Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 11, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Refund of Input Tax Credit - tax on the export of eggs - nil rated commodity - petitioner had instead of opting for exports without payment of tax, had opted for the column with payment of tax - error is bonafide - The officer shall issue the refund within a period of eight (8) weeks - HC
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Refund of interest amount deposited - Scope of Section 50 - If such interpretation is accorded, the contention of the petitioner that the interest so levied against the petitioner is in the nature of penalty is not worth acceptance. - Since the petitioner herein filed its return after some delay for the period July, 2017, October, 2017, November, 2017 and March, 2018 i.e. GSTR-3B return were filed after 20th day of the succeeding month for which the tax was due, the Revenue has rightly computed the interest on such delayed payment - Since the petitioner has duly discharged his liability towards interest by making payment of total amount and filing Form DRC-03, no case of refund of such amount arises. - HC
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Eligibility to claim ITC - Inputs - GST / tax paid on purchases made to meet the obligations under corporate social responsibility will be eligible for input tax credit under CGST and SGST Acts. - AAR
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Territorial Jurisdiction of Advance Ruling Authority - As seen from this provision there is a territorial nexus between the authority for advance ruling of a state and its geographical boundary. Therefore, this advance ruling authority constituted under the Telangana State Goods and Services Act cannot give a ruling on the liability arising under the CGST Act or SGST Act in a different state. - AAR
Income Tax
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Unaccounted cash - On-money received - Merely finding the name of the transaction in the excel sheet during the search cannot held the assessee responsible for cash which was never tracked down by the Assessing Officer from assessee’s books of accounts. - AT
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Unexplained Cash deposit during demonetization - Assessee is regular in filing his Return of Income for more than nine years and has already shown his books of accounts and submitted the same to the Assessing Officer to show that he has sufficient cash balance to justify cash deposit during demonetization and hence no adverse view should be drawn in absence of any finding that the cash withdrawn is used for any unaccounted income or any unaccounted asset - AT
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Rectification u/s 154 - Addition u/s 54 - sale of property - Merely there is an observation of the revenue audit party it is not a mistake apparent on record. - There exist no mistake which is apparent on record. The law duly empowers the revenue to invoke other provision to consider the audit objection but the same is not permitted under the provision of section 154 of the Act as it done by the AO. - AT
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Unexplained cash deposits - conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumption of facts Once nothing has been proved against the appellant with aid of any direct material especially when three rounds of investigation have been carried out, then nothing can be implicated against the appellant. - AT
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Revision u/s 263 by CIT - If the argument of the ld. AR is accepted then the supervisory authority of the Pr. Commissioner granted under the Act is hampered. Provisions of Section 263 of the Act give unfettered right to the Commissioner of Income Tax to revise any order passed by the AO. Whatever was to be excluded by the law has already been provided under that Section and the only exception are the issues 'decided and considered' in the appellate orders. - AT
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Receipt of interest on enhanced compensation - Income from other sources - the interest received by the assessee u/s 28 of the Land Acquisition Act, 1984 on enhanced compensation is part and parcel of the compensation, if the agricultural land of the assessee has been acquired under compulsory acquisition and, thus, the same is exempt income u/s 10(37) of the Act. - AT
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Nature of expenditure - Allowable business expenditure or personal expenditure - education expenses of the daughter - With the logic advanced by assessee, every professional firm or business, incurring educational expenses for their progeny/ children would all claim the same as if for furtherance of their business, but it is not the case. The primary motive for incurring the expenses is to continue to carry the legacy of business and profession in the family and is purely personal in nature. - AT
Customs
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Refund of excess duty paid - The appellant was denied relief before a higher forum by contending that Department intends to file an appeal. Even after accepting the final order of Tribunal, they have not passed an order of final reassessment. The inaction on the side of the department cannot be a ground to reject the refund claim as premature. - AT
Indian Laws
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Dishonor of Cheque - ongoing moratorium period as contemplated u/s 14 of the IBC - The moratorium provision not extending to persons other than the corporate debtor. In respect of persons other than the corporate debtor, Director or Managing Director, as the case may be, Section 14 of I&B Code did not apply to Section 138 proceedings - HC
IBC
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CIRP - Liquidation proeedings - fraudulent transactions - The self–contained IBC in Sec.35(2) empowers the liquidator to take possession (custody) and control of all properties and actionable claims of the CD. It has been adjudicated that the Respondents indulged in fraudulent transactions and they are personally liable to pay the amount of Rs. 21.37 Crores/- - the CD has actionable claims upon the schedule mentioned properties belonging to the Respondents. - Tri
Service Tax
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Levy of service tax - Cost sharing agreement - group company associated enterprise - since the activities under taken under the cost sharing agreement do not amount to provision of Service in terms of the decision of Hon’ble Apex Court in case of Gujarat State Fertilizers & Chemicals Ltd., the demand of Service Tax on the activities under taken under the cost sharing agreement cannot be sustained. - AT
Central Excise
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Remission of Excise duty - rejection of the remission application on the ground that fire was avoidable and due to not taking proper care by the appellant - Be it of Inspector of Police, Fire Brigades, Deputy Director, Industrial Health and Safety Industry, Nagarpalika and from various reports, it is clear that the fire incident has taken place due to short circuit. The short circuit is clearly beyond the control of anyone and it is general that in majority of cases fire takes place due to short circuit and the same cannot be predicted by anyone in advance - AT
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Classification of goods - Folders for inserting certificates - The criteria being that all the printing or writing that is required to be done on the said cards is already done at the time of clearance and therefore, the same would be classifiable under Chapter 49. The same argument equally applies to folders for inserting certificates which contain already pre-printed details of the arguments and nothing remains to be written on the same. Relying on the aforesaid Circular and Chapter Note 12, it is apparent that the said product needs to be classifiable under Chapter 49 and not under Chapter 48.- AT
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Process amounting to manufacture - Green Houses - Revenue was of the view that 'greenhouses' are put up as elements to be assembled on site, and appellant was manufacturer of greenhouses where they supply the raw material and carry out erection/ installation also - This is a question of fact and needs to be ascertained from the facts available on the records. - Matter restored back - AT
VAT
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Open purchase order - inter-state sale or not - The Open Purchase Orders do not constitute any Contract. The Purchase Orders issued from time to time for supply of goods constituted Contract between parties. Thus, the sale effected pursuant to such Purchase Orders is an Intra-State sale in that State. It is so because, whilst Goods were stored in various States, the ownership and title of goods vested with the assessee. - HC
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Recovery of arrears of tax - When the Hon'ble Supreme Court has held that taxes paid by the assessee/appellant will not be refunded, it does not allow the Department to collect the differential taxes in the case of assessees who have not met the demands already made - It is trite that even though all statutory remedies are exhausted and held against the petitioner, it is legal to invoke powers under Article 226 to challenge the same as it vitiates the old law. - HC
Case Laws:
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GST
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2022 (11) TMI 485
Cancellation of the Registration Certificate of petitioner - failure to file Goods and Services Tax monthly returns for a continuous period of six months - Section 29 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- This Court, in the case of Tvl.Suguna Cutpiece Vs The Appellate Deputy Commissioner (ST) (GST) and others [ 2022 (2) TMI 933 - MADRAS HIGH COURT] has held that Since, no useful will be served by not allowing persons like the petitioners to revive their registration and integrate them back into the main stream, the impugned orders are liable to be quashed and with few safeguards. In view of the fact that this Court has been consistently following the directions issued in the case of Tvl.Suguna Cutpiece Vs Appellate Deputy Commissioner (ST) (GST) and others and the Revenue/Department has also accepted the said view as evident from the fact that no appeal has been filed in any of the matters, this Court intends to follow the above order of this Court. This Court feels that the benefit extended by this Court in the earlier orders referred to above in Suguna Cutpiece Centre's case, may be extended to the Petitioner - Petition allowed.
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2022 (11) TMI 484
Refund of Input Tax Credit - tax on the export of eggs - nil rated commodity - petitioner had instead of opting for exports without payment of tax, had opted for the column with payment of tax - HELD THAT:- An order of rejection came to be passed by the officer wherein the petitioner's response with regard to the quantum of ITC appears to have been accepted though he does not say so in as many words. In conclusion, he reiterates the objection raised by him in regard to the categorization of the services pointing out that the petitioner's entitlement fails since it was made only under the residuary category. This is the sole ground upon which the claim has been rejected. A counter has been filed by the respondent. Nowhere in the counter nor in the course of the oral arguments, does Ms.Lydia, learned standing counsel dispute the entitlement of the petitioner to the refund. In fact, she would fairly accede to the position that the error is bonafide and reiterate that the petitioner is, in fact, entitled to the refund of ITC seeing as the export was not liable to tax. The officer shall issue the refund within a period of eight (8) weeks from today after satisfying himself in regard to the quantum of refund as on the date of refund of application - Petition allowed.
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2022 (11) TMI 483
Refund of interest amount deposited - Scope of Section 50 - Levy of interest on delayed filing of GSTR-3B u/s 50 of the CGST Act - Discharge of the tax liability due or not - amount deposited as tax through valid challans by a registered person in the Government Exchequer prior to the filing of the GSTR 3B returns - GSTR- 3B return is being filed later - HELD THAT:- Section 39(7) provides that every registered person who is required to furnish a return under sub-section (1) other than the person referred to in the proviso thereto, or sub-section (3) or sub-section (5), shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return. Every such registered person is required to file his return in terms of Section 39(7) in Form GSTR-3B by 20th day of the succeeding month and on failure to file such return by the due date, a late fee shall be paid in terms of Section 47 of the Act - A combined reading of Section 49(1) of CGST Act, 2017 and Rule 87 (6) and (7) of CGST Rules, 2017 both go to show that such deposit does not mean that the amount is appropriated towards the Government exchequer. On other hand other, a bare reading of sub-section (3) of Section 49 indicates that such amount available in the Electronic Cash Ledger is used for making payment towards tax, interest, penalty, fees or any other amount under the provisions of the Act and the Rules in the manner prescribed and subject to such conditions as may be prescribed. A combined reading of Section 39 (7), 49 (1) and Section 50(1) read with its proviso and Rule 61(2) also confirms this position. Rule 61(2) provides that every registered person required to furnish return under Sub-Rule (1) shall subject to provisions of Section 49, discharged his liability towards tax, interest, penalty, fee or any other amount payable under the Act or under the provisions of Chapter by debiting the Electronic Cash Ledger or Credit Ledger and include the details in the return in the form GSTR 3B. Therefore, discharge of tax liability is simultaneous with the filing of GSTR 3B return under the scheme of GST regime and the provisions of GST Act intended to ensure seamless flow of movement of goods and services and payment of tax by the registered persons in the form prescribed through a digital mode maintained by GSTIN. Since the petitioner herein filed its return after some delay for the period July, 2017, October, 2017, November, 2017 and March, 2018 i.e. GSTR-3B return were filed after 20th day of the succeeding month for which the tax was due, the Revenue has rightly computed the interest on such delayed payment and requested the petitioner to pay the differential amount of Rs. 13,23,782.99. Since the petitioner has duly discharged his liability towards interest by making payment of total amount and filing Form DRC-03, no case of refund of such amount arises. Petition dismissed.
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2022 (11) TMI 482
Eligibility to claim ITC - Inputs - CSR expenditure spent by the company - Compliance with the Companies Act, 2013 - Section 17 (5)(h) of the CGST Act, 2017 - HELD THAT:- The expenditure made towards corporate responsibility under section 135 of the Companies Act, 2013, is an expenditure made in the furtherance of the business. Hence the tax paid on purchases made to meet the obligations under corporate social responsibility will be eligible for input tax credit under CGST and SGST Acts.
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2022 (11) TMI 481
Territorial Jurisdiction of Advance Ruling Authority - Requirement to obtain temporary GST Registration at various locations/States for each location to claim GST tax installation, testing commissioning of antennas - applicability of Section 22 of the CGST Act - HELD THAT:- The applicant is having his place of business in the state of Telangana and is seeking a ruling on his liability to obtain a registration in other states where he is executing to contracts including installation, testing and commissioning of antennas. In this connection it is inform that under section 96 of the CGST Act, the authority for advance ruling constituted under the provisions of a state goods and services Act shall be deemed to be the authority for advance ruling of that state. As seen from this provision there is a territorial nexus between the authority for advance ruling of a state and its geographical boundary. Therefore, this advance ruling authority constituted under the Telangana State Goods and Services Act cannot give a ruling on the liability arising under the CGST Act or SGST Act in a different state. Application dismissed.
