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TMI Tax Updates - e-Newsletter November 20, 2023 Case Laws in this Newsletter: GST Income Tax Customs PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles Credit can be claimed when exempted by-products are obtained while producing taxable goods under the UP VAT Act THE LIMITED LIABILITY PARTNERSHIP (SIGNIFICANT BENEFICIAL OWNERS) RULES, 2023 Appellate Authority should provide sufficient reasons for not considering Appeals filed after the limitation period News Comprehensive Guide and Instructions for Direct API Integration with Any of the 6 IRPs for E-Invoice Reporting Piyush Goyal addresses 2nd Voice of Global South Summit, says countries need to act together to make supply chains open, secure, trusted and resilient Infrastructure Finance Secretariat, DEA, organises workshop on “Public Private Partnership (PPP) Project Structuring Toolkit for Roads and Highways Sector” Notifications Customs 11/2023-Customs - dated 17-11-2023 - ADD Seeks to impose anti-dumping duty on toughened glass for home appliances imported from China PR for a period of 5 years. GST 54/2023 - dated 17-11-2023 - CGST Seeks to amend Notification No. 27/2022 dated 26.12.2022 to notify biometric-based Aadhaar authentication for GST registration in the State of Andhra Pradesh GST - States 20/2023-State Tax (Rate) - dated 3-11-2023 - Mizoram SGST Amendment in Notification No. 5/2017-State Tax (Rate), dated the 7th July, 2017 02/2023-C.T./GST - dated 10-11-2023 - West Bengal SGST Seeks to notify that an e-waybill is required to be generated in respect of movement of goods including for the purpose of job work,originating and terminating within the State of West Bengal having consignment value exceeding rupees fifty thousand Circulars / Instructions / Orders SEBI SEBI/HO/MIRSD/POD-1/P/CIR/2023/181 - dated 17-11-2023 Simplified norms for processing investor’s service requests by RTAs and norms for furnishing PAN, KYC details and Nomination FEMA 08 - dated 17-11-2023 International Trade Settlement in Indian Rupees (INR) – Opening of additional Current Account for exports proceeds Highlights / Catch Notes GST Biometric-based Aadhaar authentication notified for GST registration in the State of Andhra Pradesh - Notification Visit to Get Source Power of TRU under GST to issue clarification regarding Classification of Goods - Tax Research Unit (TRU) - In the absence of a conferral of any power upon the TRU, or it being recognized as being statutorily enabled to issue any clarification or directive under Section 168 of the CGST Act, the circular is liable to be quashed and set aside on this ground alone. - HC Visit to Get Source Disallowance of ITC - Validity of order passed u/s 74 - allegation of creation of bogus invoices - This Court does not find any violation of principles of natural justice and deprival of any constitutional rights. In such view of the matter, this Court is not inclined to entertain the Writ Petitions. - HC Visit to Get Source Input Tax Credit (ITC) - GST paid on inward supplies used for providing transportation facilities - Provision of service of transportation of employees from residence to office premises is for personal consumption or comfort of employees but not an activity which is part of business - Credit is not available - AAR Visit to Get Source Supply or not - levy of GST - canteen facilities provided to its employees - it was clarified by the CBIC that prerequisites provided by the employer to its employees in terms of contractual agreement will not be subjected to GST. - However, recovery of charges from the employees as business activity shall be chargeable to tax / GST - AAR Visit to Get Source Income Tax Search and Seizure - Validity of Order passed u/s 132(3) prohibiting petitioners/assessee from removing articles (liquor bottles) in the cupboard at the resident without prior permission of the IT Authorities - Liquor stands included within the expression “valuable article” - Revenue failed to satisfy the seizure of liquor - Revenue is saddled with cost of Rs. 10,000/- - HC Visit to Get Source Maintainability of Appeal against ITAT order - substantial question of law or fact - The appeals of the revenue having been dismissed for the A.Ys. 2011-12, 2012-13 and 2013-14, the cross objection having become academic and infructuous were not adjudicated. In the result, the cross objections raising the grounds (1) to (3) filed by the assess were dismissed. - HC Visit to Get Source Validity of assessment passed u/s 143(3) r.w.s. u/s 144B - gross violation of the principle of natural justice - whether by not issuing show cause notice while framing the assessment, principles of natural justice have at all been violated? - Held Yes - Assessment order quashed and set aside - HC Visit to Get Source Reopening of assessment - investment out of foreign funds in the assessee’s NRE Accounts - investment in time deposit and mutual funds - Undisputedly, the funds came from NRE Accounts and the source therefore was beyond the reach of the authorities. Even on reading the provisions of section 10(4), it is apparent that such incomes are exempt from being included in the total income. - Notices and order u/s 148A quashed - HC Visit to Get Source Disallowing business loss - business of trading in shares and securities - As pr AO assessee was directly involved in sham and bogus transactions of entry providers - Though AO has given the chart of fluctuation as well as increase of the data during the said period, the same cannot be the sufficient reason for disallowing the business loss of the assessee. - AT Visit to Get Source Validity of revised return 139(5) - Revised return did not conform to the prescription of section 139(5), before its substitution w.e.f. A.Y. 2017-18, which provided for revision of a return filed u/s. 139(1) and not u/s. 139(4) of the Act. The substituted section 139(5) now liberalizes the revision of return originally filed under sub-section (1) or under sub-section (4). The amendment has come into vogue from the A.Y. 2017-18. - Assessment based on revised return is invalid - AT Visit to Get Source TDS liability u/s. 194C - payment to members of AOP - Work received by the AOP executed by its members - relationship of principle to principle OR principle to agent - CIT(A) rightly held that, deduction of TDS on the payments made by the assessee to its members does not arise - AT Visit to Get Source Disallowance u/s 14A - AO says only that for carrying out the activity of investment and to earn exempt income, some more expenditure than what the assessee itself disallowed has to be necessarily incurred. This is only a surmise and guess not based on any cogent reason - Action of AO is not correct - Additions deleted - AT Visit to Get Source Revision u/s 263 - Computation on MAT u/s 115JB on the basis of consolidated financial statements - The stepdown subsidiaries and other associate companies are independent assessees in the eyes of law and they have declared their financial statements and profits independently and filed the relevant return of income. Therefore, the Profit and Loss declared by the subsidiaries and associate companies cannot be assessed to tax in the hands of the assessee second time. - AT Visit to Get Source Admission of additions evidences - Claim of exemption u/s 10(38) - LTCG on sale of listed shares - non-admission of additional evidence for the reason that the assessee did not furnish the documentary evidence in spite of giving several opportunities is not correct. - AO directed to decide the issue afresh - AT Visit to Get Source Unexplained cash deposits in bank account - AO applied the provisions of sec 115BBE - Assessee was aged about 73 years - Assessee initially surrendered some amount as the source was not traceable - Later he produced the details and evidence of deposit - CIT(A) did not believe the version of the assessee - Additions deleted - AT Visit to Get Source Revision u/s 263 - Addition u/s 69 - taxability of income u/s 115BBE - nature and source of the surrendered income during the course of survey operation - the assessee has provided the necessary explanation about the nature and source of such unrecorded transactions and the necessary nexus with assessee’s business has been established - The order so passed by the AO cannot be held as erroneous due to lack of inquiry - AT Visit to Get Source Disallowance u/s 40A(3) - cash payment to the farmers/land owners exceeding permissible limits - business expediency - section 40A(3) was intended to penalize the tax evader and not honest transactions and that is why after framing Rule 6DD(j) the CBDT steps in by issuing the circular dated 31st May 1977. - No penalty - AT Visit to Get Source Deemed dividend u/s 2(22)(e) - two shareholders of the assessee company having 70% and 30% of shares respectively are registered shareholders of the lending companies - the assessee-company neither registered shareholder nor beneficial shareholder in its group concerns, wherein the unsecured loans or deposits was availed by assessee. - CIT(A) rightly deleted the additions - AT Visit to Get Source Customs Anti-dumping duty on toughened glass imposed for home appliances imported from China PR for a period of 5 years. - Notification Visit to Get Source Levy of penalty u/s 114 (i) of the Customs Act, 1962 on Merchant Exporter - smuggling of Red Sanders - No evidence put forth as regards antecedents of the exporter of irregular exports in the past, nor there is any evidence of appellant’s role in procurement of red sanders; as such there is no evidence of appellant’s connection with such activities - No penalty - AT Visit to Get Source Revocation of Customs Broker License - forfeiture of security deposit - Even at the time of clearance of goods for various importers in the past, the Customs assessing group and the Commissionerate did not find out any discrepancy in valuation or any misdeclaration. - There are no merits in revoking the license of the appellants - in view of the failure of the appellants to have acted in a proactive manner in fulfillment of the obligation under sub-regulation 11(a) ibid, particularly when they have received the documents from importer through intermediary, it is justifiable to forfeit the entire security deposit given by the appellants, which would be reasonable - AT Visit to Get Source Recovery of duty from the Surety - exemption of bond for customs duty exemption - The impugned order confirmed the demands only against the importer and the duties were ordered to be recovered from the appellant only to the extent that they could not be recovered