consideration as in the present case, the sanction is accorded to the Deputy Director of Income Tax for initiating prosecution and not to the Assistant Director of Income Tax. - Proceedings quashed - HC
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• Section 40(a)(ia) Disallowance Not Applicable for Late TDS if Recipient Discloses Payment in Income Return.

  Case-Laws - AT : Disallowance u/s 40(a)(ia) with regard to the non-deduction of tax at source in respect of payments made towards labour payment - Once the recipient has disclosed the payment in his return of income, the assessee is not liable for TDS. - Just because the recipient / contractor filed his return of income for the AYs 2013-14 and 2014-15 belatedly, it is not correct to disallow the payment made by the assessee. - AT
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• Retrospective Application of CBDT Notification Benefits Assessee with Foreign Tax Credit u/s 139(4) in the USA.

  Case-Laws - AT : Relief u/s. 90 / 90A - foreign tax credit - the assessee has paid foreign tax credit in USA and has filed his return of income U/s. 139(4) - we consider it deemed to be fit that the CBDT Notification can be applied retrospectively which is being a beneficial provision to the assessee. - AT
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• Forfeited Security Deposit After Lease Termination is Taxable Income, Classified as Income from House Property.

  Case-Laws - AT : Nature of income - Forfeiture of security deposit - termination of certain lease agreement - from assessee’s point of view, there is no extinguishment of any right. The impugned amount was received as security deposit and a part of the same has been forfeited by the assessee. The security deposit has changed its character upon forfeiture and the same is clearly an income of the assessee - Amount is taxable as Income from House Property - AT
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Customs

• Dispute Over Export Goods Classification: Iron Oxide vs. Iron Ore; Authority Overlooked Key Letter Violating Natural Justice Principles.

  Case-Laws - AT : Misdeclaration of export goods - Iron Oxide - goods are Iron Oxide Dry Powder, or Iron Ore? - the Joint Deputy CRCL’s letter not taken into cognizance as the Adjudicating Authority has failed to provide the same to the appellant and therefore has grossly violating the principals of natural justice following the principle of the natural justice. At the same time since the initially two reports clearly holds that export consignments are made of the Iron Oxide. - There is no mis-declaration in the export consignments - AT
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• Customs Broker License Revocation Overturned; Appellants Cleared of Export Fraud, Rs. 20,000 Penalty Imposed.

  Case-Laws - AT : Revocation of Customs Broker License - irrespective of the appellants not informing the Customs about the non production of export goods, the above independent system of checks and data base would have brought to the fore, the export fraud committed by the exporter ABCCPL - the appellants have not caused any violation or in any way connected with the export fraud committed by the exporter ABCCPL and other connected persons. - Order of revocation set aside - Penalty of Rs. 20000 imposed - AT
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• Customs Broker License Suspension Overturned Due to Unjustified Delay by Department in Taking Action.

  Case-Laws - AT : Suspension of Customs Broker License - Since, this alleged offence was also well within the knowledge of the department, suspension of the license, if any, warranted could have been initiated along with the other offence where their License was suspended. The action of the department in waiting for more than four years and suspending the License immediately after setting aside the earlier revocation order, cannot be sustained in the eye of the law. - AT
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Corporate Law

• Petitioners Must Prove Membership at Filing to Claim Oppression Under Companies Act, 2013: Tribunal Decision.

  Case-Laws - AT : Oppression and mismanagement - Determination of minimum shareholding for filing complain / petition against the company - The ‘onus’, to establish ‘Membership’ is on the Petitioner, and it is up to him to prove, that he is a Member, of a Company, ‘on the day’ of filing of petition. When he is not a Member of Company, he cannot allege ‘Oppression’, to invoke, Section 241 of the Companies Act, 2013, against the Company, as opined, by this ‘Tribunal’ - AT
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Indian Laws

• Accused Fails to Disprove Liability for Bounced Cheque; Presumption u/s 139 Stands Firm in Court Ruling.

  Case-Laws - HC : Dishonour of Cheque - insufficient of funds - the presumption u/s 139 - the accused admitted the issuance of cheque, signature of cheque and thereby, he has to disprove the cheque and his liability but he failed to prove the same. Thereby, the aforesaid case law will squarely applicable to the present facts of the case. - HC
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IBC

• Court Analyzes CIRP Start: Is a Civil Suit Necessary to Prove a Dispute Under IBC Section 8?

  Case-Laws - AT : Initiation of CIRP - pre-existing dispute or not - While admitting that the civil suit was filed subsequent to the issue of notice under Section 8 of IBC, it has been contended that there is no need in every case for a civil suit or an arbitration to be pending before Section 8 notice and that a dispute as understood by the IBC is not limited to a pending suit or an arbitration but includes a real dispute as to payment between the parties. - AT
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• Resolution Plan Approved Despite Income Tax Liabilities; Rs. 3334.29 Crores Claim Addressed, No Violation of Section 30(2)(e.

  Case-Laws - AT : Approval of Resolution Plan - Dues of Income Tax liability - reliefs from Income Tax liabilities have not been granted as prayed by the Successful Resolution Applicant. The claim which was submitted in the proceeding and the Successful Resolution Applicant has very well dealt with claim submitted by the Income Tax Department of Rs.3334.29 Crores. Even if the claim for the AY 2012-13 of Income Tax Department cannot be said to be extinguished, Appellant being an Operational Creditor, the liquidation value of the Income Tax Department is NIL. The payment of Rs.10 Lakhs cannot be said to be violative of provisions of Section 30(2)(e). - AT
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• Resolution Plan Rejected: No Procedural or Material Irregularities Found; CoC's Commercial Decisions Remain Non-Justiciable Under Insolvency Law.

  Case-Laws - AT : Rejection of Resolution Plan - validity of the plan - no case has made by CRP to establish any procedural or material irregularity committed by the RP/CoC in rejecting their EoI and that the challenges raised by the CRP clearly fall within the domain of commercial wisdom of the CoC which is non-justiceable. - AT
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Service Tax

• Court Confirms Service Tax and Penalties on Fees Retained for Consultancy Services, Not Sovereign Functions.

  Case-Laws - AT : Levy of Service Tax - collection of fees in discharge of sovereign functions - Instead of depositing the money to the Government, it is kept by the assessee - The same is the consideration received by the appellant for providing the Consultancy Service - this money cannot be equated with fee collected for discharging sovereign function. - Demand of service tax with penalty confirmed - AT
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Central Excise

• Insufficient Evidence Leads to Dismissal of Allegations on Cenvat Credit Misuse and Clandestine Goods Removal by Revenue.

  Case-Laws - AT : Clandestine Removal - Availment of credit of countervailing duty paid by the respondents - The Revenue has miserably failed to produce corroborative evidence on records so as to substantiate the charges of non- receipts of imported goods and substitution of the same with kabadi scrap and availment of the wrong Cenvat Credit. - AT
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Case Laws:

• GST

• 2023 (10) TMI 286
  Exemption granted by the Central Government under Section 11 of the Goods and Services Tax Act, 2017 - demand of GST on premium paid by the petitioner to YEIDA for allotment of Institutional Plot to set up a Hospital - HELD THAT:- There is no doubt that the petitioner was allotted Institutional Plot H-02 at Sector 22-A, YEIDA, by the YEIDA on 28.04.2015. On 01.07.2017, the Act was enforced. Thus GST provisions became relevant to the allotment made to the petitioner with respect to instalments that were required to be paid by the petitioner, after 30.06.2017. The Exemption Notification though does contain Column no. 5, to specify the condition for grant of exemption yet, against Entry no. 41 of that Notification there never existed any specification or condition for grant of exemption. In fact, the original Notification No. 12/2017, dated 28th June, 2017 mentions the word Nil against Column no. 5, against Entry no. 41 thereto. Thus the legislature chose to grant unconditional exemption with respect to payment of upfront amounts. While amending that Notification, vide Notification No. 32/2017, dated 13th October, 2017 though other changes were made to add by way of an activity for which allotment of plots were made exempt from tax and certain Corporations were also sought to be included wherein ownership of the Central Government or the State Government etc. may exceed 50%, at the same time, no amendment was made to the original Notification to introduce any condition for grant of that exemption. The exemption made available to the petitioner by virtue of the original Notification issued under Section 11 read with order of the Authority for Advance Ruling, is unconditional. Consequently, the letter dated 24.08.2018 issued on behalf of YEIDA is wholly unfounded in law and also in facts. Besides absence of conditions imposed by the legislature while granting exemption, no fact allegation has been made in the said communication of any specific condition having been violated by the petitioner. The impugned communication dated 24.08.2018 is quashed - Petition allowed.

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• 2023 (10) TMI 285
  Delay of 6 days in filing e-appeal - pre-requisite deposit of 10% of the disputed tax has not been paid. Submission of learned counsel for petitioner is that, the Assessment Order dated 02.01.2022 was not uploaded on the official website immediately and therefore, he was constrained to file the appeal in manual form on 28.02.2022. HELD THAT:- The Division Bench of this Court in W.P. No. 3308/2021 [ 2021 (2) TMI 1165 - ANDHRA PRADESH HIGH COURT] observed that manual form of filing appeal is permissible in terms of Rule 108(1) of APGST Rules 2017. The conspectus of the facts and law shows that the explanation offered by the petitioner against the first ground of dismissal as plausible and tenable. So far as, the second ground of rejection is concerned a perusal of copy of the challan filed along with material papers shows that the petitioner made a pre-deposit of 10% of the demanded tax on 25.02.2022 i.e., at the time of manual filing of the appeal. Therefore, it can be said that the said requirement was also complied. Thus, the 1st respondent ought to have admitted the appeal filed in electronic form instead of rejecting the same under the impugned endorsement. The impugned endorsement dated 09.09.2022 passed by the 1st respondent is set aside with a direction to the 1st respondent to register the appeal and dispose of the same in accordance with governing law - Petition allowed.

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• 2023 (10) TMI 284
  Valid SCN or not - challenge to the Impugned Notice in Form GST DRC-01 is that it is not a Show Cause Notice but an order as the petitioner has been asked to pay the tax and penalty - HELD THAT:- The Impugned Communication in Form GST DRC-01 dated 21.07.2023 perused. Rule 142(1) of TNGST Rule 2017 contemplates issuance of a notice in Section 73(1), 74(1) or 76(2) in Form GST DRC 01. It also contemplates issuance of a statement under sub-section (3) to Section 73 and 74 and a summary thereof has to be electronically transmitted in Form GST DRC 02, specifying therein the details of the amount payable. A reading of the Impugned Notice dated 21.07.2023 seems to indicate the respondent has asked the petitioner to pay the amount directly instead of calling upon the petitioner to show cause as to how the amounts specified therein should not be demanded from the petitioner. Thus, there is a minor mistake in the issuance of the Impugned Order as it seems to give an impression that it is an order of the respondent. The Court is inclined to dispose this writ petition by directing the respondent to issue a corrigendum to the Impugned Notice in Form GST DRC-01 dated 21.07.2023 calling upon the petitioner to Show Cause as to how the amounts should not be demanded in accordance with Rule 142(1) of TNGST Rules, 2017 within a period of thirty (30) days from the date of receipt of a copy of this order - Petition disposed off.

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• 2023 (10) TMI 283
  Seeking stay and revocation on recovery proceedings until a proper hearing is provided to the petitioner by the Respondent - seeking to command the Respondent to desist from unilaterally and arbitrarily deciding the Tax liabilities without considering the facts and circumstances of the matter - seeking opportunity of personal hearing - HELD THAT:- The assessment order has been passed on 28.11.2019. The petitioner has not challenged the assessment order by filing statutory appeals. The petitioner has approached this Court by filing the present writ petition after almost four years from the date of assessment order. This Court does not find this writ petition as maintainable against the assessment order that was passed in 2019. The learned Counsel for the petitioner submits that this Court may grant some installments for making payment of the arrears of tax - Under Section 80 of the CGST Act, there is power vested in the Commissioner to grant upto 12 installments for the payment of arrears of tax. If the petitioner wants to deposit the tax in installments, the petitioner may approach the Commissioner within a period of seven days from today, and then the Commissioner should decide the application within another period of seven days thereafter for granting installments for payment of arrears of tax as assessed by the assessing authority. Petition dismissed.

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• 2023 (10) TMI 282
  Revocation of cancellation of GST registration of petitioner - failure to file returns - HELD THAT:- It is seen from the records that the government has issued Notification No.03/2023~Central Tax dated 31.03.2023 and has extended the time up to 30.06.2023, but the extension is granted to taxpayers granting time on or before 31.12.2022. Unfortunately, the petitioner s cancellation was on 11.05.2023, had it been prior to 31.12.2022 then the petitioner would have come within the time prescribed under the said notification. But the consideration for extension was pending during that period, hence this Court is of the considered that the petitioner is entitled to the benefit. This Court is allowing the writ petition and the respondent is directed to restore the petitioner s GST registration number. After restoration the petitioner is directed to file the returns and pay tax and penalty as per law - Petition allowed.

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• Income Tax

• 2023 (10) TMI 281
  Rectification Application dismissed in view of the bar of limitation prescribed u/s 254 (2) - HELD THAT:- As decided in Cement Corporation of India Limited [ 2023 (2) TMI 925 - DELHI HIGH COURT] consider a similar order passed by the Tribunal invoking the limitation as prescribed under section 254 (2) while deciding the application for recall of an order. The Delhi High Court after considering the provisions of section 254(2) of the Income Tax (Appellate Tribunal) Rules discussed the provisions and decided that the application for recall is to be decided in terms of the provisions contained in Rule 24 of the Rules and reliance upon Section 254 was misplaced. No reason to disagree with the said judgment as in the present case also, the application moved by the petitioner, in its tenor was traceable to the provisions of Rule 24 of the Income Tax (Appellate Tribunal) Rules and the petitioner never sought rectification of the said order. A mere wrong mention in the title of the application, that too on the basis of the observations made by the Tribunal itself cannot be construed against the petitioner and cannot wipe away the scope of application under Rule 24 of the Income Tax (Appellate Tribunal Rules). The order impugned dated 21.06.2023 is clearly unsustainable and is quashed. The matter is remanded to the Income Tax Appellate Tribunal to pass a fresh order in the light of the provisions contained under Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 in accordance with law.

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• 2023 (10) TMI 280
  Constitutionality of Explanation to Section 10AA(1) - Exemption to SEZ unit / Developer - Contention of the petitioner that the Explanation to Section 10AA(1) is unconstitutional as violative of Articles 14, 19(1)(g) and 265 of the Constitution of India - HELD THAT:- The Explanation does not introduce any new method of computation of the tax thereby curtailing the rights of the assessee in any way, it merely clarifies the vagueness around the deduction that crept in due to the deliberate misapplication of the decision in Yokogawa [ 2016 (12) TMI 881 - SUPREME COURT] by the assessee to the facts and circumstances of this case. The assessee does not have a vested right to claim deduction since such deduction is only allowable in terms of the provisions of Section 10AA of the Act, and the Explanation inserted merely clarifies the intention of the legislature and does not alter the position of law as contained in the parent provision. Respondent submit that in any case, the decision in Yokogawa (supra) is not applicable in the instant case since that decision dealt with Section 10A of the Act, and not Section 10AA of the Act. Sections 10A and 10AA of the Act are not in pari materia and thus it cannot be said that the decision in Yokogawa (supra) was in any manner applicable to this instant case, and thus there was no need for the legislature to insert the aforesaid Explanation to circumvent the decision in Yokogawa (supra). Therefore, the contention of the petitioner that the Explanation to Section 10AA(1) of the Act is unconstitutional is without merits. As principle of legitimate expectation is not applicable to the case of the petitioner and Explanation after Sub-section (1) of Section 10AA of the Income Tax Act, 1961, inserted by amendment with prospective from 1st April, 2018, applicable in respect of the assessment year 2018-19 and subsequent years is constitutional and is a valid piece of legislation and is not arbitrary, discriminatory and is not violative of Articles 14, 19 265 of the Constitution of India. WP dismissed.

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• 2023 (10) TMI 279
  Validity of prosecution proceedings against the complainant / service provider along-with the accused person who deducted the TDS - TDS was deducted but not deposited by the deductor with the income tax authority - The accused persons flatly refused to pay the said TDS amount to the complainant. - proceeding being Complaint u/s 120B/420/406 of the Indian Penal Code along with all orders passed therein - whether mandatory provision of section 202 Cr.P.C. has not been complied with by the learned Magistrate? - HELD THAT:- Section 202 Cr.P.C. makes it obligatory upon the Magistrate that before summoning the accused residing beyond his jurisdiction he shall inquire into the case himself or direct investigation to be made by a Police Officer or by such other person as he thinks fit, for finding out whether or not there is sufficient ground for proceeding against the accused. In the present case only the complainant has been effectively examined u/s 202 Cr.P.C., who has stated about the facts/offences alleged in the present case. The deposition of the sole witness is clearly not in respect of the statements made in the written complaint and thus not part of an inquiry. Thus in view of the judgment in Vijay Dhanuka and Ors. vs Najima Mamtaj and Ors. [ 2014 (3) TMI 1103 - SUPREME COURT] it is clear from the said order that no inquiry as obligatory u/s 202 Cr.P.C. has been conducted. The Magistrate did not comply with the provision of Section 202 Cr.P.C., even though the petitioners reside (State Rajasthan) outside the jurisdiction of the Court (District Kolkata). In the present case the Magistrate did not Conduct any inquiry into the case himself or direct an investigation as required under Section 202 Cr.P.C. before directing the issue of process and as such the order is not in accordance with law, and is thus an abuse of the process of law. It is evidently clear that assessee received the rent income, and the Tenant (Deductor) has deducted TDS but has not deposited the TDS so deducted into the Central Government Account. We note that issue u/s is no longer res integra. In the case of Kartik Vijaysinh Sonavane [ 2021 (11) TMI 682 - GUJARAT HIGH COURT] held that where TDS has been deducted by employer of assessee, it will always been open for department to recover same from said employer and credit of same could not have been denied to assessee. As such the proper approach for the complainant was to inform the Income Tax Authority as an assessee is not liable under the Act for the deposit of TDS. Thus, the ingredients required to constitute the offences alleged u/s 406/420/120B is clearly absent in the present case. Surprisingly, none of the parties herein have produced the document relating to either full payment (as claimed by the petitioners) or with TDS (as claimed by the complainant), which relates to the dispute. Thus there being no prima facie case made out against the petitioners in respect of the offences alleged, the interference of this court is necessary in the interest of justice and the proceedings liable to be quashed in respect of the petitioners.

