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TMI Tax Updates - e-Newsletter
November 12, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of GST - share of sitting fees and other expenses paid by the applicant on the directions of the Arbitrators for an amount - the argument of the applicant that their activity do not attract GST has no legal backing. - AAAR
Income Tax
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Reopening of assessment u/s 147 - The assessee had made full disclosure regarding the facts and circumstances in which the said amount was paid. It is obvious that the AO had considered the allowability of such deduction. The AO now seeks to re-assess the assessee’s income on the ground that the amount paid by the assessee to his sisters was not deductible from the sale consideration for the purpose of computing capital gains. This is clearly a case of change of opinion. - HC
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Estimation of income - ITAT applied the progressive rate of estimated profit for 5 years from 10% to 25% - Assessee sought Net profit rate to the entire receipts both disclosed and undisclosed - the assessee is entitled to succeed. - HC
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Attachment of property - Challenge to notices u/s 281B - Though the parties would agree that there has been some extension of the orders passed originally, there is lack of clarity on the number of extensions and the periods that such extensions covered. - As no material has been placed before the Court to the effect that the extensions are contrary to statute, the submissions of the petitioners are rejected. - HC
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Assessment u/s 153A - Validity of notice issued - the only pre-condition for issuance of the notice u/s 153A is the search itself. Thus unable to accept the argument of the petitioners to the effect that the transfer of the seized material is a pre-condition to the issuance of the notice u/s 153A as such a conclusion would tantamount to re-writing of the provision to read in such a condition, which is legally impermissible. - HC
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Penalty u/s 271AAA - undisclosed income - During the assessment proceedings, the assessee substantiated the manner in which the said income was derived through confirmations, bank statements, tax credit statements, third party ledger confirmations. So per se, Section 271AAA cannot be invoked in the present case. Thus, order under Section 271AAA related to penalty does not survive. - AT
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Rectification u/s 154 of the Revision order passed u/s 263 by CIT - Period of limitation - There cannot be any occasion for rectification u/s. 154 of the Act for that order which has already been quashed. - AT
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Deduction u/s. 54F - purchase of land with old structure that is to be demolished - What has been in effect and substance purchased in the instant case, as also evidenced by the sale deed, is only a plot of land for construction of a residential house thereon. Rather, but for the demolition having been completed by the date of inspection, no stamp duty would have been paid on the structure part. No case for construction of a residential house has been preferred or pressed at any stage, including before us. The assessee is, accordingly, not entitled to any exemption u/s. 54F on the purchase of plot. - AT
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Addition u/s. 68 - unexplained share capital and premium - the assessee company concealed its own identity, address as well as the identity and address of its directors. The motive being that in case the assessee company is burdened with the additions/taxes, it may avoid the payment of the same by concealing its identity and identity of its directors. The assessee/appellant has not come to the court with clean hands. The appellant in this case wants to abuse the process of law.- AT
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LTCG - sham transaction - Permitting such criminal acts by carelessly accepting the statements/surrenders made by unscrupulous brokers needs to be addressed consciously especially when applied to the clients of such brokers who may have trusted the financial acumen of these brokers. These innocent trusting lambs should not be carelessly allowed to be thrown at the wolves by the manipulative brokers. - AT
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Addition on account of share application money received - With regards to the credit worthiness of the party, the respondent has submitted the books of accounts, return of income and audit report of the investor companies. Even, both the investor companies have also submitted the documents as required by the AO. Further, the director of the company has appeared before the AO and confirmed the transactions. - No additions - AT
Customs
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Seeking grant of bail - Smuggling - Gold bars - The relevant provisions of the Customs Act are intended to protect the fiscal and commercial interest of the nation. An offence like this must be viewed with all the seriousness. There is no doubt that the instant release of the applicant, who is involved in such activities, would hamper the investigation and the applicant may tamper with the evidence. - HC
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Violation of principles of natural justice - The hands of the adjudicating authority cannot be tied and shackled. If any error is committed by an adjudicating authority while passing it is always open for an assessee to assail the same in an appellate proceeding under the Act. - HC
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- Classification of goods - melting scrap - the petitioner has not produced any evidence to substantiate that the imported goods were Heavy Melting Scrap (HMS). We cannot re-determine classification and valuation of the imported goods under article 226 of the Constitution of India. - HC
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Classification of Hard Disk Drives - The design of the Schedule encompassing all products within the tariff enumeration does not offer scope for traversing beyond the ninety eight chapters making it evident that certainty of fitment is one of the characteristics of classification for smooth operation of international trade - the settled classification may be unsettled only by argument of inapplicability owing to distinguishable nature of the product. Such argument has not been put forth in the contentions of Learned Authorized Representative. - AT
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Relevant date for filing of Refund - It is settled that even if the refund claim is filed well within the time and the same is returned for want of clarification or documents and the claim was resubmitted, the date of filing the refund application is taken as the date of first filing the refund claim and not the date on which the claim was resubmitted. - AT
Indian Laws
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Dishonor of Cheque - rebuttal of presumption - Although it is permitted in a case of such nature to raise a probable defence from the available materials in the cross-examination of the prosecution witness only, but the nature of the cross-examination and the probable defence raised by the accused do not qualify as a rebuttal to the provisions under Section 139 of the N.I. Act - HC
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Dishonor of Cheque - Direction to deposit 30% of composition amount in lieu of suspension of sentence imposed by learned trial Court - ven if original complaint is filed prior to amendment of S. 148 of the Act, appellate court can exercise power under S. 148 to direct accused to deposit minimum 20% of compensation. - Compensation amount modified from 30% to 20% - HC
IBC
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Committee of Creditors - including the Appellant as member of CoC - The Adjudicating Authority has grossly erred in overlooking the fact that allowing membership of the Appellant on the CoC post the first CoC meeting does not wipe out the deliberations and decisions taken in the first CoC meeting - AT
PMLA
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Money Laundering - Jurisdiction of lower court - If the ED wants to invoke the provisions of the PMLA to discern the offence under Section 3 of the PMLA, the designated Court is the Court of Session alone which had the power to even consider any application emanating from the provisions of the PMLA as the offence supra, Section 43 supra and Section 71 clearly mean that the designate Court to try anything emanating from the PMLA is the Special Court and the Special Court is the Court of Session. Section 71 has overriding effect on any law. - HC
Service Tax
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Extended period of limitation - the genesis for issuing show-cause notice for extended period of limitation is from the very material on record before the authority - The appellant since unable to attack a crucial finding of fact recorded by the Tribunal, necessarily must fail in the challenge against the order impugned in the appeal. - HC
Case Laws:
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GST
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2022 (11) TMI 553
Maintainability of petition - availability of statutory remedy of appeal - Confiscation - Section 129 of Central Goods and Services Tax Act, 2017 - HELD THAT:- It is submitted that therefore, and even otherwise, in view of the statutory remedy of appeal available even against the final order of confiscation, the High Court ought not to have entertained the writ petition and ought to have relegated the respondent2 original writ petitioner to avail the statutory remedy to appeal. Issue notice, returnable on 25.11.2022.
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2022 (11) TMI 552
Principles of natural justice - opportunity granted to the Petitioner to file a reply to the draft audit report or not - draft audit report as well as the final audit report, issued on the same date - extension of audit period - HELD THAT:- On a plain reading of Section 65 (4) together with Section 65 (6) of the OGST Act and Rule 101(4) of the OGST Rules, it is plain that the procedural requirement of the Petitioner having to be given 30 days time to file a reply to the draft audit report was not followed in the present case. On that short ground, this Court sets aside the final audit report dated 30th June, 2022 issued under Section 65 (6) of the OGST Act. The position would, therefore, revert to the stage, at which the draft audit report was issued on 30th June, 2022. However, even if the Petitioner is afforded an opportunity at this stage to file a reply to the above draft audit report, followed by the authorities issuing the final audit report, the original deadline of three months would be crossed on 21st December 2022. If the exercise is not completed by that date, the entire exercise would be rendered futile. Therefore, the following directions are issued by this Court subject to the condition that the Commissioner will by a reasoned order in terms of the proviso Section 65(4) of the OGST Act extend the time for completion of the audit by the maximum permissible further period of six months in terms thereof. The Petitioner will file its reply to the draft audit report accompanied by all the documents that the Petitioner wishes to rely on not later than 28th November, 2022 - After considering the reply of the Petitioner, the final audit report will be issued by the Opposite Party Department under Section 65 (6) of the OGST Act not later than 21st December, 2022. Petition disposed off.
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2022 (11) TMI 551
Direction upon the Respondent Authorities to allow the petitioner to file Form GST TRAN-I in order to carry forward the transitional credit into its electronic credit ledger from the Pre GST Regime to GST Regime - HELD THAT:- On going through the judgment rendered by the Apex Court in the Case of UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER] , whereby the time for opening of GST common Portal has been extended for a further period of four weeks from the date of the order. The time for opening of GST common portal has been extended for a further period of four weeks from the date of the order. As such, petitioner, who could not submit its TRAN-1 application, may submit TRAN-1 application within the window period - Petition disposed off.
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2022 (11) TMI 550
Levy of GST - share of sitting fees and other expenses paid by the applicant on the directions of the Arbitrators for an amount - reverse charge mechanism - liquidated damages - compensation of additional cost incurred due to delay in issue of drawings and failure of HGCL to handover site on time and refusal to issue the taking over certificate - HSN Code and GST rate - time limitation. Whether GST payable on the claim of Rs. 2,20,00,000/- for the HGCL share of sitting fee and other expenses paid by the applicant on the directions of the Arbitrators for an amount? - HELD THAT:- It is observed by this Authority that the Government, vide Sl.No.3 of Notification No.13/2017. dt. 28.6.2017 has levied tax in respect of services provided by the Arbitrary Tribunals to be paid by any business entity located in the taxable territory, under reverse charge mechanism. The relevant tariff also provides SAC code of 998215 for such services @ 9% each under CGST and SGST - the argument of the applicant that their activity do not attract GST has no legal backing. Whether GST is payable on the claim of INR of Rs. 1,15,80,62,000/- (including interest amount) on account of compensation of additional cost incurred due to delay in issue of drawings and failure of HGCL to handover site on time and refusal to issue the taking over certificate? - HELD THAT:- As per the claim documents submitted before the lower authority, not disputed by the applicant, the amount was towards compensation for delay in execution of the works and prolongation costs. When a subjective meaning is deciphered from the phase used by the applicant themselves, the amounts were recovered as compensation for delay in execution of the works. That is to say that the applicant had received the amount to agreeing to the obligation to refrain from an act, or tolerating an act or a situation that arose due to delay in execution or protraction or elongation of work. This is nothing but compensation for refraining to do an act or tolerating to do an act. The consideration received for such act is taxable @ 9% each under CGST and SGST and falls under Ch Head 9997 at Sl.No. 35 of Notfn No. 11/2017-CT (rate). Appeal disposed off.
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Income Tax
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2022 (11) TMI 549
Reopening of assessment u/s 147 - whether the issue of the impugned notice is occasioned by a possible change of opinion and seeks to review the assessment order? - computation of long-term capital gains arising from sale of immovable property - cost of assets and expenses in connection with transfer of the Property and for perfecting title - HELD THAT:- The Sale Deed clearly indicated that the value of the Property at the circle rate was ₹68,08,00,000/- (Rupees sixty-eight crores and eight lacs only). Although, the assessment order does not refer to the fact that the value of the Property as per the circle rate was higher than the consideration received, it is apparent that the AO had examined the computation of capital gains, including the question as to the fair market value of the Property. The assessee had explained why, according to him, ₹60 crores were required to be considered the fair market value. It is apparent that the AO had accepted the said explanation as he did not raise any further query regarding the same. AO was not satisfied with the cost of acquisition of the Property and had undertaken a detailed investigation in that regard including by retrieving information from the Delhi archives. Given the nature of enquiry, it is difficult to accept that the AO had not considered the question of the fair market value. The cost of assets and expenses in connection with transfer of the Property and for perfecting title were also subject matter of a detailed scrutiny during the assessment proceedings. The assessee was specifically called upon to furnish the documentary evidence in support of cost of land, cost of construction and cost of improvement. The assessee had responded to the same by providing details and the manner in which costs of acquisition had been computed. AO had examined the statements and elaborately dealt with the question whether indexation was available in respect of the amount paid by the assessee to his sisters. AO had recomputed the capital gains by making an addition by reducing the costs of acquisition as claimed by the assessee. The question whether the AO was correct in accepting that the amount of ₹19,20,00,000/- paid by the assessee was required to be deducted from the total consideration received from the vendee, is not material. The principal question is whether the AO had examined the computation of income by way of long-term capital gains. Undisputedly, he had. The assessment cannot be reopened only for the reason that the AO has changed his view on the question of the fair market value or whether the amount paid by the assessee to his sisters was deductible from the total consideration. The assessee had made full disclosure regarding the facts and circumstances in which the said amount was paid. It is obvious that the AO had considered the allowability of such deduction. The AO now seeks to re-assess the assessee s income on the ground that the amount paid by the assessee to his sisters was not deductible from the sale consideration for the purpose of computing capital gains. This is clearly a case of change of opinion. It is now impermissible for the AO to seek reopening of the assessment to review its decision regarding the fair market value of the Property or deduction on account of the amount of ₹19,20,00,000/- paid by the assessee to his sisters or the expenses incurred by him. - Decided in favour of Assessee.
