TMI Tax Updates - e-Newsletter
November 10, 2022

Case Laws in this Newsletter:

GST Income Tax Insolvency & Bankruptcy PMLA Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. No GST on recoveries on account of Notice Pay, Bond Forfeiture, Canteen Charges, ID Cards replacement Liquidated Damages etc.

   By: Bimal jain

2. TOBACCO AND TOBACCO PRODUCTS ARE LIABLE TO BOTH GST, EXCISE DUTY AND NCCD

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Journey Towards an Inclusive and Responsible Microfinance Sector (Keynote address delivered by Shri M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India - November 04, 2022 - at the launch of MFIN’s India Microfinance Review, Mumbai)

2. Indian Trade Service (ITS) officers conference - “Manthan 1.0” held Kevadia

Notifications

DGFT

1. 43/2015-2020 - dated 9-11-2022 - FTP

Amendments under the Foreign Trade Policy in sync with RBI A.P.(DIR Series) Circular No.10 dated 11th July 2022

GST - States

2. 17/2022 – State Tax - dated 22-8-2022 - Chhattisgarh SGST

Seeks to amend Notification No. 13/2020–State Tax, dated the 31st March, 2020

3. 16/2022-State Tax - dated 16-8-2022 - Chhattisgarh SGST

Seeks to amend Notification No. 14/2019-State Tax, dated the 11th March, 2019

4. 15/2022-State Tax - dated 16-8-2022 - Chhattisgarh SGST

Seeks to amend Notification No. 10/2019—State Tax, 11th March 2019

Circulars / Instructions / Orders

IBC

1. IBBI/IP/55/2022 - dated 9-11-2022

Review of Regulations

DGFT

2. 35/2015-20 - dated 9-11-2022

Amendments in Para 5.11 of the HBP in sync with RBI A.P.(DIR Series) Circular No.10 dated 11th July 2022

Highlights / Catch Notes

GST

• Petitioner's GST registration cancellation invalid due to lack of notice; registration to be restored u/r 25.

  Case-Laws - HC : Cancellation of GST registration of petitioner - Concededly, no notice was issued to the petitioner requiring, as mandated by Rule 25, his presence at the time of verification - the impugned order cancelling the petitioner’s GST registration cannot be sustained. - GST registration shall stand restored. - HC
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Income Tax

• Supreme Court Rules Foreign Travel Ineligible for LTC Tax Exemption u/s 10(5) of Income Tax Act.

  Case-Laws - SC : TDS u/s 192 - LTC to an employee - exemption u/s 10(5) - foreign travel - A foreign travel also frustrates the basic purpose of LTC. The basic objective of the LTC scheme was to familiarise a civil servant or a Government employee to gain some perspective of Indian culture by traveling in this vast country. It is for this reason that the 6th Pay Commission rejected the demand of paying cash compensation in lieu of LTC and also rejected the demand of foreign travel. - Demand confirmed - SC
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• ITAT Erred by Remanding Agricultural Land Tax Case; Must Reassess Distance from Municipal Limits Per High Court.

  Case-Laws - HC : Nature of land sold - distance from the limits of municipality - agricultural land - ITAT manifestly erred in remanding the matter to the Assessing Authority instead of recording the finding with regard to the distance of the land itself, which is contrary to the directions of the Hon’ble High Court - Matter restored before ITAT - HC
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• Non-resident payments disallowed u/s 40(a)(i) for not deducting TDS on Fees for Technical Services.

  Case-Laws - AT : TDS u/s 195 - payment made to non-resident marketing partner - the services rendered by marketing partner is in the nature of FTS, the assessee ought to have deducted TDS in terms of Sec.195 - Since, the assessee has failed to deduct TDS when payment made to non-resident, the AO has rightly disallowed said payment u/s.40(a)(i) of the Act. - AT
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• Section 206C enforces TCS on scrap sales; failure to submit Form 27C results in tax liability with interest.

  Case-Laws - AT : TCS on Scrap - section 206C - there is no requirement that the goods to be eligible for scrap should be produced/manufacture by the seller itself. - In present assessee’s case the assessee has not filed prescribed Form 27C thereby exempting the seller to collect tax under Section 206C - CIT(A) has rightly made tax liability including interest u/s 206C - AT
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• Income Tax Act: Cash Loan Penalties u/ss 271D & 271E Not Applicable When Assessed Individually per Person.

  Case-Laws - AT : Penalty u/s 271D and penalty u/s. 271E - Default u/s 269SS and u/s 269T - Loan/deposits taken/paid by the assessee in cash is more than Rs.20,000/- - after evaluating the provisions of law, aggregate of loan is to be seen personwise and not aggregate loan taken from all the persons in the whole year. Therefore, under these present facts and circumstances of the case, the penalty is not attracted in the present case- AT
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• Section 56(2)(vii)(b) Dispute: Leasehold Rights Not Classified as Immovable Property; Stamp Value vs. Sales Consideration Issue.

  Case-Laws - AT : Addition invoking provisions u/s 56(2)(vii)(b) - assessee only received lease hold right for 99 years - difference of stamp value minus sales consideration - The definition of property does not refer to rights or transactions which may enable use or enjoyment of property and it appears that having regards to description context and objective, acquisition of such rights cannot be equated with immovable property. - AT
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• Assessing Officer Ordered to Delete Addition Due to Unexplained Income from Penny Stock Transactions; Gain of Rs. 1,655 Not Accommodation Entry.

  Case-Laws - AT : Trading in shares - allegation of transactions in penny stock scrip - unexplained income - Assessee has not paid the purchase cost nor received the entire sale consideration rather received the gain of Rs.1,655/- which cannot be considered as accommodation entry of gain of penny stock transaction. Therefore, direct the Assessing Officer to delete the entire addition. - AT
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• Court Questions Validity of Consultant Fees Due to Lack of Documentation; Assessee Fails to Justify Payments.

  Case-Laws - AT : Disallowance of professional fee paid - genuineness of expenses - Even a layman will not convince that after paying crores of rupees over the period to consultant assessee is not in possession of any document in the form of report/advice/road map/blueprint about the project, company, HR matters, Legal matters, financial matters, Engineering Services etc. Assessee’s counsel vehemently argued the matter but despite of bench’s specific reference about the reports of deliverables his reply was not satisfactory. - AT
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• Appellate authority wrongly dismisses Section 154 rectification application despite admitting error in capital gain computation.

  Case-Laws - AT : Rectification u/s 154 - Capital gain computation - Having admitted to this mistake in his order, there was no other recourse available in law to the Ld.CIT(A) other than allowing assessee’s rectification application. His dismissal of the rectification application on the ground that it would change the CIT(A)’s order is in blatant disregard and against all settled principles of law. If a mistake is admitted to have occurred in an order, the same needs to be rectified. There are no two ways about it. - AT
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• CIT Uses Section 263 to Revise AO's Oversight on Cash Deposits, Trust Loans, and Related Party Advances.

  Case-Laws - AT : Revision u/s 263 by CIT - AO has not verified the cash deposited by the partners and also loan taken from the Trust and cash embezzlement and interest free advances to related persons. All these things are not been examined by the AO. DR has rightly pointed out that ld. Pr. CIT has rightly exercised his revisionary powers u/s 263 of the Act - AT
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• Referral Fees Paid Abroad Not Subject to TDS u/s 195; No Services Rendered in India by Companies Involved.

  Case-Laws - AT : TDS u/s 195 - nature of 'referral fee' paid outside India - No services were rendered in India by these two companies for facilitating the investment in the assessee company by these five companies. Merely reference of the 'consultancy charges' in the ledger of the assessee cannot be a ground to treat the charges paid by the assessee as consultancy charges - AT
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Indian Laws

• Cheque Dishonor Case: Money Lending Act Inapplicable as Loan to Friend Was Interest-Free and Non-Commercial.