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• 2023 (10) TMI 278
  Assessment u/s 153A - Addition u/s 68 - whether any incriminating material found so as to justify reopening of assessment of unabated/completed assessments u/s 153A? - HELD THAT:- As in view the law as laid down in the case of Abhisar Buildwell Private Limited [ 2023 (4) TMI 1056 - SUPREME COURT] followed by this Court in a recent judgment in Fortune Vanijya Private Limited [ 2023 (10) TMI 204 - GAUHATI HIGH COURT] we have no hesitation in holding that the Hard Drive GCL HD 1 collected by the jurisdictional authority during the search carried out in the premises of the assessee in the year 2017 does not constitute incriminating material so as to justify reopening of assessment of unabated/completed assessments under Sections 153A of the Income Tax Act and addition to the income of the assessee under Section 68. The concurrent findings of fact recorded by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal in the 3(three) appeals of the revenue and the cross- objections of the assessee [ 2021 (12) TMI 1459 - ITAT GAUHATI] cannot be termed to be perverse, illegal or unjustified in any manner. Hence, we are of the unhesitant opinion that the appeals herein, do not involve any substantial question of law warranting admission.

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• 2023 (10) TMI 277
  Reopening of assessment u/s 147 - Validity of order passed u/s 148A(d) - change of opinion - assessee has not produced any supporting documentary evidences in respect of the donation given - allegation of non sharing of the information/material purportedly relied upon in the impugned notice - HELD THAT:- There is a specific purpose for not introducing any further enquiry or adjudication in the statute, on the correctness or otherwise of the information, at this stage. The reason for it is obvious. Under the scheme of the Act a detailed procedure has been provided u/s 148 for issuance of notice whereafter the assessing authority has to determine, in the manner specified, whether income has escaped assessment and the defence of assessee, on all permissible grounds, remains open to be pressed at such stage. The ultimate determination made by the Assessing Authority under Section 147 for reassessment is otherwise subject to appeal under Section 246-A of the Act. Merits of the information referable to Section 148A thus remains subject to the reassessment proceedings initiated vide notice under Section 148 of the Act. It is for this reason that issues which require determination at the stage of reassessment proceedings and in respect of which departmental remedy is otherwise available are not required to be determined at the stage of decision by the Assessing Authority under Section 149A(d). The scope of decision under Section 148A(d) is limited to the existence or otherwise of information which suggests that income chargeable to tax has escaped assessment. Thus, in our opinion, the impugned order under Section 148A(d) of the Act and notice under Section 148 would not warrant any interference under Article 226 of the constitution of India as challenge to such order would be available to an assessee while challenging the order passed in reassessment proceedings consequent to the notice issued under Section 148 of the Act. The Apex Court in the case of Anshul Jain Vs. Principal Commissioner, Income Tax [ 2022 (10) TMI 3 - SC ORDER] observed What is challenged before the High Court was the re-opening notice under Section 148A(d) of the Income Tax Act, 1961. The notices have been issued, after considering the objections raised by the petitioner. If the petitioner has any grievance on merits thereafter, the same has to be agitated before the Assessing Officer in the re-assessment proceedings. High Court has rightly dismissed the writ petition. In view of the above, we find no merit in the challenge laid to the order dated 30.03.2023 passed under Section 148A(d) of the Income Tax Act, 1961 as well as to the notice dated 30.03.2023 under Section 148.

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• 2023 (10) TMI 276
  Time limit for completion of assessment u/s 153A - Limitation as computed in terms of Section 153B, r/w Explanation thereunder and the extension provided by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 ( TOLA ) - whether the extension of time under TOLA is to be given effect, prior to exclusion of the period mentioned u/s 153B, or after? - HELD THAT:- It is the statutory time that must be taken into account for the purposes of TOLA, that is, the date as per the main provision of Section 153B only. The Explanation provides for exclusions in various situations. The application of the exclusions will result in expansion of the period taking note of various intervening events and the ultimate date would thus fluctuate depending on the exclusions taken into account and applied. This cannot be equated to statutory prescription and the date of limitation is determined only by the main provision which is inflexible. In the present case, the last date for completion of assessment as prescribed by Section 153B is within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed. The last date of the 21 month period as prescribed admittedly falls on 30.09.2020. This date falls within the range of dates as stipulated in the TOLA, extended by virtue of subsequent notifications, to 30.09.2021. The extension, by taking benefit of the period of interim protection will follow only thereafter. With this, the date stands extended by 16 months and 24 days to 20.04.2023. The orders of assessment have been passed on 29.01.2022, well within time. The differences between the parties in regard to the periods of interim protection are minor and rendered irrelevant in light of my conclusion that it is TOLA Act that is to be taken into account first. The argument on limitation is rejected and the impugned orders of assessment for AYs 13-14 to 18-19 are found to be passed in time. The orders of assessments for AYs 13-14 to 18-19 are thus confirmed as are the impugned orders of penalty and the writ petitions pertaining to those notices, orders of assessments and orders of penalty, are dismissed. The petitioner is permitted to file statutory appeals on merits and such appeals, if filed within a period of four weeks from date of receipt of this order, shall be entertained by the appellate authority without reference to limitation but ensuring compliance with all other statutory requirements. For the assessments for the period 2011-12, 2012-13 and 2019-20 are concerned, no writ petitions have been filed by the petitioner at the original instance. Thus, and applying the limitation under Section 153B, the date for statutory time limit for assessment would expire on 30.09.2020, though extended upto 30.09.2021 by virtue of the TOLA and subsequent extensions. The question of any period available thereafter to the revenue would not arise seeing as no writ petitions have been filed at the original instance, and hence, the last date for completion of assessments for the period 2011-12, 2012-13 and 2019-20 would be 30.09.2021. The impugned assessments have been framed on 29.01.22, beyond the stipulated time and are hence barred by time. As far as the defence of the revenue based upon Clause (xi) to Explanation to Section 153B is concerned, that clause relates to exclusion of the period taken for handing over seized material the assessing officer. The clause has been inserted with effect from 01.04.2021 and hence operates prospectively only, being a substantive provision. The benefit of the exclusion under that clause thus, would not be available to the revenue in the present assessments. The impugned orders of assessment passed on 28.01.2022 in respect of AYs 11-12, 12-13 and 19-20 are hence held to be barred by limitation qua these three assessment years and are set aside. The writ petitions challenging those notices, orders of assessment and penalties are allowed.

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• 2023 (10) TMI 275
  Reopening of assessment - reasons to believe - Issue of notice where income has escaped assessment - Time limit for notice u/s 149 - HELD THAT:- The impugned proceedings have commenced with issuance of notice u/s 148 on 07.04.2021, seven years from the end of the assessment year in question. There is no averment in the notice that information has been received indicating escapement of income attributable to the petitioner. There is no allegation that any new material has been found justifying a re-look into the matter. In fact, in order dated 29.07.2022 u/s 148A(d), the officer opens stating As per the information available on record, it is observed that following discrepancies were noticed in the case of the assessee or A.Y.2014-15 described as under . All materials in relation to foreign currency borrowings and transfer of assets to Asset Reconstruction Companies have been fully and comprehensively placed before the Officer, even at the time of scrutiny proceedings. The original assessment order passed on 29.12.2017 specifically recorded detailed examination of the financials of the petitioner. One of the issues dealt with under original assessment relates to disallowance under Section 14A r/w Rule 8 of Income Tax Rules in the course of which the investments of the petitioner have been subject to minute scrutiny. Interest from investments, including external commercial borrowings, income from venture capital funds and deduction under Section 36(1)(viii) in relation to transfer to special reserve, have not escaped the Officer s scrutiny. An addition has been made under capital gain and disallowance of deduction of interest cost on zero coupon bonds. Thus, there is no doubt that the Officer has examined all aspects of the return and framed an assessment after thorough scrutiny. While so, the impugned proceedings are initiated based on the financial records already available with the Officer and indicating that a different view invoking Section 43A in respect of unrealised loss should have been taken. As regards the sale consideration from assets transferred to ARC, the officer records that income has been offered under the head other sources but expresses the view that the sale consideration ought to have been offered in full and not amortised over the years. A perusal of the reasons will confirm that in all the issues, the officer merely refers to the financials, Form 3CD, profit and loss account, computation statement and the details furnished during original scrutiny. Thus, in this case as well, there is no new or tangible information that has come to the notice of the authority to justify re-assessment as all relevant information was well available with the original authority. Obviously, only some specific information that has come to the notice of the officer, and hitherto unknown, would satisfy this requirement. Such information must be tangible and new and stale information already part of the record simply cannot qualify. Incidentally, the term flagged has been omitted from this clause w.e.f 01.04.22 by Finance Act 2022. Thus, and evidently, material already on record and that has undergone scrutiny at the first instance cannot satisfy the statutory condition. On this score, the assumption of jurisdiction for initiation of proceedings for re-assessments is seen to be bad in law and quashed. Validity of the impugned proceedings have also to be tested on the anvil of the statutory condition in section 149 that the officer has in his possession, books of accounts or other documents or evidence which reveal that income chargeable to tax, represented in the form of an asset has escaped assessment - With effect from 01.04.2022, even entries in the books of account could be pressed into service by an officer to initiate re-assessment after a period of three years. This cannot be resorted to prior to 01.04.2022 as the law, as it stood then, did not enable the same. Needless to state, the amendment of section 149 by way of substitution on 01.04.2022 is substantive making substantial inroads into the rights of an assessee and can only be taken to be prospective. Thus, as on 01.04.2021 the command of the law is to the effect that there must be material indicating the existence of an asset that leads to the inference of escapement of income. The import of the phrase books of income has been considered by a Division Bench of this Court in Commissioner of Income-tax vs Taj Borewells [ 2007 (4) TMI 203 - MADRAS HIGH COURT ] that makes reference to an earlier decision in S.Rajagopala Vandayar vs. CIT [ 1990 (1) TMI 36 - MADRAS HIGH COURT ] as held Profit and Loss Account and the Balance Sheet are not the books of account as contemplated under the provisions of the Act. The learned Standing Counsel for the Revenue has not placed any authority or any case law or any other material or evidence to show that the books of account includes Profit and Loss Account and Balance Sheet. Thus the impugned notices and proceedings for reassessment are quashed. Assessee appeal allowed.

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• 2023 (10) TMI 274
  Proper authority / Jurisdiction to launch Prosecution Proceedings - Prosecution launched by the Assistant Director of Income Tax - Offences punishable u/s 276C(1) and 278B - complaint under Section 190 R/w. Section 200 of Cr.P.C. - HELD THAT:- As rival contentions of both the parties and the precedents relied upon by them, it is evident that once sanction has been given to a particular authority, i.e., the Deputy Director of Income Tax, the prosecution has to be launched by him alone and not by the Assistant Director of Income Tax, who did not have the power to launch the prosecution proceedings. Though it is the contention of the learned Standing Counsel for the respondent that the Deputy Director of Income Tax is a senior officer and the Assistant Director of Income Tax is a junior officer and both were doing the same duties, the said contention cannot be taken into consideration as in the present case, the sanction is accorded to the Deputy Director of Income Tax for initiating prosecution and not to the Assistant Director of Income Tax. In view of the above discussion, this Court is of the considered opinion that it is a fit case to quash the proceedings against the petitioner.

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• 2023 (10) TMI 273
  Validity of passed u/s 143(3A) and 143(3B) - impugned order has been passed without issuance of notice and therefore the impugned order suffers from gross violation of principles of natural justice - HELD THAT:- As per Section 4 of the Contract Act, 1872, communication of proposal is complete when it comes to the knowledge of the person to whom it is made. The principle in Section 4 of the Contract Act, 1872 can be invoked universally for all situations. Since there is no proof of service of draft order and/or show cause notice on the petitioner and since the respondent is also unable to confirm the communication of the draft order and show cause notice on the petitioner, it has to be construed that there is no service to the petitioner. We find merits in the submission of the petitioner. The impugned order is unsustainable. Therefore, this writ petition deserves to be allowed . This writ petition is allowed by directing the respondent to pass a fresh order on merits within a period of 75 days from the date of receipt of this order. The respondent shall also serve a copy of the draft assessment order and show cause notice on the petitioner within a period of 15 days from the date of receipt of this order. The petitioner shall file reply to the show cause notice within a period of 30 days thereafter. The respondent shall pass thereafter appropriate orders on merits, within a period of 30 days.

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• 2023 (10) TMI 272
  Deduction u/s 80P - eligibility of the assessee for exemption u/s 80P(2)(a)(i) or u/s 80P(2)(d) - interest earned on FDs with the co-operative banks and interest earned from SB Accounts with the co-operative banks - HELD THAT:- It is an admitted fact that the appellant is a cooperative society engaged in the business of providing credit facilities to its members and accepting deposits from its members. It does not enjoy any license to carry on the business of banking from Reserve Bank of India. Therefore, as held in the case of PCIT vs. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd.[ 2023 (5) TMI 372 - SC ORDER] that the assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act. For allowability of exemption under the provisions of section 80P(2)(d) in respect of interest income earned by a cooperative society from the cooperative bank, there is a cleavage of judicial opinion among several High Courts on the issue of eligibility of this kind of income for exemption u/s. 80P(2)(a)(i) - As relying on M/S. RATNATRAY GRAMIN BIGAR SHETI SAH. PAT SANSTHA MARYADIT case [ 2018 (12) TMI 1926 - ITAT PUNE] the interest income earned on fixed deposits with cooperative bank/scheduled bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, we direct the Assessing Officer to delete the addition by allowing the exemption u/s 80P(2)(a)(i) and section 80P(2)(d) of the Act. Thus, the grounds of appeal filed by the assessee stand allowed.

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• 2023 (10) TMI 271
  Excess dividend received by assessee - Company JEPL paid dividend distribution taxes (DDT) u/s 115-O of the Act, the A.O. treated the additional dividend received by the assessee as taxable on the ground that there is a change in the terms and conditions with respect to the issue of dividend - CIT(A) deleted addition - HELD THAT:- It is worth to observe that the original terms and conditions are permitted to amend with the consent of at least 75% of the shares holders of these shares, which has been complied in the present case. As per the provision of Section 10(34) of the Act, the dividends which are referred in Section 115-O of the Act, are exempt and as per Section 115-O, domestic companies are liable to pay Dividend Distribution Tax on the amounts declared as dividends, accordingly, any dividend declared/paid by a domestic Company on which DDT has been paid, is exempt u/s 10(34) of the Act. In the present case, the Company paying dividends to the assessee has duly paid DDT and, therefore, the assessee is entitle to treat the dividend as exempt u/s 10(34) - Thus, in our considered opinion, we find no error or infirmity in the order of the CIT(A) in deleting the addition - we dismiss the Appeal filed by the Revenue.

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• 2023 (10) TMI 270
  TDS u/s 194C or 194I - tax liability on CAM charges - short deduction of TDS - Demand u/s. 201(1A) holding the Assessee to be Assessee in default - HELD THAT:- By respectfully following the order of case of Yum Restaurants India [ 2022 (10) TMI 256 - ITAT DELHI] and also the order passed in Assessee s own case for A.Y 2012-13 [ 2023 (2) TMI 58 - ITAT DELHI] we hold that the provisions for rent are governed by Section 194-I and CAM charges by Section 194C of the Act, accordingly, we allow the Grounds of appeals of the Assessee and set aside the impugned order and direct the AO to re-compute the CAM charges, taking into consideration the two sections mentioned above.

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• 2023 (10) TMI 269
  Reopening of assessment post order passed by Income Tax Settlement Commission u/s. 245D - additions made by the AO in the present order surviving after order of NCLT - HELD THAT:- It is pertinent to note that the assessment was framed u/s. 144 r.w.s. 147 of the Act dated 21-12-2018 making estimated addition. During the pendency of the appeal before the ld. CIT(A), the National Company Law Tribunal passed order dated 14-10-2021 whereby resolution plan approved by the Committee of creditors was approved and thus the same resolution plan is binding on all the parties such as Central Government and the related dues shall stand extinguished. This submission of AR is a settle legal principle and therefore the same is accepted. The Income Tax Settlement Commission has also passed order which is binding on the Revenue Department and the Assessing Officer has no power to reopen the assessment. CIT(A) has rightly held that claims which are part of the resolution plan stood extinguished as well as once the Income Tax Settlement Commission has decided/settled the tax component between the assessee and the revenue, the revenue authorities do not have any power to reopen such assessment. Revenue appeal dismissed.