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2022 (11) TMI 548
Estimation of income - ITAT applied the progressive rate of estimated profit for 5 years from 10% to 25% - Assessee sought Net profit rate to the entire receipts both disclosed and undisclosed - separate addition of the gross amount of undisclosed receipts to the taxable income - whether the assessing officer was justified in applying the order passed by the tribunal only in respect of the disclosed income? - HELD THAT:- As mentioned manner in which the order of the tribunal is to be interpreted has been rightly interpreted by the learned tribunal in its order dated 20th February, 2015 by observing that profit has to be decided for turn-over in its entirety. If that be the case, then the contention raised by the appellant needs to be accepted. As could be seen from the giving effect to order passed by the assessing officer assessing officer had given effect to the order of the tribunal by understanding as if the tribunal directed the net profit estimation only in respect of the disclosed income. The tribunal having clarified that the profit has to be estimated in its entirety, the view taken by the assessing officer in its order is incorrect. Thus, for the above reasons, the assessee is entitled to succeed. - The assessing officer is directed to apply the net profit rate as ordered by the tribunal in its order therein to the entire receipts of the appellant/assessee both disclosed and undisclosed.
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2022 (11) TMI 547
Validity of search u/s 132 - highhandedness of the officials - whether the conditions of section 132 have been met? - possession of information leading to a reason to believe - assessee contended that, search was initiated on the basis of a newspaper report - HELD THAT:- The issue of a warrant by a Commissioner is neither a judicial nor a quasi-judicial act. The Commissioner were enjoined to issue such warrant only based upon information in his possession in consequence of which he forms the necessary belief, the matter is not subject to scrutiny by the Court. - on the whole, the search was not established to be malafide, oppressive or excessive. So too in this case. The Bench held further that even if a search had been illegal, the evidence seized can be validly used in the assessments to follow. The files relating the recording of information and reasons to believe were called for and I find that the officer has recorded cogent reasons for the initiation of the search itself. The records reveal that the officer has had information in his possession to lead to the belief that action under Section 132 was warranted. The challenge to the search is rejected and all writ petitions on this score, are dismissed. Necessary response or urgency in the medical emergency leading to hospitalization of one of the children of the petitioner - HELD THAT: As the Hon ble Supreme Court has observed in the case of Pooran Mal [ 1973 (12) TMI 2 - SUPREME COURT ] search and seizure, by its very nature, is bound to cause some dislocation to the parties concerned. Some of this dislocation is also intended as a conscious measure to intimidate. There are limits that must be adhered to and in the present case, the exacerbation of the medical condition of the person concerned is a matter of hospital record. As does not dispute the medical record. His attempt is to state that the child had a pre-existing medical condition and thus, the Department cannot be held responsible for the sudden distress needing hospital attention. There has been a specific allegation by the petitioner in regard to the delay in permitting the family to seek medical assistance. Though denied in general terms, unconvinced that the respondents did exercise necessary measures, as warranted, in such a situation. The necessity for speculation in such a situation could have been avoided had the footage from CCTV cameras been available. In light of the discussion as above, we do find that the response of the officials in the medical emergency as above, is wanting, and leaves something to be desired. In CCIT V. State of Bihar through Chief Secretary [ 2012 (2) TMI 116 - PATNA HIGH COURT ] the Patna High Court has held that where appropriate, the assessee may also choose to approach the human rights authority seeking redressal of its grievances. To be noted that similar allegations have been made by the petitioner in regard to his relative, that have not been, in my view, been established and thus call for no directions from this Court. Transfer of cases u/s 127 - centralization of assessments - HELD THAT:- in the present circumstances, where the petitioners have been afforded opportunity to respond and have, in all but one case, not so responded, so grave as to go to the root of the matter and vitiate the proceedings totally. Relevantly, the petitioners have, by virtue of the present challenge demonstrated that there has been no prejudice caused to them by the non-service of the centralization orders as their grievances in that regard are being effectively aired and heard. In any event, the learned standing counsel is directed to issue the orders to the petitioners forthwith. Moreover, the reasons for centralization do reveal that the consolidation proposed is for reasons of administrative efficiency and convenience and there has been no denial of this aspect of the matter by the petitioners. In light of the discussion above, these writ petitions are dismissed. Assessment u/s 153A - Validity of notice issued - HELD THAT:- the only pre-condition for issuance of the notice u/s 153A is the search itself. Thus unable to accept the argument of the petitioners to the effect that the transfer of the seized material is a pre-condition to the issuance of the notice u/s 153A as such a conclusion would tantamount to re-writing of the provision to read in such a condition, which is legally impermissible. As the Audit has recommended, it is necessary that the Legislature or the Board, administratively, fix such timelines, for the purpose of integrity of procedure, including compliance with the provisions of natural justice as well as to ensure quality in the framing of assessments in a timely manner. This is protect against, and prevent a situation where the notices are issued too proximate to the expiry of limitation leading to a hurried framing of assessment and that the assessment is not based upon incriminating material. Such arguments are indeed available to assessees, but subsequent to the framing of the assessment itself, that would enable an examination of the material brought on record in order to test such submissions.The challenge to notices issued under Section 153A is rejected. Challenge to notices in terms of Section 153C - The provisions of Section 153C require the receiving officer, that is, the jurisdictional assessing officer of the assessee concerned, to issue notice,if he is satisfied that the books of account/documents/assets seized or requisitioned have a bearing on the determination of total income of such other person for the block period. The satisfaction recorded must state that the seized materials relate or pertain to such other person, and to the period in question, that is, the block of six years as stipulated under Section 153A. The sample satisfaction note extracted is detailed and in our considered view, complies with all the statutory requisites. With this, the ingredients of Section 153C stand satisfied.The challenge to notices in terms of Section 153C is decided against the petitioners. Attachment of property - Challenge to notices under Section 281B - The provisions of Section 281 provide for an attachment of properties of an assessee to protect the interests of the revenue, pending proceedings for assessment, re-assessment or imposition of penalty. Subsection (2) of Section 281 B states that every provisional attachment shall have effect only for a period of 6 months from date of order of provisional attachment, though the proviso permits the period to be extended for reasons to be recorded in writing. Such extensions, in total, are not to exceed two years pending proceedings or 60 days after the date of order of assessment/reassessment, whichever is later. Though the parties would agree that there has been some extension of the orders passed originally, there is lack of clarity on the number of extensions and the periods that such extensions covered. Thus, and in light of the aforesaid ambiguity, as would merely reiterate the provisions of Section 281B. As no material has been placed before the Court to the effect that the extensions are contrary to statute, the submissions of the petitioners are rejected. These Writ Petitions are dismissed.
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2022 (11) TMI 546
Late fee u/s 234E - delay in filing the statement of TDS remittance - HELD THAT:- In the decision in M/s. Sarala Memorial Hospital v. Union of India and Another [ 2018 (12) TMI 1818 - KERALA HIGH COURT] an identical question arose for consideration. After considering the statutory provisions of section 234E and section 200A of the Act and the implications of the amendment brought in to the Act, it was held that the amendment would take effect only from 1st June, 2015 and is thus prospective in nature. The aforesaid judgment has become final and is binding upon the authorities. Thus the jurisdiction to levy late fee under section 234E arises only from 01-06.2015 and not earlier. As regards the contention on the delay, though the said contention was impressive on first blush, it can be seen that the nature of challenge raised by the petitioner is based upon the lack of jurisdiction of the respondents to impose late fee. Since in matters where total lack of jurisdiction is alleged, delay cannot be relied upon as a ground to deny the relief, this Court is of the view that the objections of the respondents are without any basis. Decisions cited are distinguishable on the facts of those cases itself. Thus quash Ext.P1 to Ext.P5 intimations to the extent it demands late fee under section 234E for the period from 2012-13 till 01.06.2015. The writ petition is therefore allowed as above.
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2022 (11) TMI 545
Late fee u/s 234E - delay in filing the statement of TDS remittance - HELD THAT:- In the decision in M/s.Sarala Memorial Hospital v. Union of India and Another [ 2018 (12) TMI 1818 - KERALA HIGH COURT] an identical question arose for consideration. After considering the statutory provisions of section 234E and section 200A of the Act and the implications of the amendment brought in to the Act, it was held that the amendment would take effect only from 1st June, 2015 and is thus prospective in nature. The aforesaid judgment has become final and is binding upon the authorities. Thus the jurisdiction to levy late fee under section 234E arises only from 01-06.2015 and not earlier. As regards the contention on the delay, though the said contention was impressive on first blush, it can be seen that the nature of challenge raised by the petitioner is based upon the lack of jurisdiction of the respondents to impose late fee. Since in matters where total lack of jurisdiction is alleged, delay cannot be relied upon as a ground to deny the relief, this Court is of the view that the objections of the respondents are without any basis. In view of the above, the demand in intimations for the period from 2012-13 to 2013-14 are bereft of authority and cannot be legally sustainable.
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2022 (11) TMI 544
Unexplained investment in construction of property - HELD THAT:- As all evidences were discarded by the authorities below without making any independent verifications , and on being asked by the Bench, it was submitted by ld. Sr DR that as is emerging from records no such independent verification was done by authorities below. Even for cash deposited by the assssee in the saving bank account maintained with UBI, it is claimed vide ground number 6 that the same was deposited out of advance received from intended purchaser of the shop and Rs. 18,00,000/- was invested in the construction of shop, thus, prima-facie it appears that double addition is made by the AO , firstly while treating Rs. 18,00,000/- as unexplained investment in the construction of commercial complex and secondly when the said cash was claimed to be deposited in bank and out of it aforesaid Rs. 18,00,000/- claimed to be used for construction of commercial complex, but however these facts require proper verification by authorities below to unravel truth, and the matter is required to be restored to AO for denovo assessment , after making proper verification . Thus, the matter is required to be set aside and restored to the file of the AO for denovo assessment by the AO, after giving proper opportunity of being heard to the assessee. The appeal of the assessee is allowed for statistical purposes
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2022 (11) TMI 543
TDS u/s 195 - tax deducted at source from the remittance to BNY Mellon - HELD THAT:- Assessee s tax withholding liability is accepted, but the amount is paid as advance tax on behalf of BNY Mellon. ITNS 281 is for the tax deductions and collections of tax at source, and ITNS is for income tax on companies and other than companies- whether advance tax, self-assessment tax or in other categories. At best, thus, it is a case of using the wrong challan for depositing the money with the income tax department- the use of ITNS 280 instead of ITNS 281. Whatever other implications it may or may not have, even if it is assumed that there is a use of the wrong challan for payment, which at worse the case could be, nothing really turns on the same. The fact remains that the taxes are paid as advance tax for BNY Mellon, and to that extent, the assessee tax-deductor cannot be saddled with a tax withholding demand under section 201(1) r.w.s. 195 of the Income Tax Act, 1961. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the assessee's plea, and quash the impugned tax withholding demand under section 201 r.w.s. 195 - Once the basic tax withholding liability u/s 201(1) is quashed, the interest liability under section 201(1A), being consequential in nature, also stand quashed.
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2022 (11) TMI 542
Penalty u/s 271(1)(c) - Defective notice u/s 274 - HELD THAT:- It is pertinent to note that the notice issued under Section 271(1)(c) of the Act has not specified the limb under which penalty was imposed, therefore, the decision of the in case of SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] will be applicable in assessee s case. Besides this on merit the assessee has given the details of income during the proceedings u/s 153A which cannot be stated as the concealment of income or inaccurate furnishing of income. Appeal filed by the assessee is allowed. Penalty u/s 271AAA - As in the order under Section 271AAA, the Assessing Officer has simplicitery stated that the assessee failed to produce any evidence in support of his claim of business of undisclosed income and therefore, penalty u/s 271AAA will be attracted. It is pertinent to note that the notice issued by the Assessing Officer was not explaining the show-cause u/s 271AAA - assessee s reply reproduced in order under Section 271AAA explains that notices were issued in respect of Section 271(1)(c) of the Act. Thus, the decision of Hon ble Apex Court in case of SSA s Emerald Meadows (Supra) is applicable in present case. Besides this it can be seen from the Assessment Order that the assessee explained the sources of cash receipts during the course of search action under Section 132 which was recorded in statement under Section 132(4) of the Act. During the assessment proceedings, the assessee substantiated the manner in which the said income was derived through confirmations, bank statements, tax credit statements, third party ledger confirmations. So per se, Section 271AAA cannot be invoked in the present case. Thus, order under Section 271AAA related to penalty does not survive. Appeals filed by the assessee are allowed.