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Income Tax
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2022 (11) TMI 480
Estimation of income - Bogus purchase - addition was made by the A.O. on the basis of credible information from the Sales Tax Department - HELD THAT:- We are in agreement with the view expressed by the CIT (Appeals) that, if the purchases are bogus, it would be impossible for the assessee to complete the business transaction and that if the purchase is bogus, the corresponding sale also must be bogus or else the transaction would be impossible to complete and as a necessary corollary, unless the corresponding sale is held to be bogus, the purchase also cannot be held to be bogus, rather it would be a case of purchase from bogus entities/parties. That view has been upheld by the Tribunal in principal while dismissing the appeal of the Revenue. In view of the above, we are of the opinion that the questions of law proposed as (a), (b), and (c) in the appeal cannot be said to be substantial questions of law. GP estimation - Tribunal has not addressed the issue of adopting the gross profit rate of 5% on the alleged Hawala purchase as against the rate of 0.69% declared by the assessee, despite the fact that the CIT (Appeals) had specifically gone into that question in its order dated 18th August, 2015 and had directed the A.O. to make 5% addition in the gross profit ratio, while deleting the balance addition.
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2022 (11) TMI 479
Reopening of assessment u/s 147 - bogus Input Tax Credit ( ITC ) on fake sale bills and the same was forwarded to beneficiary entities - Petitioner states that the Assessee has not transacted with M/s Nandi Traders and her Permanent Account Number (PAN) has been misused to register the impugned GST number - HELD THAT:- The averments raised by the Petitioner give rise to factual pleas and the AO is competent to determine the veracity of the pleas raised by the Petitioner, which include the misuse of her PAN as well as the use of an illegal bank account. Petitioner s plea that the GST Number, which is registered at the premises in Libaspur, Delhi is not in her control or possession and the transactions under scrutiny which were undertaken by Superior International and M/s Nandi Traders were carried out in a bank account which is not operated by the Petitioner, are all factual pleas which will be determined by the AO during the assessment proceedings after examine the evidence. We are certain that during the reassessment proceedings the AO will duly consider and adjudicate all the pleas of the Petitioner, including the plea of the fraud in obtaining the GST Number and the bank account. The petition is disposed of with the liberty to the Petitioner to raise all her pleas and contentions before the Assessing Officer. We make it clear that we have not examined the merits of the controversy. The rights and contentions all parties are left open.
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2022 (11) TMI 478
Addition on account of commission and brokerage paid - genuineness of services rendered - purchase of land from land owners - HELD THAT:- We note in this admitted factual backdrop that the assessee acted on behalf of the said company and purchased lands from various land owners which ultimately stood transferred to the company. He had claimed the impugned payments involving 74 persons in total transactions of Rs.16.72 crores. There is further no quarrel that all the payments had been made through banking channel and list of recipients had also been submitted before lower authorities. We find that the AO expressed his disagreement with the impugned expenditure commission claimed which ultimately stands accepted in the CIT(A) s order. Coming to our reason for not agreeing with either party submits, we find that neither the assessee had been able to prove each and every head of claim nor the AO had called him to substantiate the same regarding all the 74 persons as we are concerned with only 9 parties herein. Faced with this situation and in the light of the fact that all the land owners/payees herein are agriculturists who randomly joined the assessee cause of clubbing the lands for setting up windmills and allied activities for M/s. Suzlon Gujrat Wind Park Ltd (an undisputed fact in assessment), we hold that a lump sum commission disallowance of Rs.12.21 lakhs cash component out of that in issue of Rs.1,68,33,800/- would be just and proper with a rider that the same shall not be treated as a precedent. The CIT(A) details findings deleting the impugned commission/expenditure disallowance of Rs.1,56,12,800/- are upheld in very terms. - Revenue s appeal is partly allowed.
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2022 (11) TMI 477
Levy of Penalty u/s 271(1)(c) - Defective notice u/s 274 - as argued AO has not struck the appropriate words i.e. Concealed the particulars of Income or furnished Inaccurate particulars - HELD THAT:- AO has not struck the appropriate in applicable words in the penalty notice. Also as mentioned in earlier para, in the assessment order the AO has not mentioned whether the penalty is initiated for concealment or filling inaccurate particulars. This issue goes to the root of initiation of penalty. Therefore, respectfully following the Hon ble jurisdictional High Court, it is held that the penalty u/s.271(1)(c) is not maintainable. Hence, the Assessing Officer is directed to delete the penalty u/s.271(1)(c). Accordingly, appeal of the Assessee is allowed.
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2022 (11) TMI 476
Revision u/s 263 by CIT - Whether PCIT has failed to give any plausible reasons as to how the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue? - HELD THAT:- It is a well settled principle of law by the decision of the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] . where it has been held that the phrase prejudicial to the interest of the Revenue u/s.263 of the Act , has to be read in conjunction with the expression erroneous order of the AO. Further the Courts observed that every loss of Revenue as a consequent of an order of the AO, cannot be treated as prejudicial to the interest of the Revenue. We find that four issues questioned by the PCIT in their show cause notice issued u/s.263 of the Act, has been thoroughly examined by the AO during the course of assessment proceedings, which is evident from notice issued by the AO and reply furnished by the assessee. Even during revision proceedings, the PCIT did not specify how and why the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue. Further, if you go by the observations of the PCIT, it is abundantly clear that the PCIT has set aside the assessment order for further verification which in our considered view is not permissible u/s.263 of the Act, even after insertion of Explanation (2) to sec. u/s.263 - Therefore, we are of the considered view that the assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue and thus, we quashed the order passed by the PCIT u/s.263. Appeal filed by the assessee is allowed.
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2022 (11) TMI 475
Disallowance of interest at the rate of 15% u/s 36(1)(iii) - HELD THAT:- We find the assessee through its authorized representative sought adjournment from time to time on the ground that the relevant documents were seized by the Pune Police. Having no evidence forthcoming from the assessee, CIT(A) having given ample time of two years to the assessee, confirmed the order of the Assessing Officer basing on the material evidence available on record along with the statement of facts filed by the assessee with Form No.35. As noted from the record that the assessee filed the appeal memo in Form No.36 on 05.04.2019 and appeal was fixed for hearing on 12.05.2022. There was no proceeding on 12.05.2022, the appeal was adjourned to 20.07.2022. It is noted from the order sheet that from 20.07.2022, again on 25.08.2022 and today on 13.10.2022 there was no appearance on behalf of the assessee, but the appeal was adjourned from 20.07.2022 to 13.10.2022 for non-appearance of assessee. Therefore, there was no material placed on record by the assessee nor appeared through its authorized representative. Therefore, considering the material available on record, having no explanation offered by the assessee, we confirm the order of the CIT(A). We totally agree with the reasons recorded by the CIT(A) vide para 3 of the impugned order. Thus, ground of appeal no.1 raised by the assessee is dismissed. Disallowance u/s 14A r.w. Rule 8D - no details were furnished by the assessee regarding the profits accumulated by the assessee and its utilization for investments in subsidiary company - AO by applying Rule 8D(2)(ii) and 8D(2)(iii) made disallowance u/s 14A - HELD THAT:- Before us, no evidence in support of its claim were filed along with Form No.36 and in the absence of which, we have no option, except to confirm the order of the CIT(A). We agree with the reasons recorded by the CIT(A) - Therefore, the order of the CIT(A) is justified and ground of appeal no.2 raised by the assessee is dismissed.
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2022 (11) TMI 474
Unexplained expenditure u/s 69C - assessee has wrongly added survey declaration to its closing stock for A.Y. 2012-13 - HELD THAT:- AO said that since closing stock for A.Y. 2012-13 becomes opening stock for A.Y. 2013-14, there needs to be an addition for A.Y. 2013-14. CIT(A) has directed the AO to delete the addition made for A.Y. 2012-13. This order or ld.CIT(A) has attained finality as Department s appeal against this order has been dismissed by ITAT on the ground of Low Tax Effect. In these facts and circumstances, we agree with the ld.CIT(A) s order that there is no merit in the addition for A.Y. 2013- 14. Therefore, the AO is directed to delete the addition made for A.Y. 2013-14. Accordingly, grounds of appeal of Revenue are dismissed.
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2022 (11) TMI 473
Unaccounted cash - On-money received - receipt of the payment after the cancellation of the booking of flat - digital data which was seized during the course of search clearly established the Planned (1) cheque and Planned (2) received as an unaccounted cash - HELD THAT:- It is pertinent to note that the assessee has given the details related to payment of Rs. 43,26,000/- which was never doubted by the Revenue as the said payment was made through cheque. The cancellation of the flat was during the search period for which after the search the assessee was paid the exact amount through cheque by J. P. Iscon Ltd. The assessee has pointed various documents including the agreement to sale wherein it was clearly set out that the flat was booked for Rs. 68,26,000/- but due to certain reasons there was cancellation of flat. The Ledger Account of J. P. Iscon Ltd. from 01.04.2010 to 31.03.2017 from assessee s books of accounts showing complete details of mode of payments/received and amount paid/received back was given by the assessee during the assessment proceeding. Merely finding the name of the transaction in the excel sheet during the search cannot held the assessee responsible for cash which was never tracked down by the Assessing Officer from assessee s books of accounts. The assessee has denied any payment of cash portion during the assessment proceeding. AO has never pointed out from the accounts of the assessee that Rs. 14,00,000/- were paid to J. P. Iscon Ltd. in cash, thus, AO as well as CIT(A) was not right in making this addition. The appeal of the assessee is allowed.
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2022 (11) TMI 472
Suppression of sales - show cause notice issued by Excise Department against assessee alleging that assessee was engaged in undervaluation of sales - CIT-A deleted the addition - HELD THAT:- As considered the judgment passed by the Co-ordinate Bench in case of Zirconia Cera Tech Glazes [ 2017 (11) TMI 1852 - ITAT AHMEDABAD] wherein addition was made only on basis of and clandestine removal of goods and revenue had brought nothing on record that it had applied its mind over and above contents of said show cause notice and further, in excise proceedings, CESTAT had decided issue in favour of assessee, impugned addition was unjustified. We find that the order passed by the Ld. CIT(A) in deleting the addition holding reopening on the basis of the show cause issued by Excise Department not justified is just and proper so as to warrant interference. In that view of the matter, the Revenue s ground of the appeal is found to be devoid of any merit and thus dismissed. - Decided in favour of assessee.
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2022 (11) TMI 471
Unexplained cash deposits - AIR details consist of 107 entries for deposit of amount into the bank and entry for sale of immovable property - HELD THAT:- The bank account statement, bank book and cash book of the appellant in respect of each bank account were duly furnished before the CIT(A) which is also appearing before us being part of the paper book alongwith bank statements. The audit report was also placed on record on 30.03.2015 which has been noted by the Ld.AO at Page No.3 of the order passed by him. The individual balance sheet as well as P L Account of the assessee and three referred concerns filed before us, reveal that there is several credit and job entries from time-to-time which has sought to be claimed to be approved of carrying out the business during the year under consideration of the assessee. As further observed by him that the document letter dated 30.03.2015 shows candid confession of the entrepreneur about the tax implications, therefore, intention of the appellant cannot be doubted. We fail to follow as to whether the Ld. CIT(A) can grant relief on the basis of the documents, which has not been verified by the Ld. AO neither been placed before the Ld. CIT(A) as per the statement made by the appellant in their submissions itself against the remand report filed by the Ld.AO. Now, merely because the books of accounts have been subjected to tax audit u/s 44AB of the Act and the Auditor had certified the books of accounts to be in order, the contention made by the assessee cannot be stated to be full proof. In that view of the matter, we do not find the impugned order deleting addition made by the Ld.AO to be justified. For the ends of justice, as we have already discussed above that the issue has not been verified by the Ld.AO properly, the same is required to be verified afresh by the Ld.AO on the basis of the documents as mentioned by him in its remand report dated 05.05.2017. We set aside the order passed by the Ld. CIT(A) and remitting the issue to the file of the Ld.AO to consider the same afresh upon taking into consideration the evidence to be adduced by the assessee as mentioned hereinabove and upon giving an opportunity of being heard to the assessee. The Ld.AO is directed to pass a reasoned order strictly in accordance with law. Revenue s appeal is allowed for statistical purpose.
