TMI Tax Updates - e-Newsletter
November 2, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax

Articles

1. Is SCN required for Recovery on the basis of GSTR-1 admitted liability? Can recovery be made without issuing Show Cause Notice?

   By: Abhishek Raja

2. NON APPOINTMENT OF COMPANY SECRETARY STATUTORILY REQUIRED

   By: DR.MARIAPPAN GOVINDARAJAN

3. ISSUE OF SUMMONS AND PROCEEDINGS UNDER GST LAW

   By: Dr. Sanjiv Agarwal

News

1. ₹1,51,718 crore gross GST revenue collected for October 2022

2. CBIC Connectivity Partner Protocol

3. Draft common Income-tax Return-request for inputs from stakeholders and the general public

Notifications

Customs

1. 56/2022 - dated 1-11-2022 - Cus

Effective rates of customs duty and IGST for goods imported into India - Seeks to amend notification No. 50/2017-Customs, dated the 30th June, 2017

2. 55/2022 - dated 31-10-2022 - Cus

Export duty exemption to specified varieties of Rice subject to the prescribed condition(s).

3. 91/2022 - dated 31-10-2022 - Cus (NT)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

IBC

4. IBBI/2022-23/GN/REG101 - dated 31-10-2022 - IBC

Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Second Amendment) Regulations, 2022

Income Tax

5. 119/2022 - dated 31-10-2022 - IT

Income of a specified person from an investment made in India - Pension fund, namely, Teacher Retirement System of Texas notified.

Circulars / Instructions / Orders

Income Tax

1. 22/2022 - dated 1-11-2022

Condonation of delay under section 119(2)(b) of the Income-tax Act, 1961 in filing of Form No.10A

Central Excise

2. 1085/06/2022 - dated 31-10-2022

Mechanism for implementation of additional basic excise duty @Rs. 2 per litre levied on sale of unblended motor spirit (commonly known as petrol)

Highlights / Catch Notes

GST

• Court Denies Bail in Cybercrime Case for Uploading Fake Documents on GST Portal; Co-Accused Still at Large.

  Case-Laws - HC : Seeking grant of bail - cyber crime - fake/fraudulent document upoladed on GST Portal - , other co-accused persons are still absconding - there is strong apprehension that if applicant is released on bail, he may temper with the prosecution evidence and he may also abscond. - this Court is not inclined to grant bail to applicant. - HC
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Income Tax

• Reinsurance Activity Outside India: No Permanent Establishment, Tax Neutral Impact Under Indian Law.

  Case-Laws - AT : Income deemed to accrue or arise in India - Permanent establishment (PE) in India - unless a particular place is at the disposal of the assessee, that place cannot be said to constitute the PE of the assessee. In any case, the core reinsurance activity is the assumption of risk, and that assumption of risk has been done outside India. - the existence of the DAPE is wholly tax neutral in India - AT
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• Court Rules No Additional Tax Due: LTCG Exemption u/s 54F Applied Correctly, Section 50C Not Applicable.

  Case-Laws - AT : LTCG computation - Exemption u/s 54F - Since entire amount of sale consideration has been invested in bands, therefore, provisions of s. 50C are not applicable - the AO has not brought evidence of receiving excess amount. The AO proceeded only on the basis of the value adopted by the Stamp Valuation Authorities. Thus as per the findings given by the Hon’ble Courts no addition is liable to be made. - AT
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• Supreme Court's Interpretation Overrules CBDT Circular for Settlement Eligibility Under VSV Act; FAQ No.59 Deemed Unlawful.

  Case-Laws - HC : Eligibility of settlement under the VSV Act - It is also settled law that when the Supreme Court or High Court declare the law on a question arising for consideration, then the view expressed by the Supreme Court or the High Court has to be given effect to and not the circular issued by the CBDT - Consequently, the FAQ No.59 of Circular No.21/2020 dated 4th December, 2020 issued by CBDT to the extent it contemplates admission of appeal before filing of declaration as a condition precedent in order for the appeal to be treated as pending and to be eligible for settlement under the VSV Act is contrary to law. - HC
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• Bengaluru Classified as Urban Area u/s 54G; Assessee Entitled to Tax Deductions for Industrial Relocation.

  Case-Laws - HC : Deduction u/s 54G - shifting of industrial undertaking - By virtue of Notification under Section 280Y(d) of the Act dated 22.09.1967, Bengaluru Corporation was declared as Urban area - As in view of the law laid down in para 39 in Fibre Boards, Bengaluru continues to be an Urban area for the purpose of Section 54G. - Assessee shall be entitled for the benefit u/s 54G of the Act. - HC
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• High Court Validates Posthumous Tax Assessment Reopening; Allows Amendments to Addressee u/ss 147 and 148A(d.

  Case-Laws - HC : Reopening of assessment u/s 147 - Notice issued to the deceased assessee during her lifetime - Initial notice was issued at the time when the assessee was alive (the present proceedings are in continuation) and thus, the AO has rightfully amended the details of the addressee in its consequent order under Section 148A(d) and notice under Section 148 of the Act. - HC
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• Court Rules AO Cannot Add Income if Funds Source is Clear u/s 68 of Income Tax Act.

  Case-Laws - HC : Addition u/s 68 - Once the Books of Accounts and the facts reflected therein showed the source of the fund and the identity of the party and the aspect that Books of Accounts of the assessee also reflected the receipt and the amount was repaid by the assessee, it was not open to the AO to raise doubts about the creditworthiness of the creditor. AO ignored the relevant material - No additions - HC
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• Reassessment Proceedings Invalidated: Section 147 Set Aside Due to Non-Compliance with Section 149(1)(b) Criteria.

  Case-Laws - AT : Reopening of assessment u/s 147 - As per the provisions of section 149(1)(b) where 4 years, but not more than 6 years, have elapsed, no notice under section 148 can be issued unless the income chargeable to tax which has escaped assessment is Rs. 1 lakh or more. - As the requirement of provisions of section 149(1)(b) of the Act are not fulfilled in the present case, therefore, the reassessment proceedings under section 147 of the Act are set aside being bad in law - AT
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• Foreign Exchange Loss and Depreciation Dispute Sent Back to Commissioner for Further Review in Tax Assessment Case.

  Case-Laws - AT : Nature of expenditure - Treatment of foreign exchange loss - enhanced depreciation - both the AO and the assessee has taken stands to suit their convenience in each of the years. Be that as it may, we notice that this issue has been examined by the co-ordinate bench in AY 2011-12 and this issue has been restored back to the file of Ld CIT(A) as held that CIT(A) has not considered all aspect of the reasoning given by the Assessing Officer for making the addition - Matter restored back - AT
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• Assessee Proves Lender's Identity and Creditworthiness; Tax Additions Deleted u/s 68 of Income Tax Act.

  Case-Laws - AT : Unexplained credit u/s 68 - unsecured loans received by the assessee - The assessee has duly proved not only the identity, creditworthiness of the lender company but also the genuineness of the transaction by way of demonstrating about the running account of the assessee with the said company and that the total loan liability of the assessee company during the year being decreased. - Additions deleted - AT
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Customs

• Penalty Justified u/s 112(a); Special Penalty Precedes General Penalty, Preventing Additional Section 114A Penalty.