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• 2023 (10) TMI 268
  Validity of assessment order as not bearing the DIN number on its body -simultaneous DIN number was generated and communicated - HELD THAT:- As this bench is of considered view that simultaneous issue of the DIN number is insignificant and superfluous exercise, in the absence of mentioning the DIN number on the body of the communication. Ld. CIT(A) has made the issue look irrelevant without appreciating the seriousness attached to the issue by the Board, by declaring fatal consequences to the non mention of DIN in the body of communication itself. Thus the grounds taken up for discussion are decided in favour of the assessee. Remaining grounds become superfluous. The appeal is allowed.

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• 2023 (10) TMI 267
  Unexplained cash deposits - assessee vehemently argued that the learned CIT(A) failed to appreciate the fact in right perspective and sufficient opportunity was not granted to the assessee - assessee drew our attention to the bank statement filed to demonstrate that the account in question was held by Mr. Surjit Singh in his individual capacity and the authorities below have wrongly taxed the deposits in assessee s hand, which is independent juristic person - HELD THAT:- As in the knowledge of the learned CIT(A) that account in question was in individual capacity but he treated it to be of the assessee company. It is stated by the learned CIT(A) that before him the assessee had submitted the bank statement from 15.4.2013 to 28.4.2013. One of the objection of CIT(A) was that the assessee failed to submit complete bank statement for the entire period i.e. 1.1.2013 to 31.3.2014 so as to verify and reconcile any further transaction of cash deposit to the assessee company. Before Tribunal the assessee has filed a bank statement that covers the period starting from 1.4.2013 to 31.3.2014 for the relevant financial year. I have perused the bank statement as filed by the assessee. V Vide entry dated 29.4.2013 there is a transfer through RTGS. Undisputedly, the basis for making addition was that certain cash deposit was made in the bank account bank account no. 67170726788 maintained with State Bank of Travancore. This bank account is in the name of Shri Surjit Singh, Director of the assessee company. The assessee ought to have provided the complete bank statement to learned CIT(A) for verifying the transaction between the assessee and the account in question, therefore we hereby set aside the impugned assessment order and restore the matter to the file of the learned CIT(A) to decide the matter afresh, in accordance with law, of course, after affording reasonable opportunity of being heard to the parties.Appeal of the assessee stands allowed for statistical purposes only.

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• 2023 (10) TMI 266
  Unexplained investment in jewellery - addition made in the assessment order and not following the Instruction No. 1916 issued by CBDT - search and seizure operation was carried out u/s 132 - HELD THAT:- From the assessment order it is clear that the AO made addition on account of non-explanation of source of acquisition/purchase of jewellery items worth Rs. 3,92,151/- and the learned CIT(A) in the appellate order states about gold coins and 17 gold ginnies. CIT(A) was of the view that gold coins and ginnies are not jewellery, which is contrary to the finding of the AO, who in unequivocal terms states that the source of acquisition/purchase of jewellery worth Rs. 3,92,151/- was without any documentary evidence. CIT(A) failed to take note of the fact that assessee is having high social status and duly declared jewellery of more than 6.27 crores. Looking to the peculiarity of facts of the present case where there is no finding by AO that addition was made on account of the fact that items do not partake the character of jewellery, we direct the AO to delete the impugned addition. Grounds of appeal are allowed.

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• 2023 (10) TMI 265
  Issuance of Notice u/s 153C/142(1)/ 143(2) - DR relying on the order of the A.O. and CIT(A) submitted that, while purchasing the lands by the assessee Company there was an involvement of cash and said cash was nothing but an unexplained investment of the assessee company, therefore, the addition made by the A.O. - HELD THAT:- As seen from the assessment order that, during the action u/s 132 certain incriminating document found and seized relating to the assessee which had certain details of investment in purchase of agricultural land and as per the details mentioned in the said document, part sum was paid through cheque and remaining was paid in cash. Thus, the A.O. rightly assumed jurisdiction as the twin preconditions mentioned in Section 153C of the Act was satisfied i.e. existence of seized document belonging to the assessee and such seized document having bearing on the determination of the total income of the assessee. Therefore, in our considered opinion issuance of notice u/s 153C/142(1)/143(2) of the Act by the A.O. is justified. Ground of the Assessee is dismissed. Addition u/s 69 - It is observed that the assessee company had purchased four lands situated at Agra during the period from 16/09/2010 to 28/01/2011. The total cost of land part amount paid through cheque and part paid through cash. Apart from the same, the assessee Company admitted at the Assessment level that cheque amount is a part of the Company s books of account and cash amount was owned by some other person. The said fact also makes it clear that there was a cash component. Agriculture land bearing Khata No. 630 having area of 0.2075 hectare in Raibha Tehsil Karavh, for the purpose of purchasing the said land payment had been made through DD and as mentioned in the seized paper, cash payment has been made by the Assessee which has been compared by the A.O. on the basis of the ratio of cheque and cash in the registries mentioned in the seized paper. Since the above investments have been made by the Company which has not been disclosed in the books of accounts of the and the A.O. rightly treated the said amount as undisclosed income of the Assessee Company. Thus, we find no error or infirmity in the order of the Lower Authorities, accordingly, Ground of the Assessee is dismissed. Taxation in who s hands? - whether CIT(A) erred in not admitting that alleged cash of Rs. 88,60,000/- have already been taxed in the hands of Shri Anil Mittal ? - Assessee/AR could not produce any evidence like copy of statement u/s 132(4) of the Act claim to have been given by Sh. Anil Mittal or other Directors which may show that said cash was owned by Sh. Anil Mittal. Further, the CIT(A) has also perused the assessment order in the case of Sh. Anil Mittal and found that nowhere discussed by the A.O. and even in the calculation of peak credit also, said page was not taken into consideration. Thus, the entries found in the seized document relating to the assessee were not owned up by Sh. Anil Mittal and also the assessee has not produced any document to show that the amount in dispute have already been taxed in the hands of Sh. Anil Mittal. Therefore we dismiss Ground of the Assessee.

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• 2023 (10) TMI 264
  Reopening of assessment u/s 147 - reason to believe - notice beyond four years - HELD THAT:- As in the absence of anything in the reasons recorded to suggest that the income chargeable to tax which has escaped assessment i.e. one lakh rupees or more, the notice issued u/s 148 of the act beyond four years of the end of the relevant Assessment Year, is treated as invalid, therefore, in our considered opinion, the said ratio is applicable to the present case in to-to and the Ld. CIT(A) erred in upholding the validity of the assessment order, accordingly, we allow Ground No. 1 2 of the assessee by setting aside the orders of the Lower Authorities.

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• 2023 (10) TMI 263
  Revision u/s 263 - AO in his detailed order has made various disallowances U/s. 14A of the Act and further has also observed that certain expenses as described U/s. 43B are allowed in the year of payment only - HELD THAT:- From this observation of the Ld. AO which was also relied on by the Ld. AR, we find that the Ld. AO has applied his mind on the claim made by the assessee U/s. 43B of the Act for allowance of expenditure on payment basis pertaining to the AY 2007-08 and earlier years. In the instant case, the order of the Ld. AO is not erroneous as the Ld. AO has applied his mind while allowing the deduction claimed by the assessee U/s. 43B of the Act and therefore one of the conditions as laid down U/s. 263 of the Act is absent. Further, in the case of CIT vs. Chettinad Logistics Pvt Ltd [ 2017 (4) TMI 298 - MADRAS HIGH COURT] held that if no exempt income forming part of the total income of the assessee was earned in the relevant assessment year, additions made by the Ld. AO by relying upon section 14A of the Act read with Rule 8D is beyond the scope and content of the main provisions. Further, in the case of Redington (India) Ltd [ 2017 (1) TMI 318 - MADRAS HIGH COURT] , the same view was upheld by the Hon ble Madras High Court. In view of these facts and circumstances of the instant case and relying on the judicial pronouncements as discussed above, we considered it deemed to be fit that exercise of powers u/s. 263 of the Act by the Ld.CIT-1, Visakhapatnam is not valid in law and deserves to be quashed. Disallowance of prior period expenses - only contention of the Ld. AO is that these expenditures related to prior period where the assessee has claimed exemption of income and hence disallowance U/s. 14A of the Act is applicable to the instant case - HELD THAT:- These items of prior period expenses raised in the grounds are crystallized during the impugned assessment year 2010-11 and accordingly, the assessee has claimed it as an expenditure during the impugned assessment year. We also find that these prior period items are not a result of errors or omissions in the financial statements of one or more prior periods. These items / adjustments are necessitated by the circumstances which are determined in the current accounting period. Even though it relates to the prior periods, it needs to be allowed as an expenditure in the impugned assessment year as it has been crystallized only during the AY 2010-11. Based on the discussion above, we find that even though the items of expenditure pertain to the earlier period where exemption U/s. 11 was claimed by the assessee these items of expenditure was crystallized only during the current assessment year and hence cannot be accrued in the previous assessment years. We therefore have no hesitation to delete the addition made by the Ld. Revenue Authorities on this ground and thereby allow the ground raised by the assessee. Disallowance of arrears of salaries and wages and arrears of pension - DR fully supported the orders of the Ld. Revenue Authorities and stated that since the expenditure pertains to the earlier years where the assessee is entitled for exemption U/s. 11 of the Act, this expenditure needs to be disallowed U/s. 14A of the Act in the current assessment year - HELD THAT:- These prior period items are not a result of errors or omissions in the financial statements of one or more prior periods. These items / adjustments are necessitated by the circumstances which are determined in the current accounting period. Even though it relates to the prior periods needs to be allowed as an expenditure in the impugned assessment year as it has been crystallized only during the AY 2010-11. The only contention of the Ld. AO is that these expenditure related to prior period where the assessee has claimed exemption of income and hence disallowance U/s. 14A of the Act is applicable to the instant case. Based on the discussion above, we find that even though the items of expenditure pertain to the earlier period where exemption U/s. 11 was claimed by the assessee these items of expenditure was crystallized only during the current assessment year and hence cannot be approved in the previous assessment years. We therefore have no hesitation to delete the addition made by the Ld. Revenue Authorities on this ground and thereby allow the ground raised by the assessee. Disallowance of excess depreciation as claimed by the assessee in respect of capital dredging - Admittedly, the assessee has incurred expenditure of capital dredging on which the assessee claimed depreciation @ 15% considering the capital dredging as Plant Machinery - AO disallowed the excess depreciation claimed by the assessee and observed that the assessee is entitled for depreciation @ 10% on capital dredging as it has to be considered as buildings - HELD THAT:- We find that the ship way constructed for dredging is on par with the construction of roads and culverts constructed in the premises of the factory and by placing reliance on the decision of the Hon ble Bombay High Court in the case of CIT vs. Mazagaon Dock Ltd [ 1993 (7) TMI 61 - BOMBAY HIGH COURT] we have no hesitation to confirm the order of the Ld. Revenue Authorities on this ground and thereby dismiss the grounds raised by the assessee. Addition towards upfront premium received on lease of lands - HELD THAT:- On perusal long term lease agreement entered into by the parties on 29/03/2010, we find that the assessee has also paid an amount as non-refundable premium to the lessor in addition to the provisional upfront free for a period of 30 years from the date of taking possession of land. It is also observed from the recitals of the lease agreement that a nominal rent of Rs. 1/- per sqmt per annum up to 30 years from the date of handing over of the land is payable by the lessee in advance on or before of 01st April of each year. Further, we observed that the assessee is following mercantile system of accounting and has also followed consistent policy of treating the revenue from upfront premium over the period of lease. This method of accounting is being followed by the assessee on regular basis which was not disputed by the Revenue in earlier years. We are of the considered view that since the assessee is consistently following a method of recognizing the revenue over the period of lease, the treatment of upfront premium received by the assessee during the impugned assessment year by considering it as a revenue income deserves to be deleted and we direct the Ld. AO to delete the addition made on account of upfront premium received during the assessment year. We are therefore inclined to allow this ground raised by the assessee. Addition towards unaccounted sundry debtors - HELD THAT:- From the annual report, we find that the assessee has rendered services to M/s. P.S Co., and has not considered an amount as receivable from the firm since whereabouts the firm were not known. It is an admitted fact that invoice was not accounted in the books of accounts and recognized as a revenue during the impugned assessment year. The argument of the Ld. AR could not be accepted due to the fact that accounting the same in the impugned assessment year and later claiming it to be a bad debt since the whereabouts of the firm is not known is not a valid argument. Income has to be recognized when the services are rendered as per the AS-9 issued by the ICAI. Merely non-accounting of income due to the fact that the party could not be traceable is not a valid accounting procedure. Accordingly, we are of the considered view that the income has to be recognized in the books of accounts and the Ld. AO has rightly added the amount which was also confirmed by the Ld. CIT(A). Thus, we do not want to interfere in the order of the Ld. Revenue Authorities. Contribution to pension fund in excess of the annual limit of 27% of the salaries and wages - HELD THAT:- As relying on GlaxoSmithkline Pharmaceutical [ 2011 (1) TMI 1530 - ITAT MUMBAI] seven if the expenditure is not allowable U/s. 36(1)(iv) of the Act, but the same is allowable U/s. 37 of the Act. Respectfully following the above decision, we are inclined to allow the contribution to Pension Fund in excess of 27% on account of salaries, wages and pension U/s. 37 of the Act and hence this ground raised by the assessee is allowed. Since, the expenditure is allowed on contribution basis, we are of the opinion that the provisions of section 43B of the Act are not applicable. Addition being the expenditure incurred towards donations and contributions - AR submitted that the assessee has incurred contribution to the Major Ports Sports Council Board (MPSCB) and also expenditure on compassionate grounds, disaster management plant, cultural activities, Teacher s Day celebrations etc. - HELD THAT:- In the instant case, it was accepted by the assessee that certain expenditure was incurred towards disaster management plan, cultural activities, Teacher s Day Celebrations etc. CIT(A) also adjudicated this issue after verification of the submissions made by the assessee and has held that out all part pertains to the expenditure which are not related to the business activities of the assessee and thereby disallowed a sum of Rs. 1,49,325/-. From the submissions made before us by the Ld. AR we are of the opinion that cultural activities, Teacher s Day Celebrations etc. are not in the nature of expenditure for business purposes and therefore concur with the findings of the Ld. CIT(A) on this issue and we find no infirmity in the order of the Ld. CIT(A). Thus, this ground raised by the assessee is dismissed. Disallowance of provision for payment of Gratuity for Rs. 30.17 Crs which is beyond the scope of the rectification U/s. 154 - HELD THAT:- This payment has been necessitated due to shortfall to meet the actuarial valuation of the Fund to ensure that there is sufficient balance in Gratuity Fund to discharge its obligation at a future date. It is neither an annual contribution nor an ordinary contribution. Even though the contribution is in excess of the specified limit, in our opinion these are incurred for the purpose of business of the assessee and hence are deductible U/s. 37(1) of the Act. We therefore do not concur with the opinion of the Ld. CIT(A) and we are inclined to set-aside the order of the Ld. CIT(A) and allow the grounds raised by the assessee. Disallowance of provision made towards interest payable on Government Loans - HELD THAT:- In the instant case the interest is payable on loans taken from Government of India. In our opinion interest payable on loans taken from Government of India is not covered u/s 43B of the Act. Respectfully following the decision of UP. RAJYA VIDYUT UTPADAN NIGAM LTD. [ 2013 (9) TMI 961 - ALLAHABAD HIGH COURT] we have no hesitation to delete the addition of Rs. 7 Crs made on account of interest payable to Government of India during the impugned assessment year. Accordingly, this ground raised by the assessee is allowed. Addition towards disallowance of contribution to VPT Employees Family Security Fund - AR submitted that a provision has been made during the FY towards the Family Security Fund of the employees of the VPT and these expenditure are incurred during the course of carrying of the assessee s business and shall be allowable U/s. 37 - HELD THAT:- The Ld. CIT(A) has therefore rightly considered the disallowance being the provision made in the books of account and hence we find no infirmity in the order of the Ld. CIT(A) on this ground and accordingly the ground raised by the assessee is dismissed.

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• 2023 (10) TMI 262
  Revision u/s 263 - denial of natural justice - PCIT has stated that AO has not examined the Loan Processing fee and at end as directed the assessing officer to examine the other issue, namely, the issue of addition of fixed assets - as argued PCIT did not provide opportunity to the assessee for hearing on the issue of addition of fixed assets - As assessee s case was selected for limited scrutiny to verify the share capital or other capital. However, the ld. PCIT has exercised the jurisdiction on the issue which was not subject matter of limited scrutiny - HELD THAT:- From the judgment of Hon`ble Supreme Court in the case of Amitabh Bachchan [ 2016 (5) TMI 493 - SUPREME COURT] it is vivid that what is contemplated by Section 263, is an opportunity of hearing to be afforded to the assessee. Failure to give such an opportunity would render the revisional order legally fragile not on the ground of lack of jurisdiction but on the ground of violation of principles of natural justice. Now coming to the assessee`s facts, we note that ld PCIT has issued the notice under section 263 of the Act about the issue of Loan Processing fee , whereas at the end of revision order, the Learned Principal Commissioner of Income Tax, has directed the assessing officer to examine the other issue, namely, the issue of addition of fixed assets , which is without giving an opportunity of hearing to the assessee, hence order passed by ld PCIT is not in accordance with the mandatory provisions of section 263 of the Act, therefore we quash the order of ld PCIT. Decided in favour of assessee.