from the importer - thus, insofar as the recovery of dues from the appellant is concerned, the order is legally correct and is also fair and balanced - AT Visit to Get Source FEMA International Trade Settlement in Indian Rupees (INR) – Opening of additional Current Account for exports proceeds - RBI grants permission to open an additional special current account for its exporter constituent exclusively for settlement of their export transactions. Visit to Get Source Indian Laws Dishonour of Cheque - Though the demand Promissory Note state and also it is pleaded by the complainant that accused had agreed to repay the said sum along with interest at 2% p.m., there is no explanation for not making any attempts to recover the interest. - Both trial Court as well as the Sessions Court has failed to appreciate the oral and documentary evidence placed on record by the complainant in the light of specific defence taken by the accused. - accused is acquitted for the offence - HC Visit to Get Source Service Tax Classification of services - C&F agent services - The customs clearance work was being done by them through the some other person who are appropriately registered as custom house agent with the customs department - the activity undertaken by the appellant cannot be categorized under Clearing And Forwarding Agent Service - AT Visit to Get Source Central Excise Valuation - Related person - In terms of Sub-Clause (iii) of Section 4(3)(b) a person shall be deemed to be related if amongst them the buyer is a relative and distributor of the assessee or distributor of such distributor - only natural person can be treated as relatives since the first condition itself of Sub Clause (iii) is not satisfied, the 4 buyers and the respondent cannot be considered as related under Sub-Clause (iii) of Section 4 (3)(b). - AT Visit to Get Source Case Laws: GST 2023 (11) TMI 666 Power of Tax Research Unit (TRU) to issue clarification regarding Classification of Goods - Validity of Circular No. 80/54/2018-GST dated 31.12.2018 issued by the Tax Research Unit of the Respondent No. 1 - polypropylene woven and non-woven bags including those laminated with Biaxially Oriented Polypropylene (BOPP) - liable to be classified as falling under Chapter 39 or not. HELD THAT:- Ld. counsels for the Revenue could not draw our attention to any provision of the CGST Act, in terms of which the TRU could be said to have been clothed with the authority or jurisdiction to render a clarification with respect to classification of goods and articles. That power clearly appears to stand conferred upon the Board exclusively. We are thus of the considered opinion that no authority vested in the TRU to issue the clarification impugned before us. In the absence of a conferral of any power upon the TRU, or it being recognized as being statutorily enabled to issue any clarification or directive under Section 168 of the CGST Act, the circular is liable to be quashed and set aside on this ground alone. All that needs to be observed in this regard is that the conflict of opinion that may exist would have to be resolved by parties taking appropriate steps as contemplated under the CGST Act. It is noted that the impugned circular while purporting to convey a position with respect to the classification of non-woven polypropylene bags has rested its conclusions solely on the basis of the provisions contained in Chapter 39. It has neither alluded to Section XI of the First Schedule to the 1975 Act nor has it referred to Chapter 56 thereof. The contention of the petitioners that non-woven polypropylene is an article which would fall within Tariff Heading 5603 was neither questioned nor contested before us by the respondents. In any case, a reading of the impugned circular would establish that it fails to examine the issue on the anvil of the distinction which the 1975 Act appears to construct when it places plastics under Chapter 39 and textiles and articles thereof separately in Section XI, and more particularly, as was contended by the petitioners in Chapters 56 and 63 of the said enactment. The impugned circular also fails to advert to the Notes placed in Chapter 39, and which in unambiguous terms, exclude textiles from the ambit thereof. The failure of parties to address the question comprehensively constrains to desist from rendering a definitive opinion in that respect bearing in mind the industry wide ramifications that may ensue. Courts should avoid expressing an opinion on questions of classification unless they are directly raised and adequate and cogent material placed on the record. Bearing in mind the impact that such a ruling may have, findings in that respect, in any case, should not be founded on material which is tenuous and inadequate. Further, since the writ petition itself stood restricted to the validity of the circular, it would be imprudent to hand down a verdict imbued with attributes of finality - the issue of classification should be left open for the consideration of the competent authority in appropriate proceedings. The impugned circular dated 31 December 2018 is hereby quashed - petition allowed. 2023 (11) TMI 665 Refund of amount as claimed by the petitioner in terms of the provision of Section 142 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- In the event, the petitioner s application is rejected, the concerned officer shall pass a speaking order setting out the reasons for the same after affording the petitioner an opportunity to be heard. The respondent is bound down to the said statement. Petition disposed off. 2023 (11) TMI 664 Disallowance of ITC - Validity of order passed u/s 74 - allegation of creation of bogus invoices - circular trading without movement of goods with an intention to avail irregular ITC - HELD THAT:- It is not in dispute that in the present case, only the input tax credit (ITC) alone was disallowed and the same will not have any impact on the petitioners inasmuch disallowing the input tax credit will affect the beneficiary who availed it and in the present case, M/s.SKMPL in liquidation is the beneficiary and not the petitioners. As against the petitioners, penalty and interest were fastened based on the search conducted and the documents seized at the premises of the petitioners, where it was found that the petitioners had indulged in creation of bogus invoices and they had not at all conducted any business activities and it was concluded that the cotton yarn purchased and sold by the petitioners have not been received in the premises - This Court does not find any violation of principles of natural justice and deprival of any constitutional rights. In such view of the matter, this Court is not inclined to entertain the Writ Petitions. Considering the fact that as against the impugned orders, there is an efficacious appeal remedy available to the petitioners, without adverting to the grounds raised by the petitioners in respect of the impugned orders, this Court grant liberty to the petitioners to prefer appeals before the appropriate authority within a period of 30 days from the date of receipt of a copy of this order, without insisting upon the aspect of limitation - Petition dismissed. 2023 (11) TMI 663 Refusal on the part of the respondents to refund the excess input tax under the GST Act - delay in filing the application for refund - amendment made to Section 54(1) to the GST Act - HELD THAT:- Insofar as the question of delay is concerned, the period between 15/03/2020 to 28/02/2022 has been excluded by the Hon ble Apex Court in IN RE COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (5) TMI 564 - SC ORDER] and considering the deletion of this period, the application which has been filed on 13/5/2020 for the month of December, 2017, would be within time. Applicability of the amendment to Section 54(1) of the GST Act - HELD THAT:- It would be apparent that the amendment would be prospective in nature, unless so specified, which is not the case and therefore, the amended Section 54(1) would be applicable to the application for refund filed post 01/02/2019 to claim for refund in respect of returns filed consequent to that date. It would therefore, be apparent that the application for refund of the input tax to be filed by the petitioner would be covered by the earlier definition of relevant date which defined the same as end of financial year and not the amended definition of relevant date which defines it as due date for furnishing return. The application filed by the petitioner for refund of the input tax for the month of December, 2017 ought to have been entertained for the above period by the respondents and appropriate orders could have been passed - The petition is allowed by directing the respondents to accept and entertain the applications for refund of input tax and process them according to the rules as applicable. 2023 (11) TMI 662 Detention and seizure of vehicle - scope of section 129 and 130 of CGST Act - it was submitted that exercise of powers under Section 129 and thereafter switching over to Section 130 and passing order thereunder without availing the petitioner the benefits of release of the goods under Section 129, could be said to be without jurisdiction. HELD THAT:- Rule, returnable on 27.9.2023. In the facts and circumstances of the case, by way of interim relief, it is directed that the goods of the petitioner as well as vehicle bearing registration vehicle Truck No.GJ- 09-AU-2976, shall be released, provided the petitioner comply with the conditions imposed - petition disposed off. 2023 (11) TMI 661 Violation of the principles of natural justice - no proper opportunity was given to the petitioner or his authorized representative to appear before the 1st respondent - HELD THAT:- From the perusal of the averments made in the impugned order, it is seen that after receipt of the notice in the appeal proceedings, the appellant and his authorized representative had appeared before the 1st respondent and had sought adjournment, the appellate authority has not given the next date of hearing, but further notice was issued to the appellant and the authorized representative. It is the case of the petitioner that such further notice issued to the petitioner were not served upon them. The order impugned is required to be set aside on the short ground that the same is passed in violation of principles of natural justice - the matter is remitted to the 1st respondent to consider the appeal filed by the petitioner in accordance with law and pass appropriate orders on the same in accordance with law. 2023 (11) TMI 660 Maintainability of appeal - appeal dismissed for non-prosecution - despite opportunity being granted to the appellant to produce the documents in support of his case, he did not produce the same - supplier was not issued a notice in the appeal - principles of natural justice - HELD THAT:- The Appellate Authority even while considering the appeal ex parte will have to consider the grounds raised in the memorandum of appeal, deciding the appeal on merits, failing which it would be abdicating its powers especially looking at the provisions where the Appellate Authority has been empowered to conduct such further enquiry as found necessary to decide the appeal, which decision also shall be on the points raised. The appeal restored before the Appellate Authority - petitioner shall appear before the Appellate Authority on 25.07.2023. The Appellate Authority or its office shall fix a date of hearing on the said date, with due acknowledgment taken from the appellant; if the date of hearing is issued from the office, proceed with the hearing on the date fixed and dispose of the appeal on merits within three months from the date of last hearing. Petition allowed. 