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2022 (11) TMI 541
Addition u/s 68 - repayment of loan from Mamta Mohta during the year which was given in the earlier year - HELD THAT:- The case of the assessee is squarely covered by the various other decisions of the Co-ordinate Benches namely ITO vs. Zazsons Exports Ltd. [ 2015 (4) TMI 747 - ITAT LUCKNOW] and Gulf Steel Minerals [ 2018 (5) TMI 627 - ITAT RANCHI] wherein the Co-ordinate Benches have held that no addition can be made in respect of sundry creditor where sundry creditors related to the purchases which are accepted by the AO. The Co-ordinate Benches have held that without rejecting the purchases, the sundry creditor cannot be treated as the income of the assessee besides holding that the application of Section 68 to make addition in respect of current purchases is wholly arbitrary and against the law. Moreover the G.P. addition has already been made.In view of these facts and circumstances and detailed finding given by the Ld. CIT(A) and the ratio laid down in the various decisions as discussed hereinabove ,we are inclined to uphold the order of Ld. CIT(A). Consequently ground no. 1 raised by the revenue is dismissed.
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2022 (11) TMI 540
Rectification u/s 154 of the Revision order passed u/s 263 by CIT - Period of limitation - matter was pending before the ITAT - Rectification order passed after the inquiry sought by the ITAT from the CIT - CIT directed the AO to pass fresh assessment order - HELD THAT:- Assumption of jurisdiction u/s. 263 to hold an assessment order as erroneous in so far as prejudicial to the interest of on the issues on which final consideration could not be drawn by the CIT while giving directions to the Ld. AO for fresh assessment is going beyond the limitation prescribed u/s. 263 (2) of the Act in the garb of provision of section 154 of the Act. The limitation prescribed u/s. 263(2) of the Act cannot be extended by resorting to the provisions of section 154 of the Act. Such an approach, if permitted, will never lead to finality of the proceedings invoked u/s. 263 and, therefore, cannot be appreciated, making the provision prescribing the limitation otiose. It is like when a case is reopened say on four issues and addition/disallowance are made only on three of the issues and one is missed for the purpose of making any addition or disallowance. Subsequently, by resorting to section 154 addition/disallowance cannot be made on the one issue which was missed in the assessment proceeding completed, once the time limit to pass the assessment order has expired. It is an issue of assumption of jurisdiction and not a mistake apparent from record since provisions of section 263 requires the Ld. Pr. CIT to apply his mind by calling for and examining the records and giving the assessee an opportunity of being heard and thereafter, forming an opinion/consideration to pass an order by holding it as erroneous in so far as it is prejudicial to the interest of revenue. In the present case, we hold that the impugned order u/s. 263 by way of rectification is time barred and liable to be quashed. Also, we hold that the original order u/s. 263 has already been quashed on the two issues raised under the first show cause notice by the coordinate bench. There cannot be any occasion for rectification u/s. 154 of the Act for that order which has already been quashed. Accordingly, grounds taken by the assessee are allowed.
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2022 (11) TMI 539
Revision u/s 263 by CIT - As per CIT, AO has failed to make an enquiry in respect of difference between receipt of brokerage and commission as per TDS certificates deducted u/s 194H and the income declared by the assesse in the books of accounts - HELD THAT:- Case of the assessee finds support to the decision referred by the Ld. A.R namely PCIT vs. Delhi Airport Metro Express Pvt. Ltd. [ 2017 (9) TMI 529 - DELHI HIGH COURT ] wherein held that the Ld. PCIT has to determine the excess depreciation before setting aside the order of AO but since the Ld. PCIT has not undertaken any enquiry to this effect and therefore the order of Ld. PCIT was not sustainable. Similarly in the present case the Ld. PCIT has not undertaken any enquiry despite the assessee submitting all the necessary details/evidences to this effect and there was no mistake in the order as the so called difference was correctly assessed to tax in AY 2015-16, AY 2017-18 and of Rs. 1,14,500/- shown on account of wrong deduction by Electrosteel Steel Ltd. reimbursement of expenses was appearing in Form 26AS in AY 2017-18. In view of these facts, we are inclined to quash the revisionary proceedings as well the order passed u/s 263 of the Act.Appeal of the assessee is allowed.
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2022 (11) TMI 538
Addition u/s 68 - Unexplained share capital/share premium received by the assessee during the year - HELD THAT:- We note that the said investment was made out of funds generated by liquidating the investment of the company thus in both the above cases even the creditworthiness is not proved and transactions are genuine. Considering all these facts we are not in concurrence with the conclusion of the CIT(A) that this transaction are not genuine besides we note the assessee company has raised sales near real estate projects at Lucknow for which piece of land was already acquired besides we note the assessee company has entered into for number of purchase agreements and also sold some property and thus realized the profit from the said transaction. We also note that the AO has invoked First proviso to Section 68 which states that the source of source of such credit has to be proved. We observe from the perusal of the Act that First proviso was inserted by the Finance Act, 2012 and is applicable from 01.04.2013 meaning thereby the immediate effect for AY 2013-14 and not from the instant assessment year. Considering the above facts and circumstances of the case, we are inclined to set aside the order of CIT(A) by allowing the appeal of the assessee.
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2022 (11) TMI 537
Denial of deduction u/s.80P(2)(d) on the interest income and dividend - assessee is a cooperative society which earned interest and dividend from Pune Central District Co-operative Bank - HELD THAT:- As seen that the Pune Benches of the Tribunal in Rena Sahakari Sakhar Karkhana Ltd . [ 2022 (1) TMI 419 - ITAT PUNE ] has held that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. Pune District Central Co-operative Bank is also a co-operative society, being, registered as such. Thus overturn the impugned order and direct to grant deduction u/s.80P(2)(d) of the Act on the amount of interest and dividend income earned from Pune District Central Co-operative Bank, a co-operative society - Assessee appeal is allowed.
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2022 (11) TMI 536
Deduction u/s.80P(2)(a)(i) - AO held the assessee to be a primary Cooperative Society and hence, not eligible for deduction in terms of section 80P(4) - CIT-A Partly reversed the order of the AO rejected the assessee s claim towards interest on long term investments/deposits held for a period more than one year, which was held to be Income from other sources on which, the deduction us.80P(2)(a)(i) and u/s.80P(2)(d) was not eligible and AO was directed to allow cost of the fund, if any and proportionate administrative expenses in respect of such income u/s. 57(iii) - HELD THAT:- Interest income on short term deposits for a period less than one year has been held to be business income and hence, eligible for deduction u/s.80P(2)(a)(i). The ld. DR could not draw my attention towards any provision drawing a distinction between deposits/investments held for a period of more than one year to be treated as Income from other sources and for a period less than one year as Business income . It is seen that the assessee falls under the jurisdiction of Hon ble Karnataka High Court. In Tumur Merchants Souharda Credit Cooperative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] has held the amount of interest received from deposits kept with banks as eligible for deduction u/s.80P of the Act. In view of the fact that the relevant distinction between the short term deposits and long term deposits and the consequential eligibility and non-eligibility for deduction u/s.80P, is not borne out from the impugned order, I am of the considered opinion that it would be just and fair if the impugned order is set aside and the matter is restored to the file of the ld. CIT(A). Thus order accordingly and direct him to pass a speaking order and to make a mention of the relevant provision, if any, under which such a distinction has been drawn. He will also take into consideration the ratio of the above said judgment of the Hon ble Karnataka High Court. Needless to say, the assessee will be allowed reasonable opportunity of hearing. Appeals are allowed for statistical purposes.
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2022 (11) TMI 535
Deduction u/s. 54F - LTCG - purchase of land with old structure that is to be demolished - whether benefit of section 54F can be given in parts? - exigibility to tax of the capital gain arising to the assessee during the relevant previous year, which is on the sale of agricultural land and two residential flats and, for the purpose, the eligibility to deduction, if any, u/s. 54F of the Act in view of the investment of the transfer proceeds - HELD THAT:- Exemption u/s. 54F is, as afore-noted, not exigible on transfer thereof. No material as to the residential house at Ganjipura, Jabalpur, the assessee s residence, as being not his house, has been furnished despite availing time for the same. Whichever way one may look at it, the assessee is not entitled to any exemption u/s. 54F. Without prejudice, even on the merits of the issue raised, we find no substance in the assessee s case. The plot purchased surely had a super-structure thereon. The purpose of purchasing the plot, however, by own admission, was to build a residential house thereon, with the super-structure thereon being only incidental. It is for this reason that the assessee intended to pay stamp duty only on the value of the plot and not the super-structure thereon which, unless being acquired for user, is valued at nil/nominal value; the scrap also entailing demolition cost, while striking a bargain for purchase and sale of IP, which also explains the non-mention thereof in the sale deed. No wonder, the dismantling thereof followed immediately after purchase, and it is admittedly only per chance that the dismantling was not complete at the time of spot inspection, resulting in stamp duty being also levied on the super-structure part. The whole premise of allowing exemption on acquisition of a residential house, whether by purchase or through construction, is an addition to the stock of inventory of residential house property of the Nation, so that capital gain to that extent is not subject to tax. Legislative intent is the foundational basis of any interpretive exercise and, therefore, the Courts are to keep the object in view while interpreting a provision (CIT v. Baby Marine Exports [ 2007 (3) TMI 206 - SUPREME COURT ] What has been in effect and substance purchased in the instant case, as also evidenced by the sale deed, is only a plot of land for construction of a residential house thereon. Rather, but for the demolition having been completed by the date of inspection, no stamp duty would have been paid on the structure part. No case for construction of a residential house has been preferred or pressed at any stage, including before us. The assessee is, accordingly, not entitled to any exemption u/s. 54F on the purchase of plot. Further still, the very fact of returning nil capital gain, determined at Rs. 46.93 lacs, implies the claim of exemption u/s. 54F qua the entire investment of Rs. 85 lacs, even as, as apparent, and not disputed at any stage, is the assessee s share in the property purchased being at one-half, so that only an investment of Rs. 42.50 lacs, if at all, could be taken into account for claim for exemption u/s. 54F, even as noticed by the AO. That apart, the same is exigible only in respect of capital gain arising on transfer of a long-term capital asset/s other than a residential house, so that it would not be entitled on capital gain arising on the sale of residential flats. This is being stated, as afore-said, without prejudice to the foregoing findings. The assessee s claim u/s. 54F is without any merit whatsoever. AO s action in denying the same is, for the reasons stated, which include that appealed to the AO, upheld.
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2022 (11) TMI 534
Revision u/s 263 - As per CIT, AO has not verified the claim of assessee u/s 80IC as well as the additional depreciation claimed by the assessee and interest income arising out of excess payment of advance tax/TDS - HELD THAT:- As in the original assessment u/s 143(3) AO has pointedly raised pre-related to details of deduction claim u/s 80IC in the return of income along with supporting evidences in respect of partly transaction of Himachal Unit in the format given in the notice dated 11.03.2019. At the time of assessment proceedings the AO has verified Form 10CCB as well as audited financial statements along with audit report which was enclosed with income tax return and computation of income. The very issues raised by the Pr. CIT of non-verification has been verified thoroughly by the AO at the stage of assessment proceedings u/s 143(3). Assessee through the documents has demonstrated that the claim of 80IC has also been previously claim for nine continuous years and this is the last and 10th year of the said deduction which has been claimed by the assessee. The additional depreciation part as well has been demonstrated by the assessee during the assessment proceedings. Related to interest of TDS the same also has been properly verified by the AO and the documents reveals that no addition is called for in that sphere. Therefore, the invocation of 263 by the Pr. CIT is not justifiable as the proper verification has been done by the AO at the assessment state and the view taken by the Pr. CIT is considered as a changed of opinion and cannot be construed as revisionary powers envisaged under the Pr. CIT s powers given under Section 263 of the Act. Thus, the appeal of the assessee is allowed.
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2022 (11) TMI 533
Condonation of delay - delay of 638 days in filing the present appeal - Addition u/s 68 and 14A - HELD THAT:- Explanation submitted in the petition for condonation of delay of 638 days in filing the present appeal does not in any way persuade us to grant the condonation. Accordingly, filing of this appeal is barred by limitation. Even otherwise, having gone through the orders of Ld. CIT(A) and the Ld. AO with the assistance of Ld. CIT, DR, the above stated facts on the conduct of assessee before the authorities below in various proceedings under the Act, reflects that assessee is abusing the process of law time and again. CIT(A) has meritoriously dealt with the issues raised by the assessee in respect of the addition made u/s. 68 towards share capital and share premium and the disallowance made u/s. 14A of the Act based on material available on record. Accordingly, we do not find any reason to interfere with the findings given by the Ld. CIT(A) and thus, grounds taken by the assessee are dismissed.
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2022 (11) TMI 532
Addition u/s. 68 - unexplained share capital and premium - HELD THAT:- The assessee company did not furnish the aforesaid details before the ld. AO, which means that the assessee right from the very beginning did not want to reveal the identity and address of its directors, even its own proper address. The facts are apparent that the assessee company might be a paper company incorporated for the purpose of routing unexplained funds in the shape of share application and share premium. Though the assessee company was represented through a Ld. Counsel not only before the ld.AO, but also before the CIT(A), but at the same time, the assessee company concealed its own identity, address as well as the identity and address of its directors. The motive being that in case the assessee company is burdened with the additions/taxes, it may avoid the payment of the same by concealing its identity and identity of its directors. The assessee/appellant has not come to the court with clean hands. The appellant in this case wants to abuse the process of law. Facts are apparent that the assessee/appellant company being a paper company has indulged in routing the unaccounted money. The assessee company miserably failed to prove not only its existence, identity and the identity of its directors, but also the identity, credit worthiness of share subscribers and genuineness of the transactions. There is no merit in the appeal of assessee and the same is hereby dismissed.