  Case-Laws - HC : Dishonor of Cheque - Application of Money Lending Act - The complainant in the cross examination though admits that he is engaged in money lending business and he is not a registered money lender, as far as this transaction is concerned, even in his statutory notice, the complainant has categorically stated that the petitioner herein being a long time friend has lend money for free of interest. That being the case, when the transaction is not for interest, the Money Lending Act have no application. - HC
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• Premature Complaints u/s 138 of Negotiable Instruments Act Can Be Quashed by Court Due to Invalid Timing.

  Case-Laws - HC : Dishonor of Cheque - pre-mature complaint - time limit for filing of complaint from the date of cause of action - The complaint under Section 138 of Negotiable Instruments Act filed before the expiry of 15 days of service of notice could not be treated as a complaint in the eye of the law and criminal proceedings initiated on such complaint are liable to be quashed. - HC
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IBC

• Balancing Justice: Ensuring Fair Hearings for Restoration Applications to Avoid Premature Dismissals and Uphold Natural Justice Principles.

  Case-Laws - AT : Seeking recall of order - It must be borne in mind that, if the Restoration Application preferred by the Party / Person is dismissed, at the threshold, then, there is a possibility, that even the meritorious case / matter may be thrown out, at the nascent stage. However, if the Restoration Application is Allowed by the Adjudicating Authority / Tribunal by resorting a liberal approach, then, there is every likelihood that the Main Matter shall be taken up for Hearing and the Case / Cause is decided on Merits, of course, after providing an adequate Opportunity of Hearing and also by observing the Principles of Natural Justice. - AT
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Case Laws:

• GST

• 2022 (11) TMI 428
  Cancellation of registration of petitioner - provisions of Rule 25 of the Central Goods and Services Tax Rules, 2017 were adhered or not - HELD THAT:- Rule 25 provides that where a proper officer is satisfied that physical verification of the place of business of a person is required due to failure of Aadhaar authentication, before the grant of registration or due to any other reason after the grant of registration, such physical verification of the place of business, if deemed necessary, is to be carried out in the presence of the said person - As is evident, in the instant case, the concerned officer deemed it necessary to carry out physical verification of the petitioner s place of business before proceeding to pass the impugned order, which resulted in, as noticed above, in the cancellation of the petitioner s registration. Concededly, no notice was issued to the petitioner requiring, as mandated by Rule 25, his presence at the time of verification - the impugned order cancelling the petitioner s GST registration cannot be sustained. The petitioner s GST registration shall stand restored - petition allowed.

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• 2022 (11) TMI 427
  Seeking release of goods - goods are diminishing nature - petitioner prayed for release of the goods on the ground that since long the goods are under confiscation and could be released on appropriate conditions - Section 129 and Section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The respondents shall release the goods and conveyance of the petitioner, confiscated and detained pursuant to the aforementioned order dated 21.03.2022 passed in FORM GST MOV-11, subject to the following conditions - (i) The petitioner deposits the amount of tax of Rs. 12,02,785/-. (ii) The petitioner deposits the amount of penalty to the tune of Rs. 12,02,785/-. (iii) The petitioner furnishes bond to the tune of Rs. 66,82,138/- towards the amount of fine. Upon compliance of the above conditions by the petitioner, the goods and conveyance of the petitioner be released by the authorities.

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• Income Tax

• 2022 (11) TMI 426
  TDS u/s 192 - LTC to an employee - salary - exemption u/s 10(5) - foreign travel - Default for not deducting tax at source while releasing payments to its employees as Leave Travel Concession (LTC) - HELD THAT:- The provisions of law discussed prescribe that the air fare between the two points, within India will be given and the LTC which will be given will be of the shortest route between these two places, which have to be within India. A conjoint reading of the provisions discussed herein with the facts of this case cannot sustain the argument of the appellant that the travel of its employees was within India and no payments were made for any foreign leg involved. We do not want to get into the role of the travel agencies and the present dynamics of air fare, but it is difficult for us to accept that a person will avail foreign tour without paying any price for it. We leave it at that. It can be seen from the records that many of the employees of the appellants had undertaken travel to Port Blair via Malaysia, Singapore or Port Blair via Bangkok, Malaysia or Rameswaram via Mauritius or Madurai via Dubai, Thailand and Port Blair via Europe etc. It is very difficult to appreciate as to how the appellant who is the assessee-employer could have failed to take into account this aspect. This was the elephant in the room. The contention of the Appellant that there is no specific bar under Section 10(5) for a foreign travel and therefore a foreign journey can be availed as long as the starting and destination points remain within India is also without merits. LTC is for travel within India, from one place in India to another place in India. There should be no ambiguity on this. Payments made to these employees was of the shortest route of their actual travel cannot be accepted either - As already been clarified above, that in view of the provisions of the Act, the moment employees undertake travel with a foreign leg, it is not a travel within India and hence not covered under the provisions of Section 10(5) of the Act. A foreign travel also frustrates the basic purpose of LTC. The basic objective of the LTC scheme was to familiarise a civil servant or a Government employee to gain some perspective of Indian culture by traveling in this vast country. It is for this reason that the 6th Pay Commission rejected the demand of paying cash compensation in lieu of LTC and also rejected the demand of foreign travel. Order passed by the CIT(A) has rightly held that the obligation of deducting tax is distinct from payment of tax. The appellant cannot claim ignorance about the travel plans of its employees as during settlement of LTC Bills the complete facts are available before the assessee about the details of their employees travels. Therefore, it cannot be a case of bonafide mistake, as all the relevant facts were before the Assessee employer and he was therefore fully in a position to calculate the estimated income of its employees. The contention of Shri K.V. Vishwanathan, senior advocate that there may be a bonafide mistake by the assessee-employer in calculating the estimated income cannot be accepted since all the relevant documents and material were before the assessee- employer at the relevant time and the assessee employer therefore ought to have applied his mind and deducted tax at source as it was his statutory duty, u/s 192(1).

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• 2022 (11) TMI 425
  Nature of land sold - agricultural land - distance from the limits of municipality i.e. Jaipur to the area in which the land in question is situated being contrary to the directions of this Hon ble Court - whether the ITAT was justified in remanding the matter to the assessing officer for measuring/re-verifying the distance of the land from the outskirts of the Jaipur when the directions of the High Court were strictly to the ITAT itself to do the needful and if necessary, to take the help of the revenue authority? - HELD THAT:- Directions specifically remitted the matter to the Tribunal only for the purposes of verifying the distance. The submission is that the verification of the distance was to be done by the Tribunal itself and it could not have relegated the matter to the assessing authority. Tribunal has remanded the matter to the assessing authority for the simple reason that the verification of the distance required proper and supporting evidence, which was not provided to it. If that be so, the Tribunal could have requested the revenue authority as directed by the High Court to make the measurement and to submit the report and acting upon such report could have recorded its finding rather than remanding the matter to the assessing officer. As pertinent to note that the ITAT is the last fact finding authority and its power in recording finding of fact is akin to that of AO/CIT (Appeals). Tribunal itself could have recorded the finding with regard to the distance of the land from the outskirts of the Jaipur City itself rather than, remanding the matter the Assessing Authority or in the alternative may have requested the Assessing Authority or the Revenue Authority to make the measurements and to submit a report for the purposes of recording finding thereof. When there is a direction issued by the High Court, the Tribunal is expected to follow the same in pith and substance. The direction of the High Court in remanding the matter to the Tribunal was to verify the distance of the land from the outskirts of the City and for that purpose, if necessary to take the help of the Revenue Authority. ITAT without taking help of the Revenue Authority simply remanded the matter to the Assessing Authority for the purposes of recording finding with regard to the distance of the land in question from the outskirts of the city of Jaipur. This is completely in derogation of the spirit of the order of the High Court. We are of the opinion that the ITAT manifestly erred in remanding the matter to the Assessing Authority instead of recording the finding with regard to the distance of the land itself, which is contrary to the directions of the Hon ble High Court. Substantial questions of law are answered in favour of the Assessee.