2023 (11) TMI 659 Vires of Sub-Rule (10) of Rule 96 of the Central Goods and Service Tax Rules, 2017 - HELD THAT:- NOTICE, returnable on 27TH JULY, 2023. By way of ad-interim-relief, it is directed that the Respondent-authorities shall not make any coercive recovery from the petitioner in respect of refund of integrated tax already paid, till further orders. 2023 (11) TMI 658 Supply or not - levy of GST - canteen facilities provided to its employees - tax on recoveries being made by the applicant from its employees towards the canteen and transportation facilities provided to them - Section 7 of the CGST Act - eligibility to ITC on the GST paid on canteen services in terms of proviso to Section 17(5)(b) of the CGST Act, 2017. Reliance placed on clarification provided by CBIC in Circular No. 172/04/2022 dt: 06.07.2022 and the press release no. 73/2017 dt: 10.07.2017 wherein it was clarified by the CBIC that prerequisites provided by the employer to its employees in terms of contractual agreement will not be subjected to GST. Whether GST is liable to be discharged on the recoveries being made by the applicant from its employees towards the canteen facilities provided to them? - HELD THAT:- The perquisites provided by the employer, canteen services in the present case, to their employees in terms of the contractual agreement between the employer and his employees as submitted by them, are in lieu of the services provided by them to their employees in relation to employment. Therefore the perquisites provided by the employer to the employee, in terms of contractual agreement, will not be subjected to GST. However if the employer makes taxable supply of canteen services to employees by charging consideration for the purpose of business, instead of providing them as a perquisite, the same will be subject to payment of GST, at prescribed rates, as per provisions of CGST/TGST Act 2017. Whether the applicant is eligible to avail input tax credit in respect of the GST paid on inward supplies used for providing canteen facilities? - HELD THAT:- As per Section 17(5)(b) of CGST/TGST Act 2017 input tax credit in respect of such canteen facilities shall be available, where it is obligatory for an employer to provide the same to its employees under Factories Act, 1948. Whether GST is liable to be discharged on the recoveries being made by the applicant from its employees towards the transportation facilities provided to them? - HELD THAT:- The transportation services, if provided as a perquisite by the employer to the employee, in terms of contractual agreement between the employer and employee, will not be subjected to GST. However if the employer makes taxable supply of transportation services to employees by charging consideration for the purpose of business, instead of providing them as a perquisite, the same will be subject to payment of GST, at prescribed rates, as per provisions of CGST/TGST Act 2017. Whether the applicant is eligible to avail input tax credit in respect of the GST paid on inward supplies used for providing transportation facilities? - HELD THAT:- Provision of service of transportation of employees from residence to office premises is for personal consumption or comfort of employees but not an activity which is part of business as the business of the applicant is to manufacture supply of pre-engineered buildings and storage racking systems but not supply of transportation of employees or passengers. Input tax credit shall not be available in respect of goods or services or both used for personal consumption as per Section 17(5)(g) of CGST/TGST Act 2017. 2023 (11) TMI 603 Levy of GST and Service Tax - royalty payable to the Government on mining of minerals - it was held in similar case in M/S SIDDHARTH VERSUS UNION OF INDIA AND 2 OTHERS [ 2022 (4) TMI 469 - ALLAHABAD HIGH COURT] where it was held that In view of the interim orders passed by the coordinate Bench of this Court in M/S A.D. AGRO FOODS PRIVATE LIMITED VERSUS UNION OF INDIA [ 2021 (12) TMI 656 - ALLAHABAD HIGH COURT] , it is found that the petitioner has made out a case for interim relief. Since the same issue is engaging the attention of this Court in the case noted above, the petitioner deserves to be treated similarly. Interim Relief / Stay granted. Income Tax 2023 (11) TMI 657 Addition u/s 69 - unexplained investments made in the JP Minda Group of companies - addition in the hands of respondent/assessee was made on a protective basis and substantive addition had been made in the hands of the JP Minda Group - HELD THAT:- The sum and substance of the judgment [ 2022 (9) TMI 1330 - DELHI HIGH COURT] passed by a coordinate bench was that the substantive addition made in the hands of the JP Minda Group was dropped, albeit, on merits. Revenue, correctly points out that the addition was dropped on the basis of a judgment passed by a coordinate Bench of this court in Commissioner of Income Tax vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] To be noted, the said judgment has been affirmed by the Supreme Court in Principal Commissioner of Income Tax vs. Abhisar Buildwell [ 2023 (4) TMI 1056 - SUPREME COURT] Tribunal dismissed the appeal preferred by the appellant/revenue, having regard to the fact that the substantive addition on merits was dropped. As indicated above, the addition in the hands of the respondent/assessee was only made on a protective basis. In these circumstances, we are of the view that no substantial question of law arises for consideration by this court. 2023 (11) TMI 656 Delay in issuing refund - ACIT said that the system (under the control of CPC, Bangalore) needs to capture the refund already approved via web service rectification order and till this issue is resolved proceedings in this case cannot be completed - HELD THAT:- This is the standard excuse given by the Department when it comes to giving refunds. The excuse used is that the system under the control of Centralized Processing Center ( CPC ), Bangalore has some issues and, therefore, amount is not being released to assessees. Interest is payable in law until the date of refund and the Department does not realize that it is public money that is used to pay interest. That is a waste and burden on the exchequer. We would only hope that the Finance Ministry looks into it with seriousness and tries to put an end to the problem faced by all assessees and the Income Tax Officers. A copy of this order be sent to the PMO, the Hon ble Finance Minister GOI, the Hon ble Law Minister GOI, the Central Board of Direct Taxes and to the Attorney General for India for information and necessary action. We only hope this problem gets resolved at the earliest. Had the department sorted out its technical issues, totally unrelated to any substantial legal issue, nevertheless contravening the fundamental right of Petitioner to receive undisputed amount of refund, the present proceedings would not have crept into the litigation arena. Respondents either by itself or through CPC shall ensure that the amount is credited to Petitioner s account on or before 4th November 2023 with interest upto the date of payment in accordance with law. 2023 (11) TMI 655 Validity of order passed u/s 144 r.w.s. 147 - denial of natural justice - As stating that the petitioner had not responded to the notices issued by the respondent Bank informed about the attachment order passed by the Department attaching the bank account of the petitioner - HELD THAT:- On perusal of the records, it is an admitted fact that the Authorised representative of the petitioner was passed away on 29.12.2017. Thereafter, the notice under Section 148 of the IT Act was issued on 31.03.2021 by way of post and the same was received by the petitioner on 03.04.2021. Thereafter, all the notices were uploaded in the e-portal and the e-portal was also accessed by the petitioner. In fact, the assessment order also sent by virtue of post and the acknowledgement card was filed before this Court. As stated in counter affidavit of the respondent, between the period of date of issuance of notice and till the date of assessment, the assessee had accessed the e-portal for filing the income tax returns for assessment year 2021-2022 and for filing the audit report for the assessment year 2021- 2022. When such being the case, find no force in the submissions of the petitioner that the impugned order was passed in violation of principal of natural justice since the respondent had already taken all the efforts to send the notices to the petitioner through physically as well as by uploading the same in the e-portal. Further, it is clear that only due to inaction on the part of petitioner in filing the reply, this assessment order came to be passed. Assessee themselves had given up their rights for personal hearing and filing of reply in the present case. However, in the scheme of the IT Act, the assessee will have two opportunities to present their case. One is before the Assessing Officer and another is before the Appellate Authority. The Appellate Authority will also have similar power of the Assessing Officer to adjudicate the petitioner s case. Hence, once a person had given up his rights, he cannot claim it back as he lost his opportunity. In such situation, he has to avail the second opportunity to present their case before the Appellate Authority. Decided against assessee. 