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2022 (11) TMI 531
Nature of receipt - claim of subsidy under PSI-2007 - revenue or capital receipt - end-use or utilization of such subsidy - HELD THAT:- As relying on Mahindra Two Wheelers Ltd [ 2019 (7) TMI 1939 - ITAT MUMBAI] and KLAUS MULTIPARKING SYSTEM PVT. LTD. [ 2018 (5) TMI 341 - ITAT PUNE] we direct the AO to treat the subsidy received under PSI-2007 as Capital receipt and delete the addition. The grounds raised by the assessee are accordingly allowed.
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2022 (11) TMI 530
Income chargeable to tax in India - Non-residents - deposits made in the bank account - taxability u/s 5(2) - HELD THAT:- Appellant was born in India in 1975 and became non-resident in A.Y. 2002-03 when he was 25 years old and not four years as held by the learned Assessing Officer. It is also stated by the assessee that he was never a partner in any firm in India. This data and statement of facts was not rebutted by the learned Assessing Officer. Further, these facts are also not doubted that assessee is employed in Belgium after he became a non-resident. Assessee also denied that he was ever a beneficiary of any discretionary trust. Therefore, it is apparent that all the allegation made in the assessment order are without any basis or evidence available with the learned Assessing Officer. If an income is to be taxed in the hands of non-resident assessee under Section 5(2) of the Act, then the burden is on the ld. AO to show that income of the non-resident assessee is falling within the definition of income chargeable to tax in his hands. No doubt, base note before us shows the name of the assessee, however, such base note could have been used for income tax in the hands of this assessee only if he would have been resident in India. That is not the case, because assessee is a non-resident accepted by the learned Assessing Officer for last several years i.e. almost 2 decades. The assessee has also produced his Passport which also do not show that he was resident in India in any of these years. It is also clear that foreign bank accounts belong to non-resident Indians cannot be illegal for the reason that non-resident Indians are bound to have their bank accounts outside India. Apparently, in this case, there is no evidence available with the learned Assessing Officer that there is an amount deposited in the HSBC bank by the assessee during the year. In fact, there is no deposit during the year. There is no evidence that such deposit is income of a non-resident under Section 5(2) of the Act. Assessee is assessed to tax year to year basis as non-resident on his Indian income. In view of this, we do not find any infirmity in the order of the learned CIT (A) in deleting the addition in the hands of the assessee for A.Y. 2006-07. Accordingly, the order of the learned CIT (A) is confirmed. - Decided in favour of assessee.
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2022 (11) TMI 529
TP adjustment - denominator of the profit level indicator (PLI) - TPO has taken operating profit / total cost (OP/TC) as the PLI whereas in the case of the assessee in preceding years, operating profit / (value added expenses)VAE - HELD THAT:- DRP following the findings of its predecessors upheld the OP/ OC as the appropriate profit level indicator (PLI), but the Tribunal for A.Y. 2010- 11 [ 2019 (12) TMI 1258 - ITAT MUMBAI] has upheld OP/VAE is the Profit Level Indicator for comparison under TNMM. Respectfully following the finding of the Tribunal (supra), we direct the Ld.AO / TPO to adopt OP/VAE as the profit level indicator for comparison with the comparable cases. The ground of appeal of the assessee is accordingly allowed for statistical purpose. Claim of TDS short granted - HELD THAT:- As assessee before us admitted that credit in respect of certain TDS has been received subsequent to the order passed by the Assessing Officer. In our opinion, the issue is merely a verification of the eligibility of the TDS credit of the assessee by the Assessing Officer and, therefore, same is restored back to the file of the Ld.Assessing Officer for allowing the TDS credit as per rules applicable. The ground of the appeal of the assessee is accordingly allowed for statistical purpose.
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2022 (11) TMI 528
Validity of assessment on non-existent entity - merger proceedings completed - notice in the name of company before amalgamation - corporate death of an entity upon amalgamation - HELD THAT:- As relying on case of State Bank of India 2022 (11) TMI 429 - ITAT MUMBAI] assessment made on non-existent entity is quashed as void ab initio - Decided in favour of assessee.
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2022 (11) TMI 527
Levying late fees u/s 234E - delay in filing of TDS statement(s) - HELD THAT:- As levying late fees u/s 234E of the Act; involving varying sums, for delay in filing of TDS statement(s), there is hardly any dispute between the parties that this statutory provision itself carries prospective effect from 01.06.2015 whereas all these quarters / assessment years; as the case may be, in issue before us are well before the said date. Revenue could not file any case law to the contrary except Rajesh Kourani Vs. Union of India [ 2017 (7) TMI 458 - GUJARAT HIGH COURT] which already stands considered in the foregoing discussion. We, accordingly, accept the assessee s identical sole substantive ground in all these appeals. The impugned late filing fees sum(s) stands deleted.
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2022 (11) TMI 526
Levy of late fees u/s. 234E - belated submission of Tax Deducted at Source - HELD THAT:- As it is with effect from 01-06-2015 that an amendment was made to section 200A of the Act providing that fees u/s. 234E could be computed at the time of processing of return of income and an intimation could be issued specifying the same payable by the deductor as fees u/s. 234E of the Act. Hon'ble Karnataka High Court in the case Fatheraj Singhvi Vs. Union of India, [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] has held that the provisions of section 234E of the Act are substantive in nature and the mechanism for computing the late fee was provided by the Parliament only w.e.f. 01-06-2015. Therefore, late fees u/s. 234E of the Act can be levied only prospectively w.e.f. 01-06-2015 and not prior to that Admittedly in all the above eighteen cases, the Revenue has levied such late fee u/s. 234E for F.Y. 2012-13, 2013-14 and 2014-15 which are prior to 01-06-2015 and hence, we set aside the concerned orders of the National Faceless Appeal Centre and direct the A.O. to delete the late fees levied u/s. 234E of the Act from the hands of the assessee. Appeals of the assessee are allowed.
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2022 (11) TMI 525
Unexplained excess stock - Addition on difference in the stock found during the course of survey - HELD THAT:- We find that Revenue has erred in comparing two accounting statements, which are un-comparable to each other because Revenue has taken book stock on the basis of Tally Software, whereas physical stock on the basis of ORIEL Software. It is also observed that AO failed to appreciate the explanation of the assessee in right perspective. The assessee with the help of audited accounts explained to the ld. AO that taxable income is being computed on the basis of ORIEL POS Software details. Excess stock has been worked out by AO on the basis of an erroneous mathematical exercise. This stock has been worked out not on account of particular items, rather on account of valuation difference, which has been worked out by appreciating two different Softwares for the purpose of book stock, vis-a-vis actual stock and if some exercise is being carried out in this manner, then difference is bound to happen. AO failed to appreciate this aspect during the assessment proceedings, when it was duly explained by the assessee. We have made reference to Closing Stock for A.Y. 2012-13 simply for the reason that these details are not being put up before us as a consequence to the survey, rather these details were put up before the Revenue prior to the survey. Therefore, in our opinion, addition is not sustainable. We allow this ground of appeal and delete the addition made to the income of the assessee on account of unexplained excess stock. Appeal of the assessee is allowed.
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2022 (11) TMI 524
Revision u/s 263 - As per CIT, AO has not examined the details with respect to cash deposits made during the demonetization period - HELD THAT:- AO has not examined the details with respect to cash deposits made during the demonetization period. AO should have been examined in depth the source of the cash deposited during the demonetization period. DR has rightly pointed out that CIT has rightly exercised his revisionary powers u/s 263 and the AO has failed to do discharge his duty in accordance with law. Therefore, the assessment order passed u/s 143(3) of the Act has rightly been set aside by the CIT in exercising his jurisdictional power is upheld. The similar issue has been decided by the coordinate bench of the Tribunal in the case M/s Bhoopalam Marketing Services Pvt. Ltd [ 2022 (11) TMI 331 - ITAT BANGALORE] - Appeal of the assessee is treated as allowed for statistical purposes.
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2022 (11) TMI 523
Revision u/s 263 - Reopening of assessment u/s 147 - Long Term Capital Gain from the position of the possibility of it being a sham transaction - HELD THAT:- On giving our thoughtful consideration to the claims and counter claims of the parties before us, we deem it appropriate to first cull out the facts necessary for adjudicating the issue before us namely; can the order passed by the PCIT u/s. 263 exercising the Revisionary Powers be said to be a valid order in the eyes of law on the basis of facts and evidences on record. In order to examine the said question, we need to set out the relevant and necessary facts on the basis of which the answer to the said question can be determined. The assessee in the facts of the present case has sold the shares of M/s. CCL International Ltd. which were acquired as a result of amalgamation of M/s. CCL International Ltd. with M/s. AAR Infrastructure wherein the assessee had originally invested a certain amount. It is an accepted fact that the Amalgamation Scheme under the aegis of the Hon'ble Delhi High Court has attained finality. The number of shares received by the assessee as a result of the amalgamation is not the issue for determination in the present proceedings. AO considering the information noticed that the assessee had sold 750000 shares in M/s. CCL International Ltd. and has not disclosed those in its return dated 02.08.2013. Considering the information after recording reasons and fulfilling the necessary formalities, he issued notice u/s. 148. The assessee filed its return on 26.10.2016 disclosing the sale of transactions. AO recording the reasons for re-opening the assessment in the impugned order dated 27.11.2017 itself required the assessee to explain and justify its claim of Long Term Capital Gain claim made in the revised return in the backdrop of the information of scam in penny stock company. This order is set aside by the ld. PCIT u/s. 263 of the Act. No contrary evidence has been filed by the Revenue. The suspicions and conjectures in the absence of any evidence have no relevance whatsoever. The argument that subsequently the share price rose and the fact that the assessee sold it at a lesser price on an earlier date is a suspicion which cannot be taken as an evidence that the share price was rigged. This fact in no way discredits the assessee's claim, infact it only fortifies the fact that assessee had no apparent insider's knowledge or clairvoyance that the share price would rise further. With hindsight most everyday rationale decisions may ultimately appear to be ill-advised actions, however none of us are clairvoyants and hence being incapable of seeing the future we act in the present. Decisions taken in the present are based on available input. What lies in the future is always an estimated guess. By accepting an estimated addition the broker cleverly evades penal consequences of Detection and discovery of client fund mis-management. These statements of surrender by Brokers it cannot be over emphasized should be treated with utmost caution in the interests of the economic activity in the country and as a safeguard to the trusting citizens who engage and pay for the services of these Brokers. These surrenders consciously and unscrupulously made invite whimsical consequences for the bonafide investors. How and why the tax department should accept the words of such a manipulative fast thinking person and why the words of such a manipulative person be permitted to be given a precedence over the documents and evidences relied upon by a person relying in good faith on the bonafide of his Broker needs to be seriously introspected upon and addressed by the tax authorities. Permitting such criminal acts by carelessly accepting the statements/surrenders made by unscrupulous brokers needs to be addressed consciously especially when applied to the clients of such brokers who may have trusted the financial acumen of these brokers. These innocent trusting lambs should not be carelessly allowed to be thrown at the wolves by the manipulative brokers. These surrender statements should be viewed with due care and caution. It is necessary for the tax authorities to examine whether the traded company has actually been barred from the Stock Exchange or was still continuing on the Stock Exchange. For the sake of removing doubts, it is being clarified that the observations are made to the transaction of buy/sale through the D-Mat account on the Stock Exchange in listed companies. On a careful consideration of the entire facts, circumstances and position of law as discussed in detail in the earlier part of this order and considering the evidences which were filed before the AO and the ld. PCIT and even further elaborated before us by both the parties, we find on facts that the Revisionary order in the peculiar facts and circumstances proceeds entirely on presumptions, conjectures and surmises. The twin conditions as laid down by plethora of decisions from the case of Malabar Industries [ 2000 (2) TMI 10 - SUPREME COURT] , we find are not met. Accordingly, for the reasons given hereinabove in detail, the impugned order is quashed. Appeal of assessee allowed.