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• 2022 (11) TMI 424
  Revision u/s 263 by CIT - As per CIT, AO has not examined properly in respect of unsecured loans received from M/s. Rams Estate for the assessment year 2016-17 - HELD THAT:- In response to the show cause notice dated 12.03.2021, assessee filed a letter dated 19.03.2021 by stating that all the details were filed before the AO and after examining the details, AO completed the assessment order u/s 143(3) and therefore, the assessment order is neither erroneous nor prejudicial to the interest of Revenue. In this case, PCIT issued show-cause notice to the assessee on the ground that the Assessing Officer has not examined properly in respect of unsecured loans received from M/s. Rams Estate for the assessment year 2016-17. DR has filed a copy of the return of income for the assessment year 2016-17 in respect of M/s. Rams Estate, wherein, under Col. 3 (b) Loans and advances, no details were mentioned. Therefore, considering the return of income of M/s. Rams Estate, we are of the considered opinion that the AO has not examined the issue properly and the assessment order is erroneous and prejudicial to the interest of the Revenue. PCIT has rightly exercised his power conferred u/s 263 and directed the AO to pass fresh assessment order in accordance with law after verification of the records. We find no reason to interfere with the order passed by the PCIT. Appeal filed by the assessee is dismissed.

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• 2022 (11) TMI 423
  Deduction u/s 80IC - assessee company has failed to e-file the return of income or manual filing within the due date specified as per section 139(1) - HELD THAT:- By following the decision of the Tribunal in assessee s own case for the assessment year 2011-12 [ 2014 (8) TMI 674 - ITAT CHENNAI] AO has made disallowance of deduction claimed under section 80IC which was rightly confirmed by the ld. CIT(A). Thus, we find no infirmity in the order passed by the ld. CIT(A). Accordingly, the ground raised by the assessee is dismissed.

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• 2022 (11) TMI 422
  Disallowance u/s. 14A r.w.r 8D - assessee has made investment in shares and claimed expenditure on account of interest payment on loans - Book Profit u/s. 115JB estimation - HELD THAT:- Explanation to Section 14A by the Finance Act, 2022 is operative only from the Assessment Year 2022-23 onwards and not applicable for the earlier Assessment Years and therefore the argument of the Ld. D.R. is hereby rejected. The decision relied by Ld. A.R. in assessee s own case in [ 2022 (6) TMI 1325 - ITAT AHMEDABAD] for the Assessment Year 2014-15 is clearly distinguishable, wherein dividend income has been earned by the assessee during the financial year and the disallowance is restricted to that amount. Therefore the decision is not applicable to the present case, since there is no dividend income earned during this financial year. We have no hesitation in confirming the order passed by the CIT(A) and deleting the addition made u/s. 14A of the Act both on normal computation as well as in the book profits u/s. 115JB of the Act. Thus the Grounds raised by the Revenue has no merits and the same are dismissed. Appeal filed by the Revenue is dismissed.

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• 2022 (11) TMI 421
  Denying deduction u/s 80P[2][a][i] - interest income earned from fixed deposits kept by it with nationalized banks and taxing the said income u/s 56 - HELD THAT:- The issue before us is identical to the issue decided by ITAT Pune Bench in assessee s own case [ 2019 (1) TMI 1994 - ITAT PUNE] for A.Y. 2008-09 i.e. interest income earned on fixed deposits kept with Nationalized Banks. Therefore, respectfully following the decision of ITAT Pune Bench in assessee s own case for Assessment Year 2008-09(supra), it is held that assessee is eligible for deduction under section 80P(2)(a)(i) in the interest earned from Nationalized Bank. Accordingly, appeal of the assessee is allowed.

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• 2022 (11) TMI 420
  Undisclosed income - addition was based on the sworn statement recorded from the assessee s brother u/s.132(4) - assessee submitted that no amount was paid by way of demand draft and the addition was based on total misconception of facts - HELD THAT:- As besides cash payment there was no other unaccounted payment by the assessee or his brother. There was no payment through demand drafts. The payment through Cheques, as already noted, was duly accounted for and there is no allegation that the same were sourced out of unaccounted sources. Therefore, impugned order could not be faulted with. The impugned additions have rightly been deleted by Ld. CIT(A) in the impugned order. The appeal stands dismissed. Unexplained investment in Jewellery - As seen that AO has granted concession as per CBDT Instruction No.1916 dated 11.05.1994 but it failed to give applicable concession for minor son and daughter. If further quantities for minor son and daughter are considered, nothing would remain to be added since the quantity of jewellery fall within the permissible limits. Another fact to be noted is that the assessee has also discharged the onus of establishing the source of jewellery. Accordingly, the impugned additions have rightly been deleted by Ld. CIT(A). The ground raised by the revenue stand dismissed.

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• 2022 (11) TMI 419
  TDS u/s 195 - payment made to non-resident - Disallowance u/s.40(a)(i) - HELD THAT:- Since, the assessee is in the business of providing software solutions and services to various industries, in our considered view, said services definitely requires technical expertise and knowledge. When the marketing partner provides pre-sale services and post-sale services to customers, the employees of marketing partner should be expertise in technical knowledge of the products. Therefore, we are of the considered view that the AO has rightly held that services rendered by marketing partner in terms of agreement between the assessee and M/s.SSG Technologies, LLC, comes under FTS as per Explanation-2 to Sec.9(1)(vii) - Since, the services rendered by marketing partner is in the nature of FTS, the assessee ought to have deducted TDS in terms of Sec.195 - Since, the assessee has failed to deduct TDS when payment made to non-resident, the AO has rightly disallowed said payment u/s.40(a)(i) of the Act. The Ld.CIT(A) after considering relevant facts rightly upheld addition made by the AO. Hence, we are inclined to uphold the findings of Ld.CIT(A) and reject the ground taken by the assessee.

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• 2022 (11) TMI 418
  TCS on Scrap - Provisions of section 206C as applicable on traders of scrap - whether CIT(A) has erred upholding the order of AO and rejected the claim of Assessee that provision of Sec. 206(C) shall not be applicable to the assessee as it was his first year of audit and TDS/TCS shall applicable to individual only if accounts are audited in immediate preceding year? - HELD THAT:- It is undisputed fact that the assessee is not a manufacturer and the scrap which was sold by the assessee was not from the manufacturing activity. The decision of the Special Bench in case of Bharti Auto Product [ 2013 (9) TMI 274 - ITAT RAJKOT ] was observed that scrap means wasted which is definitely not usable as it is. Scrap might have been bought and sold. Scrap might have arisen due to manufacturing activity which is sold. Whatever it may be, it is a fact that the assessee had the scrap for sale. In the present assessee s appeal the assessee has taken reliance on the Circular 18 dated 21.05.2012 was not considered by the Special Bench of the Tribunal. But from the perusal of the said Circular which later issued by the CBDT it is stated that there is no requirement that the goods to be eligible for scrap should be produced/manufacture by the seller itself. In present assessee s case the assessee has not filed prescribed Form 27C thereby exempting the seller to collect tax under Section 206C - Assessing Officer as well as CIT(A) has rightly made tax liability including interest under Section 206C - There is no need to interfere with the findings of the CIT(A). Hence, appeal of the assessee is dismissed.