2023 (11) TMI 654 Search and Seizure - Validity of Order passed u/s 132(3) prohibiting petitioners/assessee from removing articles (liquor bottles) in the cupboard at the resident without prior permission of the IT Authorities - challenge is founded on the ground that exercise of power by the Authorities is colourable in nature since the subject matter in question relates to Section 132 (1) but not u/s. 132(3) - HELD THAT:- Bare perusal of Section 132(1) elicits that where the Revenue receives information which compels them to believe that any person is in possession of any money, bullion, jewellery or other valuable articles or things and such item represents either wholly or partly undisclosed income for the purpose of Income-tax Act, then Revenue is empowered to enter and search any building, place, vessel, vehicle or aircraft where such articles are suspected to be kept, or break open the lock of any door, box, locker, safe, cupboard (almirah) or other receptacle of which keys are not available or search any person who is suspected of having on his person any such article or require of any person to afford the authority concerned the necessary facility to have access the articles or to seize such articles found as a result of such search and to place marks of identification on any such articles after making note or inventory if these articles are stock-in-trade. Officer concerned u/s. 132(1) has wide powers of search and seizure of articles mentioned therein which include books of account, other documents, money, bullion, jewellery, other valuable articles. Whereas sub-section (3) of Section 132 can be invoked for imposing similar prohibitory order in regard to various articles which for reasons other than the reasons mentioned in second proviso to Section 132(1) make it impossible or impracticable for the competent authority to take physical possession or to remove. The expression valuable article is not defined in Income-tax Act but is understood in common parlance to include all such things which have value or in other words are marketable. The objection of Revenue that liquor cannot even be included in the expression valuable article / thing defies the very definition of valuable article or thing understood in common parlance and, therefore, deserves to be and is rejected. Pertinently, Section 132 deals with search and seizure contains comprehensive provisions for which the Revenue may encounter. This provision thus is quite exhaustive. The entire Section 132 does not give any indication that the expression valuable article / thing can have restrictive meaning to the extent as indicated by counsel for Revenue. Another aspect which deserves consideration is that Taxing Statute is to be understood by the plain meaning of the words employed and to which no intendment or implication is permissible. While interpreting Taxing Statute in case of doubt, meaning understood in common parlance is to be accepted. Thus what comes out loud and clear is that the impugned order is an outcome of colourable exercise of power by the Revenue Authorities which have wrongly invoked Section 132(3) of IT Act since the facts and circumstances were suitable enough for invocation of Section 132(1). Liquor is undoubtedly a thing which is a valuable article since it has value in the market. Thus, by the very wide sweep and extent of expression valuable article , liquor stands included within the expression valuable article . Moreso, the objection of Revenue that liquor cannot even be included in the expression valuable article / thing defies the very definition of valuable article or thing understood in common parlance and, therefore, deserves to be and is rejected. Pertinently, Section 132 deals with search and seizure contains comprehensive provisions for which the Revenue may encounter. This provision thus is quite exhaustive. The entire Section 132 does not give any indication that the expression valuable article / thing can have restrictive meaning to the extent as indicated by counsel for Revenue. Another aspect which deserves consideration is that Taxing Statute is to be understood by the plain meaning of the words employed and to which no intendment or implication is permissible. While interpreting Taxing Statute in case of doubt, meaning understood in common parlance is to be accepted. In view of above discussion what comes out loud and clear is that the impugned order is an outcome of colourable exercise of power by the Revenue Authorities which have wrongly invoked Section 132(3) of IT Act since the facts and circumstances were suitable enough for invocation of Section 132(1). Revenue has failed to satisfy that this was a case which made it impossible/impracticable for Revenue to seize the liquor found at the premises of petitioners and, therefore, it can be presumed that there were no compelling reasons to invoke Section 132(3). Impugned order passed by respondent No.2 u/s. 132(3) of IT Act is set aside. Revenue is saddled with cost of Rs. 10,000/- . 2023 (11) TMI 653 Seeking de-sealing of property - petitioner's erstwhile owner leased out the property to the third respondent, who underwent liquidation - petitioner being the owner of the property made a representation setting out fact that place/property, where, the third respondent-Company run the business, is the petitioner's property and therefore, sought to de-seal the property HELD THAT:- As far as second respondent, Assistant Commissioner of Income Tax is concerned, since it appears that pursuant to a check conducted by the Income Tax Officials at the premises of the third respondent-Company, the certain books of accounts and all other documents of the third respondent- Company were seized; that the Official Liquidator, in pursuance of the proceedings initiated against the third respondent-Company is need of such documents, which were in the custody of Income Tax Official and has sent notice to the Assistant Commissioner of Income Tax, for providing those documents, the said Income Tax Official has been impleaded as one of the party respondent in this Writ Proceedings, this Court is of the view that it would be suffice to direct the first respondent to vacate the property, inasmuch as, the second respondent has no role to play in regard to the prayer made by the petitioner. Accordingly, this Writ Petition is disposed of with a direction to the first respondent to consider the representation made by the petitioner, dated 04.01.2022 and to pass orders for de-seal of the property. The first respondent is also directed to take back all books of accounts, equipments, if any, that were kept lying in the premises and vacate and hand over vacant premises within a period of 30 days from the date of receipt of a copy of this order. 2023 (11) TMI 652 Maintainability of Appeal against ITAT order - substantial question of law or fact - as alleged ITAT merely erred in not deciding the grounds raised by the appellant in the cross objection specifically the ground no. 3 pertaining to the A.Y. 2012-13, ITAT merely brushed aside all the grounds raised in the cross objection by holding that the grounds raised in the cross objection merely in support of the order of the First Appellate Authority and no substantial arguments were raised, thus order of the Ld. ITAT is perverse HELD THAT:- The grounds of assessee for the A.Ys. 2012-13 and 2013-14 are identical and similar and the learned CIT (DR) could not show any distinct or dissimilar factual position of situation between the A.Y. 2011-12 and A.Ys. 2012-13 and 2013-14. Therefore, the conclusion recorded in the appeal filed by the Revenue with regard to ground Nos. 1 to 5 of Revenue for A.Y. 2011-12 would apply mutatis mutandis to ground No. 1 to 5 of Revenue for A.Ys. 2012-13 and 2013-14. The assessee has filed the cross objections only to support the first appellate order. However, no substantial arguments were advanced in support of cross objections by the assessee. The appeals of the revenue having been dismissed for the A.Ys. 2011-12, 2012-13 and 2013-14, the cross objection having become academic and infructuous were not adjudicated. In the result, the cross objections raising the grounds (1) to (3) filed by the assess were dismissed. This Court is of the view that neither any of the proposed substantial questions of law (1) to (3), nor any other substantial question of law arises for consideration herein. Consequently, in the absence of any substantial question of law having been made out by the assessee, the present appeal preferred by the assessee against the order impugned passed by the ITAT, Indore does not deserve to be admitted. 2023 (11) TMI 651 Validity of reopening of assessment u/s 147 r.w.s. 144B - not supplying the reasons for reopening and without issuing draft assessment order - as alleged respondent instead of supplying reasons for reopening, straightaway issued the show cause notice - HELD THAT:- Section 144B prescribes for procedure to be adopted by the National Faceless Assessment Centre for making draft assessment order and provide details of the penalty proceedings to be initiated therein, if any. It further provides for supplying reasons and draft assessment order. In view of above, it can be safely be said that the impugned order was passed by the respondent in violation of principles of natural justice without providing reasons for reopening and the draft assessment order or in other words by not following the prescribed procedure laid down as per the provisions of section 144B of the Act, 1961 for Faceless assessment. This petition succeeds and is accordingly allowed. The impugned order of assessment passed by the respondent u/s 147 read with Section 144B and demand notice under section 156 of the Act are quashed and set aside. The respondent/Revenue will be at liberty to proceed with assessment under the provisions of section 144B of the Act, 1961, as permissible under the law for providing the reasons for reopening and the draft assessment order so as to provide an opportunity of hearing to the petitioner. Such exercise shall be completed within 12 weeks from the date of receipt of copy of this order. 2023 (11) TMI 650 Validity of assessment passed u/s 143(3) r.w.s. u/s 144B - gross violation of the principle of natural justice - whether by not issuing show cause notice while framing the assessment, principles of natural justice have at all been violated? - HELD THAT:- The impugned order was passed by the respondent in violation of principles of natural justice without issuing show cause notice while framing assessment and affording an opportunity of personal hearing by not following the prescribed procedure laid down as per the provisions of section 144B of the Act, 1961 for Faceless assessment. In the result, this petition succeeds and is accordingly allowed. The impugned order of assessment passed by the respondent u/s 147 read with Section 144B and demand notice for the assessment year 2018-19 u/s 156 of the Act are quashed and set aside. 