  Case-Laws - AT : Levy of penalty - Generalia specialibus non derogant - levy of special penalty over general penalty - the Commissioner perfectly justified in imposing penalty under Section 112(a) on the respondent. Once he has imposed penalty under Section 112(a), in view of the proviso, penalty under Section 114A cannot be imposed. - AT
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IBC

• NCLT Can Reinstate Withdrawn Petitions and Handle Corporate Debtor Claims u/s 60(5)(c) of Insolvency Code.

  Case-Laws - HC : Restoration of petition, which has been withdrawn - There cannot be a dispute on the inherent power of the NCLT to direct restoration of an application which had been permitted by the Tribunal to be withdrawn earlier - Apart from this, Section 60(5) c) of the Insolvency and Bankruptcy Code also empowers the NCLT to entertain or dispose of any application or proceeding by or against the corporate debtor or corporate person as well as any claim made by or against the corporate debtor. This provision is in the nature of a residuary power. - Writ petitioner may raise the issue befoer the NCLT - HC
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Service Tax

• Commissioner (Appeals) Mistakenly Used Wrong Date for Refund Application, Impacting Interest Calculation on Delayed Refund.

  Case-Laws - AT : Interest of delayed refund - Relevant date for calculation of Interest - The Commissioner (Appeals) committed an illegality in construing 29.01.2020 as the date of filing of the refund application whereas the dates of filing of the refund applications were 30.03.2017, 20.06.2017, 31.07.2017 and 28.08.2017. On 29.01.2020 the appellant had merely submitted an application for implementation of the order passed for refund of the amount claimed in the four applications - AT
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• Service Tax Not Applicable on Exhibition Services Provided Abroad, Ruled Non-Taxable Under Relevant Rule.

  Case-Laws - AT : Levy of service tax - exhibition service provided by foreign service provider in respect of exhibition in abroad - admittedly the whole of the service was provided outside India and received outside India, therefore, even in terms of the said rule, the service tax is not leviable on the Business Exhibition Service received by the appellant which was performed outside India hence not taxable in the hands of the appellant. - AT
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Case Laws:

• GST

• 2022 (11) TMI 28
  Validity of proceedings under Section 129 of CGST Act - invocation of bank guarantee - It is the case of the petitioner that since the Appellate Tribunal has not been constituted, the appeal period has not even started to run and therefore the petitioner is entitled to a direction that pending the constitution of the Appellate Tribunal and without giving to the petitioner a right to file such appeal, the bank guarantee provided by the petitioner cannot be invoked - HELD THAT:- As long as the provisions of Section 112 (8)(b) of the CGST/SGST Act requires the petitioner to deposit a sum equivalent to 20% of the tax amount in dispute as a condition for maintaining an appeal before the Tribunal, it must be held that even if the Appellate Tribunal is not constituted the petitioner must be directed to deposit a sum equivalent to 20% of the tax amount in dispute as a condition for stay of invocation of bank guarantee - This payment will however be subject to the condition that the same will be treated as sufficient compliance of the provisions contained in Section 112 (8)(b) of the CGST/SGST Act to maintain an appeal as and when the Appellate Tribunal is constituted. This Writ Petition is disposed of directing that on petitioner remitting an amount payable by the petitioner under Section 112(8)(b) of the CGST/SGST Act for maintaining an appeal before the Appellate Tribunal, any bank guarantee furnished by the petitioner in proceedings under Section 129 of the CGST/SGST Act will not be invoked.

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• 2022 (11) TMI 27
  Seeking grant of bail - cyber crime - fake/fraudulent document upoladed on GST Portal - alleged that GST registrations were obtained by using fraudulent means by some miscreants - HELD THAT:- Considering all the facts and circumstances of the case, arguments advanced by counsel for the parties, nature and gravity of allegation it is noticed that during investigation it has been found that forged GST firm namely Shanti Impex, M/s A.N. Enterprises, M/s Kasyap Enterprises, M/s Rahul Enterprises has been operated by Suleman Karim Ali Meghani and present applicant Amir Halani, other co-accused persons are still absconding, therefore, there is strong apprehension that if applicant is released on bail, he may temper with the prosecution evidence and he may also abscond. Hence in view of the prima facie evidence available on record, this Court is not inclined to grant bail to applicant. This bail application filed by applicant under section 439 of Cr.P.C. is accordingly dismissed.

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• Income Tax

• 2022 (11) TMI 33
  Revision u/s 263 - additional income being his share of 14% of cash received from Mr. D V Harish, MD of Davanam Constructions with whom a JDA is being entered into by the partnership firm - PCIT noticed that the AO has not conducted any enquiry with regard to the cash paid and to that extent he treated the assessment order as being erroneous and prejudicial to the interests of the revenue - HELD THAT:- There is no dispute about the fact that the impugned order u/s. 263 of the Act has been issued manually. It is also noticed that the DIN for the order is generated through two separate intimations one bearing the same date as the date of the order u/s.263 and the other is dated 25.03.2022. The argument of the DR that the intimation dated 24.03.2022 is part of the order and that there is no violation cannot be accepted as generating the DIN by separate intimation is allowed to be done to regularise the manual order provided the manual order is issued in accordance with the procedure as contained - On perusal of the order u/s.263, it is noted that the order neither contains the DIN in the body of the order, nor contains the fact in the specific format as stated in Para 3 that the communication is issued manually without a DIN after obtaining the necessary approvals. Therefore, we are of considered view that the impugned order is not in conformity with Para 2 and Para 3 of the CBDT circular. As we hold that the orders passed u/s.263 for the assessment years 2014-15 to 2016-17 are invalid and shall be deemed to have never been issued as per Para 4 of the CBDT circular as the order is not conformity with Para 2 and Para 3. It is ordered accordingly.

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• 2022 (11) TMI 32
  Royalty/FTS/FIS - Taxability of payment received by the assessee under Master Franchise Agreement as Royalty/Fee for Technical Services (FTS), both under the Domestic Law as well as India-USA Double Taxation Avoidance Agreement - (DTAA) - HELD THAT:- The factual position relating to the disputed issue being identical in the impugned assessment year, respectfully following the decision of the Tribunal in assessment year 2016-17 [ 2022 (7) TMI 781 - ITAT DELHI ] we hold that the amount received by the assessee under the Master Franchise Agreement, cannot be treated either as a royalty/FTS/FIS. Accordingly, addition is deleted. Appeal is allowed.

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• 2022 (11) TMI 31
  Income deemed to accrue or arise in India - Permanent establishment in India - existence of the dependent agency permanent establishment - HELD THAT:- DRP has referred to the existence of business connection u/s 9(1) but then that aspect of the matter is wholly irrelevant because in a case in which a double taxation avoidance agreement comes into play, as admittedly, in this case, the provisions of the Income Tax Act 1961 cannot be pressed into service unless these provisions are more beneficial to the assessee. DRP has simply observed that since the core business activities are conducted by RGA India, RGA India constitutes the fixed place PE. As we we have seen above, unless a particular place is at the disposal of the assessee, that place cannot be said to constitute the PE of the assessee. In any case, the core reinsurance activity is the assumption of risk, and that assumption of risk has been done outside India. There is thus no occasion to attribute reinsurance profit attribution to RGA India. Whatever activities are carried out by RGA India have been duly paid for by the asseseee, and the transfer pricing assessment has accepted that position. Once that position is accepted, there cannot be any further profit attribution for services rendered by the RGA. We disapprove the stand of the authorities below, and hold that there was no fixed place permanent establishment on the facts of this case. As regards the existence of the dependent agency permanent establishment, that aspect of the matter, in the light of the coordinate bench decision in the case of ADIT Vs Asia Today Ltd. [ 2021 (11) TMI 804 - ITAT MUMBAI ] is wholly tax-neutral and does not, therefore, need our adjudication. Thus we hold that the assessee did not have a fixed place permanent establishment in India, that the question of assessee having a dependent agency PE is wholly academic in the sense that, as the law stands now, the existence of the DAPE is wholly tax neutral in India. Accordingly, the business profits earned by the assessee on account of the reinsurance business have no tax implications in India. In view of these findings, all other issues raised in the appeal are academic and call for no adjudication as of now. Appeal of assessee allowed.