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2022 (11) TMI 470
Addition u/s 68 - burden of proof - Bogus profit from bogus trading in commodities through the broker - AO was of the view that onus to prove the source of income was on the assessee, and hence he had not made any further inquiry and it was sought to be justified on the ground that Section 8, read with Section 106 of the Indian Evidence Act, 1872 that when the fact is substantially within the knowledge of any person, burden of providing that fact is upon him - HELD THAT:- As the burden was on the department to show that the amount of demand drafts found to be credited in the assessee s account in the books of account of GMDC belonged to the assessee by bringing proper evidence on record and the assessee could not be expected to explain the source of income or to call responsible officers of the GMDC or bank to discharge the burden that laid upon the department. As further find that in case Dr. Swati Mahesh Vinchurkar vs DCIT [ 2021 (6) TMI 1123 - ITAT SURAT] the Division Bench of Surat Tribunal also took view that once assessee denied that she has not earned income as reflected in her form 26-AS, the onus shifts of the Revenue authorities to prove such income of such assessee. The addition solely cannot be made by ignoring the submission of assessee. AO was not justified in absence of bringing any cogent evidence to make such addition of alleged profit, when the assessee specifically denied his involvement in the transaction of Multi National Commodity Exchange and has furnished his bank statement showing that there is no such credit in his books. Hence, we direct the Assessing Officer to delete the addition of alleged bogus profit. Appeal filed by the assessee is allowed.
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2022 (11) TMI 469
Unexplained Cash deposit during demonetization - Counsel submitted before us that amount deposited in the bank account represents past withdrawal as well as past savings - HELD THAT:- As per Press Release dated 18.11.2016 and Guidelines for Verification of Cash deposit during demonetization to the AO vide Instruction No. 3/2017[ F.NO. 225/100/2017/ITA-II] dated 21.2.2017 and annexure thereof issued under section 119 of Income Tax Act,it is vivid that In the case of taxpayers above 70 years of age, the limit is Rs. 5.0 Lakh per person and for other person the limit is Rs.2.50 lakh per person. The source of such amount can be either household savings/ savings from past income or amounts claimed to have been received from any of the sources mentioned in Paras 2 to 6 of the CBDT circular. Amounts above this cut-off may require verification to ascertain whether the same is explained or not. Considering the above CBDT Circular, we are of the view that in assessee`s case under consideration, the assessee and his wife is having only one saving bank account wherein both deposits their past savings, therefore assessee should be allowed a blanket exemption of Rs. 5,00,000/- in view of instructions of CBDT, as the wife of the assessee did not have any other operational bank account and hence she has deposited her household savings in the same bank account of Axis bank where she is also a nominee - CBDT Instructions also clearly states that only the amount above the cut-off may require verification. Therefore, assessee is entitled to claim a blanket exemption of Rs. 5,00,000/- (Rs.2,50,000/- assessee himself and Rs.2,50,000/- for wife) in view of instructions of CBDT. Assessee is regular in filing his Return of Income for more than nine years and has already shown his books of accounts and submitted the same to the Assessing Officer to show that he has sufficient cash balance to justify cash deposit during demonetization and hence no adverse view should be drawn in absence of any finding that the cash withdrawn is used for any unaccounted income or any unaccounted asset. Demonetization was a compulsion event and hence it has to be viewed differently from normal cash deposits. We also note that submission was furnished by the assessee to assessing officer, during assessment proceedings, with supporting evidence and no defect could be pointed out in these evidences maintained by the assessee. We therefore, taking into account all these peculiar facts and circumstances, delete the balance amount. Appeal of assessee allowed.
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2022 (11) TMI 468
Addition u/s 68 - bogus LTCG - penny stock purchases - denial of cross examination of persons giving credit - HELD THAT:- As noted that the assessee requested the AO for cross examination of all such persons but the assessee was not provided opportunity of cross examination holding that at this juncture of time, it is an attempt to delay/ halt the proceedings by assuming the instrument of cross examination as a right. It is understandable that for the sake of natural justice, the assessee can exercise his power to cross examine the evidences gathered against her. Hence, the assessee was deprived off to cross examine the persons whose statements / evidences were obtained against her. Equity market is under control and supervision of SEBI, price of scrip is not in control of the assessee or any individual person. The stock market is completely based on probabilities of market political scenario, trend of market, fiscal policy, stability of government speculation, global trend of market etc. - Theory of probability of gain or loss is always there but it may not be pre-arranged as the market is based completely on electronic system. The SEBI suspended only trading of 26 scrips out of the above said 58 scrips and only 11 scrips prices were found rigged. Sunrise Asian Ltd. (Scrip Code 506615) was not included in these scrips whose shares assessee had purchased on 01-04- 2012. As also noted that no cogent evidence against the assessee has been found by the lower authorities and all the payments were routed through banking channel by using cheque. In this case, it is found that the enquiries were conducted by the DCIT at Kolkata and the statements were recorded at the back of the assessee. Assessee was deprived off to cross examine the witnesses. It is also noted that no any cogent material to show that the assessee has brought back his own unaccounted income in cash. In view of the above deliberations, facts and circumstances of the case, the Bench finds that the ld. CIT(A) is not justified in dismissing the appeal of the assessee by confirming the above additions hence, the Bench delete the additions made by the lower authorities by allowing the appeal of the assessee.
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2022 (11) TMI 467
Rectification u/s 154 - Addition u/s 54 - sale of property - Mistake on the basis of Audit Objections - whether addition was made after giving proper opportunity of being heard vide notice u/s 154/155 to the assessee - HELD THAT:- DR did not controvert the arguments of assessee that considering the present set of fact the ld. AO did not bring anything in the notice issued to him so as to demonstrate that in fact there is a mistake apparent on record. The claim of the assessee is already considered which is based on the submission on merits in the scrutiny assessment and order has been passed which is based on the evidences and submission made by the assessee. Merely there is an observation of the revenue audit party it is not a mistake apparent on record. The ld. AO is in error of reviewing his own order under section 154 of the Act. Considering the facts placed on record the bench noted that the issue noted by the ld. AO is not a mistake apparent on record and is not subjected to revision under the guise of provision of section 154 of the Act and therefore, order passed under section 154 of the Act lacks jurisdiction as ld. AO did not demonstrate as to what is the mistake apparent on record and the debatable or change of opinion is not subject matter of the provision of section 154 of the Act, as the law allows the mistake apparent on record be rectified which is expressly not demonstrated before us and see that there exist no mistake which is apparent on record. The law duly empowers the revenue to invoke other provision to consider the audit objection but the same is not permitted under the provision of section 154 of the Act as it done by the AO. In view of the above, we do not find any infirmity in the order of the ld. CIT(A)/NFAC and accordingly decline to interfere. Hence the ground of the appeal of the revenue is dismissed.
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2022 (11) TMI 466
Revision u/s 263 by CIT - difference found in 26AS statement - HELD THAT:- As in case of Sahita construction Company [ 2022 (2) TMI 1298 - ITAT INDORE] it is vivid that case of the assessee was selected for limited scrutiny for verification of limited issues (Share capital and Turnover) and the same were examined in detail by the assessing officer. The issue of TDS and amount disclosed during survey were never a part of reasons for the limited scrutiny. AO does not have any occasion to examine the same, hence order passed by the assessing officer is neither erroneous nor prejudicial to the interest of Revenue. So far alternative argument of Counsel is concerned, we note that in the Tax Audit Report, the amount has been shown wrongly and during the assessment proceedings, AO has raised this issue, wherein AO has issued show-cause notice u/s 142(1) requiring the following details. We do not agree with the stand taken by Ld. DR for the Revenue to the effect that Ld. PCIT has unlimited power under section 263 of the Act to revise the order passed by the Assessing Officer, in case of limited scrutiny cases. In limited scrutiny cases, the assessing officer does not get the opportunity to examine other issues which are not part of limited scrutiny. AO has not converted the limited scrutiny into full scrutiny by taking permission from the higher Income Tax Authorities. PCIT can exercise the supervisory power under section 263 only on the issues examined by the assessing officer and therefore the definition of the term record in clause (b) of Explanation 1 of section 263, means the record on which assessing officer has expressed his opinion. Hence, the plea taken by the ld DR for the Revenue, is not acceptable. It is well established that the impugned order passed u/s. 143(3) of the Act dated 21.12.2019, was passed by assessing officer, after calling for relevant information and after detailed examination of the same. The Assessing Officer has passed the assessment order after calling for details on the issue and after considering the reply and documents and after verification of the same and after due application of mind passed the assessment order, so it cannot be termed as erroneous and prejudicial to the interest of the revenue. So, the Ld. PCIT s finding fault, with the order of the Assessing Officer is erroneous as well as prejudicial to the interest of revenue, on account of lack of inquiry, has to fail. Therefore, we note that during the assessment stage, the assessing officer has raised the question relating to TDS and assessee has replied and then after Assessing Officer has examined the same and applied his mind and passed the assessment order. About the amount declared during the survey proceedings to the tune assessee has shown in its profit and loss account and paid the taxes thereon. The assessee claimed the indirect expenses against other regular business income and not against the amount declared in survey. The profit and loss accounts were submitted before the assessing officer. AO has examined the profit and loss account and applied his mind and took the possible view and then after framed the assessment order, hence such order passed by the Assessing Officer, after making detained inquiry, should not be erroneous. Assessing Officer has passed the assessment order after calling for details on the issue and after considering the reply and documents and after verification of the same and after due application of mind passed the assessment order, so it cannot be termed as erroneous and prejudicial to the interest of the revenue. PCIT s finding fault, with the order of the Assessing Officer is erroneous as well as prejudicial to the interest of revenue, on account of lack of inquiry, has to fail - Appeal filed by the assessee is allowed.
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2022 (11) TMI 465
Unexplained investment u/s 69A - cash deposit by appellant in her two bank account - cash deposit in bank account during demonetization year - HELD THAT:- Keeping in view that despite furnishing complete details for previous and subsequent period of demonetization year, the assessee has discharged his onus by showing the magnitude of cash deposit, during demonetisation period was not at much variance, comparative to previous and subsequent period, therefore, the addition made by AO does not stand in judicial scrutiny and we direct to delete the addition made. Appeal of assessee is allowed.
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2022 (11) TMI 464
Revision u/s 263 by CIT - addition made in the hands of assessee u/s 153C - Whether incriminating material was found and seized during the course of search operation conducted in the case of one of the partners of assessee firm by name, Ajaz Farooqui and his related business concerns? - non -availing of IDS - HELD THAT:- Revenue has failed to point out any incriminating document found during the course of search pertaining to / belonging to the assessee firm relevant to the assessment years under consideration from the records of Assessing Officer as well as from the record of the Tribunal which formed basis of making the addition in the hands of assessee. The law is fairly settled that no addition can be made in the hands of assessee u/s 153C in the absence of any incriminating material pertaining to the assessee firm for the years under consideration. Further, the assessee in this case had filed return of income which was duly noticed by the Assessing Officer at the time of recording satisfaction, however, despite knowing the return of income and alleged non-disclosure of the bank account in the return of income, the Assessing Officer has not resorted to proceed u/s 147 / 148 of the Act. In the present case, as mentioned above, a search was carried out in the premises of Ajaz Farooqui, one of the partners of the assessee firm, and his related business concerns and some incriminating material / documents were found and seized. However, the documents so found do not pertain to the years under consideration and therefore, cannot form the basis for making an addition in the hands of assessee under section 153C. From the perusal of the assessment order and the seized material, it is clear that no addition has been made by the Assessing Officer based on the incriminating material. Therefore, the plea of the Revenue that the additions were made on the basis of the seized material is without any basis. Further, we may point out that the Assessing Officer had also examined the return of income filed by the assessee in response to the notice which was duly considered by him and the income already been declared was considered while computing the total income for Rs. 2,25,65,581/-. Thus, the additions made by the AO were not based on the incriminating material and hence, the action on the part of the CIT(A) in our opinion is in accordance with the law. As in view of the support drawn from the decision in the case of M/s. G.V.K. Enterprises [ 2021 (12) TMI 1394 - ITAT HYDERABAD] we dismiss the appeals filed by the Revenue. Though, DR had sought to distinguish the decision on the pretext that the assessee has not gone to the Income Declaration Scheme, 2016. We have already mentioned that once the assessee had filed the return of income and the same was also considered by the AO at the time of assessment, therefore, non- availing of IDS will not be a reason to distinguish the case. Further, we do not find any material on record to demonstrate that the order of Tribunal in the case of M/s. G.V.K. Enterprises [ 2021 (12) TMI 1394 - ITAT HYDERABAD] has been set aside / stayed / overruled by any higher judicial forum. No other ground has been adjudicated by us, as the appeals of the assessee are liable to be dismissed on the sole ground adjudicated by us while deciding Revenue appeal.