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• 2022 (11) TMI 417
  Revision u/s 263 by CIT - case was selected for scrutiny through CASS - Non examination of issues cash deposits made in the bank account of the assessee during demonetization period - HELD THAT:- Though the case of the Appellant/Assessee was also selected for detailed scrutiny for the reason of high value receipt of cash shown from third parties, in the assessment order there is no discussion in respect of the same. The assessment order only deals with the disallowance of claim of deduction under Section 80P - In response to the notice, issued u/s 263 Appellant had filed reply/submission on 20.02.2022, and had stated therein that the cash deposited during demonetization period. (i.e. 09.11.2016 to 13.12.2016) was collected from the customers/member and the details of the same were submitted by the Appellant in the assessment proceedings. There is no material on record to suggest that any investigation/enquiry was made by the Assessing Officer in relation to the same. No details of the inquiry/investigation conducted by the Assessing Officer have been stated in the assessment order, or the aforesaid reply/letter, or the written submissions filed before the Tribunal. The assessment order was passed without making enquiry or verification which ought to have been made by the AO in view of the fact that high value receipt of cash from third parties was one of the reasons for selection for scrutiny. The provisions of Clause (a) of Explanation 2 to Section 263 of the Act are clearly attracted in the facts of the present case. Thus, in our view, the PCIT was justified in exercising of powers of revision under Section 263 - Decided against assessee.

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• 2022 (11) TMI 416
  Penalty u/s 271D and penalty u/s. 271E - Default u/s 269SS and u/s 269T - Loan/deposits taken/paid by the assessee is more than Rs.20,000/- - assessee argued that amount received from various parties / amount paid to various parties for unsecured loan did not exceed the limit of Rs.20,000/- and thus no provisions of Section 271D and 271E are attracted - HELD THAT:- As the plain reading of both the Sections denotes that Section 269SS is attracted when the amount of loan taken from individual person exceeds Rs,20,000/- and Section 269T is attracted when the repayment of loan made to individual person exceeds Rs.20,000/-. The Bench has also gone through the cash book placed on record and statement of loan taken and loan repaid in cash drawn from the cash book it can be noted that the amount of loan taken from each person and amount of loan repaid to each person does not exceed Rs.20,000/-. Revenue Authorities levied and confirmed the penalty by holding that Aggregate of loan/deposits taken/paid by the assessee is more than Rs.20,000/- by not appreciating the provisions of these Sections. In my view, after evaluating the provisions of law, aggregate of loan is to be seen personwise and not aggregate loan taken from all the persons in the whole year. Therefore, under these present facts and circumstances of the case, the penalty is not attracted in the present case and thus both the penalties confirmed by the ld. CIT(A) (supra) are directed to be deleted.Appeals filed by the assessee are allowed.

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• 2022 (11) TMI 415
  Addition invoking provisions u/s 56(2)(vii)(b) - difference of stamp value minus sales consideration - assessee only received lease hold right for 99 years - to be equated with purchase of immovable property or not - As submitted that section 56(2)(vi)(b) is deeming fiction and it is settled preposition that deeming provision cannot be extended beyond the purposed for which it is enacted and section 56(2)(vii)(b) applies only in the cases of transfer of Immovable property takes place but not where the transfer of rights in the immovable property takes place - HELD THAT:- The definition of property does not refer to rights or transactions which may enable use or enjoyment of property and it appears that having regards to description context and objective, acquisition of such rights cannot be equated with immovable property. As relying on Bhavna Shashikant Ghone [ 2022 (9) TMI 919 - ITAT PUNE ] we are of the view that Section 56(2)((vii)(b) cannot be applied in assessee s case. It is also noteworthy to mention that letter dated 6-01-2014 issued by RIICO in favour of M/s. Unique Impex is clear evidence that the assessee only received lease hold right for 99 years . Hence, in view of above deliberations and the case laws mentioned hereinabove, the Bench does not concur with the view of the ld. CIT(A) and the addition sustained by the ld. CIT(A) is directed to be deleted. Thus the solitary ground of the assessee is allowed.

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• 2022 (11) TMI 414
  Reopening of assessment u/s 147 - case was re-opened on the basis of third party information - Trading in shares (intra day) - allegation of transactions in penny stock scrip - unexplained income - assessee submitted that the transaction was made through Bombay Stock Exchange ( BSE ) assessees broker Jainam Share Consultants Pvt Ltd. - No payment for purchase of share was made to the broker and all the transactions were intra-day transaction and assessee earned profit on such overall transaction - HELD THAT:- AO passed his assessment order for want of reply or evidence and it is the case of assessee that he has furnished complete details regarding such transaction before CIT(A). NFAC/CIT(A) was duty bound to verify the fact and such evidence, either of his own or by seeking remand report from the assessing officer. On careful analysis of such evidence, find that the assessee has successfully prove that he has entered into intra-day transaction share of Scan Steel Ltd. Assessee has not paid the purchase cost nor received the entire sale consideration rather received the gain of Rs.1,655/- which cannot be considered as accommodation entry of gain of penny stock transaction. Therefore, direct the Assessing Officer to delete the entire addition. So far as objection raised by Ld. Sr-DR for the Revenue that assessee has made cash deposit in his bank account, find that assessee has shown such deposit as income from other sources . Therefore, the submission raised by Ld. Sr-DR for the Revenue is mis-placed. Assessee s appeal is allowed.

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• 2022 (11) TMI 413
  Assessment u/s 153A - validity of Reopening of assessment u/s 147 - HELD THAT:- An assessment order under section 153A r.w.s 143(3) of the Act does not deal with the materials other than incriminating material found during the search. Assessee s claim that he has already disclosed the amount debited and paid to JIPL was duly reflected in the books of accounts and verified also by the AO is not correct. For verification other than amount debited in the books of accounts nothing was there like agreement of consultancy, reports prepared by consultant or any other material which substantiates the genuineness of the expenditure. It is only after a report from DDIT (Inv.) Unit-1(3), Mumbai dated 24.03.2014 was received against an enquiry conducted on JIPL with reference to a Tax Evasion Petition filed against JIPL. With reference to this report various people from assessee s side and JIPL were examined on oath with relevant agreement, etc. Claim of the assessee that action under section 147 is merely a change of opinion, hence not tenable is unwarranted in the light of report of DDIT (Inv.) Unit-1(3), Mumbai and contradictory statements given by various persons of both the sides, we found action of the AO under section 147 of the Act as legitimate one and original Ground No.1 and Additional Ground Nos. 1 2 are dismissed. Disallowance of professional fee paid - genuineness of expenses - Amount debited to WIP in the balance-sheet - HELD THAT:- Where the payment to a consultant (JIPL) was being made in crores of rupees over the period, it is highly inconvincible that with reference to services rendered there is not even a single document /report/communication ever submitted by assessee. Even a layman will not convince that after paying crores of rupees over the period to consultant assessee is not in possession of any document in the form of report/advice/road map/blueprint about the project, company, HR matters, Legal matters, financial matters, Engineering Services etc. Assessee s counsel vehemently argued the matter but despite of bench s specific reference about the reports of deliverables his reply was not satisfactory. In the lights of above observation at all the forums including ITAT, we are of the firm view that this claim of the assessee is liable to be rejected and order of the Ld. CIT(A) is in right perspective requires no interference. Original Ground no- 2 of the assessee is dismissed. Expenses claimed towards consultancy charges - HELD THAT:- Assessee never produced before any form evidence of expenses claimed towards consultancy charges paid to M/s. JIPL. In our humble opinion there is no flaw in the order of AO as far as following the direction in the case of Asian Paints Ltd. [ 2007 (1) TMI 159 - BOMBAY HIGH COURT] and directions of Hon ble Supreme Court in the case of M/s. GKN Driveshaft (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] In view of the above we don t agree with additional ground of appeal no. 3 raised by the assessee, hence dismissed.