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• 2023 (10) TMI 261
  Revision u/s 263 - Addition u/s 40A(3)/269T - As per CIT AO ought to have inquired the issue of utilization of cash by the company and examined the violation of section 40A(3)/269T of the Act when in fact said amount is not expended during the year but disclosed on assets side of balance sheet - HELD THAT:- AO has asked the assessee to submit month-wise details of cash sales for the financial year 2015-16 and month-wise details of cash sales for the financial year 2016-17 relevant to assessment year 2017-18. The assessing officer also asked the assessee to submit cash book for the assessment year 2017-18. AO also asked the assessee to submit Sales Tax return and VAT return and other returns filed under the Income Tax Act. We note that with help of these documents and details, the assessing officer has examined the cash received by the Raremat Mall Management office (assessee`s office) from the assessee and summery of cash which have been utilized by the Raremat Mall Management office. Therefore, we note that assessing officer has examined the issue raised by the ld PCIT in his revision order therefore order passed by AO is neither erroneous nor prejudicial to the interest of revenue. According to us, the present order of AO passed u/s 143(3) cannot be termed as erroneous since enquiry was, in fact, carried out by him on the issue on which the PCIT has found fault with and has taken a plausible view. We note that the AO has made enquiry during the assessment proceedings about cash issued to Raremat Mall Management office and utilization of the such cash. Thus we note that the AO enquired during assessment proceedings and the assessee had filed details before him. So we find that the AO s action cannot be termed erroneous Since not only enquiry was carried out by the AO on the issue under consideration and based on the evidence gathered he has taken a plausible view, which at any rate cannot be called as an un-sustainable view. The Hon ble Supreme Court in the case of Malabar Industries [ 2000 (2) TMI 10 - SUPREME COURT] held that this phrase i.e. prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the AO. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interest of the revenue. When the AO adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law . Decided in favour of assessee.

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• 2023 (10) TMI 260
  Income from house property - disallowance of interest paid on housing loan (borrowed capital) referring to the third proviso to section 24 for the reason that the assessee failed to furnish certificate for interest - assessee claimed TDS on the advance rent received but not reflected in the return of income for this assessment year - CIT (A) directed AO to allow 30% of ALV on advance rent as allowance u/s 24(a) having taxed in the current assessment year - HELD THAT:- For the interest on borrowed capital we see no valid reason for disallowing the interest paid on borrowed capital to the banks. The evidences furnished by the assessee in the form of statement of accounts and certificates issued by the banks, sanctioning and disbursing the housing loan to the assessee actually goes to show that the assessee has obtained loans from banks for acquiring the property and the property was let out and the rental income was offered to tax and, therefore, AO should have allowed interest paid on borrowed capital while computing the income under the head income from house property. The observations of the CIT (Appeals) that the interest claimed in the computation has already been allowed by the AO is totally misplaced as AO has not allowed the assessee to carry forward the loss under the head income from house property which is mainly paid on borrowed capital. Thus we direct AO to allow interest on borrowed capital as claimed by the assessee and the same shall be carried forward under the head income from house property. Notional interest on interest free security deposit - As various Courts have held a consistent view that notional interest cannot form part of actual rent. Hence, there is no justification to take a different view that what has been stated in Asian Hotels Limited [ 2007 (12) TMI 274 - DELHI HIGH COURT] - Ratio of the decisions squarely applies to the facts of the assessee s case. Thus, we reverse the findings of the ld. CIT (Appeals) on this issue and hold that no notional interest on interest free security deposit can be added to the ALV of the property while computing income from house property. Appeal of assessee allowed.

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• 2023 (10) TMI 259
  Income accrued in India - royalty receipts - receipts towards software license and maintenance charges, global technology charges and GWAN connectivity charges - HELD THAT:- As we observe that the issues have been decided by Ld.CIT(A) in favour of the assessee following the decision of in assessee s own case [ 2021 (12) TMI 571 - DELHI HIGH COURT] and also Engineering Analysis Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] and therefore, we see no infirmity in the order passed by the Ld.CIT(A) in holding that receipts towards software license and maintenance charges, global technology charges and GWAN connectivity charges are not royalty under the IT Act and also under India UK DTAA. Thus, we sustain the order of the Ld.CIT(A) and reject the grounds raised by the Revenue.

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• 2023 (10) TMI 258
  Addition u/s 68 - unsecured loans - HELD THAT:- There is no finding of any cash deposited in the bank account of the creditors prior to disbursement of loan and no adverse finding recorded regarding the identity and existence of creditors and further no findings that the creditors were entry operators of any kind by the AO. The loans were interest bearing loans and the related interest income is duly reflected in the ITR of the Creditor Companies. AO. without having any basis observed that the Creditor Companies are shell Companies on the basis of common Directors among Group Companies and the rotation of funds/money in the Group Companies which is unfounded. In so far as Orbit Contractors and Financial Pvt. Ltd. notice issued u/s 133(6) was not responded by the creditor. The assessee had furnished the necessary acknowledgment of ITR for Assessment Year 2014-15 and 2015-16, balance sheet and P L Account for the year ending 31/03/2015, the assessee had also provided copy of company master data, copy of Form 16A issued for interest paid on loan received as well as the source of the lending company. The assessee had provided loan confirmation, Certificate of incorporation and PAN Number, copy of the ITR, balance sheet and P L Account, Bank Statement of Creditor etc. as evidence for identity, creditworthiness and genuineness of the creditor. The assessee is not required to prove the source of the investment. In this case, the assessee has proved the identity of parties and genuineness of the transaction, which are being transaction through bank. The capacity of the lender cannot be doubted since there was no allegation that the assessee has rooted its own money through the investors. Further in the absence of any finding regarding cash deposited in the banks account of the creditor prior to disbursement of loan and no adverse finding regarding the identity and existence of the creditor and since all the loans were interest bearing loans and related interest income is duly reflected in the ITR of the creditor companies, in our opinion, CIT(A) has committed no error in deleting the addition. Accordingly, we find no merit in Ground No. 1 of the Revenue. Disallowance u/s 14A read with Rule 8D2 (ii) of the Rules - HELD THAT:- The assessee has to establish the availability of own fund for making investment in exempted income yielding investment. Unless the assessee established the availability of own funds, we are not in a position to uphold the argument of the Assessee s Representative. Being so, in the interest of justice, we remand the issue to the file of the A.O. with a direction to the assessee to prove the availability of own funds so as to interest in exempted income yielding investments by filing relevant cash flow/fund flow statement for the year under consideration, accordingly, we partly allow the Ground No. 2 of the Revenue for statistical purpose.

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• 2023 (10) TMI 257
  Disallowance towards payment made to contractors for want of TDS - addition u/s 40(a)(ia) - assessee has submitted that the contract-labourers are in the muster roll of the assessee and are covered by the ESI/PF Act - Deductions towards ESI/PF have also been duly made and deposited to the respective accounts - CIT(A) deleted addition as the assessee has directly engaged labourers borne in the Provident Fund records and made payments through the head labourer - HELD THAT:- CIT(A) has observed that the assessee has directly paid labour charges to the labourers through the head labourer and all the labourers are borne in the Provident Fund records of the assessee. When all the labourers are treated as person directly employed by the assessee for the purpose of PF Act and merely because the wages are disbursed through the head labourer for convenience, it cannot be said that there was an element of contract involved. No incriminating material like contract agreement, etc. was brought on record. CIT(A) has observed that the AO was misled by the statement given by Shri Murugesan as reported in the appraisal report and never bothered to examine the liability of the assessee to deduct tax at source independently with reference to the facts of the case. CIT(A) has rightly deleted the disallowance made u/s 40(a)(ia) of the Act by holding that the assessee has directly engaged labourers borne in the Provident Fund records and made payments through the head labourer and therefore, there was no liability to TDS. CIT(A) has rightly deleted the disallowance made u/s 40(a)(ia) of the Act and thus, the ground raised by the Revenue is dismissed for the all the assessment years under appeal. Addition towards variation in stock during the course of search proceedings, a sworn statement was recorded on 19-11- 2015 from director of the assessee-company - CIT(A) has observed that AO had mistakenly considered the (+) as excess stock and arrived at the value of such notional stock and thereby calculated the value and added the same as excess stock. Moreover, in the assessment order, the AO has not anywhere brought on record that such excess stock was sold in the market and resultant unaccounted income was earned. The standard yield of oil of 63% fixed by the assessee was to monitor the quality of copra for internal purposes and it does not mean that the appellant did not account the actual production in excess of 63%. The actual production whether more or less than 63% was accounted in the stock book and further shown as sales in the Profit and Loss Account. CIT(A) has held that there was no excess stock and the consequent addition made on the notional excess stock is nothing but an illusion and accordingly, deleted the additions made by the AO for all the assessment years under appeal. Thus, we find no infirmity in the order passed by the ld. CIT(A) on this issue and the ground raised by the Revenue is dismissed for all the AY under appeal. Disallowance of expenditure violating the provisions of Section 40A(3) - CIT(A) has noted from the documents produced before the him as was furnished to the AO that all the payments to the Kerala supplier were through banking channel i.e. RTGS - HELD THAT:- The only case of the Assessing Officer was that the assessee s agent issued bearer cheques for purchase of copras but fact remains that the assessee receives copra by paying purchase price through RTGS. Therefore, invoking the provisions of section 40A(3) of the Act is not justified and cannot be made. So far as agents are concerned, according to their convenience, bearer cheques were issued for procuring copras. The bearer cheques issued by the agents for the purpose of purchase of copras cannot be said that the assessee paid cash for purchase of copras. In view of the above, we hold that the AO failed to establish that the assessee made purchases by paying cash and therefore, the AO was not justified in invoking section 40A(3) - Thus, the ground raised by the Revenue is dismissed for all the assessment year under appeal. Bogus purchase made by the company - AO has observed that there is rate variation in the purchase of copra resulting in inflation of purchase price - CIT(A) has held that the addition was made purely based on doubt, suspicion, assumption and surmises and deleted the additions made by the Assessing Officer for all the assessment years under appeal - HELD THAT:- CIT(A) has observed that the assessee was in the business for the past several years and has acquired a reputation for its products. It was further observed that in order to get high quality of end product (oil), it is essential and unavoidable for the assessee to acquire high standard of copra for crushing and consequently it has to pay a higher price. Without taking into account this basic requirement for consideration, indulging in an exercise to make such an addition was not correct. The ld. CIT(A) has further observed that neither the investigation team nor the AO has brought any material on record to show that part of the purchase price was received back by the assessee. We find no reason to interfere with the order passed by the ld. CIT(A) on this issue. Difference in closing stock as per SAP vs. Return of income - AR submitted that the variation was only due to the fact that the assessee switched to SAP based accounting software - HELD THAT:- As considering the above addition in the closing stock, for the assessment year 2012-13, the addition on account of telescopic effect was made in the assessment years 2013-14 and 2015-16 for Rs..21,33,110/- and Rs..32,25,318/- respectively. Since the value of closing stock of Rs. 2,47,72,535/- has been directed to be deleted in the assessment year 2012-13, the addition on account of telescopic effect made for the assessment years 2013-14 and 2015-16 for Rs..21,33,110/- and Rs..32,25,318 respectively are liable to be deleted. Accordingly, the ld. CIT(A) has rightly deleted the addition made. Purchase made from Market Committee and the consequential addition in the assessment year 2015-16 and 2016-17 - HELD THAT:- AO indulged in a futile exercise in making the impugned addition. By considering various documents produced by the assessee such as Permit to move the copra from the market committee to the assessee, proof of cess payment by the successful bidder etc. which were furnished before the AO during assessment proceedings, copy of the same were part of the appellate order, CIT(A) opined that the explanation offered by the assessee are plausible. After examining the permit to move the copra from the place of origin to the place of destination that is the factory of the assessee etc., CIT(A) further opined that even admitting but not accepting for a while that the assessee had indulged in purchases from market committee directly, neither the Investigation Team nor the AO has found out any corroborative documents either to prove that the assessee indulged in purchase directly from the market committee or for corresponding unaccounted sales. CIT(A) has rightly deleted the addition - We find no reason to interfere with the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed for both the assessment years. Addition made towards alleged on-money payment made towards acquisition of land by the assessee - HELD THAT:- CIT(A) has observed that while resorting to the said addition, the AO has not examined the vendor and recorded any sworn statement to bring on record that the vendor received any on-money payment. In the absence of any corroborative evidence supported by any sworn statement from the vendor, CIT(A) was convinced with the explanation offered by the assessee. Further, the ld. CIT(A) has observed that the assessee has offered substantial additional income for AYs 2010-11 to 2016-17 towards bogus bought notes - Under the above facts and circumstances, the ld. CIT(A) has rightly deleted the addition Disallowance u/s 40(a)(ia) with regard to the non-deduction of tax at source in respect of payments made towards labour payment - whether the recipient has disclosed the payment received in his return of income and paid tax thereon? - HELD THAT:- Once the recipient has disclosed the payment in his return of income, the assessee is not liable for TDS. As per proviso to section 201(1) where a person fails to deduct tax at source on the sum paid to a resident or on the sum credited to the account of a resident such person shall not be deemed to be an assessee in default in respect of such tax if such resident has furnished his return of income under section 139 of the Act taking into account such sum for computing income in such return of income and has paid the tax due on the income declared by him in such return of income. In this case, the contractor Mr. Chandrasekar has declared the receipt of payment in his return of income for which relevant material evidence was furnished before the authorities below. Just because Mr. A. Chandrasekar filed his return of income for the AYs 2013-14 and 2014-15 belatedly, it is not correct to disallow the payment made by the assessee. Under the above facts and circumstances, we set aside the order of the ld. CIT(A) on this issue and delete the addition made. Assessee appeal allowed.

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• 2023 (10) TMI 256
  Excess stock found during the course of survey - income from business profession OR unexplained investment - AO excessed stock valued u/s. 69B and computed tax u/s. 115BBE on the ground that the assessee could not explain source for excess stock found during the course of survey - HELD THAT:- We find that the excess stock found during the course of survey was mixed with regular stock in trade employed by the assessee in his business. The stock was not separately identified so as to assess it under the head unexplained investment . The assessee is having only one source of income i.e. income from trading in gold jewellery and silver articles. The entire stock found during the course of survey was available for trade at the business premise of the assessee and it was part and parcel of the regular business stock. Once, it is considered as regular business stock, then, obviously the source for acquisition of said stock is out of business income earned for the relevant assessment year, because, it is a general practice in business that whatever excess income earned is kept in the form of stock and debtors. Since the excess stock found during the course of survey was not separately identified and was mixed with regular business income, the assessee has rightly offered additional income declared during the course of survey under the head income from business profession , and this position is supported by the decision of Bajargan Traders [ 2017 (11) TMI 388 - RAJASTHAN HIGH COURT] AO and the Ld. CIT(A) are erred in assessing additional income declared towards excess stock found during the course of survey u/s. 69B of the Act r.w.s. 115BBE of the Act, and thus, we direct the AO to assess the income under the head income from business profession as declared by the assessee. Decided in favour of assessee.

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• 2023 (10) TMI 255
  Relief u/s. 90 / 90A - foreign tax credit denied stating the return of income was not filed before the due date of filing of the return of income U/s. 139(1) - HELD THAT:- Assessee has filed Form-67 on 28/10/2019 by claiming relief as per section 90 / 90A of the Act and as per DTAA with USA. It is also found that the return of income was filed for the AY 2019-20 on 29/10/2019. We also find force in the argument of the Ld. AR that the CBDT Notification dated 18/8/2022 can also be applied retrospectively which is stated by way of Explanatory Memorandum to the above said Notification. There is also no express provision in the India and USA DTAA that the foreign tax credit shall be denied on failure of submission of statement in Form-67 within the due date prescribed U/s. 139(1) - in the instant case, the assessee has filed Form-67 on or before the due date prescribed U/s. 139(4) of the Act and also before the filing of the return of income on 29/10/2019. Further, we also find that the Form-67 was filed before processing the return of income by the CPC U/s. 143(1) of the Act. We also find that the Ld. AO has also rejected the rectification petition filed by the assessee U/s. 154 of the Act citing the same reason that the assessee has not complied with the provisions of Rule 128(9) of the Rules in submission of Form-67 - We also noted that the due date for filing of original return of income u/s. 139(1) for the AY 2019- 20 is 31/8/2019 whereas the belated return U/s. 139(4) of the Act can also be filed on or before 31/3/2020. CBDT Notification also in its Explanatory Memorandum states that the amendment even though has come into force on 1/4/2022, it can also be applied retrospectively if any person is being adversely affected. In the instant case, the assessee has paid foreign tax credit in USA and has filed his return of income U/s. 139(4) - we consider it deemed to be fit that the CBDT Notification can be applied retrospectively which is being a beneficial provision to the assessee. In support of this view, we rely on the decision of the Hon ble Supreme Court in the case of CIT vs. Vegetable Products Ltd [ 1973 (1) TMI 1 - SUPREME COURT] wherein their Lordships have held that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted . Revenue appeal dismissed.