2023 (11) TMI 649 Reopening of assessment - investment in time deposit and mutual funds out of foreign funds in the assessee s NRE Accounts - HELD THAT:- Undisputedly, the funds came from NRE Accounts and the source therefore was beyond the reach of the authorities. Even on reading the provisions of section 10(4), it is apparent that such incomes are exempt from being included in the total income. The impugned orders in all these petitions are, therefore, without jurisdiction. The orders in the respective petitions are therefore quashed and set aside. Petitions are allowed, accordingly. 2023 (11) TMI 648 Addition u/s 41(1) - cessation of liability - as per AO assessee failed to prove genuineness of the outstanding credit balance - HELD THAT:- When the transaction between the assessee and the M/s.Paper Star Marketing was found to be genuine in the preceding AY 2012-13 as per the assessment order after the same being examined by the AO, then the outstanding balance pertaining to the same transaction could not have been stated to be non-genuine since the AO in preceding year after conducting inquiry had found that the adverse material on record in form of denial by the said party did not lead to the conclusion that the transaction of the assessee with the said party was non-genuine. Tribunal therefore has rightly come to the conclusion that for such reason only the CIT (Appeals) has rightly deleted the addition made by the AO by invoking Section 41(1). Considering the provision of Section 41(1) no addition can be made under the said provision unless the liability ceased to exist during the previous year and the assessee write off the same in its books of accounts. It is also found as a matter of fact that the assessee has made payment to the said party in the next year i.e. AY 2014-15 so the liability cannot be said to have ceased to exist during the year under consideration and the appellant has also not written out the same in its books of accounts. No substantial question of law arises. 2023 (11) TMI 647 Disallowing business loss - As pr AO assessee was directly involved in sham and bogus transactions of entry providers - business of trading in shares and securities - HELD THAT:- AO has not contradicted these scrips as to how far the assessee s involvement was there, except observing that the shares involved were admittedly controlled by the entry providers. AO related to this scrip has not given observation as to how the entry providers and the assessee as well as the share broker i.e. ASE Capital Markets Limited has involved in the entire transactions except that the assessee through ASE Capital Markets Limited has purchased and sold the shares. The same is related to scrips of Comfincap, Radford Global Limited, SIMIL, Turbo Tech Engineering Limited and Dhenu Buildcon Infra Limited. The documents such as contract notes, investor s report and client-wise sauda summary were before the Assessing Officer but the Assessing Officer has not taken cognisance of these documents thereby stating that the assessee was directly involved in sham and bogus transactions of entry providers. Though AO has given the chart of fluctuation as well as increase of the data during the said period, the same cannot be the sufficient reason for disallowing the business loss of the assessee. Thus, the Assessing Officer was not right in disallowing the claim of business loss of the assessee. Appeal of the assessee is thus allowed. 2023 (11) TMI 646 Exemption u/s. 54F denied - assessee owned more than one residential house as on the date of transfer of the asset - interpretation of the term on the date of transfer - As per DR when the vacant plot was transferred, the assessee owned more than one residential house and consequently assessee was not entitled to exemption u/s. 54F - HELD THAT:- It is an admitted fact that the assessee has gifted residential house being Plot No.36B, Bharatpur, Bhubaneswar to his sister, Smt. Amitarani Giri, who was already in possession as a tenant of the property. It is also an admitted fact that the assessee was residing at Flat No.1, Maha Maya Enclave, which is a self occupied property. At the beginning of the specified date being 27.12.2014, admittedly, the assessee did hold two residential properties. However, at the end of the specified date, the assessee own only one residential house. A perusal of the proviso to section 54F shows that the wording used is on the date of transfer of the original asset . Though ld AR has been vehement in his argument that the meaning of the term on the date of transfer should be considered as the end of the specified date of transfer, we are unable to accede to the arguments because the date of transfer starts at 00 hours and ends at 23.59 hours. On the date means any time during the date and at the beginning of the date of intended transfer of the original asset, the assessee did own more than one residential house. This being so, Assessing Officer and ld CIT(A) is right in denying the assessee the benefit of exemption u/s. 54F of the Act. It must be mentioned here that the interpretation brought out by ld AR itself lead to substantial question of law as to what exactly is the interpretation of the term on the date of transfer . The interpretation given by ld AR though plausible is not acceptable to this Tribunal. Appeal of the assessee stands dismissed. 2023 (11) TMI 645 Validity of orders passed by AO without quoting DIN - Introduction of additional ground based on CBDT Circular dated 14.8.2019 - HELD THAT:- We find that it is a question of law which is based on the material which is already on record and, therefore, the introduction of the additional ground deserves to be allowed. A useful reference in this regard can be made to the decision of the Hon ble Supreme Court in NTPC vs. CIT [ 1996 (12) TMI 7 - SUPREME COURT] in which the Hon ble Supreme Court has inter alia held that the view that the Tribunal is confined only to issues arising out of the appeal before the CIT(A) is too narrow a view of the powers of the Appellate Tribunal. It has been held that Tribunal will have a discretion to allow or not to allow new ground to be raised. However, where the Tribunal is only required to consider a question of law arising from the facts which are on record, in the assessment proceedings, there is no reason, why such a question should not be allowed to be raised - we allow the introduction of additional ground as prayed. Manadation to quote DIN - On merits it is a matter of record that the order of the Assessing Officer does not bear any DIN. CBDT vide aforesaid Circular dated 14.8.2019 has mandated, Generation/ Allotment/ Quoting of computer generated Document Identification Number (DIN) in the body of all communications, in the nature of notices/summons/ letters/ correspondences as well as the orders passed. All that the communication states is about the provision of facility for generation of Intimation Letter containing Document Identification Number / Document Number (DIN/DN) for documents issued outside ITBA system but uploaded manually in Income Tax Business Application (ITBA). From para 4 of the communication, it is clear that it pertains to the functionality to capture and uphold the letters, notices and orders issued manually and served on taxpayers by users due to any exceptional circumstances under Para 3 (i), (ii) and (iii) of the aforesaid Circular dated 14.8.2019. It is not the case made out that there are any exceptional reasons recorded in these appeals as required by the Circular dated 14.8.2019. Thus, in our opinion, the said communication cannot come to the aid of the Revenue in the present Appeals. The issue is no longer res integra, as it is covered by several decisions of the coordinate Bench and in particular the decision in the case of M/s Brandix Mauritius Holdings Ltd. [ 2022 (11) TMI 34 - ITAT DELHI] which has been confirmed by the Hon ble Delhi Court in the case of CIT (International Taxation-1), New Delhi vs. M/s Brandix Mauritius Holdings Ltd. [ 2023 (4) TMI 579 - DELHI HIGH COURT] 2023 (11) TMI 644 Income accrued in India - PE in India - HELD THAT:- As none of the conditions of fixed place PE as enshrined under Article 5(1) of India Germany tax treaty stand satisfied Project Office at Vadodara does not constitute Fixed Place Permanent Establishment of the assessee company and BTIL does not constitute fixed place PE of the assessee company, is upheld and issue decided in favour of the assessee. 2023 (11) TMI 643 Validity of revised return u/s 139(5) - Revision of belated return filed u/s 139(4) - Denial of benefit of exemption u/s 54F claimed in the revised return - assessee case selected for Limited Scrutiny under CASS - assessee had neither offered any income from Capital gain nor claimed any deduction/exemption under this head in the original return but only in revised return - HELD THAT:- It was only in the revised return that the assessee offered income from long term capital gain after claiming exemption u/s. 54F. This shows that the return taken up for scrutiny was the revised return and not the original one. From para 1 of the notice u/s. 143(2), it is clear that it refers to the deduction claimed under the head `Capital gains , which was claimed in the revised return filed u/s. 139(5). It thus become palpable that the revised return was considered for selection of the case under CASS and the notice u/s. 143(2) was also issued with reference to the revised return only. Revised return did not conform to the prescription of section 139(5), before its substitution w.e.f. A.Y. 2017-18, which provided for revision of a return filed u/s. 139(1) and not u/s. 139(4) of the Act. The substituted section 139(5) now liberalizes the revision of return originally filed under sub-section (1) or under sub-section (4). The amendment has come into vogue from the A.Y. 2017-18. The assessment year under consideration is 2015-16. It is the pre-substituted provision which will prevail for the year under consideration, debarring the revision of any return filed u/s. 139(4). Since the revised belated return filed on 11-02-2016 was an invalid one, the same could not have been acted upon for the assessment. Once the invalid return is excluded from consideration, what survives is the valid return filed by the assessee u/s. 139(4) on 11-09-2015. The assessment could have been taken place only with reference to such return filed u/s. 139(4) and not the invalid return filed by the assessee. The selection of the case under Limited Scrutiny under CASS on the basis of the invalid return and thereafter the issuance of jurisdictional notice u/s. 143(2) also qua such invalid return can have no consequence except the passing of an illegal assessment orde r. We, therefore, vacate the assessment order and the consequential proceedings flowing therefrom. Assessee appeal is allowed. 