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2022 (11) TMI 463
Unexplained cash deposits - CIT(A) not accepting the contention of appellant that cash received was against sale of property and same to be treated as Income from Capital gain and not from unexplained cash credit - HELD THAT:- As in this case the material facts strongly indicate a probability that, the appellant had occasioned to receive on-money (cash) in the sale transaction of capital asset, and another very strong probable factor is that the said cash was deposited into bank account after the occurrence of sale transaction. The probable factors could have gone against the appellant only if deposits would have been anterior to said sale transaction. Insofar as the revenue s action is concerned, at least something extra and weighing would have been unearthed over and above the financial information received in AIMS module / ITD system in order to draw presumption so has to conclude income by way of cash credit u/s 68 of the Act. However, this presumption or suspicion how strong it may appear to be true, but needs to be corroborated by some evidence to establish a link that, said amount of cash deposit(s) is actually untaxed income credited in the form of cash credit. It is quite a trite law that suspicion how so ever strong may be but cannot be the basis of addition except for some material evidence brought on record. The theory of preponderance of probability‟ is applied to weigh the evidences of either side and draw a conclusion in favour of a party which has more favourable factors in his side, and conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumption of facts Once nothing has been proved against the appellant with aid of any direct material especially when three rounds of investigation have been carried out, then nothing can be implicated against the appellant. We find force in the submission of the appellant, and for the reason we set aside the order of both the tax authorities below, and direct the Ld. AO to treat the said cash deposits as integral part of sale consideration received and reframe the assessment in the light of chapter IV-E of the Act, ergo we order accordingly.
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2022 (11) TMI 462
Disallowance being 10% of labor charges paid in cash - HELD THAT:- During the course of hearing, it was agreed by both the sides that no further appeal has been preferred against the aforesaid order of learned CIT(A) and the disallowance at 5% of labour charges has been accepted. Since, in the present case neither assessee could provide complete details in support of its claim nor Revenue treated the entire payment to be bogus, therefore, we deem it appropriate to restrict the disallowance of labour charges paid in cash to 5%. We order accordingly. As a result, ground No. 1 raised in assessee s appeal is partly allowed. Disallowance of sub-contract expenses - HELD THAT:- From the record it is evident that even after receipt of PAN details of the parties, to whom sub-contract amount was paid by the assessee and TDS being deducted, no further action was taken by the AO either by issuing notice under section 133 (6) of the Act or by issuing summons under section 131 of the Act to these parties, in order to determine the veracity of assessee s claim. It is also evident that the AO has also not cross verified the details of TDS amount furnished by the assessee from the record available with the Department. Once the PAN of the parties to whom sub-contract amount has been paid was available with the AO, all the basic details as sought from the assessee could have been easily traceable from the data available with the Department. However, no such efforts by the AO are evident from record. Therefore, in view of the above, we find no merits in sustaining the addition of even 10% of sub-contract expenses claimed by the assessee. Accordingly, we direct the AO to delete the impugned addition of 10% of sub-contract expenses claimed by the assessee. As a result, ground No. 2 raised in assessee s appeal is allowed.
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2022 (11) TMI 461
Assessment u/s.153C - Additions towards purchases from unregistered dealers - As observed that when the survey was conducted u/s.133A of the Act, the AO cannot frame the assessment u/s.153C - HELD THAT:- In this case, there is no dispute with regard to the fact that absolutely there is no incriminating material was found during the course of search in the case of M/s.BGAL, which pertains to the assessee and which shows undisclosed income pertains to these assessment years. Therefore, we are of the considered view that the AO ought not to have made assessment u/s.153C of the Act, and made additions towards purchases made from unregistered dealers. The Ld.CIT(A) has rightly apprised the facts and held that the action of the AO in framing the assessment u/s.153C of the Act, was only survey u/s.133A of the Act, conducted is legally incorrect. Additions made towards purchases from unregistered dealers - The assessee has declared purchases made from unregistered dealers in the VAT returns filed for the respect month and paid relevant VAT on said purchases. The assessee had also made 90% of payments against said purchase through proper banking channel. Although, the assessee has made small portion of payment by cash in excess of prescribed limit, but in our considered view, payment made by the assessee does not hit by provisions of Sec.40A(3) of the Act, because, any payment made to a cottage industry is excluded u/r.6DD(f) of IT Rules. Therefore, we are of the considered view that the AO is erred in invoking the provisions of Sec.40A(3) of the Act, for payments made in cash in excess of prescribed limit, even though, the case of the assessee comes u/r.6DD(f) of IT Rules. As regards remaining purchases on which payment made through proper banking channel, the assessee had filed complete details including name and address of the person from whom purchase was made, payment details and also filed relevant VAT returns to prove that said purchases were declared to Commercial Tax Authorities and paid applicable VAT - additions made by the AO cannot be sustained. CIT(A) after considering relevant facts has rightly deleted additions made by the AO and thus, we are inclined to uphold the findings of the Ld.CIT(A) and dismiss the appeal filed by the Revenue.
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2022 (11) TMI 460
Disallowance of interest expenditure on account of diversion of funds for non-business purpose - Proof of Sufficiency of interest free funds entitling diversion thereof to sister concern as such - HELD THAT:- We are mindful to the fact that, the funds borrowed on interest under OD facility is meant for working capital needs of the borrower is governed by terms of loan agreement and bench is also aware of the fact that, every banker while making such a sanction invariably restricts the borrower from diverting the such loan funds or utilization thereof for any purpose outside the sanctioned tenacity by stipulating appropriate condition in the loan agreement itself. Since the appellant neither brought on the record any authorisation from the banker entitling such diversion of funds to sister concern nor placed any evidential material to substantiate such interest free payments or diversion were triggered on account of business exigencies vis- -vis obligation and commercial expediency, consequently the claim of the appellant fails the test laid by the Hon ble Supreme Court in S.A. Builders Ltd. Vs CIT [ 2006 (12) TMI 82 - SUPREME COURT] thus we find no infirmity with the disallowance made on this count, ergo ground number 1 stands dismissed. Repairs maintenance expenditure - Revenue or capital expenditure - HELD THAT:- In the present case before us, it is an admitted fact that, the appellant has occupied the premises on short term lease in a disfigured condition and carried out the extensive repairs to convert the same into workshop and showroom so has to suit its business operation to be carried therefrom under a dealership specification, but without bringing into existence any capital field / asset or rights therein, except enduring usage over a short period of lease, which naturally subjected to pre-termination, consequently no control over the term of enduring usage as well. And the question as to whether or not such extensive repairs is of enduring nature is extensively dealt in the case of Alembic Chemical Works Co.[ 1989 (3) TMI 5 - SUPREME COURT] For the purpose of allowability of any expenditure under the Act, what is material is the classification between the capital and revenue and the same-does not recognise of any concept of deferred revenue expenditure cataloguing with enduring benefit, hence for the reason we disapprove the contention of Ld. DR s for treating the revenue expenditure as deferred expenditure, and are we are of the considered view that, the expenses incurred by the appellant squarely intra-legem to the provision of section 30(a)(i) of the Act, and the same finds fortified by the decision in Cultural Enterprises Corp. Vs CIT [ 1992 (1) TMI 81 - CALCUTTA HIGH COURT] ergo we remove the infirmity in the order of both the tax authorities below by deleting the disallowance carried out u/s 30(a)(i) of the Act.
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2022 (11) TMI 459
Correct head of income - income earned from unsold lottery tickets as income from other sources OR income from business - HELD THAT:- As per the assessee, all the transactions relating to its business has resulted in income from business. The purchases, losses, unsold stock of lottery tickets, expenditure and all the activities are pertaining to business only. Further, the assessee being a seller / trader, all/any income generated from lottery tickets is exclusively in the nature of business income, unlike in case where the person earned income from lottery tickets by winning the prize. As per the assessee, it has not purchased the lottery tickets with a chance to win the prize and the same were purchased in the course of business for the purpose of trading and, therefore, income arising therefrom can be taxed only under the head Income from Business . Also submitted that in the course of lottery dealing, every dealer ends up with some quantity of lottery tickets unsold at the end of draw, which are not taken back by the main distributor. In such circumstances, purchase price paid by the lottery dealer to the extent of unsold lottery tickets is loss. However, this loss is mitigated by prize money attributed to prize winning lottery tickets out of unsold lottery tickets lying with the trader. We find that in Pooja Marketing [ 2021 (5) TMI 793 - ITAT MUMBAI] dealt with a case, wherein the taxpayer was carrying out business as a Sole State Level Distribution for distributing lottery tickets in the State of Maharashtra and in this process has won prize from unsold lottery tickets, which were not taken back by the main distributor. Thus held such prize money from unsold lottery tickets as income from business of the taxpayer firm. A.R. during the course of hearing placed reliance upon the agreement entered with the Government of Maharashtra, which was filed by way of an application seeking admission of additional evidence. The assessee also placed on record its appointment letter as Stockists , inter alia, for the State of Maharashtra, as part of the compilation of additional evidences. As per the assessee, these documents could not be filed before the lower authorities as the hearing before the learned CIT(A) was concluded only on the basis of partial submissions filed by the assessee. In view of the above, we admit the aforesaid additional evidences filed by the assessee. We find that since these documents were not available with the lower authorities, therefore, no findings have been rendered on them. Accordingly, we deem it fit and appropriate to restore this issue to the file of the Assessing Officer for de novo adjudication after considering the additional evidences filed by the assessee before us and in the light of the aforesaid decision of the Co ordinate Bench of the Tribunal rendered in Pooja Marketing (supra). Grounds raised by the assessee are allowed for statistical purposes.
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2022 (11) TMI 458
Penalty imposed u/s 271AAA - unexplained cash and unexplained jewellery - HELD THAT:- While deciding assessee s quantum appeal, the Tribunal has deleted addition made on account of unexplained cash. Whereas, the addition made on account of unexplained jewellery has been restored back to the AO for fresh adjudication. Thus, additions based on which penalty under section 271AAA was imposed by the AO as of now, do not survive. That being the factual position emerging on record, the penalty imposed under section 271AAA at least for the present, cannot survive. Accordingly, we delete the penalty imposed under section 271AAA - However, it is open for the Assessing Officer to initiate proceeding under section 271AAA if warranted, depending upon the decision to be taken relating to the addition made on account of unexplained jewellery in the fresh assessment to be made by him in pursuance to the direction of the Tribunal. Appeal of assessee allowed.