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• 2023 (10) TMI 254
  Determine the nature of loss arising on forward contracts cancelled by the assessee prior to the date of settlement - HELD THAT:- It could be seen that the assessee has entered into forward contract to safeguard against the foreign exchange fluctuation on its revenue receipts from foreign parties. These transactions, being in the nature of hedging transactions, would fall under exempted category of speculative transactions u/s 43(5)(a). Another finding is that the quantum of hedging was reasonable having regard to the export turnover of the assessee. It is actual loss which had arisen on account of cancellation of the forward contracts entered into with the banks to safeguard realization of export proceeds. CIT(A) has relied on the binding decision of Celebrity Fashions Ltd. [ 2020 (9) TMI 1022 - MADRAS HIGH COURT] wherein such loss was allowed as a business loss. It could thus be seen that the adjudication of CIT(A) is in line with the correct position of law and backed by binding judicial precedents. No contrary decision has been shown to us. Therefore, the adjudication rendered in the impugned order could not be faulted with. In the result, the revenue s appeal stands dismissed. Nature of income - Forfeiture of security deposit - termination of certain lease agreement - income from house property or income from other sources - HELD THAT:- The amount waived by one party would be the income of the other party. The amount waived should only be considered as income from other sources . It is not correct on the part of the assessee that there is extinguishment of right to rent. Right to rent is not transferred to anyone. Right to rent had not extinguished also as the assessee can very well rent the property to any other person as it wishes immediately after the forfeiture of the deposit also. The right to rent the property was very much with the assessee even after the forfeiture and hence, it could not be treated as transfer. Therefore, assessee s claim that there was extinguishment of right could not be accepted. There was no transfer of any right which would justify assessment of receipt as capital gains. The deposit was in the nature of revenue only as rent gets adjusted in it. Hence, it could not be treated as capital receipt in the hands of the assessee. It could also not be assessed as advance rent as canvassed by the assessee as the property was not continuing on rent with the same person. Since it was revenue in nature and the same could not be taxed under income from house property , the same was liable to be taxed as u/s. 56(2). Accordingly, the action of ld. AO was upheld which is the grievance of the assessee. We find that this issue has rightly been clinched by learned first appellate authority. It is quite clear that from assessee s point of view, there is no extinguishment of any right. The impugned amount was received as security deposit and a part of the same has been forfeited by the assessee. The security deposit has changed its character upon forfeiture and the same is clearly an income of the assessee. As rightly held, right to rent is not transferred by the assessee to anyone. Neither this right has been extinguished in any manner. Therefore, the aforesaid retained amount could not be assessed as capital gains. The same is also not in the nature of advance rent. Therefore, the same would be assessable under the head income from house property only. We order so. The impugned order does not require any interference on our part.

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• 2023 (10) TMI 253
  Addition being difference in closing stock - As noticed that in closing stock shown there was a mistake leading to the under-stating of closing stock - HELD THAT:- The mistake was crept while preparing the stock inventory manually by sales girl that was corrected by assessee and computerized rectified stock inventory has been filed and it cannot be said that it is an after-thought. When the mistake was noticed by assessee, it was rectified by computerizing the same. GP rate commensurate with earlier year rate of GP rate. Accordingly, addition made towards discrepancy in stock inventory is not proper. Accordingly, delete the addition so made. Addition being other income instead of agricultural income - agricultural income declared from the lands which he has taken on Land tenancy or Lease or Geni - HELD THAT:- The assessee has filed the lease deed from these parties for taking the lands from above parties. The assessee was asked to produce the copy of agreement entered into for acquiring lands on Tenancy, along with copy of Pahini, Bill in support of sale of agricultural products and details of expenses to verify the genuineness of the agricultural income declared by the assessee. The bills produced does not bear the name of the assessee nor the name of the original land owner. According to the AO, assessee violated the Law of Karnataka Land Reforms Act, which was confirmed by the Tahsildar, Shivamogga vide his letter dated 10.12.2009. On this basis, the lower authorities observed that no Tenancy shall be created or continued in respect of any land nor shall any land be leased for any period as per section 5(1) of the Karnataka Land Reforms Act, 1974. Accordingly, lower authorities confirmed the treatment of agricultural income declared by the assessee as non-agricultural income i.e. income from other sources. In our opinion, violation of Karnataka Land Reforms Act cannot be reason to disallow the claim of assessee as agricultural income.

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• 2023 (10) TMI 252
  Bogus purchases - AO has considered the whole business activity and fund flow of the assessee to be sham and intended to circulate the money outside of India and bring it back - HELD THAT:- Bench is of considered opinion that when the Ld. AO was not believing the confirmation submitted by the assessee from M/s. Thakur Associates then it was necessary to give an opportunity to rebut the same to the assessee. AO was drawing inferences from the statement of Rahul, and Ld. CIT(A) has rightly observed that no reason have been given in the assessment order in not allowing cross examination of Rahul which is a violation of principle of natural justice. CIT(A) has taken into consideration the assessment record and observed that assessee was never asked by Ld. AO to produce Sanjeev Thakur for verification. Revenue in this appeal does not dispute that this was an incorrect factual aspect of the assessment proceedings as recorded by Ld. CIT(A) on the basis of records before it. What transpires is that the payments were made through banking transactions and without any factual evidences, AO concluded that the amount deposited in the account of Thakur Associates was withdrawn as cash by the assessee. The findings of Ld. CIT(A) require no interference. Decided against the Revenue. Bogus sales - What transpires from record and rightly held by Ld. CIT(A) is that apart from his own belief, Ld. AO did not make any inquiry with regard to sales from M/s. Golden Harvest. The fact that the amounts were received from M/s. Golden Harvest from banking channel was taken into consideration by Ld. CIT(A). CIT(A) also concluded that without inquiry from M/s. Golden Harvest and without confronting specifically to the assessee why the sale should not be treated as bogus the same could not have been discarded and treated as undisclosed income from undisclosed source. Thus, the findings of Ld. CIT(A) in deleting the additions on account of alleged bogus purchases and sales do not require interference. Ground is decided against the Revenue. Inguine fabrication charges - The bench is of considered opinion that the Ld. AO without making any inquiry and contradicting the claim of assessee has made disallowance of fabrication expenses. Assessee had claimed that there is general practice to make cash payments to small time workers and it is difficult to keep records of cash payments but the same was not considered without any reasonable observations. Ld. CIT(A) has rightly deleted the addition and need no interference. Addition made on account of peak export by the A.O. - There is no denial to fact that these all statutory documents were prepared and submitted for relevant custom clearance by the custom authorities. There is no matter on record to show that if any inquiry was made with the custom department questioning genuineness of these documents. The export proceeds were received through banking channel and duty draw back, DEPB received on account of export were duly accounted by the assessee. The finding of Ld. AO that assessee has exported some other types of good instead of those mentioned in the export documents cannot be accepted as it is not supported with any direct or circumstantial evidence and to the contrary the custom clearance documents being records of a statutory authority have to be presumed to be correct. Thus, Ld. CIT(A) taking into account all the aforesaid aspects and pointing deficiencies in the order of ld. AO, including the contrary stand of rejecting the exports and allowing shipping and forwarding and travelling expenses incurred on these export, had set aside the peak addition which need no interference. Unexplained credits - Revenue cannot dispute the fact that the opening balances in the book of accounts has been added as an unexplained credits. While the settled proposition of law is that Section 68 of the Act cannot be invoked in case of outstanding balances of creditors as recorded at the beginning of FY. Reliance in this regard can be placed on the judgment of Usha Stud Agricultural Farms Ltd. [ 2008 (3) TMI 91 - DELHI HIGH COURT] , CIT vs. Om Prakash Mahajan Sons [ 1984 (2) TMI 41 - DELHI HIGH COURT] and Nipun Builders Developers Ltd. [ 2011 (7) TMI 1285 - ITAT DELHI] Ld. CIT(A) has rightly deleted the addition and the same requires no interference. Failure of Ld. AO to take into consideration the undoubted expenses was certainly required to be allowed from the total income, however, the manner in which Ld. AO had proceeded to summarily re-compute the total taxable income, it appears these expenses were impliedly disallowed by him as he had disbelieved the sales purchase and cash credits. Deduction u/s 80HHC of the is a natural consequence of the nature of income derived and as the additions made by Ld. AO have been substantially deleted a re-computation of the total taxable income is required to be done and therefore these issues are also restored to the files of Ld. AO to take into consideration the relevant evidences of assessee and allow the expenses and give benefit of exempt income in accordance with law.

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• 2023 (10) TMI 251
  TP Adjustment - Comparable selection - Functional dissimilarity - HELD THAT:- Exclude Scarecrow Communications Ltd. from the list of comparables to determine the ALP of international transactions. Axience Consulting Pvt. Ltd. Company ought to be excluded as it is functionally not comparable to the Assessee. Dun Bradstreet Information Services India Pvt. Ltd.be excluded as Functionally dissimilar. Pressman Advertising Ltd. as stated that the company s business activity falls within a single business segment i.e. advertising, selling of space for advertisement in print media and public relations and hence no additional disclosure other than those made in the financial statements are required under indas 108 operating segments . Thus it is clear that under the advertising services, this company also earns revenue from selling of space for advertisement in print media and public relations for which no bifurcation has been provided. In any event, advertisement services provided by this company also cannot be compared to the services rendered by assessee to its AE under the marketing support services which is limited to presale support activities. Lintas India Pvt. Ltd. as Functionally dissimilar as providing advertising services and the principle business activity has been described in the annual report to be advertising and marketing communications. The revenue recognition by this company has been mentioned to be an advertising agency catering services to much number of clientele. Exclude this company M/s. Majestic Research Service Solutions Ltd. from the list of comparables on the basis of functionality and dissimilarity. Cheil India Pvt. Ltd. company is engaged in the business of advertising, communication, publicity and merchandising including undertaking market research, planning and providing consultancy services and training in the same field. There is no segmental details available and the entire revenue is disclosed as revenue from sale of services. We do not find this company to be functionally similar with that of assessee. Accordingly, we direct this comparable to be excluded. Kestone Integrated Marketing Services Pvt. Ltd. be rejected as not functionally comparable to the assessee and passes all filter applied by the assessee. Interest on delayed receivables - We direct the AO/TPO to apply LIBOR rate for credits beyond 60 days only.

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• Customs

• 2023 (10) TMI 250
  Maintainability of appeal - Classification of imported goods - Oil contained in the Bunker Tanks in the Engine Room/Outside Engine Room of Vessel imported for breaking up - to be assessed independently of the vessel under CTH 2710 or with the Vessel imported for breaking up under CTH 8908 00 00? - HELD THAT:- In the light of the order of this Court in M/S Mahalaxmi Ship Breaking Corp. Etc. vs. Commissioner of Customs Bhavnagar [ 2023 (4) TMI 1250 - SC ORDER] , the present appeals too have to be dismissed. Appeal dismissed.

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• 2023 (10) TMI 249
  Continuation of suspension of Customs Broker License - appellant were employed by M/s Aditya Exports as a Customs Broker or not - transacting customs broker business or not - role of Custom Broker between SEZ and DTA transactions - Regulation 10 (a) of Customs Brokers Licensing Regulations, 2018 - HELD THAT:- The suspension in the instant case has been done by prima facie considering the report of DRI which was implemented as per the appellant with delay at least in two stages. The last statement in the matter was recorded on 28.04.2023, however the report was sent by DRI on 07.07.2023, which is beyond 30 days period prescribed by the Board, and circular 09/2019-Cus dated 8 April, 2010. Further there is delay in immediate suspension order as the same was passed after 15 days of the receipt of the offence report as pointed out and reproduced in para 19 (supra) of the submission. The appreciation of evidence and the capacity in which the employee worked cannot be clearly established either way, till the investigation is still in progress - the Learned Commissioner has acted on prima facie appreciation of the evidence made available to him in the report published by the DRI. The matter regarding time lines as well as Board circular and it is applicability after coming into force of CBLR -2018 were also considered in 2020 (371) ELT 685(Madras) in the matter of M/S. KTR LOGISTICS SOLUTIONS PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS, THE INQUIRY OFFICER/DEPUTY COMMISSIONER OF CUSTOMS [ 2019 (12) TMI 22 - MADRAS HIGH COURT] , in which the Hon ble High Court considered various decisions which were available in favour of the party as well as in favour of department. Regarding whether conditions and time lines prescribed were mandatory or declaratory and it was held that the time limit prescribed at each stage needs to be complied with mandatorily, if not the consequence that would follow is the continuation of the suspension of his license thereby affecting/paralyzing the business activities of the licensee. These consequences, though not mentioned in the Regulations, are however evident apparently on the face of the facts and circumstances. Therefore, it cannot be said that there is no consequence for non adherence to the time limit and therefore, such time limit is only directory and not mandatory. Thus, no contrary decision by Hon ble High Court of Gujarat has been brought to notice by either side on mandatory and declaratory nature of the time lines prescribed as well as to indicate that Board Circular No/. 09/2010-Cus at 08.04.2010 has been withdrawn or superseded, we have no difficulty in observing as deduced from decisions above that time lines are mandatory conditions and need to be observed including those prescribed in the Board Circular of 09/2010-Cus. In the instant case since there is a breach of time lines prescribed by the Board, we therefore hold that in the facts of the case the suspension done is bad in law - revocation of suspension is ordered. Appeal allowed.

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• 2023 (10) TMI 248
  Misdeclaration of export goods - Iron Oxide - goods are Iron Oxide Dry Powder, or Iron Ore? - to be classified under Tariff Item 2821 1010 or under Customs Tariff Heading 2601 1119? - violation of principles of natural justice - HELD THAT:- It can be seen from the above test report that the consignments consisted of Iron Oxide and the only evidence on the basis of which it has been held that the subject consignments are of Iron ore/ concentrate by the Adjudicating Authority is Joint Director CRCL s letter dated 12.02.2016 which has neither been provided to the appellant nor that was existing at the time of issuing SCN - the Joint Deputy CRCL s letter not taken into cognizance as the Adjudicating Authority has failed to provide the same to the appellant and therefore has grossly violating the principals of natural justice following the principle of the natural justice. At the same time since the initially two reports clearly holds that export consignments are made of the Iron Oxide. There is no mis-declaration in the export consignments, the classification of the export consignment under the CTH 2821 1010 of the Customs Tariff Act is based on facts and there are no mis-declaration in this case. The impugned order in original and order in appeal are without any merit - Appeal allowed.

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• 2023 (10) TMI 247
  Ex-parte order - no response to SCN provided - Smuggling - 6 kg. gold of purity 999.99 Carat concealed in a machine - burden to prove - HELD THAT:- The appellant did not respond to the CELEBI notice it did not respond to the show cause notice issued under Section 124 the appellant also fail to respond three notices of personal hearing where after the impugned order was passed ex-parte. The recovery notice which is mentioned to be a source of knowledge to the appellant about the impugned proceedings has also been issued on the same address on which were issued the earlier notices including the show cause notice. It is observed that during investigation it was revealed that the address mentioned on both AWB is of the premises belonged to one Mrs. Indu Sharma Statement of Shri Saurabh Sharma son of Mrs. Indu Sharma was recorded under section 108 of the Customs Act, 1962 on 09.06.2015 in which he, interalia, stated that said shop was rented out to Shri Sumeet Jain S/o Shri S.C. Jain, resident of 1480 Sector 21, Gurgaon from October 2013 to May 2014 which belonged to Shri R.K. Grover, resident of C-427, 1st Floor, C.R. Park, New Delhi who vide his statement dated 10.06.2015 stated that he was owner of premises 1480, Sector 21, Gurgaon. Shri Subhash Jain was his tenant at his property 1480, Sector 21, Gurgoan from 2003-2006. These facts when seen with IEC it becomes clear that the registered person of that IEC i.e. Shri Sumeet Jain the Proprietor of present appellant is the only person connected to the impugned AWB. He has not produced any evidence to show that the IEC has been forged in his name without his knowledge. He has not produced any document. Learned Departmental Representative has also placed on record the communication received from Assistant Commissioner of Customs review dated 17.12.2019 showing that the department has made sufficient compliance of Section 123 of Customs Act, 1962 - the Adjudicating Authority has meticulously summarized the grounds for order absolute confiscation of the gold and the packing machines seized and to order penalty on the appellant. There are no reason to differ from those findings. Appeal dismissed.