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• 2022 (11) TMI 412
  Estimation of income - GP estimation - whether CIT(A) has erred in granting relief to the assessee in reducing the gross profit rate at 0.5% as against at 3% estimated by the AO? - HELD THAT:- As in assessee s own case on almost similar set of facts wherein similar estimation was made by AO in AY 2013-14 [ 2021 (12) TMI 1287 - ITAT SURAT ] and on appeal before CIT(A) similar additions was restricted to 1% and on further appeal by assessee. Considering the decision of Tribunal in assessee s own case on similar facts in preceding year and respectfully following the same, the estimation made by ld. CIT(A) is increased from 0.5% to 1% of total turnover. Thus, the grounds of appeal raised by the Revenue are partly allowed.

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• 2022 (11) TMI 411
  Addition u/s.69 - unexplained investment - for maturity of the fixed deposit the assessee failed to make any satisfactory explanation - HELD THAT:- On perusal of the details of the FDR, we find that these FDR were created in the earlier year and therefore if any addition is warranted then it can only be in the year in which such FDRs were created and not in the year of the maturity of fixed deposit. It is for the reason the investment was made in the earlier year and which was matured in the year under consideration. As such the amount matured in the year under consideration does not represent the unexplained investment merely on the reasoning that it was credited in the bank account of the assessee - it the source of money which has been used for the purpose of the FDR and the same can only be brought to tax and that too in the year in which such FDR were created. Thus, after considering the necessary fact as discussed above, we set aside the findings of the of CIT(A) and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed.

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• 2022 (11) TMI 410
  Rectification u/s 154 - Capital gain computation - assessee had sold land which was ancestral land acquired by him - HELD THAT:- The contents of the order passed by the CIT(A) both in quantum proceedings and u/s 154 of the Act on rectification application filed by the assessee ,we agree with the assessee, itself are self-speaking and loud and clear that the ld.CIT(A) was aware that the decision of the jurisdictional High Court cited by the assessee was applicable in the facts of the case before him. In his order passed in quantum proceedings, we find, he dismisses assessee s contention of the reference made to DVO by the AO being bad in law relying on a decision of the Hon ble Delhi High Court, this despite the fact that the assessee cited decision of the jurisdictional High Court in favour of the assessee. CIT(A) did so without distinguishing the decision of the jurisdictional High Court cited by the assessee. In fact, he on the contrary implicitly accepted the applicability of the said decision to the facts of the case when he dismissed assesses plea stating in his order with due respect to the order of the jurisdictional high court . This shows that he was aware that the decision of the jurisdictional High court applied to the issue before him Even when the assessee filed a rectification application before him for not following the jurisdictional High Court decision, the Ld.CIT(A) did not distinguish the said decision while dismissing assesses application, but again on the contrary stated that accepting assesses application would tantamount to changing the decision . This again is an implicit acceptance by the Ld.CIT(A) of the mistake in his order passed in quantum proceedings by not following the ratio laid down by the jurisdictional High Court on the issue before him. Having admitted to this mistake in his order, there was no other recourse available in law to the Ld.CIT(A) other than allowing assessee s rectification application. His dismissal of the rectification application on the ground that it would change the CIT(A) s order is in blatant disregard and against all settled principles of law. If a mistake is admitted to have occurred in an order, the same needs to be rectified. There are no two ways about it. Therefore, without going into the merits of the case, on the basis of the admission of the ld.CIT(A) itself that jurisdictional High Court decision applied in the case of the assessee which he repeatedly implied in his order passed both in quantum proceedings and u/s 154 of the Act, we set aside the order of the ld.CIT(A) passed under section 154 of the Act and direct him to allow the assessee s rectification application.

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• 2022 (11) TMI 409
  Addition on account of re-computation of capital gain - AO reworked value of capital gain and exemption claimed u/s 54 of the Act by disallowing certain items from the cost of acquisition - HELD THAT:- We note that property was sold and new property was purchased jointly by the assessee with Shri Yogesh N Patel being 50% shareholder and 50% of sale consideration was received by him/ Yogesh N Patel - assessee has placed on record copy of application dated 22-12-2011 along with the copy of return of income with computation of total income of his co-owner who declared similar capital gain and claimed similar exemption. The return of the co-owner has been accepted by revenue u/s 143(1) of the Act. Therefore, in our considered view when, the long term capital gain and exemption claimed by the co-owner has been accepted, then the assessee cannot be treated indifferently. We accept the contention of assessee that once, the similar LTCG offered and exemption claimed by the co-owner has been accepted by the Revenue, then the assessee is also entitled for similar relief. We find convincing force in the submissions of assessee. Hence, the appeal of the assessee is allowed. So far as the objection of case of co-owner, no scrutiny assessment was initiated, is concern, we find that this fact was brought by assessee at the earliest possible action. Revenue has not taken any action for reopening the case of co-owner and thereby accepted the capital gain and exemption on same transaction, therefore, the assessee cannot be treated indifferently for similar transaction. Thus, the objection raised for the revenue is not acceptable to us. Hence, the ground of appeal of the assessee is hereby allowed.

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• 2022 (11) TMI 408
  Revision u/s 263 by CIT - Unexplained cash deposits made during the demonetization period in his bank account - HELD THAT:- We observe that the AO has not examined the details with respect to cash deposits made during the demonetization period in his bank account as per the CBDT guidelines with the supporting documents, he has submitted only a letter and certificate from the bank, which is placed and we do not find anywhere that there was any enquiry made by the AO in this regard viz. cash opening, availability of cash and application of cash during the demonetization period. We also observe that the AO has not verified the cash deposited by the partners and also loan taken from Dr. HT Memorial Trust and cash embezzlement and interest free advances to related persons. All these things are not been examined by the AO. DR has rightly pointed out that ld.Pr.CIT has rightly exercised his revisionary powers u/s 263 of the Act and the AO has failed to do discharge his duty in accordance with law. AO is investigating officer thereafter he is adjudicating officer. The order passed by the AO is erroneous and prejudicial to the interest of the revenue. Therefore, the assessment order passed u/s 143(3) of the Act has rightly been set aside by the ld.Pr.CIT in exercising his jurisdictional power is upheld. We upheld the order passed by the ld.Pr.CIT and the AO is directed make fresh assessment in accordance with law following the CBDT guidelines in regard to cash deposited during the demonetization period The AO is also directed to carry out his examination as per the decision mentioned in the case of Bhoopalam Marketing Services [ 2022 (11) TMI 331 - ITAT BANGALORE] - Appeal of the assessee is allowed for statistical purpose.

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• 2022 (11) TMI 407
  Unexplained cash deposits - difference in sales between periods from July December 2016 and July December 2015 on the ground that such cash sales are made to unidentifiable persons and the assessee failed to prove the genuineness of the sales and has made substantial cash deposit during demonetization period and the assessee failed to substantiate the source of the cash deposit - HELD THAT:- Merely filing the details such as cash book, ledger, purchase details, VAT returns, etc are not sufficient especially when the assessee had made huge cash sales during the demonetization period as compared to the earlier year during the same period. In our opinion, the matter has not been properly adjudicated in the way the same should have been adjudicated. It is settled proposition of law that the powers of CIT (Appeals) are co-terminus with that of the powers of Assessing Officer. In the instant case, although the AO has categorically asked the assessee to substantiate the huge cash deposits during the demonetization period by giving PAN numbers of so called purchasers, ;the assessee has not filed such details and the learned CIT (Appeals) without verifying the pay in slips along with the bank statements was carried away by the submissions made by the assessee. We deem it proper to restore the issue to the file of CIT (Appeals) with a direction to adjudicate the issue afresh after considering the nature of huge cash deposit made in large number of Rs.2000 currency notes in the bank - Needless to say the CIT (Appeals) shall give due opportunity of hearing to the assessee. The grounds raised by the Revenue are allowed for statistical purposes.