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2022 (11) TMI 449
Revision u/s 263 by CIT - Scope and power of CIT - justification to set aside the assessment order passed under section 143[3] r.w.s. 153D of the Act dated 24/12/2019 and direct the assessing officer to modify the original assessment passed - HELD THAT:- We do not find any fetters on the powers of Ld.PCIT/CIT for revising any order passed by the Ld.AO, except as provided in Explanation 1(c) of the section. However, the argument of the assessee is that, powers granted to the PCIT and CIT u/s 263 becomes otiose if the authority below the rank of PCIT/ CIT i.e Joint Commissioner of Income tax, has approved the order u/s 153D of the Act. The Ld.Ar is making out an argument that, if the lower authority, u/s 153D, has approved the order, the Higher Authority i.e., PCIT and CIT lose their power to revise such orders. We do not find force in this argument of the assessee as Pr.CIT is way high above the Jt.CIT. We refer to section 116 of the Act, where the Income Tax authorities in their hierarchical order are listed, clears the doubt about it. The assessment order in the present facts are not passed under the instructions of the superior authority or under the direction of the superior authority, but merely an approval was granted by the Joint Commissioner of Income Tax under Section 153D of the Act to pass the orders. Provisions of Section 153D speak about prior approval for assessment in the case of search . The section also provide for obtaining the prior approval of the Joint Commissioner for merely passing an order. Thus if the argument of the AR is to be accepted then in such cases where the assessment has been framed under Section 153A or Section 153C, the same will go out of the ambit of the provisions of Section 263 of the Act and such a view cannot be even considered to be a plausible view in the eye of law. Provisions of Section 263 of the Act give un-fettered right to the Commissioner of Income Tax to revise any order passed by the AO - Whatever was to be excluded by the law has already been provided under that Section and the only exception are the issues 'decided and considered' in the appellate orders. Therefore, the reasoning of the arguments advanced by the AR in respect of Ground no.3 falls without any legs to stand. Even the authority above PCIT and CIT cannot deprive the powers of the revision and thus there is no reason that lower authority exercising powers granted to it can prevent the PCIT or the CIT to exercise revisionary powers. Therefore, it is apparent that none of the lower authorities or even a superior authority cannot put spokes in exercising the power of the Pr.CIT. The power of the Commissioner u/s 263 is in the nature of supervisory jurisdiction. This power is granted to correct an error, which is prejudicial to the interest of the Revenue in the order of the AO, even if it is approved by the Joint Commissioner, who is also falling below the rank of the Pr. Commissioner. If the argument of the ld. AR is accepted then the supervisory authority of the Pr. Commissioner granted under the Act is hampered. Provisions of Section 263 of the Act give unfettered right to the Commissioner of Income Tax to revise any order passed by the AO. Whatever was to be excluded by the law has already been provided under that Section and the only exception are the issues 'decided and considered' in the appellate orders. Therefore, the reasoning of the arguments advanced by the Ld. AR on this line also fails and we dismiss the same. Addition u/s 68 - We are of the view that the PCIT is not justified in set aside assessment order passed u/s. 143(3). The Ld.AO had conducted enquiry based on the return filed in lieu of the notices issued post search action. A specific query has been raised as to why the amount offered by assessee at the time of recording statement u/s. 132(4) stands reduced by a sum of Rs. 4 Lakhs in response to which reply has been furnished by assessee which has been accepted by the AO and no addition has been made. The said amount has been offered to tax by assessee as business income and no addition has been made by the Ld.AO under any other provisions of the Act, applicability of section 115BBE is not possible. PCIT has stated that AO should have treated the said income as unexplained cash credit and addition should have been made u/s. 68 - This contention is not accepted as for invoking the provisions of section 68 there has to be entries in the books of account for which no explanation is offered by assessee. In the present facts of the case, the declaration by assessee is based on a seized material which is self-explanatory in terms of the parties to whom payments have been made in cash as well as cheque towards construction. In the present facts of the case, the order passed by the Ld.AO may be prejudicial however, it cannot be held to be erroneous and the Ld.AO had adopted one of the possible view. Respectfully following the ratio laid down by Hon ble Supreme Court case of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT ] we hold the revisionary proceedings initiated in the present facts to be bad in law and quash the consequential order passed dated 22/03/2022.
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2022 (11) TMI 448
Income from other sources - interest u/s 28 of Land Acquisition Act received by the appellant which was part of enhanced compensation received on compulsory acquisition of her agricultural land which is exempt u/s 10(37) - HELD THAT:- In the present case, from the orders of the authorities below, it is clear that the authorities below have treated interest received by the assessee on enhanced compensation u/s 28 of the Land Acquisition Act, 1984 as Income from other sources and denied exemption u/s 10(37) of the Act. The facts and circumstances of the present case are identical and similar to the case of Ram Kishan [ 2020 (12) TMI 1244 - ITAT DELHI] wherein the coordinate Bench of the Tribunal categorically held that the interest received by the assessee u/s 28 of the Land Acquisition Act, 1984 on enhanced compensation is part and parcel of the compensation, if the agricultural land of the assessee has been acquired under compulsory acquisition and, thus, the same is exempt income u/s 10(37) of the Act. Respectfully following the said proposition, allow ground No.2 of the assessee and the AO is directed to delete the addition.
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2022 (11) TMI 447
Reopening of assessment u/s 147 - Non disposal of dispose off/adjudicate objection of the assessee - HELD THAT:- The legal contention raised by the Ld. Counsel for the assessee is squarely covered in favour of the assessee before the judgement of Hon ble Supreme Court in the case of GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] and judgement of Hon ble Delhi High Court in the case of Ferrous Infrastructure (P.) Ltd. [ 2015 (5) TMI 871 - DELHI HIGH COURT] as the AO failed to dispose off/adjudicate objection of the assessee vide letter dated 10.10.2017 to the re-opening of the assessment therefore, notice u/s 148 of the Act dated 30.03.2017, the impugned reassessment order u/s 147/144 and all proceedings and orders in pursuance to the said notice and reassessment order are quashed. Legal Ground Nos. 1 2 raised by the assessee are allowed.
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2022 (11) TMI 446
Ex-parte order Passed by CIT-A - Non granting of TDS credit Foreign Tax Paid credit - CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismissed the appeal ex-parte confirming the action of the assessing officer - HELD THAT:- We find CIT(A) has issued the notices of hearing referred but there was no response and thus the CIT(A) came to a conclusion that the assessee is not interested and decided the appeal based on the information available on record. We find that the assessee has raised grounds of appeal challenging the validity of Assesseement and non granting of TDS credit Foreign Taxes Paid credit overlooking the DTAA with U.S.A and there could be various reasons for non appearance which cannot be overruled. We considering the principles of natural justice shall provide one more opportunity of hearing to the assessee to substantiate the case before the Assessing Officer along with evidences and information. Accordingly, we set aside the order of the CIT(A) and remit the entire disputed issues to the file of the Assessing Officer to adjudicate afresh on merits Grounds of appeal of the assessee for statistical purposes.
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2022 (11) TMI 445
Nature of expenditure - Allowable business expenditure or personal expenditure - claim of education expenses of the daughter of the assessee which was denied by the authorities below holding the same to be personal in nature, and alternatively capital in nature - assessee submitted assessee s daughter was a highly qualified architect working in the assessee s firm and wanted to pursue higher education; that she had studied in various prominent institutions , interned with globally acclaimed architects and had a huge repertoire of knowledge and expertise and had agreed to work with the assessee for five years after completing her education - HELD THAT:- The contract mentions the agreement being entered to pay back the expenses incurred on her education by her father, as she was contracted to work on minimum wages and not actual salary. This is definitely not a normal contract which any father would enter with his daughter and the purpose appears to be to receive back in terms of her services what was paid by her father, the assessee, for her education. This in itself shows that education expenses were not incurred with the intention of furthering the business of the assessee but out of moral obligation as a father and the purpose of contracting her services for five years was strangely enough only to receive back what was paid for her education in terms of services rendered by her at lesser than normal rates. The contract is just an after-thought which not even binds the daughter for a reasonable period to contribute substantially to the assesses practice. Whether the assessee had ever incurred such expenditure on the education of any other employee in this firm, either in the past or in the future, has not been brought to our notice, so as to give weightage to the contention that such education expenses were incurred primarily with the intention of promoting its business or profession. As merely because these expenses were in relation to the daughter of the assessee that they were incurred by the assessee, and not dominantly because they were for the purpose of business of the assessee firm. Even if the daughter of the assessee was pursuing any other course, the father was morally bound to spend on the education of his daughter. Therefore, the fact that the daughter pursued the very same profession in which the father was , was not a material fact for incurring the expenditure. As also stated above by us, that the business of the assessee remained in the family alone, was also a major contributing factor for the father to incur this expenditure. Therefore, the primary and dominant purpose for incurring this expenditure was personal consideration and not professional consideration. With the logic advanced by assessee, every professional firm or business, incurring educational expenses for their progeny/ children would all claim the same as if for furtherance of their business, but it is not the case. The primary motive for incurring the expenses is to continue to carry the legacy of business and profession in the family and is purely personal in nature. We have no iota of doubt in holding the impugned expenditure as personal and not allowable therefore as business expenditure. Appeal of the assessee is dismissed.
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2022 (11) TMI 444
TDS u/s 194J - disallowance of Primary Rate Interface (PRI) line charges paid to telecom companies on account of non-withholding of taxes - HELD THAT:- This issue is squarely covered in favour of the assessee by the order of Pune Tribunal in assessee s own case [ 2022 (6) TMI 737 - ITAT PUNE] in the case of Lee Murihead (P) Ltd. [ 2019 (4) TMI 1871 - BOMBAY HIGH COURT] - Further, we find that in the said decision, had referred to the decision of Hon ble Supreme Court in the case of CIT Vs. Kotak Securities Ltd. [ 2016 (3) TMI 1026 - SUPREME COURT] while providing relief to the assessee. This decision of Hon ble Apex Court has been placed before us in the paper book filed - In view of the aforestated judicial pronouncement where the addition on lease line charges have been deleted, respectfully following the same, on the same parity of reasoning this ground of appeal of the assessee is allowed and the A.O/T.PO is directed to delete addition on lease line charges from the hands of the assessee. Ground is allowed. Disallowance of expenditure made pursuant to ESOP scheme floated by the assessee s parent company - Disallowance u/s 40(a)(ia) or u/s 37 - HELD THAT:- As noted by the D.R.P that in the said report of the A.O he had constantly harped upon the point that the assessee was not able to substantiate that the amounts were paid to employees as perquisites on which TDS has been deducted. Once the addition is sustained by the D.R.P and made by the A.O for non-deduction of TDS the provisions for addition and confirming the disallowance should have been u/s 40(a)(ia) of the Act and not u/s 37 of the Act as has been invoked by the A.O and sustained by the ld. D.R.P. In view thereof, we set aside the findings of the ld. D.R.P on this issue and allow this ground of appeal of the assessee. Ground is allowed.
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2022 (11) TMI 443
Reopening of assessment u/s 147 - unaccounted transactions - information received from Investigation Wing and statement recorded of Shri Akshay Doshi u/s. 131 - HELD THAT:- We find the CIT(A) has considered the facts, provisions of law and judicial decisions and observed that in the case of search in Bhoomi group , the incriminating material was found, were the aassesee is one of the investor in the land and it was not disclosed by the Assessee in the original return of income or during original assesseement U/sec 143(3) of the Act. We find the statement recorded above are linked with the assessee undisclosed income and these facts were not disclosed in the return of income filed u/sec 148 - A.O. found that the assessee is one of the investor/partner along with the others to acquire the land for TDR generation which cannot be disputed and was admitted in the post search statement by the director and the assessee was provided the benefit of cross examination of the director to test check the authenticity of the transactions. We considering the material information and the statements recorded do not find merit in this ground of appeal and up hold the decision of the CIT(A) on the validity of re assesseement and dismiss the grounds of appeal including the additional ground raised by the assessee. Addition of cash on the basis that it has been offered in the AOP - contentions of the Ld.AR are that though there is no mapping/ correlation of each entries with the A.O.P funds individually but the said money is part of the search proceedings and which has been taxed in the case of AOP - HELD THAT:- We find that the CIT(A) has passed an order considering the fact that the cash invested as contribution by the assessee in the capacity as partner is liable to taxed in the hands of the AOP but these facts are without any supporting evidences nor from the material information filed to explain how the transactions are routed. Basically the CIT (A) should have verified how the transactions have been reflected in the AOP on case to case basis but not on the general assumptions/ presumptions before granting the relief. Accordingly, we found the CIT(A) has only considered the facts of the scrutiny assessment and the assessee submissions and there is no finding on the facts that how the money has been disclosed in the AOP. We considering the overall facts, circumstances and provisions of law, and to meet the ends of justice shall provide one more opportunity to the assessee to substantiate with evidences and mapping of entries between the assessee and the AOP books of accounts and the statements duly supported with the material evidences. Accordingly, we restore this disputed issue to the file of the CIT(A) to adjudicate afresh on merits as discussed above and allow the grounds of appeal of the revenue for statistical purposes.