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• 2023 (10) TMI 246
  Revocation of Customs Broker License - forfeiture of security deposit - penalty - providing false, fabricated documents as a part of export bills to the banks - Violation of provisions of Regulations 10(d), (w) (m) of Customs Broker License Regulations, 2018 - HELD THAT:- It is seen that the Department had initiated independent action against the appellants under CBLR, 2018 on the basis of SFIO investigation report dated 17.01.2019 about alleged irregularities on the part of CHAs/CBs and freight forwarders as they aided and assisted ABCCPL and Shri Ashish Jobanputra (AJ), Director of ABCCCPL in fraudulent export credit availment without actual export of goods and by irregularly discounting export bills with banks based on check lists and the House BLs/MTDs without completing exports. Accordingly, the jurisdictional Principal Commissioner suspended the CB license under Regulation 16(1) of CBLR, 2018 on 27.08.2019. The impugned order was passed by the jurisdictional Principal Commissioner revoking the Customs Broker license granted to the appellants for the failure on the part of appellants to fulfill the obligations cast on them under Regulations 10(d), 10(e) and 10(m) of CBLR, 2018 and also imposed penalty of Rs.50,000/- besides forfeiture of entire security deposit. In the present case, the Banks have without verification of the shipping bills and GR forms have allowed the credit facilities to the exporter ABCCPL on the basis of check lists, even before the goods are actually exported out of the country. Further, RBI have also provided for a Caution list of exporters who do not repatriate their sale proceeds to be earned from their exports in time through an Export Data Processing and Monitoring System. Thus, irrespective of the appellants not informing the Customs about the non production of export goods, the above independent system of checks and data base would have brought to the fore, the export fraud committed by the exporter ABCCPL - the appellants have not caused any violation or in any way connected with the export fraud committed by the exporter ABCCPL and other connected persons. There is definitely delay in adjudication and that for the export transactions occurred in February, 2015, the order of revocation of appellant s customs broker license has been passed on 28.05.2021. Revenue is unable to explain why there was such a long delay of 6 years in taking action against appellants, when the information about fraudulent exports was received on 17.01.2019 - The impugned order has been passed after nineteen months from the date of issue of SCN. There are no reasons recorded in detail justifying the delay in passing the impugned order by the learned Principal Commissioner. Even if an explanation that could be offered by the department for the delay in show cause proceedings and passing the impugned order is due to COVID and unspecified administrative reasons, the same cannot be accepted. There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants and for forfeiture of security deposit, inasmuch as there is no violation of regulations 10(d), 10(e) and 10(m) and the findings in the impugned order is contrary to the facts on record. However, in view of the failure of the appellants to have acted in a proactive manner in fulfillment of the obligation under sub-regulation 10(d), it is found that it is justifiable to impose a penalty of Rs.20,000/- against the appellants, which would be reasonable and would be in line with the judgement of the Hon ble Supreme Court in the case of K.M. Ganatra [ 2016 (2) TMI 478 - SUPREME COURT] in bringing out the importance of crucial role played by a Customs Broker. The impugned order modified - appeal allowed.

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• 2023 (10) TMI 245
  Smuggling - non-supply of documents - denial of the right of cross-examination - seeking to remand the case to the jurisdictional Commissioner of Customs for fresh decision after supply of documents relied upon - HELD THAT:- The learned Commissioner of Customs (Adjudication) while taking up the case in denovo adjudication had categorically mentioned about how he had gone ahead with ensuring provision of various documents sought by the parties from the department and cross examination of witnesses, keeping in view of the directions given by the Tribunal. He had recorded in the impugned order about the various documents provided by the DRI investigation to Shri Deepak Dialani through his advocate and few of the documents which could not be produced; he had also fixed up various dates for cross examination of all 17 witnesses, however could record the proceedings of cross examination conducted before him only in 4 cases, as others did not turn up. Thereafter, the learned Commissioner (Adjudication) has gone into the facts of the case, evidences available on record, and all the four cross examination record of the witnesses. He had also made clear that in view of the Hon ble Supreme Court s judgement in the case of Gopal Saran Vs. Satyanarayana [ 1989 (2) TMI 415 - RAJASTHAN HIGH COURT ], that evidences of those persons who were not made available for cross examination not being treated as evidences, as if such evidences simply does not exist, the statements and panchnamas of remaining persons whose cross examination could not be conducted before him, he had completely ignored and discarded those as evidence. From the net result of the cross examination of 4 witnesses and the non- availability of other witnesses, documents that have been produced during the proceedings, the learned Commissioner (Adjudication) had arrived at the conclusion that all the allegations based on the statements of these witnesses recorded under Section 108 of the Customs Act have to be discarded and the show cause notice proceedings has to be discharged as liable to withdrawn or dropped. Similarly, he dropped the show-cause notice dated 12.09.1997 in his other order dated 16.02.2009. On perusal of the impugned orders, it is found that denovo proceedings have been conducted in accordance with the law, abiding by the principles of natural justice duly giving opportunity for personal hearings, opportunity for cross examination and submission of documents/evidences by both the parties to the dispute. Further, various legal provisions regarding demand of duty, imposition of penalty have been examined by the learned Commissioner (Adjudication) on the basis of evidences after examining the burden of proof under Section 123 ibid. The impugned orders do not require any interference - the appeals filed by the Revenue are dismissed.

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• 2023 (10) TMI 244
  Refusal to grant redemption of 417 gms. (4 nos.) of gold ornaments - levy of penalty U/S 112 of Customs Act, 1962 - Baggage Rules - HELD THAT:- It is on record that the appellant had imported 417 gms. of gold jewellery which was in his possession during the flight from Bangkok and that, upon arrival and at the first point of contact with customs authorities at the airport, he had opted for the red channel procedure. There was also no allegation that the said ornaments were concealed in any manner. It was common ground that the appellant was not entitled to import the gold brought in by him. At the same time, there is no bar on import of gold except that, as baggage , only eligible persons may do so. Baggage herein has to be read in the restrictive sense of eligibility for exemption/concession afforded by chapter XI of Customs Act, 1962 and not from the broader understanding of having been carried on board any conveyance arriving from abroad. Consequently, it suffices for the purposes of law for the gold ornaments to be assessed and cleared in the manner prescribed in Customs Act, 1962. The goods are liable for confiscation owing to ineligibility as passenger. It is not the case of the appellant that confiscation is not warranted as the appeal is merely concerned with access of the appellant to the gold ornaments. As gold ornaments are not restricted for import, confiscation without option to redeem is not valid exercise of authority under section 125 of Customs Act, 1962. Accordingly, the option of redemption is granted to the appellant herein, who may, upon payment of fine of Rs. 1,25,000/-, have possession of the gold ornaments restored to him. Penalty of Rs. 2,50,000/- is reduced to Rs. 50,000/-. Appeal disposed off.

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• 2023 (10) TMI 243
  Suspension of Customs Broker License - allegation of facilitating the attempted export of overvalued consignments of M/s Axon International under three shipping bills - HELD THAT:- Regulation 16(1) of CBLR, 2018 allows suspension of the License in appropriate case where immediate action is necessary. In the instant case, the Commissioner has not adduced any reason of immediate necessity to exercise the power under Regulation 16(1) of CBLR, 2018 to pass the impugned order. In the instant case, the suspension of the License was effected on 23.06.2023, after a period of four years and four months for the alleged offence committed in April 2019. It is also observed that the License of the appellant was revoked on 23.11.2019 with respect to another alleged offence and the said revocation order was set aside by this Tribunal M/S. S.K. KANJILAL VERSUS COMMISSIONER OF CUSTOMS (AIRPORT ADMINISTRATION) , KOLKATA [ 2022 (8) TMI 74 - CESTAT KOLKATA ]. Since, this alleged offence was also well within the knowledge of the department, suspension of the license, if any, warranted could have been initiated along with the other offence where their License was suspended. The action of the department in waiting for more than four years and suspending the License immediately after setting aside the earlier revocation order, cannot be sustained in the eye of the law. Thus, there is no immediate necessity to suspend the license. The Commissioner has not recorded any valid reason warranting immediate suspension of the License. Accordingly, the impugned order suspending the License is liable to be set aside - appeal allowed.

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• Corporate Laws

• 2023 (10) TMI 242
  Recall of final Order/Judgement dated 31.07.2023 and Order dated 19.07.2023 - It is strongly contended by the Learned Sr. Counsel that the Order dated 19.07.2023 wrongly notes that both these Appeals were heard at length and Judgements were reserved and parties were directed to file their Additional Written Submissions - existence of element of fraud or not - HELD THAT:- The grounds on which a Tribunal or a Court can recall the Order has been clearly laid down - there is no element of fraud or collusion ; that this Tribunal did not commit any mistake or prejudice any party or has acted outside its jurisdiction On adhering to Principle of Natural Justice, and therefore, it is held that the power to recall our Orders/Judgements dated 19.07.2023 and 31.07.2023 ought not to be exercised in the facts of the attendant matter on hand. Application dismissed.

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• 2023 (10) TMI 241
  Oppression and mismanagement - Determination of minimum shareholding for filing complain / petition against the company - NCLT rejected the petition - the impugned order, was passed by Hon ble Member (Judicial) of the Tribunal , sitting singly, in the absence of the Hon ble Member (Technical). Failure to possess requisite Shareholding necessary to maintain the underlying petition - appellant possessed 19.83% shareholding in the 1st Respondent / Company, at the time of filing the present petition - conduct in breach of the fiduciary duties of Directors owed towards 1st Respondent / Company as per Section 166 of the Companies Act, 2013. Appellant contends that the Tribunal had committed an error, in coming to the conclusion that the shareholding at the time of accruing of cause of action, would be determinative, of the maintainability of the petition and in sequel, had also held, that the Appellant at the relevant point of time, due to less than 10% shareholding at such time, could not have maintained the petition and eventually determine the said point, as well as the underlying petition against the Appellant herein. HELD THAT:- Section 419(3) of the Companies Act, 2013, enjoins that the powers, of Tribunal , shall be exercisable by Benches consisting of two Members, out of whom, one shall be a Judicial Member and other shall be a Technical Member . As a matter of fact, the proviso to sub-section 3 of Section 419 of the Companies Act, 2013 points out that it shall be competent for the Members of the Tribunal authorised in this behalf to function as a Bench comprising of a single Judicial Member and exercise the powers of Tribunal , in respect of such class of cases or such matters relating to such class of cases as the President, may, by general or special order specify. Also, in the second proviso it is mentioned that if at any stage of hearing of any such case or matter, it appears to the Member , that the case or matter is of such nature / character, that it should be Heard, by a Bench consisting of two members, the case or matter may be transferred by the President, or as the case may be, referred to him for transfer to such Bench, as President , may deem fit. Hence, considering the importance of issues / controversies / disputes involved in a case, a single member , of the Tribunal, may transfer or refer the matter to the President, for hearing by a Bench consisting of two Members or to such Bench as the President may deem fit. It cannot be gainsaid that the Principal Bench of Tribunal, shall be at New Delhi, whose powers, shall be exercised by Two Members it shall be competent for the Members, authorised in this behalf to function as Bench consisting of a single Judicial Member, in respect of such class of cases, as President , may by general or special order specify. This Tribunal holds that the impugned order dated 27.11.2019, in Company Petition No. 20/2016 (TP No. 248/2017) passed by the Hon ble Member (Judicial) of NCLT, Bengaluru Bench, sitting singly, cannot be found fault, with because of the fact that Section 419(3) of the Companies Act, 2013 empowers, the Judicial Member , of the Tribunal to Hear the case , based on the order dated 22.10.2019 of the NCLT, New Delhi, which had the Approval , of President of NCLT , New Delhi and hence, the impugned order dated 27.11.2019, passed by the Tribunal is not a nonest , illegal and void ab initio one and the point, is so answered. The primary plea of the Appellant, is that the Learned Single Member of the Bench of the Tribunal , had effectively over ruled the said order passed by the Division Bench and upheld by this Tribunal. In effect, the said point according to the Appellant, vitiates the impugned order of the Tribunal, and hence, the impugned order of the Tribunal, is liable to be set aside. Possession of shareholding - HELD THAT:- This Tribunal, is of the cocksure considered opinion, that although, the Appellant , held 10% as on date of filing of the CP No.486/2018, on 06.09.2018, but in respect of the events, that took place, before the Appellant , held 10% shareholding, then, it is held by this Tribunal, that he had not fulfilled the qualitative criteria , to sustain the Company Petition , in as much as, he had not possessed, the requisites shares , at the particular point of time, when the purported cause of action arose. As such, it is, safely and securdly concluded by this Tribunal, that the Appellant s / Petitioner s petition, in CP No. 486/2018, on the file of National Company Law Tribunal, Bengaluru Bench, on the date of filing of the petition, (on 06.09.2018), is, perfectly, maintainable , but he is precluded, from adverting, to the events , which took place, before he possessed / acquired, 10% shareholding in the Company . The onus , to establish Membership is on the Petitioner, and it is up to him to prove, that he is a Member, of a Company, on the day of filing of petition. When he is not a Member of Company, he cannot allege Oppression , to invoke, Section 241 of the Companies Act, 2013, against the Company, as opined, by this Tribunal - There is no straight jacket cast iron formula , specified, to define the term , oppression and mismanagement . A single act may not be enough for the grant of relief of oppression , and continuous course, of oppressive code of conduct , on the part of the Majority Shareholder , is very much necessary. The onus of proof , in proving the affairs of the Company , were / are being, conducted in a manner prejudicial or oppressive to any Members , or against the public interest / or in any way, prejudicial , to the interest of the Company etc. and this Tribunal, ongoing through the impugned order dated 27.11.2019 passed by the NCLT, Bengaluru Bench in CP No. 486/BB/2018, comes to a consequent conclusion, that the Appellant / Petitioner has not established to the subjective satisfaction of this Tribunal , that affairs of the Company , are conducted, in any manner prejudicial or oppressive either to the Appellant, or other shareholders / stakeholders. The ultimate conclusion , arrived at by the NCLT, Bengaluru Bench, in dismissing the CP No. 486/BB/2018 through its order dated 27.11.2019, without costs is free from any legal flaws - Appeal dismissed.

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• 2023 (10) TMI 240
  Professional Misconduct - Acceptance of audit engagement without valid authorization and without complying with ethical requirements; and issuing an audit report in violation of the Act - Failure to comply with Standards on Auditing (SAs) - penalties and sanctions - HELD THAT:- Given the actions and omissions, it is established that CA Aabhas Tiwari did not comply with the stipulations in the Chartered Accountants Act, 1949 regarding the acceptance of the statutory audit engagement and showed gross negligence and lack of due diligence while accepting an invalid appointment as auditor. In addition to accepting a legally invalid appointment, the EP also did not ensure the audit quality. The EP was grossly negligent in performing his professional duties by not adhering to the requirements laid down by the relevant SAs. This has led to the issuance of an audit report not backed by valid audit evidence and the absence of quality in the audit work. Specifically, the following failures on the part of BP Aabhas Tiwari as contained under the Articles of Charges in the SCN are established. a) Failure to exercise due diligence and ascertain from the audited Company whether the requirements of Sections 139 of the Act in respect of such appointment had been duly complied with, as explained and proved in part C-1 above. (As per Section 22 and Clause 9 of Part I of the First Schedule to the CAs Act); b) Failure to exercise due diligence and being grossly negligent in the conduct of professional duties, because of the lapses and omissions as explained and proved in parts C-1 and C-11 above. (As per Section 22 and Clause 7 of Part I of the Second Schedule to the CAs Act); c) Failure to obtain sufficient information which is necessary for the expression of an opinion or its exceptions are sufficiently material to negate the expression of an opinion, because of the lapses and omissions as explained and proved in part C-11 above. (As per Section 22 and Clause 8 of Part I of the Second Schedule to the CAs Act); and d) Failure to invite attention to material departure from the generally accepted procedures of audit applicable to the circumstances of the audited Company, because the EP certified in the report that the audit was done as per SAs mandated under section 143 of the Act and committed the lapses and omissions as explained and proved in part C-11 above. (As per Section 22 and Clause 9 of Part I of the Second Schedule to the CAs Act). Penalties and Sanctions - HELD THAT:- Section 132(4) of the Companies Act, 2013 provides for penalties in a case where professional misconduct is proved. The law lays down a minimum punishment for such misconduct. Considering the fact that the EP has admitted his mistake regarding the acceptance of the engagement and that professional misconduct has been proved and considering the nature of violations and principles of proportionality and keeping in mind the deterrence, signalling value of the sanctions and time required for improvement in knowledge gaps, we, in the exercise of powers under Section 132(4)(c) of the Companies Act, 2013, proceed to order the following sanctions: i. Imposition of a monetary penalty of Rs. 100,000 (One Lakh) upon CA Aabhas Tiwari; ii. CA Aabhas Tiwari is debarred for six months from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate.

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• Insolvency & Bankruptcy

• 2023 (10) TMI 239
  Correctness of admitting section 7 application - allegation is that Section 7 application has been filed with the help of fabricated and manufactured documents as well as by suppression of material facts - HELD THAT:- It is trite law that under the IBC once a debt becomes due or payable, in law and in fact, and there is incidence of non-payment of the said debt in full or part thereof, CIRP may be triggered by the Financial Creditor as long as the amount in default is above the threshold limit. It is also well accepted that debt means the liability in respect of a claim and claim means a right to payment even if it is disputed. When financial debt is undisputedly established and default in payment is also crystal clear, it is opined that the Adjudicating Authority did not commit any error in admitting the Section 7 application. There are substance in the contention of Respondent No.1 that the IA was not only heard by the Adjudicating Authority but was heard before pronouncing the order in the main company petition. It is also borne out from the orders that both parties were present and had placed their respective contentions / arguments before the Adjudicating Authority in the matter of the IA. It is an undisputed fact that there was disbursal of funds by the Financial Creditor to the Corporate Debtor. Receipt of this amount by the Corporate Debtor has not been controverted by the Appellant. Neither has any claim been made that this entire sum was repaid by the Corporate Debtor. That being the case there arises no doubt in our mind that there was a debt on the part of the Corporate Debtor qua the Financial Creditor which remained unpaid. There is no infirmity in the findings of the Adjudicating Authority that the Financial Creditor having successfully proved the financial debt and default on the part of the Corporate Debtor, Section 7 application has been admitted. There are no error in the order impugned passed by the Adjudicating Authority admitting the Section 7 application - there is no merit in the Appeal - appeal dismissed.