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• 2022 (11) TMI 30
  LTCG computation - Deduction u/s 54B - Applicability of Section 50C, where entire actual sales consideration has been invested - lower authorities had denied the claim by stating that the land was purchased after the due date of filling of the Return - whether the assessee is eligible for deduction u/s 54B for purchase of land after due of filing of return and what amount is to be invested whether according to actual sale consideration or as per DLC Rate for claiming deduction u/s 54B of the Act, whether for calculation of LTCG, the cost of acquisition should be as per DLC rate or actual sale consideration and what is the actual DLC rate or whether assessee has received excess sale consideration as mentioned in the sale deed? - HELD THAT:- Person had not furnished return of previous year within time allowed under subsection (1) i.e. before 31st day of July of Assessment Year, assessee could file return before expiry of one year from end of ever relevant Assessment Year-Considering said case, instant court had considered provisions and interpreted same-In that view of matter, issue was required to be answered in favour of assessee and against department-Assessee s appeal allowed - See Shankar Lal Sharma [ 2018 (1) TMI 1000 - RAJASTHAN HIGH COURT ] The assessee is eligible for claim of deduction u/s 54B and as per record and purchase deed the assessee had invested the amount of Rs.13,51,388/-( 1/4th of Rs.51,50,000/- purchase cost+2,55,550/- stamp duty). Amount which is to be invested for claiming the deduction u/s 54B for calculation the LTCG - whether according to actual sale consideration or as per DLC rate? - As no addition is required to be made on account of LTCG in the present case. As per decisions for claiming u/s 54B on account of LTCG, the assessee is required to invest the amount as per actual sale consideration and not as per DLC Rate. The assessee as per record i.e. sale deed and purchase deed had invested the amount of Rs.13,51,388/-( 1/4th of 51,50,000/- purchase cost + 2,55.550/- stamp duty) u/s 54B of the Act in purchase of new assets i.e. agriculture land while the actual LTCG was of Rs.6,71,250/-, which was to be invested by the assessee. It shows that the assessee had invested more amount of Rs.13,51,388/- than the amount of Rs.6,71,250/-. Thus no addition is required to be made. Calculation of LTCG, the cost of acquisition should be as per DLC rate or actual sale consideration and what is the actual DLC rate or whether assessee has received excess sale consideration as mentioned in the sale deed - Since entire amount of sale consideration has been invested in bands, therefore, provisions of s. 50C are not applicable - In absence of evidence on record, higher price for sale of land could not be presumed from the consideration shown in registered sale deeds and rates of property fixed by Stamp Valuation Authority for registration purposes could not be taken to be price for which property might had been sold. It is noted that in this case the AO has not brought evidence of receiving excess amount. The AO proceeded only on the basis of the value adopted by the Stamp Valuation Authorities. Thus as per the findings given by the Hon ble Courts no addition is liable to be made. In this view of the matter, the addition sustained by the ld. CIT(A) is deleted.

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• 2022 (11) TMI 29
  Late filing fee u/s 234E - late filing of TDS statement in Form No. 27Q - HELD THAT:- As in the case of Shree Narayana Guru Smaraka Sangam Upper Primary School [ 2017 (1) TMI 1105 - KERALA HIGH COURT ] it has been held that there is no element of quid pro quo for collecting late fee, and that by incorporating section 234E, late fee has become mandatory. There is no opposition to this view. However, there also cannot be any denial that where the lapse came about due to a mere technical error, like the one in the present case, i.e., inadvertent wrong filing of TDS Statement, i.e., in Form No. 26QB, rather than in the applicable Form No. 27Q, there is no case for levy of late filing fee u/s 234E. CIT(A) has not also taken into consideration the fact that had the intention of the assessee been otherwise, it would not have deposited the entire TDS amount. Mere technical breach cannot lead to the assessee being penalized. CIT(A) has further not considered the fact that actually, no loss has been caused to the Revenue. The case of M/s G.B Builders Vs. ACIT [ 2022 (4) TMI 1313 - ITAT AHMEDABAD ] is to the same effect. Therein also, it was held that a mere technical inadvertent error did not invite levy of late filing fee u/s 234E of the Act. The case of Block Development Officer, Chaksu, Jaipur [ 2020 (6) TMI 565 - ITAT JAIPUR ] on the other hand, is not of much aid to the Department. There, the assessee had not filed any TDS Statement at all and it was on the facts of that particular case, that the Tribunal has confirmed the levy of late filing fee u/s 234E of the Act. Appeal is allowed.

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• 2022 (11) TMI 26
  Eligibility of settlement under the VSV Act - appeal filed against the assessment order under Section 143(3) is pending - petitioner challenging the action in partially settling dispute relating to penalty for Assessment Year 2014-15 pending before ITAT under the Vivad Se Vishwas Scheme without settling the dispute relating to quantum appeal for Assessment Year 2014-15 pending before CIT(A) - HELD THAT:- In the opinion of this Court, when a section contemplates pendency of an appeal, what is required is that an appeal should be pending and in such a case there is no need to introduce the qualification that it should be valid or competent. In Raja Kulkarni v. The State of Bombay [ 1953 (11) TMI 17 - SUPREME COURT] the Supreme Court has held that whether an appeal is valid or competent is a question entirely for the appellate court before whom the appeal is filed to decide and this determination is possible only after the appeal is heard but there is nothing to prevent a party from filing an appeal which may ultimately be found to be incompetent, e.g. when it is held to be barred by limitation. From the mere fact that such an appeal is held to be unmaintainable on any ground whatsoever, it does not follow that there was no appeal pending before the Court . To the same effect is the law laid down by the judgments of the Supreme Court in the cases of Tirupati Balaji Developers (P) Ltd. v. State of Bihar Ors.[ 2004 (4) TMI 575 - SUPREME COURT] and Commr. of Income Tax, Rajkot Versus Shatrusailya Digvijaysingh Jadeja, [ 2005 (9) TMI 362 - SUPREME COURT] - In the said cases, it has been held that an appeal does not cease to be an appeal though irregular and incompetent. Though Section 10 of the VSV Act gives power to the CBDT to issue directions, yet this Court is of the view that the said Section is similar to Section 119 of the Act, 1961. Consequently, the CBDT under Section 10 of VSV Act cannot issue circulars adverse to the assessee. It is also settled law that when the Supreme Court or High Court declare the law on a question arising for consideration, then the view expressed by the Supreme Court or the High Court has to be given effect to and not the circular issued by the CBDT - Consequently, the FAQ No.59 of Circular No.21/2020 dated 4th December, 2020 issued by CBDT to the extent it contemplates admission of appeal before filing of declaration as a condition precedent in order for the appeal to be treated as pending and to be eligible for settlement under the VSV Act is contrary to law. RELIEF - Keeping in view the aforesaid, the Forms 3 dated 23rd January, 2021 and 12th February, 2021 attached as Annexures P-16 and P-21 as well as the FAQ No.59 of Circular No.21/2020 dated 4th December, 2020 issued by CBDT to the extent mentioned hereinabove are quashed and respondent No.1 is directed to treat the appeal filed against the assessment order under Section 143(3) for assessment year 2014-15 before CIT(A) on 24th May, 2019 as pending as on 31 st January, 2020. The respondents are also directed to issue revised Forms 3 by settling both the appeals against the assessment order for assessment year 2014-15 (i.e. quantum appeal pending before CIT(A) and the appeal against levy of penalty pending before ITAT) in accordance with the provisions of VSV Act within eight weeks.