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2022 (11) TMI 522
Capital gain computation - Addition u/s.50C - sale of land on the ground that there is difference between the stamp duly valuation and the sale consideration shown in the agreement - HELD THAT:- When assessee has come up with a categorical plea that he has recorded the actual value of the land in question paid by the assessee the AO was required to refer the matter to the DVO before making any addition in the differential amount. Intention of the legislature in incorporating section 50C of the Act in the statute is to stop any miscarriage of justice. So we are of the considered view that reference to the DVO is must to arrive at the logical conclusion. So we remit this issue back to the AO to decide afresh after calling the report from the DVO qua the market value of the property in question. So ground No.1 2 of A.Y. 2011-12 2012-13 are decided in favour of the assessee for statistical purposes. Compensation paid to the taparies (the taparies are the people who have illegally encroached upon the land of the assessee meant for mining purposes) - CIT(A) confirmed the disallowance by observing that when the assessee has bought the land in question from the government of Rajasthan, it is the duty of the government to give the assessee clear and peaceful possession of this land and moreover assessee has been claiming this deduction on account of compensation paid to the taparies year on year and it does not fit into the scheme of a business ordinarily run by a prudent businessman to allow the encroachment of his land every year and then to claim the compensation - HELD THAT:- Every businessman s endeavor is to run the business without any litigation etc. and they have brought on record the complete list and compensation amount paid to the said taparies and the entire payment has been made through banking channel and in these circumstances the Ld. CIT(A) is not allowed to decide the issue merely on the basis of conjuncture and surmises without controverting the evidence brought on record by the assessee. So following the earlier order decided by the Tribunal we hereby set aside the findings returned by Ld. CIT(A) and direct the AO to delete the disallowance made/confirmed in this case on account of compensation paid to taparies. Commission on sales ranging from 5.25% to 35.48% - AO has restricted to 5% of the sales and thereby disallowed an amount - HELD THAT:- Bare perusal of the findings returned by Ld. CIT(A) goes to prove that assessee has failed to discharge the onus that how and why there is a huge difference in the payment of commission paid on sale to different persons ranging from 5.25% to 35.48%. Because when all the commission agents engaged by the assessee to sell its land are located in the same area it is beyond human probability as to why there is a huge difference in the payment of commission to the different persons for the land situated in the same area. Assessee has not brought on record any such facts. Moreover, it is undisputed fact on record that for the subsequent years the assessee has itself accepted 5% commission on sales by not filing any appeal. So in these circumstances, we do not find any illegality and perversity in the impugned findings returned by AO as well as Ld. CIT(A). - Decided in favour of the assessee. Personal/Business use of vehicles - assessee claimed insurance, depreciation, interest and car expenses in the profit loss account on the vehicles registered in the name of Chairman Managing Director (CMD) - assessee submitted that though the cars are registered in the name of CMD but the same are used for business purposes and payment has been made from the books of assessee company and part of its fixed assets - HELD THAT:- We are of the considered view that when vehicles in question though registered in the name of CMD but are part of its fixed assets and entire payment has been made through books of accounts which have not been disputed by the AO and keeping in view the rule of consistency as in the earlier years and in the subsequent years adhoc disallowance has been made at 10% of the total expenses on vehicles by considering the personal use of vehicles, the AO is directed to disallow 10% of the expenses claimed by the assessee. The impugned order passed by the Ld. CIT(A) on this ground is accordingly modified. Foreign travel expenses incurred on the foreign trade stated for the purpose of meeting foreign parties - Allowable business expenditure - HELD THAT:- When assessee has been exporting its product to various countries and all the expenses have been incurred through books of accounts which have not been disputed the same has to be treated to have been incurred for business purposes except the expenses stated to have been incurred for visiting Bangkok, to which country assessee has neither any export of its product nor any type of import from Bangkok. So in these circumstances, we are of the considered view that the Ld. CIT(A) has rightly disallowed small portion of expenses claimed by the assessee towards element of personal views. So we find no reason to interfere into the adhoc disallowance made by the Ld. CIT(A) in the impugned order. Addition on account of interest income earned by the assessee company from Jaiput Vidyut Vitran Nigam Ltd. (JVVNL) as shown in the form 26AS - case of the assessee that the interest in question has been earned from security deposit kept with JVVNL which has been duly offered to tax in the subsequent years and TDS has also been claimed - HELD THAT:- When interest income has been duly offered to tax in the subsequent years and TDS has also been claimed in the next years there is no reason to disallow the same. Moreover, the assessee has been paying income tax at the same rate. Identical issue has been dealt with by the Hon ble Delhi High Court in case of CIT vs. M/s. Vishnu Industrial Gases P. Ltd. [ 2008 (5) TMI 636 - DELHI HIGH COURT] and has been decided in favour of the assessee. Disallowance of raising and mining expenses - AO found that in some of the expenses complete details of addressees are not available on self made vouchers and in the absence of supporting evidence regarding such type of self made vouchers held that the entire amount of expenses is not incurred wholly and exclusively for the purpose of business and made adhoc disallowances - HELD THAT:- As we are of the considered view that when expenses incurred by the assessee have otherwise not been specifically disputed and books of accounts have been admitted as correct and all the payments have been made through banking channel, the Revenue Department cannot proceed at its whims and fancies by making disallowance for one year and allowing the same expenses in other years. Revenue Department is required to follow the rule of consistency. In these circumstances, we are of the considered view that no ground for making disallowance is made out, hence disallowance confirmed by the Ld. CIT(A) is ordered to be deleted.
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2022 (11) TMI 521
Reopening of assessment u/s 147 - addition u/s 68 69C - HELD THAT:- We find that CIT(A) by well reasoned order and after considering the various decisions cited in his order and for reasons given in his order has held the reopening of the assessment u/s 148 to be in accordance with law. As far as addition on merits is concerned, he has given a finding that assessee has not discharged the onus of proving the creditworthiness of the companies who had invested in the assessee company, the genuineness of the transaction nor the assessee could produce the directors of the investing companies before the authorities. Before us, assessee has not placed any material on record to controvert the findings of lower authorities. In such a situation, we find no reason to interfere with the order of CIT(A). Thus the grounds of assessee are dismissed.
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2022 (11) TMI 520
Estimation of income - Bogus purchases - HELD THAT:- The purchase price mentioned in the alleged sales bills cannot be accepted. The obvious reason is that the assessee did make purchases but at a lower price so as to increase its overall profits. In these circumstances, the entire amount of alleged bogus purchases cannot be disallowed / added, but only profit element embedded therein needs to taxed. As the books of account of the assessee was not rejected by the AO and had accepted the sales of the assessee. The assessee maintained proper books of accounts including purchase register, sales register, stock register, etc. and not specific defect or irregularity observed by the AO. But on the other hand, assessee dealt with an entity of entry provider Mr. Bhanwarlal Jain, this is also not in dispute. In similar facts of the case, the Hon'ble ITAT, Mumbai in the case of Amy Diam Vega Jewellery P Ltd [ 2017 (10) TMI 236 - ITAT MUMBAI ] has upheld the order of the CITIA), who in view of report of the Task Group for Diamond sector submitted to Department of Commerce, had reduced the profit margin in such suspicious purchases to 4% as against estimation of 8% made by the AO. Thus we are of the considered view that addition made by AO should be restricted upto 4% of the total addition made. We delete the addition made by the AO and restrict the same upto 4%. Appeal filed by the assessee partly allowed.
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2022 (11) TMI 519
Addition on account of share application money received - Assessee had not discharged the onus of proving the identity of creditor, the capacity of the persons advancing the money and the genuineness of the transaction regarding share application money - HELD THAT:- The respondent has proved the identity of the investor companies by furnishing their PAN, return of income filed for the year under consideration. Further, the respondent proved the genuineness of the transactions by submitting bank statements, share allotment letter. With regards to the credit worthiness of the party, the respondent has submitted the books of accounts, return of income and audit report of the investor companies. Even, both the investor companies have also submitted the documents as required by the AO. Further, the director of the company has appeared before the AO and confirmed the transactions. The transaction took place through proper banking channels. The audited books of accounts of assessee and investor companies were available with the assessee and the AO has not found any infirmity in the books. Therefore, it is quite apparent that the respondent has discharged his onus of substantiating the identity, genuineness and creditworthiness of the investors. Appeal of the Department is dismissed.
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2022 (11) TMI 518
Agricultural income - seeds production activity - whether the CIT(A) is justified in holding the seeds production activity as exempt u/s 10(1) as against the business income as held by the A.O? - whether the income derived by the assessee is from agricultural operations amounting to agricultural income? - HELD THAT:- We find the AO denied the claim as agricultural income and treated the same as business income by placing reliance on the decision of Hon ble Supreme Court in the case of Raja Benoy Kumar Sahas Roy [ 1957 (5) TMI 6 - SUPREME COURT ] and case of Namdhari Seeds Pvt. Ltd. [ 2011 (10) TMI 488 - KARNATAKA HIGH COURT ] held every amount accrued to a person in whose hands agricultural produce passes through cannot become agricultural income and it is only when owner, landlord or farmer or persons having derivative interest in such lands receives income from land by performance of agricultural operations on it can be termed as agricultural income by placing reliance in the case of Raja Benoy Kumar Sahas Roy (supra). Therefore, the finding of Hon ble High Court of Karnataka Namdhari Seeds Pvt. Ltd. (supra) is applicable to the facts of the present case. Thus, the order of AO is restored. Grounds 1 to 6 raised by the Revenue are allowed.
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2022 (11) TMI 486
Revision u/s 263 - Whether Tribunal was justified in law by setting aside the order passed under Section 263 of the said Act on the ground that the AO had already conducted an inquiry on the issues in question in connection to the proceedings initiated under Section 263? - HELD THAT:- As seen that it is not a case of no enquiry conducted by the AO but the Assessing Officer had given a questionnaire to the assessee and after inviting a reply on the various queries raised, the assessment has been completed. The settled legal position on the exercise of power under Section 263 of the Act is that the supervisory jurisdiction to circumstances must exist to enable the Commissioner to exercise power of revision namely, the assessment order should be erroneous and it should be prejudicial to the interest of the revenue. If the AO has taken a decision in accordance with law, the said order cannot be termed to be erroneous by the revisional authority merely because the order should have been written in a different format or the order should be an elaborate order. The consideration of revisional authority u/s 263 must be based on materials on record of the proceedings called for by him. If there is no material on record on which it can be said that the revisional authority acting in a reasonable manner could have come to such a conclusion, the very initiation of the proceedings by the revisional authority will be illegal and without jurisdiction. On a reading of the order passed by the revisional authority u/s 263 it is evidently clear that there is no specific finding rendered by the authority as to how the order passed by the AO was erroneous and all that the revisional authority states is that no enquiry was conducted, which is factually incorrect.
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Customs
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2022 (11) TMI 517
Seeking grant of second bail - Smuggling of foreign origin Gold bars - recording of statement of accused persons under Section 108 of the Customs Act, 1962 - HELD THAT:- Considering the nature and gravity of allegation as also the fact that applicant s earlier bail application was rejected by this Court on merit after considering all the facts and circumstances of the case, the arguments advanced by counsel for the applicant in this repeated application was considered at the earlier occasion, therefore, there are no material changes in the circumstances in which the applicant is entitled for bail. Although after rejection of the earlier application of the applicant respondent has collected so many evidence including the call detail record. The revised guideline issued by the Joint Commissioner, Customs (New Delhi) does not support the case of the present applicant. Therefore, this court is not inclined to allow this repeated bail application. Application dismissed.
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2022 (11) TMI 516
Seeking grant of bail - Smuggling - Gold bars - reliability of statements u/s 108 of CA - HELD THAT:- Considering the nature and gravity of allegation as also the fact that the applicant Vaibhav Jain along with Vishal Jain both of them bought 3 golden bars from co-accused Mukesh Valecha in lieu of cash of Rs.1,56,60,000/- without any invoice, which was allegedly recovered by DRI officers from the possession of the present applicant Vaibhav Jain, co-accused Vishal Jain, Dheeraj and Shankar Singh Yadav. From the investigation it is prima facie gathered that the present applicant along with other co-accused Vishal Jain, Dheeraj and Shankar Singh Yadav went to the Ulhas Nagar to get 3 k.g. smuggled gold bars and they were carrying it in a specifically built secret coating in the vehicle bearing registration No. MP07-CK-8887 while DRI officers intercepted the vehicle on 12.4.2022. The applicant is found to be one of the master mind behind the whole gold smuggling activities. Call data records also reveal that present applicant Vaibhav Jain and co-accused Vishal Jain talked 40 times during the period 1.1.2022 to 15.4.2022. Considering the value of gold already seized, the manner in which the gold were received in this country and the attendant circumstances, there can be no doubt that the occurrence is flagrant violation of the provisions of Customs Act. The relevant provisions of the Customs Act are intended to protect the fiscal and commercial interest of the nation. An offence like this must be viewed with all the seriousness. There is no doubt that the instant release of the applicant, who is involved in such activities, would hamper the investigation and the applicant may tamper with the evidence. This Court is not inclined to grant regular bail to the present applicant - application dismissed.
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2022 (11) TMI 515
Violation of principles of natural justice - seeking opportunity of cross-examination of Officers and Directors - reliability of document authored by some of its directors and employees from Malaysia - HELD THAT:- The Appellant cannot force the department to issue summons to its directors/employees to scuttle the adjudication proceedings. The question of cross examination of a witness will arise only where statements of such witnesses are relied upon in the show cause notices issued - That apart, under the Customs Act, 1962, strict rules of evidence under the provisions of Indian Evidence Act, 1872, do not strictly apply to quasi judicial proceedings namely before the Adjudicating Authority under the Act. Finding of facts and conclusion thereon is to be determined on the principle of preponderance of probability. If the department makes out a case based on the aforesaid well settled principal of law of preponderance of probability, the proposal in the show cause notices can be confirmed. Reliance placed on the Provisions of Section 28(9) of the Customs Act, 1962, is also misplaced. The time line prescribed under the aforesaid provision is elastic and not rigid. It cannot be invoked by the appellant to assail the continuance of the show cause notice proceeding dated 27.01.2005 as it is based on the decision of the learned Single Judge in W.P.No.18918 of 2000 vide order dated 24.06.2005. The hands of the adjudicating authority cannot be tied and shackled. If any error is committed by an adjudicating authority while passing it is always open for an assessee to assail the same in an appellate proceeding under the Act. The appellant has not made out any case for interfering with the order of the learned Single Judge of this Court - Appeal dismissed.