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2022 (11) TMI 442
Revision u/s 263 by CIT - As per CIT grant of depreciation and interest was not in accordance with the provisions of section 44AD(2) - HELD THAT:- PCIT has considered the action of the AO as erroneous and prejudicial to the interest of the revenue stating that interest and depreciation is not allowed on the profit estimated u/s.44AD. This is not the correct facts of the case, as the assessee has clearly submitted that 44AD is not applicable to him and this fact has been acknowledged by the AO in his order. PCIT has substituted his view with that of the AO to state that the deduction of interest and depreciation is allowed u/s.44AD by the AO and concluded the order of the AO as erroneous. AR drew our attention to para 4 and 5 of the AO s order where the AO has clearly acknowledged that the assessee has used the % specified in 44AD and that the said section is not applicable in assessee s case. It is because of this reason the AO has adopted a higher % for estimation viz., 9% which fact is not correctly noticed by the PCIT. PCIT has also misinterpreted the reliance placed by the assessee and considered by the AO in the case of Sammurai Techno Trading Co Ltd [ 2009 (11) TMI 938 - KERALA HIGH COURT] had stated that when reliance is placed on this decision on the applicability of 44AD then the assessee ought not to have claimed interest and depreciation and the AO should have allowed the claim. This is a gross misconception on the part of the PCIT, since the assessee had relied on the decision only to justify the applicability of 8% as a profit estimate even when section 44AD is not applicable in his case. The AO though accepted the estimation proceeded to enhance the % to 9% after considering the facts and the details furnished. Therefore the conclusion of the PCIT that the order passed by the AO is erroneous is not tenable as the assumption of the PCIT that the AO has estimated the profits by applying the provisions of section 44AD and allowed interest and depreciation on the estimated profit, is not correct interpretation of AO s order. Penalty proceedings initiated u/s.271B for non-maintenance of books of accounts being erroneous and prejudicial to the interest of the revenue - As relying on the case of Siddappa [ 2022 (4) TMI 535 - ITAT BANGALORE] we do not find it necessary to interfere with the observations of the PCIT on the issue of dropping the penalty proceedings initiated by the AO. Appeal of the assessee allowed.
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2022 (11) TMI 429
Disallowance u/s 14A - sufficiency of own interest free funds - HELD THAT:- From the details furnished it is clear that the interest free funds are undoubtedly more than the investments made by the assessee. In such circumstances the presumption shall be that the investments were made only from out of interest free funds and not from borrowed funds. Respectfully following the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. HDFC Bank Ltd [ 2014 (8) TMI 119 - BOMBAY HIGH COURT ] we direct the Assessing Officer to delete the interest disallowance made under Rule 8D (2)(ii) of I.T. Rules. Incorrect computation of refund, adjustment of refunds granted while computing interest u/s. 244A - AR submitted that refund granted by the tax department has to be first adjusted against the interest and thereafter against the tax - HELD THAT:- As gone through the details furnished by the assessee and find that there is merit in the submission of the Ld. counsel for the assessee. Therefore, in view of the submissions made we are of the view that this matter has to go back to file of the Assessing Officer for denovo consideration in the light of the decisions relied on by the assessee. Thus, we restore this issue to file of the Assessing Officer for denovo adjudication after providing adequate opportunity of being heard to the assessee. Accordingly, Ground No. 2 raised by the assessee is allowed for statistical purpose. Assessment Order on non-existent entity - HELD THAT:- We observe that on similar circumstances in which State Bank of Bikaner and Jaipur merged with the SBI , the Coordinate Bench following the decision of the PCIT v. Maruti Suzuki India Ltd., [ 2019 (7) TMI 1449 - SUPREME COURT] held that Assessment Order passed in the name of the erstwhile company is void ab-initio and quashed the same. DR has raised certain objections that (a) assessee has filed Form No. 35 in the erstwhile company name, we observe that the appeal cannot be filed before Learned Commissioner of Income Tax (Appeals) without following the Name/PAN mentioned in the Assessment Order . Therefore, this argument is misplaced. (b) With regard to other arguments on filing the return of income in erstwhile bank name and not surrendering the PAN, the return of income was filed at the time when the merger scheme was not approved by Hon'ble High Court. With regard to surrender of PAN this has relevance when the whole business is merged with the new company and what is relevant is not existence of the PAN, the relevance is how the Assessing Officer treats the non existing company in the Assessment Order particularly when it is brought to his notice of the facts. Considering the above discussion, we allow the additional ground (i) raised by the assessee
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Customs
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2022 (11) TMI 441
Smuggling - Gold - petitioner had not made any declaration or sought permission for the import of the gold - Confiscation - penalty - HELD THAT:- The Authorities have been more than liberal in deciding the revision application. While confirming the facts in question, the Government has set aside the confiscation of the gold and has permitted redemption for re-export on payment of redemption fine of Rs.20,00,00/- under Section 125 of the Act. The penalty imposed has also been reduced to a sum of Rs.4,00,000/- and the penalty of a sum of Rs.10,000/-, under Section 114AA, was set aside. No justification is made out for intervention in the impugned order and, in fact, learned counsel for the petitioner, fairly, restricts his plea to leniency. In light of the fact that the petitioner has, admittedly, brought in gold without either a declaration or a permit, there is no avenue to intervene in the impugned order, particularly seeing as the order is discretionary one and no error, much less perversity, is made out in the same. There is no merit in this writ petition - Petition dismissed.
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2022 (11) TMI 440
Refund of excess duty paid - Valuation of imported goods - 100% Knitted Polyester Fabrics - rejection of declared value - enhancement of the value on the basis of NIDB data - time limitation - refund also rejected on the ground of being pre-mature and on the ground of being incomplete - HELD THAT:- On perusal of Section 27 as it stood prior to the amendment, it can be seen that the second proviso states that one year / 6 months, as the case may be, do not apply when duty is paid under protest. The fourth proviso to sub-section (1) states that when duty becomes refundable as a consequence of judgment, decree, order or direction of the court, the limitation of one year or 6 months, as the case may be, shall be computed from the date of such judgement, decree or order. Both being proviso, it does give rise to some confusion. However, after the amendment to Section 27 by adding sub-section (1B) separately and using the phrase Save as otherwise provided in this section , the intention of the legislature to put the situation when duty has been paid under protest under a different category where no limitation applies is very much clear - In the case on hand, although refund claim is made out of a consequence of judgement, decree or order, the appellant having paid duty under protest, the limitation of one year envisaged in Section 27 will not apply. The issue of time bar is answered in favour of the appellant. Rejection of refund on the ground of being premature - It is the case of the Department that the claim is made without re-assessment / final assessment of the Bills of Entry - HELD THAT:- The view taken by the department that the refund claim is time-barred as well as premature appears to be self-contradictory. Further, it is the duty of the department to conduct reassessment in consequence to the orders passed by the Tribunal which has set aside the enhancement of the value of imported goods. Undisputedly, the department has accepted the order passed by the Tribunal and there is no appeal filed against the said order - The appellant was thus denied relief before a higher forum by contending that Department intends to file an appeal. Even after accepting the final order of Tribunal, they have not passed an order of final reassessment. The inaction on the side of the department cannot be a ground to reject the refund claim as premature. The other reason for rejection of the refund is that refund claim is incomplete and not supported by necessary documents - principles of unjust enrichment - HELD THAT:- The matter having reached upto the Tribunal and also the Hon ble High Court, it can be safely inferred that the department will not find it difficult to verify the copies of Bills of Entry produced by the appellant. The appellant having produced the Chartered Accountant certificate only before the Commissioner (Appeals), the original authority has not been able to verify the issue of unjust enrichment - the matter requires to be remanded to the original authority. The rejection of refund claim on the ground of time-bar and premature is set aside. The department is directed to complete the re-assessment and then process the refund claim. The appellant shall be given an opportunity to furnish documents to prove that refund is not hit by unjust enrichment - appeal allowed in part and part matter on remand.
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Insolvency & Bankruptcy
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2022 (11) TMI 457
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of demand notice - whether the demand notice in Form 3 dated 23.11.2020 was properly served? - HELD THAT:- The petitioner has placed a tracking report, whereunder it was stated that the speed post was delivered to the corporate debtor and no reply to that has been duly received. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is to be noted that none appeared on behalf of the corporate debtor and had been set ex parte vide order dated 21.12.2021. Moreover, the petitioner has appended an affidavit u/s 9(3)(b) of Insolvency and Bankruptcy Code,2016 stating that the operational creditor served Demand Notice dated 23.11.2020 to the Corporate Debtor as per the provisions of Section 9 of IBC, 2016. There was no notice given by the Corporate Debtor relating to the dispute of unpaid Operational Debt. Whether this application is filed within limitation? - HELD THAT:- This application was filed on 12.08.2021 vide Diary No.00968. Whereas the date of default is 23.04.2019 as per last transaction, therefore, this Adjudicating Authority finds that this application has been filed within limitation. Threshold limit of debt involved - HELD THAT:- There is a total unpaid operational debt (in default) of Rs. 1,01,12,899/-. The operational creditor was supplying TMT to the corporate debtor on a running account basis and raised invoices attached as Annexure A-5. Accordingly, the petitioner proved the debt and the default, which is more than Rupees one crore - It is noted that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. It is evident from the above-mentioned facts that the liability of the corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default, which is above threshold limit. In the present petition, all the requirements have been satisfied. It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition deserves to be admitted. Petition admitted - moratorium declared.
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2022 (11) TMI 456
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - whether the present application is filed within limitation? - HELD THAT:- It can be seen from the records that the date of default is 30.09.2017 i.e. the date on which the account of the corporate debtor was declared Non Performing Asset and the last date for filing the present petition was 29.09.2020. The present petition is filed vide Diary No. 00667 dated 01.07.2021. The period from 15.03.2020 till 28.02.2022 stands excluded by virtue of order passed by Hon ble Supreme Court in IN RE COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (5) TMI 564 - SC ORDER ] - the present petition is filed within limitation. Whether there is default in payment or not? - HELD THAT:- It is observed from the record that in the present case, the default is evidenced by the sanction letter dated 18.06.2015 and 07.03.2017, working for computation of default, Memorandum of deposit of title deed, registration of charge issued by the Registrar of Companies, CERSAI report, record of default with Information Utility, Packaging Credit Agreement dated 02.02.2016, Hypothecation of goods and book debts, hypothecation of movable assets dated 02.02.2016, agreement of guarantee dated 02.02.2016, statement of account, agreement of hypothecation of current asset dated 02.02.2016, balance and security confirmation, recall notice dated 09.11.2017 and NPA certificate dated 13.05.2021 - he respondent corporate debtor has proceeded ex parte, thus, there is no rebuttal to the claim of petitioner. The application filed in the prescribed Form No.1 is found to be complete. Another condition is that there are no disciplinary proceedings pending against the proposed Resolution Professional. In the present case, in Part III of Form 1, Mr. Hemanshu Jetley has been proposed as Interim Resolution Professional. Petition admitted - moratorium declared.
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2022 (11) TMI 455
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - threshold limit of debt involved - time limitation - HELD THAT:- On perusal of the email, this Bench observed and have the clear picture in mind that the Corporate Debtor acknowledges the amount due which is to be repaid by the Corporate Debtor to the Operational Creditor. Thus, it clearly shows that there is a clear debt and default by the Corporate Debtor in repaying the outstanding amount with respect to pending invoices to the Operational Creditor. On perusal of the records, it is found that the Petition was filed on 21.10.2021 and the Corporate Debtor acknowledges his liability on 23.07.2021, thus Petition is filed well within the prescribed period of Limitation i.e. 3 years as provided under Section 18 of Limitation Act, 1963 - After perusal of the material on record, this Bench is of considered view that the there is no reason to deny the Petition under section 9 filed by the Operational Creditor to initiate the CIRP against the Corporate Debtor. On perusal of the documents submitted by the Applicant, it is clear that Operational debt amounting to more than Rs.1,00,00,000/- is due and payable by the Corporate Debtor to the Applicant. There is default by the Corporate Debtor in payment of debt amount. Therefore, there are no objection on record against the application filed for initiation of CIRP against the corporate debtor. Hence, the Application filed by the Operational Creditor is liable to be admitted - the application is complete and has been filed under the proper form. The debt amount is more than Rupees One Crore and default of the Corporate Debtor has been established. Petition admitted - moratorium declared.
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2022 (11) TMI 454
Seeking restoration of petition - commission of grave default of the terms of the Deed of Settlement - competent authority mentioned in the order exclude or include this Adjudicating Authority (NCLT) or not - HELD THAT:- The petitioner is not entitled to any liberty under Order XXIII, Rule 3A, since the Settlement Deed dated 11.01.2021 is voluntarily executed between the OC and CD on mutually agreed conditions without alleging any fraud, coercion or misrepresentation. Further, the Settlement Deed is analogous to passing a money decree directing its payment by instalments as provided in Order XX, Rule 11, CPC, but even the said provision does not provide for restoration of the disposed suit in the event the judgment Debtor commits default. Once the lis is validly settled between the parties and accepted by the Court, the lis attains a quietus and terminates since the cause of action for the lis has merged with the final order of settlement. If the terms thereof are violated by any of the parties thereto, the breach thereof provides a fresh cause of action to take appropriate action against the party concerned. However, it shall not under any circumstances restore or revive the cause of action, which had already merged with the final order of settlement. In the application, the applicant stated that the disposed petition to be revived for the recovery of the outstanding operational debt due from the corporate debtor. Time and again it has been expressed and explained by the Apex Court that the Provisions of IBC, 2016 is not of money recovery proceeding; but here the intent of applicant reveals that the applicant invoices the provisions of IBC,2016 so as to enforce recovery against the corporate debtor; the same should not be allowed. In the circumstances, the petition cannot be restored. Application dismissed.