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• 2022 (11) TMI 25
  Deduction u/s 54G - shifting of industrial undertaking - AO rejected the benefit on the ground that Bangalore was not an urban area - Tribunal classifying Bangalore as a non-urban area for the purposes of Section 54G when it was previously categorized as an urban area until 1990 - HELD THAT:- By virtue of Notification under Section 280Y(d) of the Act dated 22.09.1967, Bengaluru Corporation was declared as Urban area - As in view of the law laid down in para 39 in Fibre Boards, Bengaluru continues to be an Urban area for the purpose of Section 54G. Assessee shall be entitled for the benefit u/s 54G of the Act. - Decided in favour of assessee.

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• 2022 (11) TMI 24
  Reopening of assessment u/s 147 - Notice issued to the deceased assessee during her lifetime - HELD THAT:- Since the present assessment proceedings are in continuation of the initial notice dated 25th April, 2021, issued to the deceased assessee during her lifetime, the same can be continued against the legal representative from the stage at which it stood on the date of the death of the deceased so as to collect the tax from the estate of the deceased person. Initial notice was issued at the time when the assessee was alive (the present proceedings are in continuation) and thus, the AO has rightfully amended the details of the addressee in its consequent order under Section 148A(d) and notice under Section 148 of the Act. The reliance placed by the assessee on the decision of this Court in Sangeeta Vig [ 2022 (6) TMI 658 - DELHI HIGH COURT ] in misplaced since in that case the initial notice under the erstwhile Section 148 of the Act, was issued at a time when the assessee was dead. However, in the present case, as noted above, the assessee was alive at the time of the issuance of initial notice under erstwhile Section 148 of the Act.

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• 2022 (11) TMI 23
  Penalty u/s 271(1)(c) - HELD THAT:- The reason shown by the assessee that AO had insisted to make certain additions and with the hope that no penalty would be imposed, the assessee gave a consent letter, is not acceptable. Hence, no exception can be taken to the orders passed by the CIT(A) and ITAT. Appeal must fail and it is accordingly dismissed.

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• 2022 (11) TMI 22
  Addition u/s 68 - funds received from M/s. Rachna Finlease Pvt. Ltd. - identity and creditworthiness proved or not? - entire gamut of facts making it evident that the transaction was in the nature of accommodation entry - HELD THAT:- Creditworthiness and genuineness of said M/s. Rachna Finlease Pvt. Ltd. was not established and that towards the share application money, the said party was a non-filer assessee company. It was sought to be argued that when the amount was given towards share application money, the assessee was not free from suspicion. Once the Books of Accounts and the facts reflected therein showed the source of the fund and the identity of the party and the aspect that Books of Accounts of the assessee also reflected the receipt and the amount was repaid by the assessee, it was not open to the AO to raise doubts about the creditworthiness of the creditor. AO ignored the relevant material. Appellate Authority as well as the Income Appellate Tax Tribunal concurrently reversed the findings of the Assessing Officer on the said count. It could not be said that any question much less any substantial question of law arise in the appeal.

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• 2022 (11) TMI 21
  Disallowance of amount of stale cheques appearing as outstanding towards Other Creditors - assessee was asked to show case as to why the same be not disallowed, to which, the assessee, inter alia, submitted that it relates to the cheque issued to the creditors, but, not presented by them to the Bank - HELD THAT:- We find that the Ld. CIT(A) after considering the details submitted by the assessee and for the reasons noted in the order has upheld the disallowance made by A.O. Before us, no fallacy in the findings of the Ld. CIT(A) has been pointed out by assessee nor has it placed any material on record to support its case. We, therefore, find no reason to interfere with the orders of the Ld. CIT(A) on this ground. Thus, the ground of appeal of no.1 of the assessee is dismissed. Adhoc disallowance of Car Repair and Maintenance Expenses and Communication Expenses - HELD THAT:- We find that the Ld. CIT(A) after considering the details submitted by the assessee and for the reasons noted in the order has upheld the disallowances made by A.O. Before us, no fallacy in the findings has been pointed out by assessee nor has he placed any material on record to support its case. We, therefore, find no reason to interfere with the orders of the lower authorities on this ground. Thus, the ground of appeal of the assessee are dismissed.

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• 2022 (11) TMI 20
  Penalty u/s 271(1)(c) - Non specification of charge - HELD THAT:- Respectfully following the judgment of the Hon ble Delhi High Court in the case of Sahara India Life Insurance Co. Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] we hold that the notice issued by the Assessing Authority did not specify under which limb of section 271(1)(c) of the Act, the notice has been issued, hence it is bad in law. Therefore, the penalty levied by the AO and sustained by the learned CIT(Appeals) on the basis of invalid notice deserves to be deleted. Accordingly, the AO is herby directed to delete the penalty. Grounds raised by the assessee are allowed.

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• 2022 (11) TMI 19
  Unexplained cash credit u/s 68 - assessee failed to offer any explanation regarding the source and nature of the deposit, the assessing officer added back the amount u/s 68 - HELD THAT:- As prior to the issue of cheque to the assessee, the lender had sufficient fund available with him. From the aforesaid evidences available on record, the following facts emerge, firstly, the identity of the creditor has been established, secondly, the transaction has been made through banking channel by way of account payee cheque and thirdly, the lender has funds available with him to advance the amount. As could be seen, only because the lender did not comply with the summons issued under Section 131 of the Act, the addition has been made. Non-compliance with the summons issued u/s 131 of the Act can be for various reasons. However, that cannot be the solely criteria to treat the loan received as unexplained cash credit u/s 68. Unfortunately, learned first appellate authority has decided the issue in a very cryptic manner without independent application of mind. When the transaction has been carried out through banking channel by way of account payee cheque, it is not understood how there can be an issue regarding the genuineness of the transaction. Nothing prevented the departmental authorities to exercise the statutory powers vested in them to get to the root of the matter, irrespective of the fact that the lender did not comply with the summons issued u/s 131 - when the assessee has discharged his initial onus to prove the source and nature of deposits made in the bank account, the burden shifts to the department to prove the contrary, which, in my view, the department has failed to discharge. Appeal of assessee allowed.