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2022 (11) TMI 514
Maintainability of petition - availability of alternative remedy of appeal - Classification of goods - melting scrap - to be classified under the heading 7204.29 of the Customs Tariff Act, 1975 or under the heading 7304.29 of the Customs Tariff Act, 1975? - non-production of any evidence to substantiate what the imported goods was nothing but Heavy Melting Scrap (HMS) in the form of old rusted pipes - HELD THAT:- The present writ petition is misconceived as petitioner had an alternative remedy against the impugned order of the Tribunal before the Hon'ble Supreme Court under Section 130 E of the Customs Act, 1962 as the dispute relates to both classification and valuation of imported goods which according to the petitioner was Heavy Metal Scrap (HMS) classifiable under heading 7204.29 of the Customs Tariff Act, 1975 - Even a statutory appeal before this court is barred under Section 130 of the Customs Act, 1962 as the dispute relates to both valuation and classification. That apart the Tribunal has given a finding on facts. It has clearly held that the petitioner has not produced any evidence to substantiate that the imported goods were Heavy Melting Scrap (HMS). We cannot re-determine classification and valuation of the imported goods under article 226 of the Constitution of India. Petition dismissed.
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2022 (11) TMI 513
Scope for invoking regulation 13(d), 13(e) and 13(n) of Customs House Agents Licensing Regulations (CHALR), 2004 - alleged wrongful claim of benefit of notification no. 40/2006-Cus dated 1st May 2006 and no. 98/2009-Cus dated 11th September 2009 - HELD THAT:- The impugned entry has claimed the benefit of an exemption notification and it is upto the assessing authority to determine entitlement thereof. It is also on record that the assessing authority preferred to resort to provisional assessment under section 18 of Customs Act, 1962 which was finalized in accordance with the manner prescribed therein sans any proposal to disturb the claim of such benefits. There is nothing on record to indicate that the proper officer has had his hands forced or his mind beguiled to permit such availment in deviation from the procedure laid down in law. In further proceedings initiated under section 28 of Customs Act, 1962 to deny the benefit of exemption and to recover differential duty, the proper officer so empowered had discarded the proposal in the show cause notice and its reversal on appeal of Commissioner of Customs before the first appellate authority is pending before the Tribunal on challenge of the importer. It was within this factual matrix that the outcome of proceedings initiated under Customs House Agents Licensing Regulations, 2004 on the charges levelled against the appellant herein should have been decided. And that is the test to which the impugned order must be subjected. It is no less of an oddity that the finding in the impugned order that the appellant had not discharged the duties of customs broker with utmost speed and efficiency and without any delay is based upon the same alleged misconstruing adopted to allege loss of revenue. The only ground for concluding that there has been loss of revenue is the reversal of the dropping of proceedings under Customs Act, 1962 by order of first appellate authority. Such appellate revision does not obfuscate non-leviability of duty opined by the assessing and adjudicating authorities which impedes a final conclusion, as yet, on that score - There is no allegation, let alone evidence, that the appellant did not demonstrate speed and efficiency or had wantonly delayed anything as far as the impugned goods are concerned - there are no reason to uphold the finding of the respondent-Commissioner that regulation 10(n) of Customs Broker Licencing Regulations, 2018 had been contravened. None of the charges remain. The revocation of licence and other detriments have no foundation on which they can be sustained - Appeal allowed.
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2022 (11) TMI 512
Classification of Hard Disk Drives - Denial of benefit of exemption from additional duties of customs beyond 6% - hard disk drives - N/N. 6/2006-CE dated 1st March 2006 (at serial no. 17) and N/N. 12/2012-CE dated 18th March 2012 (at serial no. 255) - HELD THAT:- The challenge to settled law by relying on the decision of the Hon ble Supreme Court in re Radhasaomi Satsang [ 1991 (11) TMI 2 - SUPREME COURT] does not appear to be correct insofar as commodity tax is concerned. Assessment to duties of customs are a function of rate of duty and value; the former is determined from the First Schedule to Customs Tariff Act, 1975. The design of the Schedule encompassing all products within the tariff enumeration does not offer scope for traversing beyond the ninety eight chapters making it evident that certainty of fitment is one of the characteristics of classification for smooth operation of international trade - the settled classification may be unsettled only by argument of inapplicability owing to distinguishable nature of the product. Such argument has not been put forth in the contentions of Learned Authorized Representative. The judicial propriety requires non-discriminatory application of classification so held and notwithstanding the continuing cavil of Revenue about the eligibility for concessional duty. Appeal allowed.
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2022 (11) TMI 511
Confiscation of imported goods - penalty - allegation is that the waste paper contains more than 1% non-paper material - HELD THAT:- It is undisputed fact that the inspection of entire goods have not been undertaken. The percentage of non-paper material arrived at on eye estimation that too not of the entire goods but a small and part quantity of one container. There is no certificate or report from expert even on the eye estimation basis - the percentage of non-paper material was arrived at on assumption and presumption basis for this reason itself the goods were not liable for confiscation. The department could not find any material evidence to allege that in case import contains more than 1%, the appellant have any involvement or understanding with the supplier. On the basis of these documents, it is clear that the appellant cannot be made responsible if any lapse committed by the supplier. The appellant have already abandoned the goods. Considering all these facts, it is clear that the appellant is not responsible for any misdeed, if any, committed by the supplier therefore, the appellant is not liable for any penalty. Accordingly, the penalty imposed under Section 112 (i) of the Customs Act, 1962 is set aside. Appeal allowed - decided in favor of appellant.
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2022 (11) TMI 510
Relevant date for filing of Refund - Recovery of the erroneous refund along with interest - recovery of erroneous refund sought on the ground that the refund claim filed by the appellant was time barred as the date of filing of refund claim was taken as 08.11.2017 - HELD THAT:- There is no dispute that the appellant had indeed submitted their refund claim vide letter dated 03.08.2016 which had been received by the office on 30.08.2016. Though the refund was returned for some query for want of documents and subsequently the appellant had resubmitted the same claim on 08.11.2017, the date of filing of refund claim shall be taken as 30.08.2016 not 08.11.2017, accordingly, the refund was filed well within the time. It is settled that even if the refund claim is filed well within the time and the same is returned for want of clarification or documents and the claim was resubmitted, the date of filing the refund application is taken as the date of first filing the refund claim and not the date on which the claim was resubmitted. In the present case also there is no dispute that the first time refund claim was filed on 30.08.2016 which was well within the stipulated time. The refund filed by the appellant is not hit by limitation - Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2022 (11) TMI 509
Oppression and mismanagement - siphoning off of funds - meetings of the Board of Directors or that of the shareholders of the company have been properly convened or not - HELD THAT:- As on today, that is the fact is that the right issue has been published and additional shares are allotted to increase the share capital. We do not wish to reverse that. We make it clear that the pattern of share which might have changed in between the petitioner and the respondent inter-say shall be subject to outcome of main petition. In order to safeguard interest of all shareholders of the company, we direct the fixed asset of the company shall not be alienated or disposed of, but at the same time to keep the company to go on, the directors of the company may raise the loans against fixed assets as per the provisions of Section 180 of the Companies Act, 2013. Application disposed off.
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2022 (11) TMI 508
Composite scheme of merger - Seeking for dispensation of the meeting of shareholders and creditors of both the applicant companies - Section 230-232 of the Companies Act, 2013 - HELD THAT:- There is no secured creditor in the applicant transferor company as per the CA certificate and the only creditor of the applicant transferee company is the holding company of the applicant transferee company. Further, consent affidavits from shareholders of both the applicant companies are received and the same is placed on record. As a result, no meetings of secured/unsecured creditors of both the applicant companies is required to be convened. Further, the meetings of the shareholders of both the applicant companies are dispensed with considering the consent affidavit furnished by the applicant companies. Application allowed.
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Insolvency & Bankruptcy
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2022 (11) TMI 507
Committee of Creditors - including the Appellant as member of CoC - whether in the facts of the present case, the decision of the IRP to constitute the CoC without including the Appellant and holding the first CoC meeting without the Appellant is sustainable in terms of the IBC and CIRP regulations framed thereunder? - whether the decisions taken in the first CoC meeting are substantive decisions and, if so, whether they deserve to be set aside as they were taken without the presence of the Appellant in the CoC? HELD THAT:- The need to have a properly constituted CoC needs no special emphasis for the CoC plays a pivotal role in the insolvency regime being the supreme decision making body in the CIRP of the Corporate Debtor. In the IBC scheme of 2016, the creditors of the corporate debtor have been granted vast powers, and responsibilities and have in fact been put in the driver s seat. The creditors are to take absolute control of the management of the corporate debtor and have been endowed with the authority to take key decisions. With a creditor-in-control management, the CoC is expected to apply their commercial wisdom for the benefit of the corporate debtor - In the present case, the IRP constituted the CoC on the basis of provisional list of claims and yet chose to exclude the Appellant/Financial creditor from the CoC on the ground that there was a need to verify the provisional claims submitted by him. This conduct is unjustified in that the exclusion of Financial Creditor from the CoC or delayed inclusion of the Financial Creditor on the CoC is prejudicial to the best interests of the Corporate Debtor. The undue haste shown by the IRP in certifying the constitution of the CoC; excluding a secured financial creditor therefrom on a flimsy pretext and also proceeding ahead with a meeting of an invalidly constituted CoC is not in sync with the form and spirit of the IBC and therefore cannot be countenanced. Whether the decisions taken by this CoC which was not validly constituted deserves to be set aside? - HELD THAT:- Under the IBC, the role assigned to the CoC is of critical significance. Section 28(1) of the IBC clearly enunciates that the Resolution Professional, prior to taking various actions in the CIRP process, needs the prior approval of the CoC and is required to seek the vote of the creditors - In the present case, the non-inclusion of the Appellant/Financial Creditor on the CoC before holding the first meeting was thus an infraction of the IBC. The CoC, therefore not having been validly constituted, the logical corollary is that decisions taken in the first meeting of the CoC stood vitiated. The Adjudicating Authority has grossly erred in overlooking the fact that allowing membership of the Appellant on the CoC post the first CoC meeting does not wipe out the deliberations and decisions taken in the first CoC meeting - the Appellant was justified in moving an application before the Adjudicating Authority for setting aside the decisions of the first CoC and staying their implementation. However, the Adjudicating Authority has erred in holding this application as one having become infructuous on the provisional acceptance of the Appellant s claims by the IRP and by providing him membership on the CoC with effect from 27.04.2022. Appeal allowed.
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2022 (11) TMI 506
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - privity of contract - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The definition defines Operational Debt as a claim in respect of the PROVISION OF GOODS AND SERVICES. The expression goods and services is preceded with the word in respect of . The materials on record does indicate that advance of Rs.60 lakhs was given by the Operational Creditor to the Corporate Debtor for availing the aviation services and with regard to which, however, no contract could be entered into between the Appellant and the Corporate Debtor. In the complaint, which has been filed before the Registrar of Companies by the Operational Creditor, details of correspondence after payment by the Operational Creditor to the Corporate Debtor has been detailed. There has been repeated correspondence as encapsulated in the complaint, which indicate that there has been correspondence and various requests from the Operational Creditor to the Corporate Debtor with regard to goods and services. Thus, the correspondence as encapsulated shows that an amount of Rs.60 lakhs was advanced for providing goods and services to the Corporate Debtor. Neither goods and services could be provided, nor any Agreement could be entered between the Appellant and the Corporate Debtor. The impugned order dated 06.01.2022 rejecting Section 9 Application on the ground that advance payment paid is not an Operational Debt deserves to be set aside and is hereby set aside - application is revived before the Adjudicating Authority to be heard and decided afresh after hearing both the parties. Appeal allowed.
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2022 (11) TMI 505
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 - HELD THAT:- It is evident that the debt is due and payable and default has occurred. The present application is admitted, in terms of section 9(5) of IBC, 2016. Application admitted - moratorium declared.