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2022 (11) TMI 439
CIRP - Liquidation proeedings - Fraudulent acts committed by respondents causing loss to Corporate Debtor - Section 66 of IBC - HELD THAT:- The Applicant filed the petition under Companies Act, 2013, R/w Rule 56 of NCLT Rules, 2016, to execute the order passed under Sec.66, IBC. Time and again it is held that IBC is a self-contained code with objective to maximise value in a timely manner. When the Code provides certain mode for execution of orders it is unnecessary to proceed under the different Act. In fact, it is ultra vires the IBC to invoke the provisions of the Companies Act, in the absence of any specific provision in the Code or Rules permitting such invocation. This application has been filed under Section 424 (3) of Companies Act, 2013. The said Section is not an enabling section to execute order, but only a section require to refer the Tribunals order for execution to the concern territorial limit Civil Courts. But Section 231 IBC,2016 ousted the Civil Court s jurisdiction in toto, hence this application cannot be proceeded under Section 424 (3) of the Companies Act,2013. The self contained IBC in Sec.35(2) empowers the liquidator to take possession (custody) and control of all properties and actionable claims of the CD. It has been adjudicated that the Respondents indulged in fraudulent transactions and they are personally liable to pay the amount of Rs. 21.37 Crores/- - the CD has actionable claims upon the schedule mentioned properties belonging to the Respondents. Regulation 33 in Schedule I of the IBBI (Liquidation Process) Regulations, 2016, provide ways and means to sell the assets of the CD by the liquidator in public action and/or by Private sale. In accordance with the Companies Act, only the ROC is furnished with a statement describing the properties of a company. The public are alerted not to deal with those properties only when the order of CIRP or Liquidation furnished to the ROC is reflected in the public domain. However, the schedule mentioned properties are in the name of the 3rd Respondent - The schedule numbers mentioned properties in this application are hereby attached and the 3rd Respondent herein is hereby prohibited from transferring or charging them by sale, gift, or mortgage or otherwise, and that all persons be and that they are hereby prohibited from receiving the same by purchase, gift or otherwise. Application allowed.
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Service Tax
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2022 (11) TMI 438
Levy of Penalty u/s 76, 77 and 78 of FA - Sale of Space and Time for Advertisement - appellant were neither registered with service tax department nor they were paying service tax and were also not filing service tax returns - HELD THAT:- The appellant have not disputed the tax liability along with applicable interest. In this position, the issue to be decided before us is only penalties imposed under Section 76, 77 and 78. Penalty under Section 76 of FA - HELD THAT:- The simultaneous penalty is not imposable as settled by the Hon ble Gujarat High Court in the case of M/S RAVAL TRADING COMPANY VERSUS COMMISSIONER OF SERVICE TAX [ 2016 (2) TMI 172 - GUJARAT HIGH COURT] , therefore, the penalty imposed under Section 76 is not sustainable. Hence, the same is set aside. Penalty under Section 77 and 78 of FA - HELD THAT:- The entire case was made out on the search conducted by the departmental officer in the premises of the appellant, the appellant have never disclosed their activity before the department, therefore, they suppressed the fact from the department accordingly, the penalty under section 77 and 78 were rightly imposed. Therefore, the penalty imposed under Section 77 and 78 is upheld. Appeal allowed in part.
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2022 (11) TMI 437
Levy of service tax - Cost sharing agreement - services provided to associated company or not - business support services or not - SCN did not allege that the said services are business support services, however, Ld. Commissioner still confirmed the service tax under business support services - violation of principles of natural justice - HELD THAT:- The arrangement between them and the associated company was in the nature of cost sharing. In the light of the observation of Hon ble Apex Court in M/S GUJARAT STATE FERTILIZERS CHEMICALS LTD. ANOTHER VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2016 (12) TMI 103 - SUPREME COURT] , it is seen that the arrangement of the appellant with it is associate companies is in the nature of cost sharing and it would not be correct to say that the appellants are providing any services to their associate companies. The revenue has not been able to identify any specific service, which the appellant has provided to its associate companies. In these circumstances, it is not found that the activities in the nature of sharing cost between associate companies amount to provision of any service by one company in the agreement with to any other companies in the said cost sharing agreement. However, since the activities under taken under the cost sharing agreement do not amount to provision of Service in terms of the decision of Hon ble Apex Court in case of Gujarat State Fertilizers Chemicals Ltd., the demand of Service Tax on the activities under taken under the cost sharing agreement cannot be sustained. Appeal allowed.
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Central Excise
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2022 (11) TMI 453
Recovery of credit - credit has been denied on the ground that the appellant has not taken ISD Registration and that the credit availed on various other units were not distributed to the Ambattur Industrial Estate as required under Rule 7 of Cenvat Credit Rules, 2004 - credit also denied on banking charges on the ground that instead of availing credit on the vouchers issued by the bank, they have availed credit on debit advices in the nature of bank statements showing the bank charges. Whether credits availed on bank charges and Chartered Accountant services are eligible or not? - appellant has not taken Input Service Distributor registration - HELD THAT:- The denial of credit on the ground that appellant has not taken Input Service Distributor registration in respect of Bank charges and Chartered Accountant services cannot sustain - The Hon ble High Court of Gujarat in THE COMMISSIONER OF CENTRAL EXCISE, O/O THE COMMISSIONER OF CENTRAL EXCISE, CUSTOMS SERVICE TAX VERSUS M/S. PRICOL LTD. [ 2021 (2) TMI 495 - MADRAS HIGH COURT] has held that there is nothing in statutory rules to disentitle an unregistered input service distributor from availing cenvat credit and that non-taking registration is only a procedural error which is curable. The Department does not dispute the collection of bank charges by the bank for the services provided by them. Merely because the credit is availed on bank advice / bank statement the credit cannot be denied unless there is discrepancy in these documents - the disallowance of credit alleging that appellant has availed credit on debit advices / bank statements is not legal and proper. Credit in respect of Chartered Accountant services has been denied alleging that the bills are not issued in the of the appellant, but has been issued in the name of an individual and other units of the appellant - HELD THAT:- The credit availed on Chartered Accountant services are based on bills dated 14.10.2008, 03.11.2009, and 07.10.2010. The appellant has furnished these bills before the Tribunal. On perusal, it is seen that these bills are addressed to the appellant-company and not in the name of an individual. After mentioning the name of the company, the name of the Kartha Mr.Ashok Ramchand Bulchandani has also been mentioned. This will not make the bills issued in the name of an individual. Denial of credit alleging that these bills are issued in the name of individual and in the name of other units of the appellant is factually incorrect - the denial of credit on Chartered Accountant cannot be sustained. The appeal is allowed.
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2022 (11) TMI 452
Denial of refund of the PLA balance laying in their own account - Applicability of provisions of Section 11B to the refund of the balance amount lying in PLA account of the appellant - HELD THAT:- The issue involved is applicability of Section 11B of the Central Excise Act, 1994 for the refund of balance amount laying in the PLA account. The appellant have relied on the decision of Tribunal s own case SUN PHARMACEUTICAL INDUSTRIES LTD VERSUS C.C.E. S.T. -DAMAN [ 2022 (6) TMI 1176 - CESTAT AHMEDABAD] wherein it was held that in case of PLA balance, it is not deposited as a duty but it is deposited as advance towards the duty. The PLA Amount takes the color of excise duty only when it is utilized for payment of duty on clearance of excisable goods. The unspent balance of PLA is only advance not duty therefore, Section 11B is not applicable. The appeal allowed.
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2022 (11) TMI 451
Remission of Excise duty - main contention of the adjudicating authority in rejecting the remission application is that fire was avoidable and due to not taking proper care by the appellant, the fire took place, therefore fire incident is not due to unavoidable circumstances - HELD THAT:- The appellant have been regularly installing the firefighting equipment in their factory from 1987-2014. The fire took place in the factory on 07.01.2017. The contention of the adjudicating authority is that the appellant have not made any expenditure towards firefighting measures from 2014 onwards and that is the reason the fire has taken place. The said contention of the learned adjudicating authority cannot be agreed for the reason that once all the firefighting equipment have been installed in the factory i.e. upto January 2014, only in case of any need the firefighting equipment is required. Only because there is no expenditure in respect of firefighting measures after 2014, it cannot be said that the appellant have not equipped their factory with firefighting measures. There is absolutely no adverse remark in any of the various reports made in respect of the incident of fire in the factory. Be it of Inspector of Police, Fire Brigades, Deputy Director, Industrial Health and Safety Industry, Nagarpalika and from various reports, it is clear that the fire incident has taken place due to short circuit. The short circuit is clearly beyond the control of anyone and it is general that in majority of cases fire takes place due to short circuit and the same cannot be predicted by anyone in advance - the appellant have taken abundant precaution as regard firefighting measure and there is no lapse on the part of the appellant to hold that the fire incident could have been avoided. Valuation of goods - price for the purpose of insurance claim was enhanced from Rs. 139 per KG to Rs. 149.16 per KG - HELD THAT:- From the calculation, it is absolutely clear that this enhancement does not include the excise duty. The enhancement is only due to inclusion of various expenses such as marketing and selling expenses, therefore, it is beyond doubt that the appellant have not included the amount of Central Excise duty. Therefore, on this count also the remission of duty cannot be varied or denied. The appellant is entitled for remission of duty in respect of final product lost or destroyed in fire incident. Needless to say that the appellant needs to reverse the cenvat credit in respect of the inputs, if any availed, contained in the final product in respect of which the remission is sought for - Appeal allowed.
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2022 (11) TMI 450
Classification of goods - Folders for inserting certificates - Letters head/pads - Waste paper - Invitation card - Envelope - classifiable under Chapter heading 48 or under Chapter 49? - extended period of limitation - HELD THAT:- The two items, namely, Folders for inserting certificates and waste paper are being contested on merit by the appellant. In respect of other items, namely, letter head/ pages, invitation cards and envelopes, the appellants are contesting solely on limitation. A perusal of Circular No. 1052/1/2017 dated 23.02.2017 shows that it specifically holds that inland letter cards which are printed would be classifiable under Chapter 49 whereas plain letter cards are classifiable under Chapter 48. Moreover, it is seen that note 12 and 14 of Chapter 48 clearly lay down that unless there is further printing or writing needed, the products where the printing is not merely incidental the said products would be classifiable under Chapter 49. The criteria being that all the printing or writing that is required to be done on the said cards is already done at the time of clearance and therefore, the same would be classifiable under Chapter 49. The same argument equally applies to folders for inserting certificates which contain already pre-printed details of the arguments and nothing remains to be written on the same. Relying on the aforesaid Circular and Chapter Note 12, it is apparent that the said product needs to be classifiable under Chapter 49 and not under Chapter 48. Classification of the waste paper - appellants have sought to classify the same under Chapter 49, however Revenue sought to classify the same under Chapter 48 - HELD THAT:- The impugned order does not give any finding whatsoever on this issue. In para 21 of the said order which discusses various items but there is no discussion whatsoever of item namely Waste Paper. It is also found that even in Order-in-Original, there are no specific findings. Notification of extended period of limitation - HELD THAT:- It is seen that CBIC has issued a Circular to Clarify the classification of the goods and the interpretation of Chapter Note 12 14 of the Chapter 48. The CBEC has issued a clarification relied on decision of Hon ble Apex Court in case of M/S. HOLOSTICK INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [ 2015 (4) TMI 357 - SUPREME COURT] . From the nature of dispute, it is apparent that it was possible that appellants to hold a bonafide belief, in such circumstances, extended period of limitation in respect of these items cannot be invoked. Appeal allowed in part and part matter remanded.