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• 2022 (11) TMI 18
  Reopening of assessment u/s 147 - assessment has been reopened after expiry of 4 years from the end of the relevant assessment year - Addition u/s 68 - unsecured loans obtained - HELD THAT:- In the present case, return of income filed by the assessee was only processed under section 143(1) of the Act and returned income was accepted. The said return was not selected for scrutiny and thus, no order was passed under section 143(3) of the Act. However, after expiry of 4 years from the end of the relevant assessment year, notice under section 148 of the Act was issued to the assessee on 29/03/2012. As per the provisions of section 149(1)(b) where 4 years, but not more than 6 years, have elapsed, no notice under section 148 can be issued unless the income chargeable to tax which has escaped assessment is Rs. 1 lakh or more. Since, it is duty of the AO to record the reasons clearly and unambiguously and no inference can be drawn there from, thus, respectfully following the aforesaid decisions, we are of the considered view that the impugned reassessment proceedings are not in conformity with the provisions of section 149(1)(b) of the Act. As the requirement of provisions of section 149(1)(b) of the Act are not fulfilled in the present case, therefore, the reassessment proceedings under section 147 of the Act are set aside being bad in law. Accordingly, the impugned order passed by the learned CIT(A) upholding reassessment proceedings, which resulted in passing of order under section 143(3) r/w section 147 of the Act is set aside. As a result, ground raised by the assessee vide petition under Rule 27 of ITAT Rules, 1963 is allowed.

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• 2022 (11) TMI 17
  Undisclosed income - As per DR assessee failed to demonstrate the source of the amount in cash given to the CBI officials - HELD THAT:- From the seizure memo available it reveals that the amount of Rs.30 lakh has been seized on 03.09.2011. Copy of savings bank passbook of the assessee reveals that the assessee had deposited cheque of Rs.10 lakh on 16.08.2011 when the assessee entered into an agreement to sell the property with Smt. Meenakshi Monsotra, wife of Shri Ashwani Kumar Sharma. Therefore, it is safely gathered that the assessee had also received cash amount of Rs.20 lakh along with cheque of Rs.10 lakh on 16.08.2012. The CBI officials seized Rs.13 lakhs in cash from the assessee after a lapse of about 18 days, therefore, I safely gather that the source of Rs.13 lakh seized by the CBI on 03.09.2011 is discernible from the documentary evidence as well as facts noted by the AO in the assessment order. Therefore, in view of the foregoing, the addition made by the AO and confirmed by the ld.CIT(A) cannot be held as sustainable and, thus, direct the AO to delete the same. Accordingly, ground No.2 of the assessee is allowed. Addition u/s 68 - unsecured loan - HELD THAT:- On careful and vigilant perusal of J-Form of Shri Jagdish as clearly observed that these are light printed but clearly legible and supports the status of Shri Jagdish and explanation of the assessee that the said loan creditor was owning agricultural land and earning exempt agricultural income out of sale proceeds of crop cultivated thereon. Thus, the objection of the ld. Sr. DR being hypertechnical is dismissed. No other objection has been placed by the ld. Sr. DR on this issue. AO has accepted the unsecured loan from Shri Naveen Kaushik and Shri Satbir Kaushik without any objection, but, disputed the amounts received by the assessee from said other three creditors. On the totality of the facts and circumstances under which the assessee had to collect an amount of Rs.17 lakhs in compliance to the directions of the CBI officials and after careful consideration and thoughtful perusal of the documentary evidence submitted by all the three creditors before the authorities below, thus of the considered opinion that there is no iota of doubt regarding the identity and credit worthiness of all the three creditors and regarding genuineness of the transaction, therefore, the AO was not correct and justified in making addition in the hands of the assessee u/s 68 - findings recorded by the authorities below being contrary to the facts and circumstances of the case and not sustainable as per the provisions of the Act are directed to be deleted. - Decided in favour of assessee. Unexplained investment - Assessee failed to prove that the amount credited to her bank account was the amount of advance received under the agreement to sell the property - - HELD THAT:- As assessee was owning House No.809, Ansals, Panipat and Rs.10 lakh was credited to her bank account on 16.08.2011. The assessee entered into an agreement to sell of the said property to the wife of Shri Ashwani Kumar Sharma and received Rs.10 lakh by cheque and Rs.20 lakh in cash. These facts have not been controverted by the AO or the CIT(A) in any manner. Therefore the impugned amount of Rs.10 lakh credited to the bank account of the assessee is advance against the agreement to sell the property. The factum of receipt of Rs.10 lakh under the agreement to sell House No. 809, Ansals, Panipat, which was owned by the assessee at the relevant point of time on 16.08.2011 is clearly established which cannot be doubted in any manner. Therefore, the reasons recorded for confirming the addition of Rs.10 lakh by the authorities below are baseless and perverse and, hence, the AO is directed to delete the addition. Accordingly, ground No.4 of the assessee is allowed.

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• 2022 (11) TMI 16
  Bogus LTCG - Disallowance of loss - sale of shares of Vas Infrastructure Limited - HELD THAT:- AO has not given any description as to why the script at particular juncture was at lowest or highest price at the time of trading due to assessee company s interference, when the entire transaction of purchase and sale of the scripts was through National Stock Exchange or Bombay Stock Exchange and that also through the authorised brokers. In fact, the Revenue has also not pointed out as to whether any of the broker during the said period was black listed or prevented to trade in the stock market by SEBI or other investigation agencies. Merely on conjecture and surmises, the Assessing Officer cannot made disallowance. In fact, the assessee has not claim the benefit of Section 10(38) in the present assessment year or earlier assessment year or in subsequent assessment years. CIT(A) has totally ignored the evidences such as Audited accounts and Tax Audit report for F.Y. 2011-12, copy of demat statements for F.Y. 2011-12, F O Segment yearly summary sheet, Audited Accounts for F.Y. 2011-12, Statement of Script wise purchase and sales for F.Y. 2011-12, stock summary of M/s VAS Infrastructure Ltd., copy of assessee s ledger in broker s books and copy of broker s ledger in books of assessee for F.Y. 2011-12 along with bank statements and bank book for F.Y. 2011-12 which were submitted by the assessee before the Assessing Officer as well as before the CIT(A). Thus, the Assessing Officer as well as the CIT(A) was not right in disallowing the claim of business loss to the assessee. The appeal of the assessee is allowed.

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• 2022 (11) TMI 15
  Addition u/s 68 - unexplained cash credits - HELD THAT:- MOU was not doubted by the AO to the extent that the assessee received commission of 1% in the said sale and purchase of the land. In fact, the assessee has explained the details of the cash book deposited in the Kalupur Commercial Co-op Bank Ltd. Assessee has explained the amount through cash books which is in respect of agricultural produce sold on 21.08.2013 as well as earning the commission of 1% paid by the RSPL Ltd. Company therefore, the same was properly explained and cannot be termed as unexplained cash credits u/s 68 - CIT(A) as well as the AO was not right in making this addition as the assessee herein has explained the details before the authorities regarding the amount - Therefore, appeal of the assessee is allowed.

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• 2022 (11) TMI 14
  LTCG - addition made u/s 50C - difference between fair market value as determined by the DVO and sale consideration as reflected in the sale deed - HELD THAT:- As following the ratio in the case of Bimla Singh [ 2008 (10) TMI 62 - PATNA HIGH COURT ] which has been followed by this Tribunal in the case of M/s. Radhika Sales Corporation [ 2018 (11) TMI 1788 - ITAT PUNE ] hold that the addition made by the Assessing Officer being the share of the assessee on account of long term capital gains being the difference between fair market value as determined by the DVO and sale consideration as reflected in the sale deed is less than 7%. Therefore, the addition as confirmed by the CIT(A) on account of long term capital gains in the hands of the assessee is not justified. Thus, the order of the CIT(A) fails and it is set-aside. Grounds of appeal no.1 to 5 are allowed.