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• 2022 (11) TMI 406
  Disallowance of purchases - allegation of accommodation entry - supplier being non genuine dealer - HELD THAT:- Assessee has purchased M.S. plates from various dealers out of which M/s V3 Enterprises was alleged to be an accommodation entry provider. As evident from the record that the assessee has furnished the details of the suppliers along with their addresses and the price quoted for the materials purchased. The only contention of the department is that the alleged dealer s name appeared in the website of sales tax department, Government of Maharashtra to be non genuine dealer. Apart from this, AO has not shown any corroborative evidences to prove that the said transaction is only a bogus transaction for the purpose of providing accommodation entry. The assessee, on the other hand, has proved the genuineness by furnishing the details of cheque, the bank account number, the invoices, delivery challans and other details evidencing the purchase of M.S. plates. The assessee has relied on the decision of DCIT vs Adinath Industries. [ 1999 (10) TMI 8 - GUJARAT HIGH COURT] which held that the assessee cannot be penalised for the action of supplier and that the assessee cannot be expected to know the commercial rationale on how this supplier operates its bank account which was considered by the Ld.CIT(A). CIT(A) has relied on the decision of the jurisdictional High Court in the case of CIT vs Nikunj Eximp Enterprises (P) Ltd [ 2013 (1) TMI 88 - BOMBAY HIGH COURT] on the ground that the assessee cannot be faulted if the seller is not traceable and also that it is not the burden of the assessee to investigate the genuineness of the seller or their business transaction. Respectfully following the above judicial precedent, we hold that there is no infirmity in the order of Ld.CIT(A). The grounds of appeal filed by the Revenue are dismissed.

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• 2022 (11) TMI 405
  TDS u/s 195 - nature and chargeability of the referral fee in US Dollars paid by assessee to M/s. CX Partners Pte Limited and M/s. Koi Structured Credit PTE Ltd. - HELD THAT:- The charge of the AO is that having regard to Section 5(2)(b) read with section 9(1)(i) of the Act, the said income is includible in the scope of total income chargeable to tax in India. To put it differently, as per the AO, a referral fee is deemed to accrue or arise in India, and therefore, the same is taxable in India. This has been inferred on the strength of the fact that the fee has been paid by the Indian Company after these companies had successfully referred five companies, which were situated in Singapore to invest in the assessee company to an extent of Rs. 370 crores. As concluded by the AO that the source of the fee is located in India. In addition to this, the understanding of AO was that said referral fee was in the nature of fees for technical services . The expression fees for technical services finds meaning in Explanation 2 to Section 9(1)(vii) broadly speaking, the said Explanation prescribes that fees for technical services, means any consideration for rendering of any managerial, technical or other consultancy services, including the provision of services of technical or other personnel, but does not include consideration for any construction, assembling, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head salaries . We may fruitfully refer to the scope of services rendered by these two companies to the assessee. Both the contract dt. 18.01.2016, which are reproduced hereinabove, clearly mentioned that services were required to be rendered by these persons for reference only and for that purpose, the agreement was entered between the parties for making the payment in US Dollars in the case of M/s. CX Partners Pte Limited and INR 16.96 million in US Dollars in the case of M/s. Koi Structured Credit PTE Ltd. In the said letter, it was categorically mentioned that the fee paid by the assessee would only be restricted to reference only and it was also mentioned that the reference fees herein shall be payable by the company without any set-off, counterclaim withholding (including withholding tax) or deduction of any kind under any applicable laws in India . It is clear that the referral fees of INR 63.04 million US Dollars were required to be paid by the assessee to this company namely, M/s. CX Partners Pte Limited without withholding any tax after completion of the transaction and similarly, INR 16.96 million in US Dollars was to be paid to M/s. Koi Structured Credit PTE Ltd. without withholding any tax. Once the investments were made by a company situated outside India on the referral of these two companies, then the question arises was whether any sum paid by the assessee to the sisters concern of said M/s. CX Intermediate Capital Fund(I) Pte. Ltd. and M/s. Koi Structured Credit Pte. Ltd. can be termed as consultancy charges . Admittedly, IDBI Bank is the lead manager and provides all consultancy for the issuance and subscription of debentures. Hence, it is not possible for us to accept the version of the Assessing Officer that the same services were provided by these two Singapore companies. Out of the five companies, which have invested a sum of Rs. 370 crores in the debentures, four companies have their registered offices and are residents of Singapore and only one company namely, Arch Reinsurance Limited, is located in Bermuda, Mumbai. M/s. CX Intermediate Capital Fund(I) Pte Ltd. and M/s. Koi Structured Credit Pte. Ltd. has provided the reference to these five companies for making the investment in the assessee company for which the assessee had paid the reference charges to these companies. No services were rendered in India by these two companies for facilitating the investment in the assessee company by these five companies. Merely reference of the consultancy charges in the ledger of the assessee with respect to M/s. Koi Structured Credit Pte. Ltd. cannot be a ground to treat the charges paid by the assessee as consultancy charges as the assessee had produced the agreement with M/s. Koi Structured Credit Pte. Ltd. reproduced hereinabove clearly mentioned that the fees were payable by the company in relation to debentures. With respect to M/s. CX Intermediate Capital Fund(I) Pte Ltd., AO had mentioned that the charges paid by the assessee were in the nature of referral fees only. The payment of referral fees by the assessee to M/s. CX Intermediate Capital Fund(I) Pte. Ltd. is further supported by the agreement and Form 15CB issued by the Chartered Accountant. In view of the above, we are of the opinion that the charges paid by the assessee were in the nature of referral fees only. Merely because the assessee had refereed the fee was payable by the Indian Company to one of these two entities, consultancy charges cannot be a ground to hold that the nature of the payment was covered by Explanation 2 to section 9(1)(vii). Second limb of challenge by the Ld. DR was that the AO in the order had mentioned that there were PE of these two companies in Delhi - Hence, the order passed by the AO was correct. Though it is correct that AO had mentioned the existence of offices of these companies in Delhi, however, the AO had failed to bring on record anything except mentioning of office address and PAN number in the order. AO is required to bring on record form of activities, which were carried out by these companies in India. Merely existence of an office of one of the sister concerns of these companies is not sufficient for the AO to conclude that the investor company or M/s. CX Intermediate Capital Fund(I) Pte. Ltd. and M/s. Koi Structured Credit Pte. Ltd. had control in India - Assessee was not required to withhold the tax at source as there was no situs of services rendered in India and further, these services were not in the nature of FTS. Hence, we find no fault in the reasoning given by CIT(A). Thus, the appeal of the Revenue fails. Appeal of the Revenue is dismissed.

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• Insolvency & Bankruptcy

• 2022 (11) TMI 404
  Seeking recall of order - whether the order cannot be entertained for the reason that even on the previous occasions the applicant had not evinced any interest in prosecuting the said application? - HELD THAT:- This Tribunal is of the considered view that an opportunity ought to have been provided by the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench - II, Hyderabad) to the Learned Counsel for the Appellant/Bank/Petitioner, because of the fact, that the that One Officer of the Bank, who represented on behalf of the Financial Creditor, logged in, had sought time, and, therefore, this Tribunal opines that the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench - II, Hyderabad), obviously, had adopted a pedantic and an hyper-technical approach, because of the fact, that no progress was made in the subject matter and added further, that the Tribunal went on to observe that even on this date, viz., 21.02.2022 given by it was exclusively to proceed with the matter. It must be borne in mind that, if the Restoration Application preferred by the Party / Person is dismissed, at the threshold, then, there is a possibility, that even the meritorious case / matter may be thrown out, at the nascent stage. However, if the Restoration Application is Allowed by the Adjudicating Authority / Tribunal by resorting a liberal approach, then, there is every likelihood that the Main Matter shall be taken up for Hearing and the Case / Cause is decided on Merits, of course, after providing an adequate Opportunity of Hearing and also by observing the Principles of Natural Justice. This Tribunal comes to a Resultant Conclusion that the Impugned Order of disposal of application passed by the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench - II, Hyderabad) is clearly unsustainable in the eye of Law - Application allowed.