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2022 (11) TMI 436
Clandestine removal - suppression of acquisition - acquittal of the accused - Sections 9(1)(b) and 9(1)(bb) read with Section 9-AA of Central Excise Act and also violation of Central Excise Rules, 1944 - HELD THAT:- CESTAT had decided the issue, ultimately it has reduced the penalties and when the amounts payable are concerned, Accused No.1-Company is liable to pay Rs. 17,74,021/- towards BED and Rs.1,98,848/- towards AED totaling to Rs. 19,72,869/-. Ex.D6 which is a confidential circular enhancing the monetary limit for launching prosecutions to Rs.25 lakhs is not disputed. The said enhancement of monetary limit was prospective in nature and squarely applicable to the benefit of the appellant in the present facts and circumstances. The Hon ble Supreme Court in the case of Radhakrishna Nagesh v. State of Andhra Pradesh [ 2012 (12) TMI 1232 - SUPREME COURT] held that under the Indian criminal jurisprudence, the accused has two fundamental protections available to him in a criminal trial or investigation. Firstly, he is presumed to be innocent till proved guilty and secondly that he is entitled to a fair trial and investigation. Both these facets attain even greater significance where the accused has a judgment of acquittal in his favour. A judgment of acquittal enhances the presumption of innocence of the accused and in some cases, it may even indicate a false implication. But then, this has to be established on record of the Court. This Court does not find any illegality in the orders of the learned Sessions Judge for relying upon Exs.D6, D7 and also D8 and finding that the benefit ought to have been extended to the appellants, the same cannot be held to be improper or not based on record - Appeal dismissed.
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2022 (11) TMI 435
Process amounting to manufacture - Green Houses - Revenue was of the view that 'greenhouses' are put up as elements to be assembled on site, and appellant was manufacturer of greenhouses where they supply the raw material and carry out erection/ installation also - classification of goods - demand of Central Excise duty on the manufacture clearance of their finished goods with effect from 28.02.2005 - Recovery of Central Excise Duty - demand of interest alongwith penalty - extended period of limitation - HELD THAT:- From the perusal of the order of the tribunal in case of JAIN IRRIGATION SYSTEM LTD., SHIV VIJAY SINGHAVI, SHRI DI DESARDA VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2018 (11) TMI 897 - CESTAT NEW DELHI] , it is evident that the said order has decided the issue of classification of the goods and has not decided the issue in respect of the manufacture. The order is totally silent on this aspect, which goes to the root of the matter i.e. whether the activities undertaken by the appellant would amount to manufacture or not. The issue of manufacture was not even argued before the tribunal in the that case and hence the order to that extent is sub silentio. Appellants have in the present case challenged the demand on the ground that activities undertaken by them do not amount to manufacture. From the perusal of the order of the tribunal in case of Jain Irrigation, it is evident that the said order has decided the issue of classification of the goods and has not decided the issue in respect of the manufacture. The order is totally silent on this aspect, which goes to the root of the matter i.e. whether the activities undertaken by the appellant would amount to manufacture or not. The issue of manufacture was not even argued before the tribunal in the that case and hence the order to that extent is sub silentio. Appellants have in the present case challenged the demand on the ground that activities undertaken by them do not amount to manufacture - the polyhouse/ green house is put up as elements to be assembled at site. It is therefore apparent that the claims of the appellants that they are just purchasing materials and selling the same that they merely collect bought out duty paid items and supply them is not correct in as much as these goods are thereafter assembled and installed at the customer site by the appellant to bring into existence the greenhouse . Commissioner has in para 27 and 28 of his order elaborately referred to the documents and records to arrive at the findings that the goods supplied were essentially complete set of components for erecting and installing the greenhouse. The issue whether the activities undertaken by the appellants do amount to manufacture of Prefabricated building -Green House or not is a question of fact and needs to be ascertained from the facts available on the records. In the paper book filed along with the appeal, appellants have enclosed a number of purchase order and invoices which were in reference to the supply of raw material, and the material. In fact there are no purchase orders/ invoices for the supply of Green House. No clear cut findings have been rendered by any authority on this aspect - Joint commissioner in his order has recorded the factum of issuance of notice demanding service tax and its adjudication. But do not records anything further. All these facts need to be ascertained and final view needs to be taken in the matter for ascertaining whether the activities undertaken by the appellant amounted to manufacture of prefabricated building green house. The matter needs to be remanded back to the original authority to reconsider the issue of manufacture and for recording the findings - Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2022 (11) TMI 434
Open purchase order - agreement to sell - inter-state sale or not - stock transfers - argument of Shri Sridharan in substance, is open purchase orders do not stipulate any specified quantity and therefore, it cannot be construed as an agreement to sell - whether in the facts of this case, inter-state transfer of goods under Form-F to petitioner's depots situated in different states amounts to inter-state sale under Section 3(a) of the CST Act? HELD THAT:- The Open Purchase Orders do not mention the quantity of the goods supplied. We may record that in order to avoid inventory, manufacturers have been using the 'JIT' (Just in time) supply model. It was argued on behalf of the assessee that to ensure prompt delivery of the goods as and when called upon, the assessee transfers the goods and stocks it in its depot. Shri. Sridharan also urged that the automobile manufacturing Industries nor the ancilliary units had any obligation to place purchase orders. In case the paint had remained unsold, the option for the assessee is to either destroy it or to take it back to its Manufacturing unit. It is not in dispute that goods were transferred from Mangaluru to various depots situated in different States under Form-F and assessments for the years 2006-07 and 2007-08 were concluded by accepting the Statutory declarations filed in Form-F. The Open Purchase Orders do not constitute any Contract. The Purchase Orders issued from time to time for supply of goods constituted Contract between parties. Thus, the sale effected pursuant to such Purchase Orders is an Intra-State sale in that State. It is so because, whilst Goods were stored in various States, the ownership and title of goods vested with the assessee. Pursuant to the Purchase Orders received from time to time, assessee has delivered the goods from its depot in that State to the respective purchasers. Order dated 27th June 2019 Annexure-A is quashed holding that Open Purchase Orders are only standing offers and do not constitute a confirmed 'Agreement to sell' and movement of goods are mere stock transfers - petition allowed.
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2022 (11) TMI 433
Application for condonation of delay - Power of review - maintainability of the review - HELD THAT:- When it came to the power of review under sub-section (8) of S.s 60 62 sub-section (9) of S. 63, a larger time of one year i.e., 365 days was provided for institution without any provision for condonation of delay - The declaration in Hongo India (P) Ltd [ 2009 (3) TMI 31 - SUPREME COURT ] squarely applies in the above case, there can be no condonation of delay under Section 62 (8) of the KVAT Act. Suffice it to notice that the assessee claimed input tax credit for the raw materials purchased by its manufacturing unit at Vadavathur, Kottayam; for reason of the tyres manufactured having been exported from its godown at Puzhal in Tamil Nadu; to which godown the finished products were transferred from Vadavathur, on stock transfer. This Court, in the order sought to be reviewed, categorically held that there can be no such clarification granted by the authority without examination of the facts and without production of sufficient documents to prove that the taxable purchases made were in pursuance of an export order - The assessee having not established an export order prior to the stock transfer, it is obvious that there cannot be taxable purchases of raw materials having been made, based on an export order at its manufacturing unit at Vadavathur. There is no discovery of a new or important fact which after due diligence was either, not within the knowledge of the applicant or could not have been produced by the assessee, when the order was made - What is attempted by the petitioner is to have a clarification that the export made from their godown at Tamil Nadu is of the manufactured goods at Vadavathur, Kottayam, enabling the manufacturing unit to claim input tax credit within the State of Kerala, which blanket order cannot be made under the clarificatory power and the consideration has to be on the individual facts of every transaction with documentary evidence produced to substantiate a claim. The Review Petition stands rejected on the aspect of delay and on the ground of the review petition not coming within the contours of a review, as contemplated by the statute.
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2022 (11) TMI 432
Validity of assessment order - recovery of arrears of tax - applicable rate of tax - Ujala Supreme - Ujala Stiff Shine - Section 25(1) of the KVAT Act - HELD THAT:- The Hon'ble Supreme Court in MP Agencie's case [ 2015 (3) TMI 787 - SUPREME COURT] held that the goods (Ujala Stiff and shine) remain in List A of Third Schedule which is taxable at 4%/5% and the inclusion of the goods in the residuary Entry 103 by the Revenue by no stretch of imagination can be made applicable. It was further held that if the assessee/appellant therein has paid the amount of VAT in excess of 4%/5% to the State Government, they will not be entitled to get refund of the said amount. Article 141 of the Constitution of India commands to follow the decision of the Hon'ble Supreme Court, if there is a law declared by the Hon'ble Supreme Court which obviously would be binding on all courts in India and the parties thereto. In the light of Articles 141 and 142, it is impermissible for the High Court to overrule the decision of the Apex Court on the ground that the Supreme Court has laid down the legal position without considering any other point. It is not only a matter of discipline for the High Courts in India, but also mandate of the Constitution as provided under Article 141, that the law declared by Supreme Court shall be binding on all courts within the territory of India. In this context, it is also relevant to look into Article 142 of Constitution of India. Admittedly, the petitioner has not challenged the judgment of this Court before the Apex Court but the respondents are not entitled to proceed with the recovery proceedings for recovery of the amount which is not authorized by law. When the Hon'ble Supreme Court has held that taxes paid by the assessee/appellant will not be refunded, it does not allow the Department to collect the differential taxes in the case of assessees who have not met the demands already made - It is trite that even though all statutory remedies are exhausted and held against the petitioner, it is legal to invoke powers under Article 226 to challenge the same as it vitiates the old law. The Exts.P3 and P4 revenue recovery notices demanding an amount of Rs.6,43,079/- is illegal and unenforceable and has to be set aside - petition allowed.
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Indian Laws
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2022 (11) TMI 431
Dishonor of Cheque - insufficiency of funds - vicarious liability of directors - Section 141 of NI Act - HELD THAT:- It is an admitted case of the petitioner that Letter of Credit Facility was availed on 26.12.2014. The impugned cheque issued in discharge of liability dated 16.06.2015. Further, the print out taken from the website of Ministry of Corporate Affairs, it is seen that the petitioner had resigned from the post of Director on 24.01.2012. Added to it, except for the said reference in Paragraphs 5 and 8 made about the petitioner, there is nothing more. In the case of S.M.S. Pharmaceuticals Limited vs. Neeta Bhalla and another [ 2007 (2) TMI 311 - SUPREME COURT] .], it has been held that a person, who is arrayed as an accused invoking Section 141 of the Negotiable Instruments Act amounts to vigorous liability, which cannot be automatic. There is no specific averments in the complaint to show that the petitioner was in-charge and responsible for the conduct of the business of the company. Further, the two requirements in Section 141 of the Act has to be read conjointly and not disjointly. Liability of directors to be determined on the date on which they resigned. In the present case the petitioner resigned in the year 2012. Dishonored cheque issued in the year, 2015 - The dismissal of the quash petitions filed by A2, A4 and A5 would no way affect the case of the petitioner, since in that case the ground taken was that the cheque was issued as security, which is not the case herein. Petition allowed.
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2022 (11) TMI 430
Dishonor of Cheque - main contention of the petitioner is that on the date of issuance of the disputed cheque, the petitioner is not the Managing Director of the 1st accused company and he has not signed the disputed cheque and also claimed that during moratorium period as contemplated under Section 14 of the Insolvency and Bankruptcy Code, 2016 (I B Code), criminal proceedings cannot be initiated - HELD THAT:- The question as to whether by operation of provision of I B Code, the criminal prosecution initiated under Section 138 r/w 141 of Negotiable Instruments Act, r/w 200 of Cr.P.C can be terminated, is no longer res integra in view of the above stated judgment in P.Mohanraj's case [ 2021 (3) TMI 94 - SUPREME COURT ], wherein the Hon'ble Supreme Court has categorically held that Section 138/141 proceeding against a corporate debtor is covered by Section 14(1)(a) of I B Code. Moratorium order would not cover person in those cases who are not a corporate debtor, but a Director thereof. The moratorium provision not extending to persons other than the corporate debtor. In respect of persons other than the corporate debtor, Director or Managing Director, as the case may be, Section 14 of I B Code did not apply to Section 138 proceedings and further, issued direction that complaint is directed to continue against the Managing Director and Director, respectively and observing that Section 14 of I B code could not cover proceedings already initiated under Section 138 of NI Act, held that such a proceedings can continue against erstwhile Directors/persons in charge of and responsible for the conduct of the business of the corporate debtor. The main plank of the petitioner herein/A3 as to the maintainability of the criminal complaint against him, who is the Managing Director, after the moratorium period, stands negatived. After perusing legal notice exchanged between parties before initiation of proceeding, There is a dispute. Disputed facts cannot be gone into by this Court by holding a enquiry or a mini trial at this stage - Petition dismissed.
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