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• 2022 (11) TMI 13
  Addition u/s. 68 - unsecured loan received by the assessee - HELD THAT:- The entire loan has been repaid by the assessee in A.Y.2011-12. The search in the case of Pravin Jain happened in Oct. 2013 wherein it transpired that he was engaged in providing accommodation entries through various entities and one such entity was M/s. Kunal Gems. The transaction of receipt of loan and repayment of loan had happened prior to the search action in the case of Pravin Jain. Once the loan transactions are settled, the assessee obviously will not have the latest address of the lender that to after a gap of few years. It is not the case of the revenue that the assessee is having regular transactions with M/s. Kunal Gems. Merely because the notice issued u/s.133(6) to M/s. Kunal Gems by the ld.AO had returned unserved, the genuine loan transaction like this carried out by the assessee cannot be doubted and disbelieved. Hold that assessee had duly proved all the three ingredients of section 68 of the Act Viz. Identity of lender, credit worthiness of the lender and genuineness of transaction. The interest claimed by the assessee in the sum of Rs. 15,016/- on the said loan has been allowed as deduction by the revenue in A.Y.2007-08. Hence, have no hesitation to direct the ld.AO the delete the addition made u/s. 68 - Appeal of the assessee is allowed.

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• 2022 (11) TMI 12
  Disallowances of bogus purchases - Addition applying the ratio of 5.46% - HELD THAT:- Neither the purchases are bogus nor there is any evidence available with AO that the five parties from whom the purchases have been made are tainted. Out of the five parties, 133(6) notices were not replied by four parties and was not received by one party - AR has categorically stated that the finding of the learned AO of the assessment order that assessee was asked to produce the Principal Officer of the purchase party which was not applied. In fact the paper book shows that the assessee has submitted in the appellate proceedings ledger accounts, confirmation, bills, challans, weightment slips and Permanent Account Number of such creditors. CIT (A) did not mention these facts - AR also stated that the assessee is dealing with these parties on year-to-year basis prior to this assessment year and subsequent to this assessment year wherein assessments have been passed under Section 143(3) and purchases from These parties have been accepted as genuine. We do not find any reason to uphold the addition - On this ground, the orders of the lower authorities are reversed and grounds no.1(a) and 2 and 3 of the appeal are allowed. Addition u/s 68 - We find that assessee has submitted the confirmation, the copy of the return of income as well as the bank account wherever Rs. 8,80,000/- are received. Such bank account is the joint account of Mr. Rohit Sawhney with his wife. The learned lower authorities therefore made an addition to that extent. We find that source of the funds are clearly established by the assessee in that bank account. Assessee has clearly shown that in that bank account was received out of maturity policy of Insurance and Rs. 6 lacs is maturity of IDBI bank fixed deposits - according to us, assessee has clearly established the identity, creditworthiness and genuineness of the transaction of the lender - Assessee has paid an interest to Mr. Rohit Sawhney, which was also allowed by the AO as deduction. Accordingly, the addition u/s 68 deserves to be deleted and hence, reversing the orders of the lower authorities, same is deleted. Cash credit addition from Moiz Hasan Ali Tapia - Assessee has submitted the confirmation and bank statement during the course of assessment proceedings. The return of income was produced during the course of appellate proceedings. Accordingly, assessee has discharged initial onus cast upon it u/s 68 - only reason for which the learned Assessing Officer made the addition is non production of income tax return of the lender. Same was produced before the appellate authority. Despite this, the appellate authority confirmed the addition refusing to accept the return of income. We find that this is unjustified. Accordingly, the addition u/s 68 is deleted. Accordingly, ground no.1 (b), 4 and 5 of the appeal are allowed. Adhoc disallowance being 15% of the total expenditure - We find that assessee has submitted month wise details of this expenditure before the learned CIT (A). There is no allegation that these expenditure are personal in nature. However, we find that as the assessee has failed to produce the details completely, accordingly, the lower authorities are not completely unjustified in disallowing the portion of this expenditure. We find that the ratio of disallowance is on higher side. Looking to the facts and circumstances of the case, we direct the learned Assessing Officer to restrict the disallowance to Rs.25,000/- only out of these expenses. However, it is also noted that assessee itself has made a disallowance of Rs.35,620/- in its computation of total income of personal use of motor car etc. Therefore, no further disallowance is required to be made. Disallowance being 15% of the total expenditure made by the ld. AO - We find that assessee has submitted month wise details of this expenditure before the learned CIT (A). There is no allegation that these expenditure are personal in nature. However, we find that as the assessee has failed to produce the details completely, accordingly, the lower authorities are not completely unjustified in disallowing the portion of this expenditure - we find that the ratio of disallowance is on higher side. Looking to the facts and circumstances of the case, we direct the learned AO to restrict the disallowance to Rs.25,000/- only out of these expenses. However, it is also noted that assessee itself has made a disallowance in its computation of total income of personal use of motor car etc. Therefore, no further disallowance is required to be made. Accordingly, ground of the appeal are allowed.

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• 2022 (11) TMI 11
  Penalty u/s 271(1)(c) - Validity of notice has been passed u/s 274 - HELD THAT:- As could be seen from the above the Hon ble Bombay High Court (Full Bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT ] while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s. 271(1)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. Ratio of this full bench decision of the Hon ble Bombay High Court (Goa) squarely applies to the facts of the assessee s case as the notice u/s. 274 r.w.s. 271(l)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. We are of the opinion that, the penalty order passed u/s 271(1)(c) by the AO and the order of the CIT(A) in confirming the penalty order are erroneous. Accordingly, the penalty order dated 01/03/2017 passed by the A.O for Assessment Year 2011-12 is hereby quashed. Accordingly, Assessee s Grounds of Appeal are allowed.

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• 2022 (11) TMI 10
  Addition being the cash deposits made during the demonetization period - AR failed to produce the books of accounts before the Ld. Revenue Authorities or before us with respect to sales made during the demonetization period - HELD THAT:- From the trading account submitted by the assessee we find that there is no opening stock to the assessee for effecting the sales during November-2016. The assessee claimed to have purchased Gold Bullion from various parties as detailed to effect the sales made during the demonetization period. However, the assessee failed to produce the sales invoice copies supporting the sales effected by the assessee. It is imperative to note here the assessee is not a retail trader to claim that the sales have been made through cash. As observed from the way that the sales have taken place from November-2016 onwards that the assessee has attempted to record his unaccounted cash in the form sale of bullion. It is seen from the bank book submitted in the paper book page 20 that the assessee does not have a sufficient bank balance to make the purchase of bullion. The assessee deposited cash and then made purchase of bullion which is contradicting the claim of the assessee that the cash deposits are made out of cash sales. In view of the above findings, we are of the considered view that there is no error in the order of the Ld. Revenue Authorities and therefore no interference is required in the order of the Ld. CIT(A). - Decided against assessee.