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• 2022 (11) TMI 403
  Approval of Resolution plan - non-payment of the full amount of Provident Fund Dues - violation of provision of Section 30(2)(e) - Time limitation - HELD THAT:- The facts of the present case are fully covered by the Judgement in JET AIRCRAFT MAINTENANCE ENGINEERS WELFARE ASSOCIATION VERSUS ASHISH CHHAWCHHARIA RESOLUTION PROFESSIONAL OF JET AIRWAYS (INDIA) LTD. ORS; ASSOCIATION OF AGGRIEVED WORKMEN OF JET AIRWAYS (INDIA) LTD. VERSUS JET AIRWAYS (INDIA) LTD. ORS. [ 2022 (11) TMI 332 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] . The above Appeal had been allowed and direction has been issued to Successful Resolution Applicant (SRA) to make the payment of Provident Funds dues in full. The submissions of Learned Counsel for the Respondent that Appeal is barred by time, cannot be accepted. The Appeal has been filed on 28th February, 2022 against the Order dated 3rd January, 2022. The Judgement of the Hon ble Supreme Court in [ 2022 (1) TMI 385 - SC ORDER ] extended the period of limitation till 28th February, 2022 for all Appeals and has further granted 90 days time to file the Appeal. The present Appeal is fully covered by the Judgment of the Hon ble Supreme Court in [ 2022 (1) TMI 385 - SC ORDER ] extending the period of limitation as afore-noted. Thus objection of the Respondent regarding limitation cannot be accepted. Submission of Learned Counsel for the Respondent that Appellant is an Operational Creditor and both Operational Creditor and Financial Creditor has taken haircut, also cannot be accepted. As held by this Tribunal in above case Jet Airways provident fund dues are not the assets of the Corporate Debtor and they have to be paid in full. Hence, the Appellant was clearly entitled for payment of full provident fund dues i.e. an amount of Rs. 2,10,13,798/-. Ends of Justice will be served in issuing direction to Successful Resolution Applicant to make the payment of balance amount of Provident Fund to the Appellant to save the Resolution Plan from invalidity - this Appeal is disposed off by directing the Respondent to make payment of balance amount of Provident Fund i.e. Rs. 1,02,92,206/-.

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• 2022 (11) TMI 402
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - assignment of debt - HELD THAT:- The applicant has claimed the default on part of the Respondent for the Loan amount of Rs. 1,21,68,208/- as on 30.03.2022 - Mere plain reading of the provision under section 7 of IBC shows that in order to initiate CIRP under Section 7 the applicant is required to establish that there is a financial debt and that a default has been committed in respect of that financial debt. Section 5(7) of IBC, 2016 defines Financial Creditor as any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. Vide Deed of Assignment dated 30.09.2021 executed between the lender of the Corporate Debtor and the Applicant in this matter, the financial debt was assigned to the Applicant. The documents submitted by the Financial Creditor and the Corporate Debtor clearly substantiate the Financial Creditor s claim that the Corporate Debtor has indebted and defaulted the repayment of loan amount - upon appreciation of the documents placed on record to substantiate the claim, this Tribunal admits this petition and initiates CIRP on the Corporate Debtor with immediate effect. Petition admitted - moratorium declared.

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• PMLA

• 2022 (11) TMI 401
  Seeking grant of regular bail - siphoning off of funds - twin conditions for grant of bail satisfied or not - Section 4 read with Section 70 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- Section 45(1) of PMLA 2002 imposes twin conditions before bail could be granted to a person accused of having committed an offence punishable under the PMLA. As per section 45(1) PMLA, the Public Prosecutor was required to be given an opportunity to oppose the plea for bail and that where the Public Prosecutor opposed such plea, the Court could grant bail only after recording satisfaction that there were reasonable grounds to believe that the person to be released was not guilty of the offence he was accused of and that while on bail he was not likely to commit any offence. The constitutional validity of provisions of section 45 PMLA 2002, imposing the twin conditions for grant of bail, which were also there before amendment of section 45 PMLA in 2018, was questioned before Hon ble the Supreme Court in Nikesh Tarachand Shah vs. Union of India [ 2017 (11) TMI 1336 - SUPREME COURT] and the Supreme Court, after holding that the prescribed twin conditions for release on bail were violative of Articles 14 and 21 of the Constitution of India, declared Section 45(1) of the PMLA, to that extent, to be unconstitutional - Thus it is apparent that despite the Supreme Court having declared that the twin conditions for release on bail as prescribed by un-amended provisions of Section 45(1) of the PMLA,were violative of Articles 14 and 21 of the Constitution of India and thus unconstitutional. Obesity, as in the case of the petitioner, who weighs 153 kilograms is not just a symptom but is itself a disease which becomes root-cause of several other diseases. With such co-morbodities, the response, the resistance, the resilience and the capacity of the body to fight ailments and recuperate efficaciously, decreases substantially. The jail doctor or for that matter, a civil hospital may not be fully equiped to handle a patient having multiple aiments who apart from medical treatmet may require a certain level of monitoring, care and attention which ordinarily is not available in jail - Considering the co-morbodities of the petitioner, it can safely be said that he falls in the exception of being sick as carved out in Section 45 of the Act, so as to be entitled to be released on bail. The petitioner is ordered to be released on regular bail on his furnishing bail bonds/surety bonds to the satisfaction of learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned - petition allowed.

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• Central Excise

• 2022 (11) TMI 400
  Maintainability of petition - requirement of deposit of mandatory amount under Section 35F of Central Excise Act, 1944 as made applicable to Service Tax matters by Section 83 of the Finance Act - HELD THAT:- It would be seen from a bare perusal of section 35F of the Customs Act that after August 06, 2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 35F on August 06, 2014 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue. The Supreme Court in NARAYAN CHANDRA GHOSH VERSUS UCO BANK [ 2011 (3) TMI 1478 - SUPREME COURT] , examined the provisions contained in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 relating to pre deposit in order to avail the remedy of appeal. The provisions are similar to the provisions of section 129E of the Customs Act. The Supreme Court emphasised that when a Statue confers a right to appeal, conditions can be imposed for exercising of such a right and unless the condition precedent for filing appeal is fulfilled, the appeal cannot be entertained. The Supreme Court, therefore, held that deposit under the second proviso to section 18(1) of the Act, being a condition precedent for preferring an appeal, the Appellate Tribunal erred in law in entertaining the appeal. The Supreme Court also held that the Appellate Tribunal could not have granted waiver of pre-deposit beyond the provisions of the Act. A Division Bench of Delhi High Court in M/S. VISH WIND INFRASTRUCTURE LLP, M/S. J.N. INVESTMENT TRADING CO. PVT. LTD. VERSUS ADDITIONAL DIRECTOR GENERAL (ADJUDICATION) , NEW DELHI [ 2019 (8) TMI 1809 - DELHI HIGH COURT] examined the provisions of section 35F of the Central Excise Act, 1944 which are pari materia to section 129E of the Customs Act and held that every appeal filed before the Tribunal after the amendment made in section 35F of the Excise Act and section 129E of the Customs Act on 06.08.2014 would be maintainable only if the mandatory pre-deposit was made. The appellant has not made the pre-deposit - the application for waiver of pre-deposit is accordingly, rejected.