2023 (11) TMI 642 TDS liability u/s. 194C - payment to members of AOP - Work received by the AOP executed by its members - relationship of principle to principle OR principle to agent - disallowance u/s. 40(a)(ia) - HELD THAT:- As decided in Shraddha Mahalaxmi Joint Venture [ 2014 (12) TMI 347 - ITAT PUNE] assessee therein also an AOP had received contracts which in turn was executed by the two members of the AOP. A contention was raised that the said assessee AOP was established for obtaining work and receiving payments against the work done by the members of AOP. The said payment was to be distributed in the agreed ratio between the two members of the AOP for carrying out the work. The Co-ordinate Bench held no deduction of TDS is warranted on the payments between the assessee and its members and deleted the addition made by the AO for violation u/s. 40(A)(ia) of the Act by placing reliance in the case of M/s. Swapnali RDS Joint Venture [ 2014 (12) TMI 320 - ITAT PUNE] . CIT(A) correctly held that on verification of agreement between the members and held that the assessee was formed only to procure work contract and members therein executed the work in accordance with the memorandum of understanding as per their own risk, held the said relationship is of principle to principle but not as a principle to agent, or of employer employee, or of contractor sub-contractor. The CIT(A) by arriving such conclusion held deduction of TDS on the payments made by the assessee to its members does not arise. Decided against revenue. 2023 (11) TMI 641 Addition of loan given by assessee - assessee submitted that she made a cash-deposit in her Bank and thereafter out of the balance held in Bank A/c the said loan was given - whether assessee explained claim of redeposit out of previous withdrawal - HELD THAT:- There is no dispute on the fact that the AO has made addition qua the loan given by assessee and not loan taken by assessee. We agree that under the scheme of Income-tax act and it is logical also, there can be an addition for bogus loan/accommodation taken by a person but certainly there cannot be any addition for bogus loan/accommodation given . If the loan given by X to Y is found bogus/accommodation, the department can make addition in the hands of Y but certainly not in the hands of X . In fact, Ld. DR also understood this basic point and that is why he simply supported the AO s order and left it for the Bench to take a call. As far as the source of cash-deposit in bank a/c, prior to giving loan, is concerned, Ld. AR has successfully demonstrated that the assessee made a withdrawal of enough amount from same bank a/c which was available for re-deposit. Thus, we need not go further to examine the genuineness or otherwise of the loan given by assessee, suffice it to say that the AO has wrongly made addition given by assessee in assessee s hands. We, therefore, direct the AO to delete the addition. Decided in favour of assessee. 2023 (11) TMI 640 Disallowance u/s 14A - AO was of the view that some more expenditure has to be necessarily incurred for carrying out the activity of investment and to earn exempt income - AO therefore recorded his dissatisfaction with the correctness of the assessee s claim - HELD THAT:- It is not in dispute that during the year the assessee did not earn any exempt income. It is also not in dispute that the assessee on its own disallowed an amount suo-moto. AO says only that for carrying out the activity of investment and to earn exempt income, some more expenditure than what the assessee itself disallowed has to be necessarily incurred. This is only a surmise and guess not based on any cogent reason whereas the assessee explained that the suo-moto disallowance made by it is equivalent to salary of an official looking after the activity of investment etc. A bald satisfaction of the Ld. AO is not envisaged under section 14A(2) of the Act. He has to record his satisfaction over the assessee s claim having regard to the accounts of the assessee which has not been done. In such a case disallowance made by the Ld. AO is not sustainable as held by the Hon ble Delhi High Court in Pr. CIT vs. Keshav Power Ltd. [ 2018 (11) TMI 645 - DELHI HIGH COURT] and Reliance Capital asset Management Ltd. [ 2017 (10) TMI 177 - BOMBAY HIGH COURT] - We, therefore hold that disallowance made by the Ld. AO under section 14A r.w. Rule 8D and confirmed by the Ld. CIT(A) is not justified. The appeal of the assessee is decided in its favour. 2023 (11) TMI 639 Assessment of trust - gross receipts computation - Depreciation claim of assessee trust - AO denied the claim for depreciation since the corresponding expenditure for acquisition of the asset was already claimed towards application of income in the earlier years - AO s inclusion of profit on sale of property at Thangam colony for arriving at the gross receipts and also for not considering the said amount for the purposes of arriving at application of income - HELD THAT:- As correctly decided by CIT(A) assessee simply credited the Schedule of fixed assets of Padi school - The said addition was made under the head land and building , which had an opening WDV - there is no acquisition of any new asset. As per the written submission filed on 22.01.2020, the amounts were stated to be utilized for improvement and acquisition of other fixed assets. However, there is no acquisition of any new fixed assets. The conditions as laid down in sub section (1A) of Sec.11 stood violated and hence such amount cannot be included for the purposes of arriving at application of income . Thus, the AO s inclusion of profit on sale of property at Thangam colony for arriving at the gross receipts and also for not considering the said amount for the purposes of arriving at application of income, both are correct. Sec.11(1A) being violated, the impugned amount cannot be considered for application and the net consideration is taxable as capital gains. Issue of allowing depreciation on the assets, whose expenditure has already been claimed towards application of Income is settled in favour of the assessee by the decision of the Hon'ble Apex Court in the case of CIT Vs. Rajasthan and Gujarat Charitable Foundation ( 2017 (12) TMI 1067 - SUPREME COURT ) - The Hon'ble Apex Court further held that the decision of the Hon ble Bombay High Court in the case of CIT Vs Institute of Banking Personnel Selection (IBPS) [ 2003 (7) TMI 52 - BOMBAY HIGH COURT] is correct, wherein the claim of depreciation in the case of trusts was held allowable on the assets whose expenditure was already claimed towards application of income. Thus, the AO should not have reduced the claim of depreciation while arriving at the application of income. AO is directed to consider the application of income (which means the claim of depreciation is allowed) against the income to be applied (which represents 85% of gross receipts). Accordingly ground no. 4 pertaining to the claim of depreciation is allowed and ground no. 5, 6 7 are dismissed. 2023 (11) TMI 638 Unexplained Cash deposits to the bank account of assessee - HELD THAT:- From the orders of the authorities below, we clearly note that the CIT(A) after considering the basis taken by the AO calling remand report on the additional evidence filed by the assessee during first appellate proceedings and rejoinder of the appellant. It was held that the appellant is not engaged in the business activity and entire credits found to the bank account of assessee remained unexplained, therefore, CIT(A) after giving part relief to the assessee uphold the remaining part of addition. We are unable to see any ambiguity, perversity or any other valid reason to interfere with the findings arrived by the CIT(A) and thus, be uphold the same. Accordingly, ground of assessee are dismissed. Long term capital gain on sale of land - Addition granting major part of relief to the assessee and such amount was computed as per submissions and additional evidence filed by the assessee himself. Therefore, we are unable to see any valid reason to interfere with the findings returned by the CIT(A) on this issue. Accordingly, ground of assessee are also dismissed. Reopening of assessment - From the reasons, it is clear that the reason to believe was on the basis of information regarding certain cash transactions in the bank account of assessee and the assessee did not file any return of income and for the reason assessee did not file return of income for AY 2009-10. We are unable to see any valid reason to interfere with the findings recorded by the CIT(A) while dismissing the ground of assessee and upholding the action of the AO for initiation of reassessment proceedings. 