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• 2022 (11) TMI 9
  Exemption u/s 11 - seeking registration u/s. 12A(1) - registration denied as assessee has failed to satisfy as to genuineness of its activities as well to charitable nature of its objects - HELD THAT:- The assessee is consistently not attending the proceedings before the Division Bench, on all the occasions on 20.03.2022, 23.05.2022, 24.05.2022, 05.07.2022 and 24.08.2022 when this appeal was called for hearing before Division Bench, wherein none appeared on behalf of the assessee nor any adjournment application was filed on behalf of the assessee, except only on one occasion on 22.3.2022 when adjournment application was moved on behalf of the assessee which stood allowed by Division Bench. Keeping in view the entire conduct of the assessee as well after carefully consideration of material on record, we are of the considered view that CIT(E) has rightly rejected the application filed by the assessee for grant of registration u/s. 12A(1) of the 1961 Act, as the assessee has failed to satisfy as to genuineness of its activities as well to charitable nature of its objects, and further there are transactions/dealings with related parties covered u/s.13(1)(c) read with Section 13(3) and based on facts and circumstances of the case the benefit is given to related parties covered u/s 13(3). Reference is also drawn to the provisions of Section 114(g) of the Indian Evidence Act, 1872, that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it. Assessee in the instant case failed to produce relevant evidences, entire material on records, facts and circumstances of the case, we dismiss this appeal filed by the assessee.

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• 2022 (11) TMI 8
  Nature of expenditure - treat non-compete fees as deferred revenue expenditure - HELD THAT:- We notice that the Tribunal has accepted the payment of noncompete fee as an intangible asset in AY 2011-12, by following the decision rendered by the jurisdictional Hon ble Bombay High Court in the case of Piramal Glass Ltd [ 2019 (6) TMI 891 - BOMBAY HIGH COURT ] Accordingly, the Tribunal has held that the assessee is eligible for depreciation u/s 32 of the Act on Non-compete fees paid, being an intangible asset. When the original claim is allowed, as rightly pointed out by Ld A.R, there is no necessity to render decision on the alternative claim of allowing the non-compete fee as deferred revenue expenditure. We allow the cross objections filed by the assessee in all the three years under consideration and hold that the assessee is eligible for depreciation on non-compete fee, as the same would fall under the category of intangible asset. We order accordingly. Hence the decision rendered by Ld CIT(A) in all the three years are reversed. Even though the decision rendered by the Ld CIT(A) has been reversed, since the cross objections filed by the assessee are allowed, the appeals filed by the revenue are also liable to be rejected as infructuous. Treatment of foreign exchange loss arising on account of revaluation of amount payable in respect of acquisition of business from M/s Pirmal Health care Ltd. - assessee has challenged the decision of Ld CIT(A) on the ground that the enhanced depreciation should have been allowed under the principle of consistency - HELD THAT:- We are unable to understand as to how the assessee could press upon the Principle of Consistency, when it has not accepted the decision taken by AO in AY 2011-12 [ 2020 (3) TMI 416 - ITAT MUMBAI ] We notice that both the AO and the assessee has taken stands to suit their convenience in each of the years. Be that as it may, we notice that this issue has been examined by the co-ordinate bench in AY 2011-12 and this issue has been restored back to the file of Ld CIT(A) as held that CIT(A) has not considered all aspect of the reasoning given by the Assessing Officer for making the addition, we deem it appropriate to remit this issue to the file of learned CIT(A) to consider them afresh and pass a speaking order on this issue.

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• 2022 (11) TMI 7
  Unexplained credit u/s 68 - unsecured loans received by the assessee - HELD THAT:- DR only submitted that the lender company did not return any income for the last four years which means that there was no activity going on and that even the inspector did not find sign board of the lender company at the given address. However, the above submissions of the ld. DR have been proved to be without merits. As noted above, not only the lender company responded to the notices issued u/s 133 of the Act but also the director of the said company appeared in response to notice u/s 131 of the Act, even the inspector also met the director cum employee of the lender company at the given address. The assessee has duly proved not only the identity, creditworthiness of the lender company but also the genuineness of the transaction by way of demonstrating about the running account of the assessee with the said company and that the total loan liability of the assessee company during the year being decreased. We do not find justification on the part of the lower authorities in making the impugned additions and the same are accordingly ordered to be deleted. Appeal of the assessee stands allowed.

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• 2022 (11) TMI 6
  Exemption u/s. 11 and 12 - assessee society is a case of general public utilities and, therefore, no longer enjoys charitable status - AO assessed the assessee as normal AOP - contention of the assessee did not find any favour with the AO who was of the firm belief that as per the amended provision of section 2 (15) - HELD THAT:- As mentioned elsewhere the impugned additions/ disallowances have been decided by this Tribunal in favour of the assessee in earlier assessment years. In so far as the applicability of section 2(15) of the Act is concerned this Tribunal in for A.Y.2009-10 [ 2019 (10) TMI 123 - ITAT DELHI] as decided AR supports the view taken by the Ld. CIT(A) on the aspect of principle of mutuality and the entitlement of the assessee to claim the benefit of Section 11 of the Act. We, therefore, uphold the same and find the grounds of appeal as devoid of merits. Quarrel relating to the decision of Global Development Activities expenses is concerned we find that the CIT(A) upheld the partial disallowance reducing the disallowance on the grounds that donations given by Government of India ought not to be disallowed - we decline to interfere with the findings of the CIT(A) the appeal filed by the revenue is accordingly dismissed.

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• Customs

• 2022 (11) TMI 5
  Levy of penalty - Generalia specialibus non derogant - levy of special penalty over general penalty - scope of provisions of Section 114A and provisions of Section 112 of Customs Act - HELD THAT:- As per proviso under Section 114A of the Customs Act, 1962, penalty could not be imposed under this section if the same has been imposed under Section 112(a). Since in his order, the Commissioner has held the goods liable for confiscation under Section 111(d) and (o) of the Customs Act and confiscated them and allowed them to be released on redemption fine, it is found that the Commissioner perfectly justified in imposing penalty under Section 112(a) on the respondent. Once he has imposed penalty under Section 112(a), in view of the proviso, penalty under Section 114A cannot be imposed. Appeal filed by the Revenue is dismissed.