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• 2023 (10) TMI 238
  Challenge to CIRP process after resolution plan was approved - seeking clarification from the Resolution professional as to whether the shareholding of Shubhkamana Buildtech Private Limited in two companies namely Rudra Buildwell Projects Private Limited and JSS Buildcon Private Limited has been taken into consideration while assessing the assets and liabilities of the Corporate Debtor? - HELD THAT:- The Information Memorandum must have been prepared in the CIRP and Form G was issued for Resolution Plan including details of the assets - It is opined that at this stage no relief can be granted on the prayer as made in the application. Appellant has prayed for providing a copy of the Resolution plan approved by the Adjudicating Authority - HELD THAT:- Suffice it to say that the Appellant was not part of the CIRP process. He himself submitted that in 2014 he resigned as Director. In so far as his submission that he is shareholder of the Corporate Debtor, Resolution Plan having been approved what are the rights of different stakeholders is subject matter of the plan. In the case of ASSOCIATION OF AGGRIEVED WORKMEN OF JET AIRWAYS (INDIA) LIMITED VERSUS JET AIRWAYS (INDIA) LTD., COMMITTEE OF CREDITORS LED BY STATE BANK OF INDIA, SHRI ASHISH CHHAWCHHARIA, THE CONSORTIUM OF MR. MURARI LAL JALAN MR. FLORIAN FRITSCH [ 2022 (2) TMI 17 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] , this Tribunal in held that after approval of the plan they were entitled to access the Resolution Plan and Resolution Professional was directed to provide relevant portion of the Resolution Plan which was relevant for the workmen. The said judgment cannot come to the aid of the Appellant in the present case who was not stakeholder in the CIRP process. The entire CIRP process being over where Resolution Plan has been approved in 2022, at this stage, any direction on the prayers made by the Appellant in the application are uncalled for and unnecessary - the Adjudicating Authority did not commit any error in rejecting the application filed by the Appellant - there is no merit in the Appeal - appeal dismissed.

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• 2023 (10) TMI 237
  Maintainability of application - initiation of CIRP - pre-existing dispute or not - whether the Corporate Debtor created a moonshine defence on frivolous grounds or there were genuine pre-existing disputes which escaped the attention of the Adjudicating Authority while passing the impugned order? - HELD THAT:- From the material facts available on record and in particular the email dated 15.06.2018, cognizance taken that it has been categorically admitted by the Corporate Debtor that this cyclical business arrangement was not supported by any written document. It is also noticed that the first reference to a cyclical business arrangement was admittedly made by the Corporate Debtor in their email sent to the Operational Creditor on 15.06.2018. It is also an undisputed fact that the contents of this email of 15.06.2018 was specifically denied by the Operational Creditor on 21.06.2018 and 09.07.2018. Both the above emails bear ample testimony to the fact that the Operational Creditor had denied any cyclical business arrangement having been agreed between them at any stage. The present facts on record clearly show that the Operational Creditor supplied and delivered raw material to the Corporate Debtor and raised corresponding invoices. No dispute has been raised by the Corporate Debtor with respect to quantity and quality of goods received by them. Corporate Debtor admittedly had made several part-payments against invoices from 01.03.2017 till 28.02.2018 - The Corporate Debtor has failed to produce any proof to show that it had made full and final payments to the Operational Creditor. The existence of debt due and payable by the Corporate Debtor has also not been controverted by the Corporate Debtor. No material has been placed on record by the Corporate Debtor to show that they had categorically rejected the outstanding dues claimed by the Operational Creditor prior to issue of demand notice. From a plain reading of the emails of the Corporate Debtor at pages 147-152 of AA, there arises no doubt in our minds that the Corporate Debtor had acknowledged that there was debt due and payable to the Operational Creditors - While admitting that the civil suit was filed subsequent to the issue of notice under Section 8 of IBC, it has been contended that there is no need in every case for a civil suit or an arbitration to be pending before Section 8 notice and that a dispute as understood by the IBC is not limited to a pending suit or an arbitration but includes a real dispute as to payment between the parties. The Adjudicating Authority in the present case has carefully considered the reply and submissions made by the Corporate Debtor and has correctly come to the conclusion that there is no ground to establish any real and substantial pre-existing dispute - there are no convincing reasons to be persuaded that there was any genuine pre-existing dispute. The Adjudicating Authority did not commit any mistake in admitting the Section 9 application of the Operational Creditor - impugned order does not warrant any interference - Appeal dismissed.

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• 2023 (10) TMI 236
  Approval of Resolution Plan - Dues of Income Tax liability - Appellant challenged the order contends that the Resolution Applicant has wrongly stated that the Income Tax Department did not file any claim pertaining to operational debt - HELD THAT:- The question of approval of Resolution Plan was remitted to the Adjudicating Authority for fresh consideration. The Adjudicating Authority while hearing the parties afresh on the Resolution Plan permitted Income Tax Department and other Objectors to raise their objections and has considered the said objections. The Hon ble Supreme Court specifically in the Jaypee Kensington judgment [ 2021 (3) TMI 1143 - SUPREME COURT] has not dealt with the claim of the Income Tax Department nor observed that claim of the Income Tax Department stands extinguished. There is one more reason to reject the submission of learned counsel for Respondent No.1 that claim of the Income Tax Department stands extinguished by judgment of Jaypee Kensington. In the impugned order, Para 131 onwards, the Adjudicating Authority has dealt with reliefs and concessions under heading X. Reliefs and Concessions . Para 132 expressly dealt with obligation of the Corporate Debtor vis- -vis Income Tax Department. The Adjudicating Authority held that the Adjudicating Authority is not inclined to grant such a blanket relief - It is made clear that reliefs from Income Tax liabilities have not been granted as prayed by the Successful Resolution Applicant. The claim which was submitted in the proceeding and the Successful Resolution Applicant has very well dealt with claim submitted by the Income Tax Department of Rs.3334.29 Crores. Even if the claim for the AY 2012-13 of Income Tax Department cannot be said to be extinguished, Appellant being an Operational Creditor, the liquidation value of the Income Tax Department is NIL. The payment of Rs.10 Lakhs cannot be said to be violative of provisions of Section 30(2)(e). Now coming to the question of relief which can be claimed by the Appellant in the present Appeal. Suffice it to say that Appellants claim for the AY 2012-13 cannot be said to be non-existent, as is the stand taken by the IRP. However, after admitting the aforesaid claim for the AY 2012-13 for total amount of Rs.1157.07 Crores, as claimed by the Appellant, Income Tax Department who has filed claim as Operational Creditor was entitle for amount not less than the amount to be paid in the event of liquidation as per Section 53. At the instance of the Appellant Income Tax Department, impugned order passed by the Adjudicating Authority need no interference - Appeal disposed off.

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• 2023 (10) TMI 235
  Rejection of Resolution Plan - validity of the plan - resolution plan already approved by 100% majority of CoC and also approved by Adjudicating Authority - it is the contention of CRP that the RP treated them unfairly and unjustly by not entertaining their resolution plan. HELD THAT:- Even after the Adjudicating Authority had allowed consideration of their plan by the RP, the RP had managed to persuade the CoC to not consider the resolution plan on its own merits by raising hyper-technical objections. Thus, the RP failed to discharge the duties as mandated by law to ensure the revival of the corporate debtor by not adopting a fair and transparent process. Furthermore, CRP has alleged that the RP had endorsed the resolution plan of Vama though it was not meeting the requirements under applicable law. From the facts of the case there are no doubt in mind that the CRP did not submit their EOI on time either in the first or second round of Form G. However as and when it was received the RP had apprised the CoC. Besides being non-serious and casual about complying with timelines stipulated in the IBC, even while submitting their EoI they had failed to adhere to mandatory requirements of RFRP. Even the EMD payment was made belatedly and that too for Rs. 2.25 crore as against requirement of Rs 2.5 crore. The CoC deliberated upon the matter and ultimately passed the resolution not to consider the non-compliant plan of CRP in the interests of the corporate debtor and this was communicated to CRP. There are no lapse or irregularity on the part of the RP or the CoC in not entertaining the belated and defective plan of CRP. The CoC has meticulously evaluated the matrix in approving the plan of Vama and the sole member of CoC having 100% voting share has already approved the plan in their commercial wisdom as contemplated under the law. That being the case, the Adjudicating Authority cannot substitute its views with the commercial wisdom of the CoC nor deal with the merits of Resolution Plan unless it is found it to be contrary to the express provisions of law and against the public interest. There is neither any material regularity nor contravention of any provisions of law by the CoC and the plan has been rightly approved by the Adjudicating Authority. The IBC provides for an initiation of timely resolution of the corporate debtor and in the instant case the resolution plan having already been approved by the CoC and the Adjudicating Authority and implemented by the SRA, it cannot now be open to interference on an appeal preferred by an unsuccessful resolution applicant. It is equally significant to note that following the rejection of the plan of CRP by the CoC, CRP accepted the EMD refund and did not approach the Adjudicating Authority objecting to the resolution plan. It is, therefore, clear that CRP did not challenge the resolution plan before the Adjudicating Authority at the right point of time and raking up the matter belatedly - no case has made by CRP to establish any procedural or material irregularity committed by the RP/CoC in rejecting their EoI and that the challenges raised by the CRP clearly fall within the domain of commercial wisdom of the CoC which is non-justiceable. Nor has CRP been able to establish any contravention of law by the Adjudicating Authority in approving the resolution plan of Vama. Tenability of the contentions raised by UTGST and AC-CGST that rejection of their claims by the RP and CoC was not in consonance with the requirements of law - HELD THAT:- There has been no dereliction of duty on the part of the RP in rejecting the belated claims of UTGST and AC-CGST - there are no error or irregularity on the part of RP to have rejected the belated claims of UTGST and AC-CGST. Furthermore, the Adjudicating Authority in the first impugned order has taken note that the resolution plan submitted by the SRA Vama has taken into account the interest of government authorities and provided for appropriate treatment of admitted government dues. The Resolution Plan submitted by the Vama has dealt with the claims of Operational Creditors to the extent of Rs. 10 lakhs besides earmarking an additional sum of Rs. 25 lakhs for all the Government Department claims and undertaken to pay all the PF dues at actuals based on the outcome of an ongoing legal case at Delhi High Court with respect thereto. Thus, the approval of resolution plan of SRA-Vama by Adjudicating Authority, which was approved by the CoC with 100% vote share, does not suffer from any material or procedural infirmities. There are no illegality in either the first or second impugned order of the Adjudicating Authority which may warrant any interference in the exercise of appellate jurisdiction - there are no merit in any appeal - appeal dismissed.

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• 2023 (10) TMI 234
  Reduction of claim filed by appellant before the Adjudicating Authority by Resolution Professional (RP) - it is also claimed that when list of creditors were published in the same list the RP transferred the claim from the category of admitted claim to the claim under review - HELD THAT:- Since learned Adjudicating Authority in its impugned order has noticed that MOUs which were the basis for claim appears as forged documents, there is no reason to place reliance on such MOUs. Moreover, on record there is nothing to show as to whether for rendering services of liaisoning any agreement was entered in between the appellant or CD. It is unbelievable that the appellant is claiming for more than Rs.4 crores as rendering services of liaisoning to the CD still on record there is no chit of paper as to on what terms and conditions the appellant was rendering liaison services to the CD or its unit. Moreover, once the Adjudicating Authority has noticed that MOUs which were brought on record before the NCLT by the appellant were forged one, in that event the whole claim of the appellant was required to be rejected and has rightly been rejected. Considering the order impugned passed by the learned Adjudicating Authority wherein the MOUs placed on record by the appellant before the Adjudicating Authority were treated as if they were forged one, in normal course it was required on the part of the Adjudicating Authority to direct for conducting enquiry/investigation while exercising powers under Section 340 of CrPC - It is opined that if any party brings on record any forged documents for getting unlawful benefit on the judicial side it would be necessary for the concerned Court to exercise its jurisdiction for examining the entire issue by entrusting same to investigating agency. In any event such act of either party may not get any lenient approach by the concerned Court. While approving the impugned order passed by the learned Adjudicating Authority,it is deemed appropriate to remit back the matter to the Adjudicating Authority with request to exercise its jurisdiction under Section 340 of Cr PC in respect of alleged MOUs, regarding which observation has been given by the Adjudicating Authority as if those documents appeared to be fraudulent one. Appeal dismissed.

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• Service Tax

• 2023 (10) TMI 233
  Seeking extension of time period for payment of dues under SVLDR Scheme - HELD THAT:- What is evident is that the petitioner was under a misconceived belief that by virtue of extension of limitation periods by virtue of the orders of the Hon ble Supreme Court, the same benefit would be available to the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (the Sabka Vishwas Scheme). The declarations were filed in respect of Service Tax liability declared in the periodical ST-3 returns but not paid and therefore they were declarations filed under the category of arrears. The last date for payment of the estimated dues for settlement of the case was 30.06.2020 and the amounts were not paid until such date - As per Rule 7 the amount had to be credited in the account on or before 30.06.2020. The petitioner made the first claim of pre-deposit only by a letter dated 7.06.2021 after almost one year of the last date for making payment under the scheme which was clearly beyond the outer limit of the operation of the scheme. In the case of M/S Yashi Constructions vs. Union Of India [ 2022 (3) TMI 110 - SC ORDER] the Supreme Court held that the High Court has rightly refused to grant relief to the petitioner for extension of the period to make the deposit under the Scheme. It is a settled proposition of law that a person, who wants to avail the benefit of a particular Scheme has to abide by the terms and conditions of the Scheme scrupulously. If the time is extended not provided under the Scheme, it will tantamount to modifying the Scheme which is the the prerogative of the Government. Thus, if the case of the petitioner is accepted, then it would tantamount to modifying the scheme which cannot be done. Petition dismissed.

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• 2023 (10) TMI 232
  Validity of SCN - Vague SCN or not - Non-issuance of Form SVLDRS-3 - failure to pay the arrears under the scheme - HELD THAT:- The impugned Show Cause Notice cannot be challenged merely on the ground that it has not specified the period. The petitioner is aware of the amount of tax that was not paid by the petitioner. The petitioner has been issued with the letter dated 17.12.2018. That apart the petitioner has admitted the tax liability under the SVLDRS Scheme 2019, but has failed to pay the amount. There is no merits in the present Writ Petition and the Writ Petition is liable to be dismissed - Petition dismissed.

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• 2023 (10) TMI 231
  Levy of Service Tax - construction of residential complex services - forming a layout consisting of plots for 74 individual houses, entering into a tripartite agreement involving itself, owners of the land and the customers/buyers - sale deeds were executed for selling sites/plots with individual buyers only - extended period of limitation - HELD THAT:- Revenue has not disputed the provision of construction service in terms of contract between the parties and the said activity was carried out in a composite manner and hence, there is no possibility to sustain demand up to 01.06.2007 on the above contract. For the subsequent period i.e., post 01.06.2007, in view of the very fact that the demand has been worked out after allowing abatement, no Service Tax could be demanded under construction of complex services simpliciter. In the light of the decision of Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ] which has followed by the co-ordinate Hyderabad Bench of the CESTAT in the case of COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, VISAKHAPATNAM - I VERSUS M/S PRAGATI EDIFICE PVT LTD (VICE-VERSA) [ 2019 (9) TMI 792 - CESTAT HYDERABAD ] where it was held that no Service Tax as confirmed in the impugned order is justified. The demand confirmed in the impugned order cannot sustain - Appeal allowed.

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• 2023 (10) TMI 230
  Levy of Service Tax - collection of fees in discharge of sovereign functions - time limitation - penalty - HELD THAT:- As per the portal of Ministry of Commerce, it is seen that the appellant is an autonomous body, and its role is to ensure that products notified under the Export (Quality Control and Inspection) Act 1963 meet the requirements of the importing countries in respect of their quality and safety. In order to understand whether the appellant is discharging sovereign function, it is important to understand the nature of the appellant. It is accepted that the appellant is a body created under Section 7 of Export (Quality Control and Inspection) Act, 1963. The Export Inspection Agency is under the administrative and technical control of the Export Inspection Council. The appellant is the certifying authority for different food products which are to be exported to other countries as per the Free Trade Agreements executed between India and other nations. The appellant collects a fee for the purpose of examination, quality control or inspection - Though the appellant s function is essential for inspection of export goods, but the usage of the term may in Section 3 of the Export (Quality Control and Inspection) Act, 1963, for the establishment of the Export Inspection Council, thus making it NOT a mandatory statutory duty activity of the Government. Consequently, it cannot be said that the appellant is discharging mandatory/statutory obligation. The contention of the appellant that the functions of Technical Inspection and Certification services rendered by them is a statutory function, cannot be accepted - As this issue was dealt in great detail by the Supreme Court in its decision in KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ALWAR [ 2022 (2) TMI 1113 - SUPREME COURT] there cannot be any other varying interpretation taken subsequent to this judgment. Accordingly, the appellant is providing service any undertakes Technical, Inspection and Certification service and the same cannot take the garb of sovereign/statutory function. Collection of fee as mandated by the Central Government - HELD THAT:- In the instant case, the findings in the impugned order and the arguments of the learned Authorised Representative that as the money is not deposited in the Government Treasury, and is available with the appellant is agreed upon. The same is the consideration received by the appellant for providing the Consultancy Service which admittedly is not transferred to the Government treasury. Hence this money cannot be equated with fee collected for discharging sovereign function. Time Limitation - HELD THAT:- The appellant is an autonomous body though under the Government of India but providing the services of technical inspection and certification against consideration. Therefore, they were liable to tax, and this has been made quite clear in the said notification, which was issued in July, 2009. Consequently, the claim of the appellant that there was confusion with the regard to the applicability of service tax on test charges till the issuance of the clarification dated 19/03/2011 cannot be accepted. It is brought on record that the appellant was apprised about the service tax liability on the impugned services through an office memorandum dated 19.03.2011. However, despite receiving the clarification, the appellant failed to get themselves registered and deposit their service tax liability to the government exchequer - this establishes their intention to avoid payment of duty. Penalty u/s 78 of FA - HELD THAT:- A plain reading of the provisions of Section 78 of the Finance Act, 1994, before the amendment makes it clear that the quantum of penalty to be imposed shall be equal 100% of the amount of such service tax. It is noted that the present demand covers the period from 2008 09 to 2013 14 (up to November, 2013) Therefore, the penalty for the period prior to 08.04.2011 should have been equal to 100% of the service tax not paid for this period. In view of the legal position prior to 08.04.2011, it is held that the Commissioner had erred in extending the benefit of reduced penalty under Section 78(1) for the period 2009-09 to 07.04.2011. However, the benefit of reduced penalty under the amended provision of section 78(1) was available to the appellant post 08.04.2011. The demand and the interest confirmed in the impugned order upheld - the penalty u/s 78 for the period prior to 08.04.2011, shall be equal to the service tax not paid by the appellant. For the period post 08.04.2011, the benefit of the amended penal provision is extended to the appellant. Appeal of Revenue allowed.