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• CST, VAT & Sales Tax

• 2022 (11) TMI 399
  Benefit of concessional rate of tax - rectification of C-Forms - principal grievance of the petitioner as articulated in the writ petition is, that the petitioner is not being permitted to revise its VAT/CST returns concerning Financial Years 2016-2017 and 2017-2018 - HELD THAT:- This writ petition is disposed of, with the consent of the learned counsel for the parties, with a direction to the respondents/revenue to issue the rectified C-Forms, subject to the verification of entitlement on merits, without being burdened with the issue concerning limitation. The writ petition disposed off.

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• 2022 (11) TMI 398
  Validity of assessment order - mismatch between the purchasing and selling dealer - ITC claimed by the purchaser does not match with the output tax due paid/payable by the seller - Mismatch of purchase/ sales transactions resulting in purchase and/or sales suppression - Mismatch of transactions because of a dealer whose registration To anolem certificate has been cancelled - HELD THAT:- After referring to the verification to be undertaken by the Assessing Authorities in regard to the materials in his possession, the Assessing Authority is required to issue notice along with all details connected to the assessment and seek objections from the assessee concerned. Thereafter, a personal hearing shall be afforded, either physically or virtually, granting adequate opportunity to the dealer to put forth its objections. The Circular also envisages a request of the assessee for cross examination of the third party dealer and provides for such an opportunity of cross examination to be granted suo motu, if the Assessing Authority believes that it would be so appropriate. The assessment will thereafter be concluded within a period of 180 days from date of issue of show cause notice. Let this procedure be followed in the present matter as well. Show cause notice, as indicated in the Circular will be issued to the petitioner within a period of four (4) weeks from today with all necessary enclosures. The assessments will be completed thereafter within a period of 180 days, in accordance with law, after hearing the petitioner - It is made clear that if the amount volunteered as per affidavit dated 11.10.2022 is not so remitted within the time stipulated as above, then it shall be as though the impugned order has not been interfered with, and the same shall stand confirmed. Writ petition disposed off.

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• Indian Laws

• 2022 (11) TMI 397
  Dishonor of Cheque - Application of Money Lending Act - discharge of legally enforceable debt or not - rebuttal of statutory presumption - preponderance of probabilities - privity of contact - section 138 and 139 of NI Act - HELD THAT:- The complaint was taken up for trial and ended in conviction holding the petitioner guilty of the offence under Section 138 of the Negotiable Instruments Act, 1881. The trial Court sentenced the petitioner to undergo SI for one year and also directed to pay compensation of Rs.25,00,000/- being the cheque amount. The compensation was directed to be paid within a period of three months, from the date of the judgment in default, to undergo SI for a period of three months. The complainant in the cross examination though admits that he is engaged in money lending business and he is not a registered money lender, as far as this transaction is concerned, even in his statutory notice, the complainant has categorically stated that the petitioner herein being a long time friend has lend money for free of interest. That being the case, when the transaction is not for interest, the Money Lending Act have no application. The standard of proof to rebut the presumption under Section 118 and Section 139 of the Negotiable Instruments Act, 1881 though not as high as required for the prosecution to prove and even preponderance of probability is sufficient for rebuttal. The accused cannot take inconsistent stand to claim that he has probabilise his defence. Inconsistent plea as a rebuttal evidence will improbabilise the rebuttal - In the instant case, the petitioner/accused had informed the bank that the subject cheque got lost he has intimated the police that the subject cheque was taken away by force by the complainant/respondent. But in the course of the trial, he has suggested to the witness that this cheque was given in respect of the liability of one Govindarajan. However, the issuance of the cheque and money transaction with the respondent/complainant has not been denied. The foundational fact of the drawing cheque and the privity has been proved by the complainant. No material placed by the accused to discharge the burden. This Court finds no error in the finding of the trial Court - this criminal Revision Case is dismissed.

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• 2022 (11) TMI 396
  Dishonor of Cheque - insufficient funds - existence of legally enforceable debt or not - time limit for filing of complaint from the date of cause of action - HELD THAT:- The facts of the YOGENDRA PRATAP SINGH VERSUS SAVITRI PANDEY ANR. [ 2014 (9) TMI 1129 - SUPREME COURT] is almost identical to the case in hand. In Yogendra Pratap Singh case, statutory notice served on the accused on 23/09/2008 and the complaint was presented on 07/10/2008. In the case in hand, the statutory notice was served on 05/02/2019 and the complaint was presented on 20/02/2019. The 15 days time from the date of receipt of the notice after excluding the date of receipt commenced from 06/02/2019 and expired on 20/02/2019. Only thereafter, the cause of action to file the complaint arises. Since the complaint was presented on 20/02/2019 a day before the cause of action, the complaint is non-est in law as per the dictum of the Supreme Court in Yogendra Pratap Singh case. The plea of the Learned Counsel for the respondent/complainant regarding the right to file fresh complaint, it is to be noted that under Section 142(b) of the Negotiable Instruments Act, the complaint ought to be filed in writing within one month from the date of cause of action as prescribed under clause (c) of Section 138 of Negotiable Instruments Act. In case, complainant is unable to file the complaint within the period of one month and if the complainant satisfies Court that he had sufficient cause for not making a complaint within such period, the proviso to Section 142(b) of Negotiable Instruments Act enables the Court to take cognizance of the complaint beyond the time prescribed. It is concluded with the words of the Hon ble Supreme Court in Yogendra Pratap Singh Case, no complaint can be maintained against the drawer of the cheque before the expiry of 15 days from the date of receipt of notice because the drawer/accused cannot be said to have committed any offence until then. The complaint under Section 138 of Negotiable Instruments Act filed before the expiry of 15 days of service of notice could not be treated as a complaint in the eye of the law and criminal proceedings initiated on such complaint are liable to be quashed. These Criminal Original Petitions are Allowed.

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• 2022 (11) TMI 395
  Dishonor of Cheque - insufficient funds - discharge of burden to prove - rebuttal of presumption - preponderance of probabilities - the revision petitioner argued to unsettle the concurrent verdicts entered into by the trial court as well as the appellate court - seeking grant of 8 months time to pay the compensation - lodging of prosecution under Section 138 of the Negotiable Instruments Act - HELD THAT:- It is the settled law that power of revision available to this Court under Section 401 of Cr.P.C r/w Section 397 is not wide and exhaustive to reappreciate the evidence to have a contra finding. In SANJAYSINH RAMRAO CHAVAN VERSUS DATTATRAY GULABRAO PHALKE AND OTHERS [ 2015 (1) TMI 1332 - SUPREME COURT ], the Apex Court held that the High Court in exercise of revisional jurisdiction shall not interfere with the order of the Magistrate unless it is perverse or wholly unreasonable or there is non-consideration of any relevant material, the order cannot be set aside merely on the ground that another view is possible. The trial court as well as the appellate court rightly appreciated the evidence given by PW1 supported by Exts.P1 to P7 to prove that the accused herein issued Ext.P1 cheque for consideration. Thereby the complainant proved his initial burden entitling him to get the benefit of presumptions under Sections 118 and 139 of the N.I Act - the law is clear on the point that when the complainant discharged the initial burden to prove the transaction led to execution of the cheque, the presumption under Sections 118 and 139 of the N.I Act would come into play. No doubt, these presumptions are rebuttable and it is the duty of the accused to rebut the presumptions and the standard of proof of rebuttal is nothing but preponderance of probabilities. There is no reason to interfere with the concurrent verdicts entered into by the trial court as well as the appellate court. Similarly the appellate court rightly modified the substantive sentence to the minimum sentence of imprisonment till rising of the court and to pay fine of Rs.13,60,684/- as compensation under Section 357(1)(b) Cr.P.C and in default of payment of the fine, to undergo simple imprisonment for three months. Therefore, the sentence also does not require any interference at the hands of this Court. The revision petition is dismissed.

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