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2022 (11) TMI 504
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 - HELD THAT:- The demand notice sent at registered address of the respondent/corporate debtor, as available on the master data of the corporate debtor, was delivered and tracking report showing its delivery has also been annexed with the petition. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The petitioner/operational creditor has filed an affidavit dated 06.02.2019 (Annexure P-9) under Section 9(3)(b) of the Code, wherein it has been deposed that after the expiry of the period of ten days from the date of delivery of the demand notice, it has not received any payment from the corporate debtor and further that there is no reply given by the respondent/corporate debtor to a dispute of the unpaid operational debt. Further, it has been deposed that no notice was given by the respondent/corporate debtor relating to the dispute of the unpaid operational debt and has further undertaken that there is no pre-existing dispute between the parties. Whether this application was filed within limitation? - HELD THAT:- A perusal of the case file shows that the application was filed vide Diary No. 1379 dated 19.02.2020, and the date of default as is mentioned in Part-IV of Form 5 is 25.01.2019 i.e. the date on which the respondent/corporate debtor assured the petitioner/operational creditor to clear the outstanding amount. Therefore, this Adjudicating Authority finds that this application has been filed within limitation. 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 and established. Also, there is no rebuttal to the claim filed by the petitioner as respondent/corporate debtor chose not to appear. 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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PMLA
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2022 (11) TMI 503
Seeking grant of Regular Bail - money laundering - scheduled offences - Section 167(2) of Cr.P.C - HELD THAT:- A bare reading of the impugned orders (Annexures P-15) reveals that the trial Court has not bothered at all to abide by the directions of this Court while passing the same as neither it has properly discussed and dealt with all the contentions, as raised by the Special Public Prosecutor for the ED before it nor has distinguished the facts and circumstances of the matter remitted to it, from those of the cases wherein the judgments, as cited by him (the Special Public Prosecutor) in support of his contentions, had been passed and it has, rather, touched a different tangent by citing the case law to discard/ignore the same. Though the impugned orders dated 02.03.2021 passed by the trial Court are not legally sustainable but however, this Court is no more competent to quash/ set aside the same as the order passed by this Court on 02.06.2021 granting the relief of regular bail to the respondents has not been interfered with and has, thus, been upheld by the Apex Court - Petition disposed off.
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2022 (11) TMI 502
Money Laundering - Jurisdiction of lower court - Summoning of petitioner by the ED for recording of the statement after registration of the crime - petitioner is in judicial custody - HELD THAT:- It is deemed appropriate to notice the statutory frame work of the PMLA. Section 2 of the PMLA deals with definitions. Section 2(1)(z) defines a Special Court to mean a Court of Session designated as Special Court under sub-section (1) of Section 43. It is not in dispute that an ECIR is filed against the petitioner and it is in furtherance of the said registration of the crime, statements of the petitioner are sought to be recorded by the respondent/ED to consider whether there is an offence made out against the petitioner for offences punishable under the PMLA. Now PMLA would mean offences punishable under Chapter II which deals with offence of money laundering. Section 50 empowers the authorities under the PMLA with regard to summons, production of documents and to give evidence. Sub-Section (3) of Section 50 directs that all persons so summoned shall be bound to attend in person or through authorized agents and shall be bound to state the truth upon any subject with respect to which they are examined or make statements and produce documents as may be required. Therefore, the authority under the PMLA does have power to summon and record statement of witnesses in terms of Section 50 of the Act - If the ED wants to invoke the provisions of the PMLA to discern the offence under Section 3 of the PMLA, the designated Court is the Court of Session alone which had the power to even consider any application emanating from the provisions of the PMLA as the offence supra, Section 43 supra and Section 71 clearly mean that the designate Court to try anything emanating from the PMLA is the Special Court and the Special Court is the Court of Session. Section 71 has overriding effect on any law. A Three Judge Bench of the Apex Court in the case of HARSHAD S.MEHTA [ 2001 (9) TMI 991 - SUPREME COURT] followed the judgment in the case of A.R.ANTULAY [ 1984 (2) TMI 317 - SUPREME COURT] to hold, if a Special Court is created under the provisions of a special enactment, the proceedings falling under that enactment shall be held only before the Special Court. For this purpose the Apex Court holds that the Special Court enjoys all the powers of the court of original jurisdiction and it holds a dual capacity and powers of both the Magistrate and the Court of Session depending upon the stage of the case. In the light of the statutory frame work of the PMLA and the application filed under Section 50 of the Act, this Court is of the considered view that the application was not maintainable before the learned Magistrate, since the Court did not have the power to direct recording of statements for it to become a record under the PMLA, the order which is passed by the Court which did not have a jurisdiction to even consider any application under the PMLA, is rendered unsustainable. Petition allowed.
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Service Tax
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2022 (11) TMI 501
Validity of order passed by the designated committee endorsed on Form SVLDRS 1 - taxability of the service has been rejected by the designated committee on the technical ground that the amount was not quantified before 30.06.2019 - contention is that the petitioner herein has filed a review application before the committee on 14.02.2022, which is still pending - HELD THAT:- Having noted the material placed on record, specifically page no.'21' of the paper book and the findings returned by the Assessing Officer from page no.'44' onwards, it is concluded that the matter requires inquiry. Sri Gaurav Mahajan, learned Advocate appearing for the respondents No.2, 3 4 prays for and is granted four weeks' time to file counter affidavit. Two weeks, thereafter, is granted to file of rejoinder affidavit - List thereafter on 14.12.2022.
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2022 (11) TMI 500
CENVAT Credit - Swatch Bharat Cess - rent-a-cab service, common input services or not - legal consultancy services - Management Consultancy Services - reverse charge mechanism - penalty - HELD THAT:- The appellant have maintained proper records of the transactions and the issue is wholly interpretational in nature. Further, the appellant is entitled to benefit of Section 73(3) as they have deposited the amount demanded pursuant to audit on 07.01.2020, which is prior to issue of show cause notice. The Revenue have not calculated and pointed out the interest payable by the appellant. Further, such amount of interest has been immediately deposited upon receipt of the show cause notice before the adjudication order. The penalty under Section 78 is not imposable - the impugned order is set aside and the appeal is allowed - decided in favor of appellant.
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2022 (11) TMI 499
Refund claim for excess paid service tax - rejection on the ground that this excess paid Service Tax could have been adjusted against the subsequent liability in terms of Rule 6(4A) of the Service Tax Rule 1994 - applicability of time limitation - HELD THAT:- The undisputed fact is that though this tax pertains to the period month ending 31 March, 2017 but the appellant have paid the excess Service Tax on 03.06.2017. The refund claim for the same was filed on 01.06.2018. Learned Commissioner (Appeals) has contended that the relevant date should be taken as of due date of payment - the relevant date provided under Section 11B in the facts of the present case the Clause (f) is applicable according to which the date of payment is the relevant date, therefore, the date of payment being 03.06.2017 and refund filing dated 01.06.2018, the appellant s refund claim is well within 1 year from the date of excess payment of Service Tax. Accordingly, the refund is not time barred. Refund amount of Rs. 11,804/- - rejection on the ground that the appellant have not submitted the documents - HELD THAT:- It is crystal clear that the appellant as against the actual income of Rs. 1976933.51 for the month of May, 2017 in ST-3 return wrong amount of Rs. 20,55,619/- was oversightly mentioned. Due to this reason on this wrong amount the Service Tax was paid, hence, there is excess payment of Service Tax. With the documents submitted by the appellant it can be conveniently ascertained what is the actual value of the service provided by the appellant - no more documents is required, therefore, the contention of the Learned Commissioner (Appeals) that the appellant have not submitted the documents in support of the claim is absolutely contrary to the documents available on the records. The appellant is legally entitle for the refund - Appeal allowed - decided in favor of appellant.
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2022 (11) TMI 498
Redetermination of Service Tax due within period of limitation - incorrect filing of required periodic returns and especially when the departmental officers were barred from routinely going to the premises of the respondent for checking their accounts - suppression of facts - Section 73 of Central Excise Act - HELD THAT:- The alleged omissions and commissions by the assessee and the surrounding circumstances warranting issuance of show-cause notice, no doubt, are stated in great detail by the Principal Commissioner of Central Excise and Customs, Cochin in Order in Original. Keeping view the scope of challenge to the order under appeal and the grounds raised, therefore, we are of the view that this Court need not refer to all the circumstances in detail. On perusal of orders and stated briefly, that the core of the controversy in the show-cause notices is whether the assessee filed returns and the service tax was not paid on the full taxable value of services rendered by the assessee. Further, whether the show-cause notice for extended limitation period is justifiable under any one of the circumstances covered by Section 73 of the Act. Alternatively, whether the period of five-year limitation is attracted to the case or not. Upon due verification of record, and the scope of appeal, we are constrained to record that the finding of fact recorded by the Tribunal on the inapplicability of extended period of limitation for the show cause notice dated 22.10.2005 does not warrant our interference and the grounds raised in this behalf do not merit consideration. Because the genesis for issuing show-cause notice for extended period of limitation is from the very material on record before the authority - The appellant since unable to attack a crucial finding of fact recorded by the Tribunal, necessarily must fail in the challenge against the order impugned in the appeal. The other argument is ancillary and it is stated the limited remand in the circumstances of the case is also erroneous. The order of remand under appeal does not warrant our interference - Appeal dismissed.
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Central Excise
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2022 (11) TMI 497
CENVAT Credit - input services - courier service particularly for the period after 2011 - denial of CENVAT credit particularly on the ground that after 2011 amendment in the definition of input service, the activity of business has been removed from the inclusion clause - HELD THAT:- It is clear that the tribunal in HALDYN GLASS LTD, ARTEK SURFIN CHEMICALS LTD, SUN PHARMACEUTICAL INDUSTRIES LTD, SUD CHEMIE INDIA PVT LTD, SHANKAR PACKAGING LTD, VIDEOCON INDUSTRIES LTD, ZYDEX INDUSTRIES, CLIMAX SYNTHETICS PVT LTD, TRANSPEK SILOX INDUSTRY LTD, COSMO FILMS LTD, PIRAMAL GLASS LTD, KAPS ENGINEERS, DYNAFLEX PVT LTD VERSUS C.C.E. S.T. -VADODARA [ 2017 (8) TMI 1217 - CESTAT AHMEDABAD] has considered the issue after taking into account the 2011 amendment and came to the conclusion that the assesses are entitle for the cenvat credit on courier services. The appellant are entitled for CENVAT credit on courier service - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (11) TMI 496
Levy of VAT (Value Added Tax) - lease charges paid by the Railways Department to the Petitioner Company - Deemed sale or not - right to use goods or the use of goods - HELD THAT:- From the authoritative decision of the Hon'ble Supreme Court in 20th Century Finance Corpn. Ltd. [ 2000 (5) TMI 980 - SUPREME COURT ] , it is evidently clear that the Hon'ble Supreme Court had in its mandate held that in respect of transfer of right to use any goods, the situs of the sale would be placed where the written agreement transferring the right to use any goods was executed and it is only that State where the written agreement was executed which is empowered to levy tax. The High Court of Orrisa in M/s Shrei International Finance Ltd. Vs. State of Orissa Ors. [ 2008 (3) TMI 638 - ORISSA HIGH COURT ] in somewhat identical set of facts has held that since the sale or purchase was in the course inter-state trade and commerce, the State of Orissa has no jurisdiction to levy tax on the lease rent received. The taxable event is the transfer of right to use goods and not the right to use goods or the use of goods. Therefore, the right to use goods or the use of goods is not the relevant factor to justify the levy of tax. Thus, the entire assessment made by the Assessing Officer and the acceptance of the same by the Revisional Authority is per se bad and illegal. This Court is of the firm view that the Order passed by this Court does not seem to be proper, legal and justified and a strong case for allowing the Review Petition accordingly has been made out - Review Petition is allowed.
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2022 (11) TMI 495
Imposition of penalty under Section 12(5)(iii) of Tamil Nadu General Sales Tax Act, 1959 - inclusion of cylinder holding charges and delivery charges in the taxable turnover - It was the specific case of the petitioner that both these amounts were not liable to be included in the taxable turnover and therefore, the petitioner and the department were in dispute for the assessment years 1987-88, 1988-89, 1990-91, 1991-92, 1992-93 and 1994-95. HELD THAT:- The decision in the case of State of Tamil Nadu V. Indian Silk Traders [ 1991 (10) TMI 302 - MADRAS HIGH COURT ], followed where it was held that Since a finding on this crucial aspect is necessary to find out whether penalty can be levied under section 12(3) or 12(5) of the Act, we are constrained to remand the case back to the assessing authority to render a finding on this aspect as to whether the assessment is based on the books of accounts or de hors the books of accounts. Though the views expressed in State of Tamil Nadu V. Indian Silk Traders, [ 1991 (10) TMI 302 - MADRAS HIGH COURT ] are fraught with contradictions and require for a re-consideration, we are refraining from taking a different view, as the view of this Court in the aforesaid case was followed by this Court in State of Tamil Nadu vs. Periyar District Cooperative Milk Producers United Ltd. [ 1992 (4) TMI 236 - MADRAS HIGH COURT ] and State of Tamil Nadu vs. Papco Offset Printing Works [ 1998 (1) TMI 508 - MADRAS HIGH COURT ]. Petition allowed.