2023 (11) TMI 637 Revision u/s 263 - Computation on MAT u/s 115JB - As per CIT profit adopted by the AO for the purpose of section 115JB is not proper - profit declared by the assessee in its standalone financial statements is less than profit declared in the consolidated financial statements - HELD THAT:- We observe that the assessee has declared its book profit in its standalone Profit and Loss Account which was offered for taxation under Income-tax Act for the purpose of computation of income under normal provisions as well as to determine the book profits u/s. 115JB - As per the requirement under Companies Act, assessee has to submit the consolidated financial statements of the assessee company where assessee has stepdown subsidiaries and associate companies. Accordingly, assessee has submitted along with its financial statements, a consolidated financial statements of the group company being a holding company of its subsidiaries and its associates. The stepdown subsidiaries and other associate companies are independent assessees in the eyes of law and they have declared their financial statements and profits independently and filed the relevant return of income. Therefore, the Profit and Loss declared by the subsidiaries and associate companies cannot be assessed to tax in the hands of the assessee second time. Therefore, the observation of the Ld.Pr.CIT to reassess the declared profit by the subsidiaries and other associates in the hands of the assessee is not proper. Therefore, he has merely remitted the issue back to the file of the Assessing Officer to redo the assessment without giving a finding that the profit declared by the assessee is erroneous in so far as it is prejudicial to the interest of the Revenue. Accordingly, order passed u/s. 263 of the Act is set-aside and the grounds raised by the assessee is accordingly allowed 2023 (11) TMI 636 Admission of additions evidences - Claim of exemption u/s 10(38) - Long term capital gain (LTCG) is arising on sale of listed equity shares - Production of additional evidence before the JCIT (Appeals) / CIT(Appeals) - Non-submission of the evidence supporting the sale of shares before the Assessing Officer since the notices were not sent to the functional email ids - HELD THAT:- We see merit in the contentions of the AR since at an overall level, the evidences furnished by the assessee supports that there has been an investment and that the same is sold during the year for a consideration and the AO should have called for further details if not satisfied with evidences already furnished by the assessee. Therefore in our considered view the non-admission of additional evidence for the reason that the assessee did not furnish the documentary evidence in spite of giving several opportunities is not correct. Before the CIT(A) the assessee filed a petition for condonation of delay and also for admission of additional evidence. The assessee in both the petitions had stated that the notices being sent to the non-functional email id as the reason for delay in filing the appeal and for delay / non-submission of details before the AO - CIT(A) while condoning the delay has accepted the said submissions but did not consider same reason as sufficient cause for admission of additional evidence and has in the order has given a detailed finding in this regard - CIT(A) also relied on the remand report of the Assessing Officer where it is mentioned that the assessee despite having the evidences at their disposal wontedly did not submit the same. We are unable to appreciate this contention since there is no reason for the assessee to withhold submitting the required the details more so when the impugned addition is significant resulting in huge demand. In this regard we are also bound to take cognizance of the fact that the Hon'ble Bombay High Court has given a direction to decide the application under rule 46A which the CIT(A) has not considered in his order. In view of these discussions we are of the view that the CIT(A) is not correct in not admitting the additional evidence while upholding the addition made by the Assessing Officer. The matter remanded back to the AO with a direction to admit the additional evidences submitted by the assessee in connection with the sale of shares and allow the claim of exemption accordingly. Appeal of the assessee is allowed for statistical purposes. 2023 (11) TMI 635 Unexplained cash deposits in bank account - AO applied the provisions of sec 115BBE - Assessee was aged about 73 years - Assessee initially surrendered some amount as the source was not traceable - Later he produced the details and evidence of deposit - CIT(A) did not believe the version of the assessee - HELD THAT:- As the assessee who traced out the details of the person from whom he received such amount and he also filed the affidavit of such person swearing to such a fact. He also filed the supporting evidence in the form of the bank withdrawal entry and explains that he lent this amount to one of his friends and received it in the relevant year. As a matter of fact, I do not find it to be something unusual. In all fairness, at that stage, he offered the same to tax since he was not recollecting the details. I doubt very much whether such an offer would be irrevocable even after the assessee traces out the source of such deposit and the evidence supporting the same. The act of refusing to look into the evidence produced by the assessee, who has never been found to be a tax evader, on the ground that it is an afterthought is nothing but an act of prejudice. Such evidence should have been examined and if any doubt arises on such examination, then the alternative view could have been taken by the authorities below. Assessee was aged about 73 years and his wife was 68 years of age. It would be difficult to believe that at such age, the pensioners will have another source of income. Moreover, this deposit of Rs. 4 Lakhs is long prior to the demonetization of Specified Bank Notes. It rules out the possibility of assessee depositing some other s money in his account. Human memory at that age is not infallible, and while appreciating the facts and circumstances, regard must be had to this fact. Lest, it would amount to penalizing the fading of memory at old age. This is not the purpose of law. Thus if we restore it to the file of AO we are afraid it will cause hardship to a senior citizen of about 80 years of age by now. It does not look reasonable, hence, we direct AO to delete this addition, in view of the plea that the total income of the assessee is less than the threshold limit. Grounds are accordingly allowed. 2023 (11) TMI 634 Eligibility to exemption u/s 11/12 - Belated filing of return - Denial of exemption where return of income is not furnished within time - assessee argued passing the order in undue hurry and in gross violation of the principles of natural justice inasmuch as no opportunity of personal hearing was provided to the Appellant - HELD THAT:- It is true that while denying exemption u/s 11/12 no intimation was given to the assessee which amounts to violation of principles of natural justice. It is true that the return was not filed u/s 139(1) of the Act, but it is equally true that the return was filed u/s 139(4) of the Act. Section 12A contains the conditions for applicability of sections 11 and 12 of the Act and at clause (ba), it is provided that the person in receipt of the income has furnished return of income for the previous year in accordance with the provisions of sub-section 4A of section 139 of the Act within the time allowed under sub- section (1) or sub-section (4) of that section . This has been inserted by the Finance Act, 2017 w.e.f. 01.04.2018 and reference to sub-section (1) or sub-section (4) is inserted by the Finance Act 2023 w.e.f 01.04.2023. Thus we are of the considered view that the assessee is very much eligible for exemption u/s 11/12 of the Act. We, therefore, direct the Assessing Officer to allow the claim of the assessee as claimed by it. Decided in favour of assessee. 2023 (11) TMI 633 Sale of land - long term capital loss / gain (LTCG) or Short term capital loss / gain (STCG) - Depreciable assets or not - Computation of Capital Gain u/s 50 - Assessee never claimed the depreciation on land - HELD THAT:- We fail to understand on the conclusion drawn by Ld. CIT(A) of treating land as depreciable assets and subjecting it to capital gain u/s. 50 of the Acton the premise that land was traded by the assessee as a business asset as reflected in the Balance Sheet of the assessee. The issue contested by the assessee was that Ld. AO was not correct in computing the long term capital gain on sale of land as against the long term capital loss reported by the assessee by taking indexation benefit on the cost of acquisition. Ld. CIT(A) has altogether digressed from the issue and taken a stand unwarranted on the facts of the case. Assessee has never claimed any depreciation nor it has been allowed in the books of account for which reference was made to the audited financial statement forming part of the paper book. Ld. Counsel referred to Schedule G of fixed assets forming part of the audited financial statement wherein land is one of the items reported in the Schedule. It was pointed out that in the gross block and net block, the amount which appeared against land are gross amounts at which the lands were acquired by the assessee. In the same schedule, in the column for depreciation, the amounts are NIL thus, no depreciation whatsoever has been charged by the assessee on land owned by it. Ld. CIT(A) has placed reliance on certain judicial precedents which are in reference to sec. 50 dealt with the depreciable assets and treatment of capital gain thereon. Thus, considering the submissions made by the Ld. Counsel, the factual matrix and the material on record, we set aside the order of Ld. CIT(A) since he has altogether digressed from the issue raised by the assessee before him and had taken a stand unwarranted on the facts of the case. Considering the above stated facts duly corroborated by documentary evidence, we find the computation of long term capital loss on sale of land to be proper and allow the claim of the assessee. Accordingly, grounds taken by the assessee are allowed. 2023 (11) TMI 632 Disallowance u/s 14A r.w.r.8D - HELD THAT:- As disallowance under section 14A cannot exceed exempt income earned by the assessee during the year. Ground of appeal so taken by the Revenue is dismissed. Claim of depreciation @ 30% on the buses as against 15% allowed by the AO - HELD THAT:- Hon'ble jurisdictional ITAT in the case of Dabwali Transport Co . Ltd. vs. DCIT, Bathinda [ 2016 (6) TMI 1283 - ITAT AMRITSAR ] held that the buses were entitled for higher rate of depreciation at the rate of 30%. Correct head of income - rental income under the head Income from Business Profession or income from House Property as treated by the AO - HELD THAT:- The question is whether the fact that rent has been fixed as a percentage of gross sales is sufficient enough to classify a particular transaction as business transaction or there should be other factors or terms and conditions of the agreement which should be considered before taking a final view in the matter. Agreements have to be read and understood holistically to get a clear picture of business understanding between the two parties, and one cannot be swayed solely by how the revenues are distributed or the operations have to be carried out. Unfortunately, we do not have the benefit of either of the agreements before us and therefore, in absence of the same, we are of the considered view that the matter deserve to be set-aside to the file of the ld CIT(A) to examine the same a fresh taking into consideration the aforesaid discussions and decide the same as per law. The ld CIT(A) shall also take into consideration the decision of Sheetal Khurana Food Private Limited [ 2011 (1) TMI 763 - PUNJAB AND HARYANA HIGH COURT ] as well as Tranvancore Sugar and Chemicals [ 2022 (4) TMI 396 - KERALA HIGH COURT ] and any other authority which the