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• Insolvency & Bankruptcy

• 2022 (11) TMI 4
  Restoration of petition, which has been withdrawn - availability of effective alternative remedy of appeal before the NCLAT - initiation of CIRP - power of NCLT under Section 60(5) of the Insolvency and Bankruptcy Code or under Rule 11 of the NCLT Rules, to restore a petition which has been withdrawn - HELD THAT:- Under the provisions of the Insolvency and Bankruptcy Code, the insolvency resolution process, of a company, commences when the petition by a creditor, under Sections 7 to 9 is admitted. Subsequently, any application by the corporate debtor to withdraw the proceedings, on the ground that the claim of the corporate debtor is settled, is permissible after the committee of creditors, constituted under the resolution process, is consolidated. The provisions of the Code also stipulate that the committee of creditors is to be constituted within 30 days from the date of admission / appointment of an interim resolution professional. A question arose before the Hon ble Supreme Court in (2019) 4 SCC 17 [2019 (1) TMI 1508 - SUPREME COURT] as to what is to be done if a settlement is arrived at even before the committee of creditors is constituted. The Hon ble Supreme Court answered this question by holding that where the committee of creditors is not yet constituted, a party can approach the NCLT directly and the Tribunal, in exercise of its powers under Rule 11 of the NCLT Rules, may allow or disallow such an application for withdrawal or settlement - In view of the observations of the Hon ble Supreme Court, the NCLT has the inherent power, to direct withdrawal of the creditors petition, before the committee of creditors is constituted. The recognition of such a power, by the Hon ble Supreme Court, in a situation, which is not covered or contemplated under the Statute or the Rules made thereunder, clearly shows that the inherent powers of the NCLT cannot be interpreted restrictively and a wider and larger approach need to be taken while interpreting Rule 11 of the NCLT Rules. Such an expansive interpretation of Rule 11 would clearly mean that the Tribunal, which has the inherent power to permit withdrawal of a petition, would also have the inherent power to restore such a petition. There could be a dispute or challenge to the grounds on which such a power of restoration can be exercised. There cannot be a dispute on the inherent power of the NCLT to direct restoration of an application which had been permitted by the Tribunal to be withdrawn earlier - Apart from this, Section 60(5) c) of the Insolvency and Bankruptcy Code also empowers the NCLT to entertain or dispose of any application or proceeding by or against the corporate debtor or corporate person as well as any claim made by or against the corporate debtor. This provision is in the nature of a residuary power. The dispute between the petitioner and the respondent as to the maintainability of the petition filed by the unofficial respondent before the NCLT on account of the subsequent MOU, capping the liability of the writ petitioner to Rs.5 crores, and whether the writ petitioner had remitted the entire amount as claimed by the unofficial respondent or whether the writ petitioner had not remitted the entire amount of Rs.5 crores as contended by the unofficial respondent, are all issues which need to be gone into by the NCLT, without being bound by its earlier observation that, the situation, as before the Memorandum of Understanding, would revive in toto. This writ petition is disposed of leaving it open to the writ petitioner to raise all the aforesaid issues before the NCLT, in the hearing before the NCLT, which would take an appropriate decision on the objections raised by the writ petitioner.

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• PMLA

• 2022 (11) TMI 3
  Money Laundering - maintainability of petition - availability of alternative remedy - provisional attachment of properties - appellant has vehemently argued before this Court that once the Tribunal has become functional, the order dated 24.08.2022 passed in LPA 487/2022 will not come in the way of the parties as an appeal was already pending on the date when the order was passed - HELD THAT:- This Court has carefully gone through the statutory provisions governing the field and it is an undisputed fact that an appeal lies before the Tribunal. The Division Bench of this Court has requested the learned Single Judge to decide the matter vide order dated 24.08.2022 only because at the relevant point of time when the order was passed by the Division Bench, no Tribunal was functional. The Hon ble Supreme Court in TITAGHUR PAPER MILLS CO. LIMITED. AND ANOTHER VERSUS STATE OF ORISSA AND ANOTHER [ 1983 (4) TMI 49 - SUPREME COURT] , has, inter alia, held that We are constrained to dismiss these petitions on the short ground that the petitioners have an equally efficacious alternative remedy by way of an appeal to the Prescribed Authority under sub-section (1) of Section 23 of the Act, then a second appeal to the Tribunal under sub-section (3)(a) thereof, and thereafter in the event the petitioners get no relief, to have the case stated to the High Court under Section 24 of the Act. In the light of the various judgments delivered by the Hon ble Supreme Court and this Court, there is an equally efficacious remedy available under Section 26 of the PMLA and the High Court is an Appellate Authority above the Appellate Authority by virtue of Section 42 of the PMLA. Hence as the Appellate Authority is very much functional, the matter deserves to be heard by the Appellate Authority only. It is true that the High Court can certainly exercise its discretion keeping in view the peculiar facts circumstances of the case to decide a matter even if alternative remedy is available. In the present case, there is an equally efficacious alternative remedy available before the Appellate Tribunal and the Tribunal is very much functional, the matter deserves to be heard before the Tribunal and, therefore, the Tribunal is requested to decide the appeal at an early date. The present LPA stands allowed. The Tribunal is requested to decide the appeal at an early date. Needless to state that this Court has not dealt with the merits of the case.

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• Service Tax

• 2022 (11) TMI 2
  Relevant date for calculation of Interest - delayed grant of refund - case of appellant is that interest should have been granted after the expiry of three months from the date of filing of the refund applications - section 11BB of the Excise Act. Whether interest should be paid to the appellant after the expiry of three months from the date of filing of the four refund claims on 30.03.2017, 20.06.2017, 31.07.2017 and 28.08.2017 or it should be paid after the expiry of three months from 29.01.2020 on which date the appellant had merely made a request to the Department to grant refund pursuant to the order passed by the Tribunal on 09.01.2020? HELD THAT:- The applications were actually filed by the appellant for refund of the amount on 30.03.2017, 20.06.2017, 31.07.2017 and 28.08.2017. Section 11BB of the Excise Act provides that if any duty ordered to be refunded under section 11B(2) is not refunded within three months from the date of receipt of application under sub- section (1), there shall be paid to the applicant interest from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty. The relevant date, therefore, is the date on which the application for refund is filed. The decisions in COMMISSIONER OF C. EX., PUNE-III VERSUS BALLARPUR INDUSTRIES LTD. [ 2008 (7) TMI 94 - HIGH COURT BOMBAY] . M/S DABUR INDIA LIMITED VERSUS UNION OF INDIA AND 2 OTHERS [ 2016 (9) TMI 787 - ALLAHABAD HIGH COURT] and RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] emphasise that though the order granting refund may have been passed on a subsequent date but interest has to be paid after the expiry of three months from the date of filing of applications for refund. The Commissioner (Appeals) committed an illegality in construing 29.01.2020 as the date of filing of the refund application whereas the dates of filing of the refund applications were 30.03.2017, 20.06.2017, 31.07.2017 and 28.08.2017. On 29.01.2020 the appellant had merely submitted an application for implementation of the order passed for refund of the amount claimed in the four applications - The order passed by the Commissioner (Appeals) is, therefore, modified to the extent that interest shall be payable to the appellant after the expiry of three months from the actual date of filing the refund applications i.e. 30.03.2017, 20.06.2017, 31.07.2017 and 28.08.2017 till the date the refund was made i.e. 28.09.2021. Appeal allowed.

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• 2022 (11) TMI 1
  Levy of service tax - exhibition service provided by foreign service provider in respect of exhibition in abroad - Service received by the appellant, performed outside India - period 2006-07, 2007-08 and 2009-10 - HELD THAT:- In the present case the service provided by the overseas service provider is Business Exhibition Service. The service provider i.e. organiser of exhibitions are located in the countries such as Pakistan, Egypt, Bangkok and Ukraine and no any part of the service was provided in India. Entire service was provided outside India only, therefore, the locations of service is outside India. In such case, service tax cannot be levied in India. Even as per Rule 3 of Sub Rule (II) of Taxation of Service (Provided from Outside India and Received in India) Rules 2006, a service can be taxable in the hand of the recipient of the service in India only when the part of the service is performed in India. In the present case, admittedly the whole of the service was provided outside India and received outside India, therefore, even in terms of the said rule, the service tax is not leviable on the Business Exhibition Service received by the appellant which was performed outside India hence not taxable in the hands of the appellant. Appeal allowed - decided in favor of appellant.

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