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2022 (11) TMI 494
Recovery of tax and penalty - excess input tax credit availed - arithmetical mistake in the order - HELD THAT:- A perusal of the averments in the counter affidavit of the 4th respondent would show that the Commercial Tax Officer, Puttur has noticed arithmetical mistakes in the consequential order dated 11.01.2018, as CTO has taken opening Input Tax Credit of Rs.26,50,970/- instead of Nil opening Input Tax Credit and passed revised order for the tax periods from October 2012 to March 2014 and determined balance tax of Rs.44,75,595/-. Suppressing the said fact, the petitioner filed an application for collection of the tax at Rs.26,82,906/- instead of Rs.44,75,575/- The said authority had granted stay on a condition of deposit of 50% of the tax of Rs.26,82,906/-. The petitioner had paid Rs.6,70,727/- only. It is further stated that the Deputy Commercial Tax Office had issued several notices requesting the petitioner to pay the amounts payable by the petitioner as per the stays granted by this Court, as well as Additional Commissioner (CT) (Legal), but no amounts have been paid. The 4th respondent also issued notices, but in vain. Since the petitioner failed to pay the entire amount due towards tax and penalty, consequential proceedings came to be initiated. It is further specifically stated in the counter that the revisional authority i.e., Deputy Commissioner of Commercial Taxes, Chittoor has not revised the entire orders passed by the assessing authorities and the revised and restricted Input Tax Credit claimed by the petitioner is only based on the revisional orders of the Deputy Commissioner of Commercial Taxes, Chittoor - the jurisdiction Commercial Tax Officer is said to have passed the effectual orders and determined the balance tax payable by the petitioner and also levied penalty. Since there is dispute with regard to payments made by the petitioner and as issue involves factual aspects also apart from the orders passed, it would be just and proper to direct the assessing authority-1st respondent to consider the matter afresh after giving an opportunity of personal hearing to the petitioner, as early as possible - petition disposed off.
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Indian Laws
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2022 (11) TMI 493
Dishonor of Cheque - insufficient funds - legally enforceable debt or not - rebuttal of statutory presumption u/s 139 of NI Act - non production of best evidence - HELD THAT:- In the case in hand, it is found that there is no dispute that there was business transaction between the petitioner and the respondent and also there is no dispute that the petitioner has admitted in his evidence having filled up the dates and amount of sum in the cheques and also there is no quarrel at the Bar that the cheques were presented to the banker by the respondent and the same were returned unpaid with the endorsement- insufficient fund . There is also no dispute that the respondent has issued legal notice to the petitioner demanding the cheques amount and the petitioner had failed to make the payment within the stipulated period, and thereafter, the petitioner had filed the complaint under section 138 of the N.I. Act. Thus, the presumption under sections 139 and 118(a) of the N.I. Act is very much available here in this case. It is a fact that the respondent had produced Tax Invoice and Challan of selling computers, laptops and accessories to the petitioner. Though Mr. Tiwari, the learned counsel for the petitioner has submitted that the respondent has withdrawn the relevant evidence and because of non-consideration of the same by the learned courts below in their judgments leads to perversity, yet, the same would not disentitled the learned courts below from drawing the statutory presumption available under section 139 of the N.I. Act. What is to be noted here is that the petitioner also failed to make any such prayer before the learned court below for production of the said documents. It also cannot be said that there is any material alteration of the cheques and no adverse inference can be drawn against the respondent and sections 20 and 87 of the N.I. Act would not come into aid of the petitioner. Mr. Deka, the learned counsel for the respondent has rightly pointed out this in his argument and submits that since signed cheques in questions were respondent in discharge of liability, non-existence of which could not be established by leading cogent evidence, it can reasonably be presumed that the cheque was filled in by the respondent being the payee at his request and/or with his acquiescence and the subsequent filling in of an unfilled signed cheque is not an alteration. This court is of the view that the petitioner herein has failed to rebut the statutory presumption drawn under section 139 of the N.I. Act. There is nothing on the record to show that the learned courts below have committed any jurisdictional error - Petition dismissed.
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2022 (11) TMI 492
Dishonor of Cheque - rebuttal of presumptions - compromise arrived at between the parties or not - Section 138 of NI Act - HELD THAT:- Admittedly no compromise had been arrived at between the parties to the subject complaint. The submission of the learned counsel appearing on behalf of the petitioners that the cheques had been issued for the same invoices and therefore would give rise to the same cause of action is not tenable, in view of the fact that the cheques in both the complaints had allegedly been issued for discharge of liability, in part, arising out of the invoices relied upon by the respondent. It is for the petitioner to prove that the said cheques were not issued towards discharge, in whole or part, of any debt or liability. This court cannot go into factual issues which are not admitted between the parties. Moreover, it is settled law that the scope of enquiry in exercise of jurisdiction under Section 482 CrPC is limited. The court should be slow to grant relief at a pre-trial stage, before parties have had an opportunity to adduce evidence. This inherent jurisdiction must be exercised sparingly and with great circumspection. This Court finds no reason to interfere with the impugned judgment - petition dismissed.
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2022 (11) TMI 491
Dishonor of Cheque - fund insufficient - discharge of burden to prove - rebuttal of presumption under Section 139 of the N.I. Act - evidence under Section 200 of Code of Criminal Procedure and under Section 145 of the N.I. Act - HELD THAT:- In P. RASIYA VERSUS ABDUL NAZER AND ANR. [ 2022 (8) TMI 1303 - SUPREME COURT] , the Hon ble Supreme Court has dealt with the issue relating to nature of transactions and source of funds of the complainant in the backdrop of the provisions of Section 138 of the N.I. Act held that once the initial burden is discharged by the Complainant that the cheque was issued by the accused and the signature and the issuance of the cheque is not disputed by the accused, in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for any debt or other liability. The presumption under Section 139 of the N.I. Act is a statutory presumption and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the Complainant/holder of the cheque, in that case, it is for the accused to prove the contrary. In TEDHI SINGH VERSUS NARAYAN DASS MAHANT [ 2022 (3) TMI 797 - SUPREME COURT] the Hon ble Supreme Court was pleased to deal with the manner in which complainant is expected to lead evidence in a proceeding under the provisions of Section 138 of N.I. Act. It has been held that unless the accused in reply notice to the statutory notice sent is able to set up a case regarding the capacity of the complainant there is no requirement of the complainant to lead such evidence. In case the accused intends to demonstrate he has to examine his witness and place documentary materials to rebut the prosecution or the complainant s case. In this case the accused did not adduce any evidence nor did she rely upon any documentary materials to rebut the prosecution or the complainant s case. As such the aforesaid three judgments of the Hon ble Supreme Court assumes importance in view of the fact that all the questions which were confronted relate to source of funds of the complainant and the capacity of the complainant to give such money to the accused neither any document has been relied upon by the defence to show that there cannot be such due nor the signature in the cheque has been disputed. Thus, it would be very difficult for a Court to accept rebuttal of the statutory presumption available under the provisions of the Negotiable Instruments Act - no materials have been produced to show as to how the cheque was in possession of the complainant as there are no allegations of lost cheque or the signature in the cheque being forged. Although it is permitted in a case of such nature to raise a probable defence from the available materials in the cross-examination of the prosecution witness only, but the nature of the cross-examination and the probable defence raised by the accused do not qualify as a rebuttal to the provisions under Section 139 of the N.I. Act and the learned Appellate Court unnecessarily resorted to the issue of difference in ink as no case has been made out by the accused for the cheque having been lost or the same was obtained by coercion. Having regard to the factual circumstances presented by the prosecution/complainant in this case in its evidence and the accused having failed to create or raise any defence to rebut the statutory presumption the order of the Appellate Court calls for interference - the respondent/accused is directed to comply with the order of the learned Judicial Magistrate 5th Court, Barrackpore, within a period of four weeks i.e. by 7th December, 2022, in the alternative the learned Judicial Magistrate, 5th Court, Barrackpore would exercise his powers under Section 421 of the Code of Criminal Procedure for executing the sentence. Application allowed.
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2022 (11) TMI 490
Dishonor of Cheque - insufficient funds - discharge of initial burden to prove - rebuttal of presumptions - preponderance of probabilities - HELD THAT:- After questioning the accused under Section 313(1)(b) of Cr.P.C, though opportunity was provided to the accused to adduce defence evidence, no defence evidence was adduced - It is the settled law that, when the complainant discharged his initial burden in the matter of transaction led to execution of the cheque, he would get twin presumptions in his favour. Law regarding presumptions is also settled as well. The law is clear on the point that when the complainant discharged the initial burden to prove the transaction led to execution of the cheque, the presumption under Sections 118 and 139 of the N.I Act would come into play. No doubt, these presumptions are rebuttable and it is the duty of the accused to rebut the presumptions and the standard of proof of rebuttal is nothing but preponderance of probabilities - Coming to the power of this Court in the matter of exercising revision, the law is well settled. It is the settled law that power of revision available to this Court under Section 401 of Cr.P.C r/w Section 397 is not wide and exhaustive to re-appreciate the evidence to have a contra finding. It is to be noted that nothing available to interfere with the concurrent verdicts, by exercising power of revision. To the contrary, it appears that the courts below rightly entered into conviction and sentence - revision petition dismissed.
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2022 (11) TMI 489
Dishonor of Cheque - proper service of legal notice or not - offence punishable under Section 138 of the N.I.Act - HELD THAT:- Plainly reading the definition of 'holder in due course', it is crystal clear that holder in due course means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque, if payable to bearer - there are no hesitation to hold that Dr. K.P.Saji Kumar, who is admittedly the Managing Director of the firm, can only do physical possession and actions on behalf of the firm and he is the person entitled to possess or bear anything for and on behalf of the firm. Uniformity and consistency in deciding similar cases by different Courts, not only increase the credibility of cheque as a negotiable instrument, but also the credibility of Courts of justice. No doubt, Section 138 of the NI Act permits imposition of fine twice the cheque amount. The revision petitioner in all these revision petitions is directed to appear before the trial court to undergo the sentence and to pay the fine within seven days from today. On failure to do so, the trial court is directed to execute the sentence without fail - revision petition dismissed.
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2022 (11) TMI 488
Dishonor of Cheque - insufficient funds - admissibility of signatures on the cheque - rebuttal of statutory presumptions - section 139 of NI Act - HELD THAT:- Trite it is that once the signatures on the cheque leaf are admitted, presumption under Section 139 of the Act does pitch in. However, the said presumption is rebuttable. At the same time in order to rebut the said presumption, accused is required to raise probable defence. Though in order to substantiate the same, he can either lead evidence in defence or can well rely upon the evidence adduced by the complainant - Thus in order to rebut the statutory presumption accused is required to raise a defence though only probable. When analysed in the light of the settled proposition of law, this Court is of the considered opinion that the accused failed to raise any defence during trial and thus it cannot be held that the presumption enumerated under Section 139 of the Act was validly rebutted by the accused. Appellate Court pittedly erred in relying upon KRISHNA NANARDHAN BHAT VERSUS DATTATRAYA G. HEGDE [ 2008 (1) TMI 827 - SUPREME COURT] to hold that in absence of resources to advance loan, the liability qua the cheque in question can be held to be not illegally enforceable. Complainant was explicit in proving source of fund i.e. the compensation received on account of loan acquisition. Admittedly, such compensation is not amenable to the provisions of Income Tax Act, 1961 and thus there was no occassion for the complainant to prove said source by producing his income tax returns Apart from that the Appellate Court has failed to meet with the reasoning adopted by the trial Court while convicting the respondent-accused and has set aside the judgment of conviction without upsetting the findings recorded by the trial Court. No cogent reasoning has been afforded by the Appellate Court for acquitting the respondent-accused. Consequently, the impugned judgment dated 22.08.2016 cannot be sustained and is, thus, set aside - The impugned order passed by the Lower Appellate Court acquitting the respondent is set aside. The matter is remanded back to the the Appellate Court to decide the matter afresh in accordance with law, after hearing both the parties. Petition allowed.
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2022 (11) TMI 487
Dishonor of Cheque - Direction to deposit 30% of composition amount in lieu of suspension of sentence imposed by learned trial Court - section 148 of NI Act - HELD THAT:- On perusal of material available on record vis- -vis reasoning assigned in the impugned order, this court finds that appellate court, while suspending substantive sentence imposed by learned trial Court was well within its jurisdiction to direct the party seeking suspension of substantive sentence, to deposit minimum of 20% of compensation/fine amount awarded by learned trial Court. Careful perusal of S. 148 of Act, leaves no room for doubt that at the time of considering prayer for suspension of sentence imposed by learned trial Court, appellate court is not estopped from imposing condition of deposit of minimum of 20% of compensation amount. Reliance placed in the judgment of Hon'ble Apex Court in SURINDER SINGH DESWAL @ COL. S.S. DESWAL AND OTHERS VERSUS VIRENDER GANDHI [ 2019 (5) TMI 1626 - SUPREME COURT ], wherein it has been held that even if original complaint is filed prior to amendment of S. 148 of the Act, appellate court can exercise power under S. 148 to direct accused to deposit minimum 20% of compensation. Though this court finds no merit in the present petition, however, having taken note of the fact that the petitioner has a huge liability to pay the compensation, this court deems it fit to modify the order dated 1.10.2022 passed by learned Additional Sessions Judge, Hamirpur, Himachal Pradesh to the extent that the petitioner shall deposit 20% of the compensation amount within a period of two months from the date of order. Petition disposed off.
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