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• 2023 (10) TMI 229
  Levy of service tax or not - Job-work - Sterilizing Services - eligibility for exemption Notification No.08/2005-ST - HELD THAT:- The very same activity on job work basis, in the case of appellant itself for the period prior to 01.07.2012 was considered by this Tribunal in UNIVERSAL MEDICAP LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA [ 2023 (6) TMI 788 - CESTAT AHMEDABAD] , wherein the Tribunal has extended the benefit of 08/2005-ST to the job work activity of the appellant for the period prior to 01.07.2012. In the present case the Learned Commissioner (Appeals) has extended the benefit of Notification 25/2012-ST for the period after 01.07.2012. However, for the previous period Notification 08/2005-ST was denied. Since, the issue relates to Notification 08/2005-ST has been considered in the aforesaid decision by this Tribunal, The issue is no longer res-integra. Hence, following the decision, the appellant is not liable to pay service Tax on the job work activity carried out by them. Therefore, the demand for the period prior to 01.07.2012 is also not sustainable. Appeal allowed.

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• 2023 (10) TMI 228
  Levy of service tax - Construction of Complex Services - developing and constructing Residential Complex at Zirakpur having more than twelve Residential units - applicability of clarification by CBEC vide Circular No. 108/2/2009-ST dt. 29-01-2009 - HELD THAT:- This issue is no more res-integra and has been considered by various benches of the Tribunal and the Tribunal has consistently held that an activity undertaken by a Real estate builder/developer is liable to tax w.e.f 01-07-2010 only with the insertion of Explanation under Section 65(105) (zzzh) to the Finance Act, 2010. It is pertinent to refer the decision of the Tribunal in the case of C.C.E C.S.T. -BANGALORE SERVICE TAX- I VERSUS KEERTHI ESTATES PVT. LTD. [ 2018 (10) TMI 840 - CESTAT BANGALORE] wherein the Tribunal has considered the identical issue as involved in the present case and has held we are of the considered view that prior to 1-7-2010 builders/developers are not liable to pay service tax for the Construction of Residential Complex Service and in the present case, the period involved is from 16-6-2005 to 31-1-2007. The Master Circular No. 96/7/2007-ST dated 23-08-2007 issued by CBEC also clarified this issue regarding the leviability of service tax on the Builders/Developers. The impugned order is not sustainable in law and therefore, the same is set-aside by allowing the appeal of the appellant - Appeal allowed.

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• 2023 (10) TMI 227
  Levy of service tax - service of Testing, Inspection and Certification Servicesproviding the service for the goods which were to be exported from India to other foreign buyers - Appellants claimed that the services provided by them amounted to export of services and hence they are not liable for Service Tax payment - penalties - HELD THAT:- It is seen that in case of SGS INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2011 (2) TMI 54 - CESTAT MUMBAI] , the Tribunal was dealing with the dispute which arose for the period 2003. In case of BA RESEARCH INDIA LIMITED, M/S. QUINTILES SPECTRAL (I) PVT. LIMITED VERSUS COMMISSIONER OF SERVICE TAX AHMEDABAD [ 2010 (2) TMI 230 - CESTAT, AHMEDABAD] also there is no mention of the amendment carried out with effect from 01/03/2008. This amendment has been brought in, in order to overcome the decisions of the Tribunal and High Court in the cited case law. Therefore, we are in agreement with the Learned AR that after 01/03/2008, the Appellant case does not survive on merits. However, as pointed out by the Learned Counsel, this matter had been under litigation before the Tribunal/High Court for quite some time and the Appellant may be said to have a genuine belief that they are not required to pay the Service Tax. Since the issue is that of interpretation, it is opined that the Appellant should not be fastened with the demand for the extended period. On account of limitation, the confirmed demand for the extended period set aside - The Adjudicating Authority to work out the details of the demand pertaining to the normal period which would be payable by the Appellant along with interest. Penalties - HELD THAT:- Considering the factual details and the interpretational difficulties, there are no justification in imposing penalties on the Appellant. Accordingly, all the penalties are set aside. Appeal disposed off.

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• 2023 (10) TMI 226
  Extended period of limitation - Commercial Training or Coaching Service - appellant are coaching classes or not - HELD THAT:- Prior to 2010, there was a confusion regarding the nature of institute which are covered under the definition of Commercial Training or Coaching Centre. In the instant case, the appellant happen to be a charitable trust and held a belief that they are not a Commercial Training or Coaching Centre and therefore, did not discharge the service tax. In these circumstances, invocation of extended period of limitation is not justified. The impugned order is, therefore, set aside and appeal is allowed on the ground of limitation.

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• 2023 (10) TMI 225
  Time Limitation - Levy of Service Tax - Business Auxiliary Service - commission income received from M/s Gopal Enterprise and Galaxy Enterprise - existence of mens rea or not - HELD THAT:- The appellants are essentially arguing the matter on the issue of limitation. It is noticed that the appellant had not declared the said income in their monthly returns. Even if the appellant believe that the said income was exempted from service tax, they should have declared the same as exempted income. It is noticed that in their pleadings, they have also argued that they have not paid the service tax due to financial Hardship. These facts clearly indicate that the appellant were fully aware about the taxability of the service and deliberately neither paid the tax nor declared the said income in the monthly returns. The appellant are fully aware of their liability and choose not be paid service tax on account of financial Hardship or otherwise. There are no merit in the appeal filed by the appellant, the same is dismissed.

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• Central Excise

• 2023 (10) TMI 224
  Valuation of excise duty - manufacture of Sorbitol Liquid Glucose - excess freight collected as compared to the actual freight paid to the transporters should be included in the assessable value or not - HELD THAT:- On the identical issue, in the same set of facts, in the appellant s own case, this Tribunal in KASHYAP SWEETNERS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VAPI AND JITENDRA PANDEY VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VAPI [ 2023 (7) TMI 1111 - CESTAT AHMEDABAD] held that excess amount of freight collected from the customers is profit on account of transportation and not part and parcel of the value of the goods and thereby not included in the assessable value. In view of the above decision in the appellant s own case only for the different period, there being identical issue involved in the present case, the issue is no longer res-integra accordingly, the demand and penalties are not sustainable. Appeal allowed.

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• 2023 (10) TMI 223
  Clandestine Removal - Availment of credit of countervailing duty paid by the respondents - inputs were actually not received by the respondents in their factories - the receipt and consumption of the same are wrongly shown in the manufacture of the final product, which was cleared on payment of duty - said imported inputs stand diverted by the respondents in the open market around Delhi - reliance placed in the third party evidences - Corroborative evidences or not - HELD THAT:- The Revenue could not bring any corroborative evidence that the disputed imported goods were diverted to any other place. It is not the Revenue s case that respondents production of final product is not proportionate to the receipt of the imported inputs. The Revenue has also not shown that if the respondents have not received the imported inputs, where the same have gone. In the absence of any evidence to show the disposal of such imported inputs to any other person, the denial of credit merely on the RTO check post reports and transporter records is not justified. In the present matter incorrect vehicles numbers were recorded on the transportation documents and on that basis revenue alleged that said vehicles are not transport vehicles / incapable of carrying the consignments. In this regard, merely because wrong vehicle number mentioned on the duty paying documents that itself does not prove that the goods have not been transported. It has been observed in various cases that it is common that the wrong vehicles number is mentioned in the documents due to clerical error or due to wrong presentation of vehicle number by the truck drivers. In the case of M/s. Steel Tubes of India Limited v. CCE, Indore [ 2008 (4) TMI 713 - CESTAT NEW DELHI] , it was held that merely because vehicle numbers mentioned in some of the invoices are not of transport vehicles, the same is not sufficient to deny the credit when there is evidence of receipt and utilization of inputs and no evidence of diversion is available. It is found that though the reports from the transport or commercial department check posts states that the goods did not cross the border posts, but for this reason, it cannot be concluded that the goods did not pass through the transit state - In the facts of the present case, Check Posts report cannot be sole basis for denial of Cenvat credit. The entire transactions were duly recorded in statutory records of the respondents - there are no reason or tangible evidence to say that inputs in question were not received by the respondents. In the whole matter department has relied upon third party records and statements. The Cenvat demand alleging fraudulent availment of Cenvat credit on strength of Bills of entry without receiving imported inputs cannot be sustainable solely based on statements of third party and their records. So long Shri Keshav Singh Tomar, Branch Manager of the transport TASH in his statement admitted that they had transported the goods from UP Border office for Respondents at Daman; the goods were received from ICD Tughlakabad under sealed containers through M/s D.V. Bhaskhi and M/s J.M. Baxi who were Customs House Agents - in the present case the reliance of third party documents /statements while conforming demand against present respondents are also observed to be unjustified and unreasonable. It is settled principle of law that in case, if the Revenue wants to rely upon the entries of the third party, the burden lies upon the Revenue Authority to prove the genuineness and authenticity of the said entry and to connect the said entry with the respondents, in case, if the respondents deny to have any connection with such entry. Therefore the charge of non receipt of non receipt of input is not maintainable only on the basis of third party records and data. It is necessary to check the evidentiary value of the third party evidence. The Cenvat demand is solely based upon the statement of third parties and the assumed interpretation of the same is not sustainable. The charge against the respondents are required to be arrived at on the basis of positive and tangible evidences including the evidences relating to procurement of raw-materials, conversion of the same to final products, clearances of the same and identification of the buyers and receipt of unaccounted cash etc. - The Revenue has miserably failed to produce corroborative evidence on records so as to substantiate the charges of non- receipts of imported goods and substitution of the same with kabadi scrap and availment of the wrong Cenvat Credit. Since the investigation has failed to adduce any corroborative evidences to establish clandestine removal of the goods and failed to discharge the onus to prove the allegations, the allegations are not sustainable - the allegation of clandestine removal of finished goods is not established - Reliance can be placed in COMMR. OF C. EX., COIMBATORE VERSUS SANGAMITRA COTTON MILLS (P) LTD. [ 2003 (11) TMI 146 - CESTAT, CHENNAI] and VAKHARIA TRADERS VERSUS COMMISSIONER OF CENTRAL EXCISE, SURAT-I [ 2004 (4) TMI 413 - CESTAT, MUMBAI] . The learned Commissioner as regard the disputed matter has very consciously considered the facts of the case, allegation of the Revenue and evidences on records and came to the conclusion that the allegation of clandestine removal of the goods and non receipt of inputs, on which credit was availed, are not established by the Revenue. Hence he rightly dropped the proceedings of the show cause notice. There is no infirmity in the order of the learned Commissioner and the same does not require any interference. Therefore the impugned order is upheld. Appeal of Revenue dismissed.

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• 2023 (10) TMI 222
  Bar on utilization of CENVAT credit - Liability to pay duty during the default period i.e. from 01.01.2012 to 31.03.2012 from cash without utilizing the cenvat credit - Rule 8(3A) of Central Excise Rules, 2002 - HELD THAT:- In case of Indsur Global Ltd. [ 2014 (12) TMI 585 - GUJARAT HIGH COURT ], the Hon ble Gujarat High Court held the provision of Rule 8(3A) as ultravirus. The consequential effect of the said judgment is that the assessee is allowed to pay the excise duty by utilizing the cenvat credit during the default period also. Following the said Hon ble High Court judgment, this Tribunal has passed various judgments in favour of the assessee. Considering this settled legal position which is in favour of the appellant, the impugned order is not sustainable - Appeal allowed.

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• 2023 (10) TMI 221
  Valuation of goods - manufacture of N-Methyl Pyrrolidone on Job-work basis - collection of certain amount towards Toll Charges or Conversion Charges, Trial Run Charges and Utility Charges from their principal M/s AACL - to be included in the manufacturing cost or not - HELD THAT:- There is no dispute that irrespective of any value of Job-work goods considering it as not a sale, the appellant have paid the excise duty on the same transaction value, at which the principal manufacturer has sold the goods to unrelated person - From the invoices, it can be seen that the Job-worker s invoice reference was given in the sale invoice of the principal manufacturer and it is observed that in both the invoices the assessable value is the same transaction value, at which the goods were sold by the principal manufacturer. From the Rule 10A(i), it is clear that in respect of Job-work goods, when the same is sold by the principal manufacturer, the transaction value of the said goods sold by the principal manufacturer shall be adopted by the Job-worker for payment of Excise Duty. In view of the clear provision for valuation of Job-work goods, as provided in the above Rule 10A(i), there is no reason to add any other element in the transaction value - the demand in the present case is completely illegal and incorrect and without support of any law. The impugned order set aside - appeal allowed.

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• Indian Laws

• 2023 (10) TMI 220
  Validity of assessment order passed in terms of Section 3 of the provisions of Water (Prevention and Control of Pollution) Cess Act, 1977 - no opportunity of hearing was granted - principles of natural justice - HELD THAT:- The assessment orders do not indicate any opportunity of hearing being granted to the petitioner. The assessment orders are also bad in law as the same does not record any reason whatsoever in determining the quantum of cess against the petitioner. In the Act and the provisions, although there is no specific provision for opportunity of hearing prior to passing of the assessment orders, it is fairly well settled that any order more so which is expropriatory in nature has to adhere to the principle of natural justice, even if not specifically provided as also explained by the Supreme Court in the case of M/S. DHARAMPAL SATYAPAL LTD. VERSUS DEPUTY COMMISSIONER OF CENTRAL EXCISE, GAUHATI OTHERS [ 2015 (5) TMI 500 - SUPREME COURT] . Thus on the face of the assessment orders, there is a violation of principle of natural justice. The submission of the counsel for the respondent that the appeal provided under Section 13 of the 1977 Act, in fact is a post decisional hearing cannot be accepted for the sole reason that Section 13 of the Act by the very word used in the statute is an appeal against an order of assessment and cannot be termed as post decisional hearing as is argued by the counsel for the respondent. The assessment orders have been passed in violation of principle of natural justice and are also an unreasoned order, cannot be sustained and thus on that limited ground the assessment orders as well as the appellate order are quashed - Petition disposed off.

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• 2023 (10) TMI 219
  Dishonour of Cheque - insufficient of funds - burden of proof lies on the petitioner but he failed to prove his case - rebuttal of presumption - HELD THAT:- The presumption under Section 139 of Negotiable Instruments Act is rebuttable presumption and if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. Further the burden was heavily upon the claimant to have showed that he had required funds for having advance money to the accused. In the case on hand, the accused admitted the signature found in the cheque and issuance of cheque but the contention of the petitioner is that he already repaid the amount but the said repayment was not proved by the petitioner. The issue in the case of Tedhi Singh v. Narayan Dass Mahant [ 2022 (3) TMI 797 - SUPREME COURT ] and John K. Abraham v. Simon C.Abraham and another [ 2014 (1) TMI 528 - SUPREME COURT ], are not applicable in the facts of the present case. On careful reading of the judgment, it is clear that once the accused admitted the issuance of cheque or signature found in the cheque, the presumption under Section 139 of Negotiable Instruments Act would operate and the burden was on the accused to disprove the cheque or existence of legally enforceable debt - in the case on hand also, the accused admitted the issuance of cheque, signature of cheque and thereby, he has to disprove the cheque and his liability but he failed to prove the same. Thereby, the aforesaid case law will squarely applicable to the present facts of the case. In this case, the oral and documentary evidences and witnesses clearly established the case of the complainant and the defence theory put forth by the accused was not proved and thereby, the trial Court as well as the appellate Court came to the fair conclusion and convicted the petitioner/accused for the offence under Section 138 of Negotiable Instruments Act. There is no infirmity found in the judgment of the Courts below and thereby this Court warrants no interference. The Criminal Revision Petition is dismissed.

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