assessee, as advised wishes to bring on record and decide the applicability thereof in the facts of the present case. In the result, the ground of appeal is allowed for statistical purposes. Characterization of the transaction - Allowing cost of improvement claimed by the assessee against the Short Term Capital Gain (STCG) on sale of land at village - CIT(A) has treated the transaction as adventure in nature of trade and not as transfer of capital asset - HELD THAT:- Revenue has not disputed this re- characterization of the transaction done by the ld CIT(A). Therefore, where the transaction is treated as adventure in nature of trade, the net profit resulting from the said transaction can be brought to tax. The assessee has established the necessary nexus of incurrence of expenditure of Rs 18 lacs by way of purchase of non-forest land and transfer thereof directly in favour of Forest Department for getting the necessary change of land use and permission to develop ecotourism resort. Therefore, the same has been rightly allowed by the ld CIT(A) while bringing the transaction to tax. Also where the said cost as claimed by the Revenue (as part of its ground of appeal) has already been allowed in the year of purchase i.e, A.Y 2013-14, the assessee cannot claim the same again in the year under consideration. The matter is accordingly set-aside to the file of the AO to examine whether the said amount has been allowed to the assessee in the year A.Y 2013-14 or not and where the same is found to be correct, the benefit thereof cannot be allowed to the assessee. In the result, the ground of appeal is partly allowed for statistical purposes. 2023 (11) TMI 631 Revision u/s 263 - Addition u/s 69 - taxability of income u/s 115BBE - nature and source of the surrendered income during the course of survey operation - HELD THAT:- All the stock was found lying at the business premises and the assessee was confronted with discrepancies in terms of stock so found and valued and he has categorically stated that the investment in stock is made from undisclosed business income of the current year. The stock physically found was valued and then, compared with stock as recorded in the books of accounts, thus, there was clear nexus of stock with the assessee s business. There is no finding on record that the difference in stock so found out by the authorities has any independent identity and the same was thus part and parcel of entire stock of cattle feed. No doubt, these transactions were not recorded at the time of survey thus qualify as unrecorded transactions satisfying one of the essential conditions, at the same time, the assessee has provided the necessary explanation about the nature and source of such unrecorded transactions and the necessary nexus with assessee s business has been established, thus, it cannot be said that these are unexplained transactions thus, doesn t satisfy the second condition for invoking the deeming provisions of section 69. AO has duly taken cognizance of the findings of the survey team, the documents found during the course of survey, the statement of the assessee, the surrender letter and the return of income and after examination thereof and due application of mind, the income has been rightly assessed under the head business income. The order so passed by the AO cannot be held as erroneous due to lack of inquiry or for that matter requisite inquiry on the part of the AO. As we have held above, there is no findings recorded by the Ld. Pr. CIT as to how the deeming provisions are applicable in the instant case and the order so passed by the AO is erroneous. We therefore find that merely stating that there was survey operation at the business premises of the assessee and provisions of Section 115BBE of the Act are attracted, the same can be a basis for exercise of jurisdiction under section 263 of the Act. In view of the same, order so passed by the Ld. Pr. CIT under section 263 is set aside and that of the AO is restored. Assessee appeal allowed. 2023 (11) TMI 630 Disallowance u/s 40A(3) - cash payment to the farmers/land owners exceeding permissible limits - payment made by the assessee to ten parties included the electricity expenses and vehicle repair expenses - HELD THAT:- By considering the judgment of Attar Singh Gurmukh Singh [ 1991 (8) TMI 5 - SUPREME COURT ] as decided in case of Anupam Tele Services [ 2014 (2) TMI 30 - GUJARAT HIGH COURT ] if section 40A(3) is read together with rule 6DD it will be clear that the provisions are not intended to restrict business activities. The payment by crossed cheque or crossed bank draft is insisted to enable the assessing authority to ascertain whether the payment was genuine or whether it was out of income from undisclosed sources. Considerations of business expediency and other relevant factors are not excluded. Genuine and bona fide transactions are not taken out of the sweep of the section. The Hon ble High Court further observed that provision of section 40A(3) and Rule 6DD are intended to regulate business transactions and to prevent the use of unaccounted money or reduce the changes to use black money for business transactions. Therefore, if the assessee has brought on record to establish genuineness of the transactions and payment as well as identity of the payee to the satisfaction of the AO then the benefit of Rule 6DD is available. Hon ble High Court has observed that section 40A(3) was intended to penalize the tax evader and not honest transactions and that is why after framing Rule 6DD(j) the CBDT steps in by issuing the circular dated 31st May 1977. Therefore, the disallowance u/s 40A(3) cannot be made without considering the business expediency and other relevant factors falling in the exceptions given in Rule 6DD of I.T. Rules. Decided in favour of assessee. Disallowance on account of salary/remuneration paid to the directors - AO question the justification and reasonableness of such huge amount paid two directors in view of the provisions of section 40A(2)(b) and asked the assessee to furnish the specific details supporting documentary evidences and finally made disallowance of 30% also confirmed by CIT(A) - HELD THAT:- For the year under consideration both directors are paying maximum marginal rate of tax and therefore, there is no revenue loss on this account. Accordingly following the earlier order of this Tribunal in assessee s own case [ 2023 (7) TMI 1322 - ITAT INDORE] adhoc disallowance made by the AO without determining the fair remuneration/salary paid to the directors having regard to their services rendered to the assessee company is not justified and the same is deleted. Appeal of assessee is allowed. 2023 (11) TMI 629 Deemed dividend u/s 2(22)(e) - two shareholders of the assessee company having 70% and 30% of shares respectively are registered shareholders of the lending companies - CIT(A) deleted the additions - HELD THAT:- We noted that the issue is fully covered in favour of the assessee as the assessee-company neither registered shareholder nor beneficial shareholder in its group concerns, wherein the unsecured loans or deposits was availed by assessee. This being factual position and the issue is being covered by Hon ble Madras High Court in the case of M/s. Ennore Cargo Container Terminal P. Ltd. [ 2017 (4) TMI 615 - MADRAS HIGH COURT ] and case of Pradip Kumar Malhotra [ 2011 (8) TMI 16 - CALCUTTA HIGH COURT ] Hence, we find no infirmity in the order of CIT(A) and hence, the same is affirmed. CIT(A)'s power for reopening of assessment u/s. 251 - Coming to assessee s appeal, we noted that the appeal of the assessee in supportive of the order of CIT(A), but only on the point that the CIT(A) cannot give direction to the A.O for reopening of assessment u/s. 251 of the Act. We find that this can be examined by the A.O at the time of taking a decision whether to reopen the assessment or not u/s. 251 of the Act. Hence, both the appeals, that of the assessee and of the Revenue, are dismissed. 2023 (11) TMI 628 Addition u/s 68 - unexplained cash credit - Allegation of Non discharge of onus of establishing the identity, genuineness creditworthiness of the loan creditor - HELD THAT:- Since the assessee has successfully discharged its onus of proving the identity of the loan creditor, which in the instant case duly registered with Ministry of Corporate Affairs, having PAN and had filed return of income as well. Further creditworthiness of the transaction is proved with the fact that they have been carried through banking channel and sufficient funds were available with the loan creditors to explain the amount of loan given and the genuineness of the transaction is proved with the fact that the assessee company is carrying out regular business activity and the loan was obtained at commercial rate of interest which was also repaid at a later date in subsequent year, interest was paid on the loans and tax at source has been deducted and duly reflected by the loan creditor in their income tax return. Therefore, we fail to find any justification in the action of ld. AO invoking the provisions of Section 68 - Assessee appeal allowed. Customs 2023 (11) TMI 627 Constitution of the Committee consisting of the Secretary (Revenue), the Commissioner of Customs and the Chairman and Managing Director of the respondent-Air India Limited - HELD THAT:- A report of the Committee signed by all the members on 3rd June, 2021 has been placed on record. The learned counsel appearing for the parties agree that these appeals should be disposed of in terms of what is recorded in the Minutes of the Meeting dated 3rd June, 2021. The appeals are disposed of by directing the parties to abide by what is recorded in the Minutes of the Meeting dated 3rd June, 2021 of the Committee constituted by this Court in terms of the order dated 15th October, 2020. 2023 (11) TMI 626 Recovery of dues - waterfall mechanism - HELD THAT:- Appeal disposed off with the clarification that the dues of the Central Board of Indirect Taxes Customs, Department of Revenue will be paid as per the waterfall stipulated under Section 53 of the Insolvency and Bankruptcy Code, 2016. 2023 (11) TMI 625 Control of Air pollution in and around capital - crop burning - notification banning use of Pet Coke as fuel which the Paper Manufacturing Association of India seeks to use - HELD THAT:- The Commission is called upon to submit urgently a report as to the steps being taken for control of air pollution in and around the Capital. List for this limited purpose on 31.10.2023. 2023 (11) TMI 624 Imposing antidumping duty on Nylon Filament yarn - Legality of the impugned notifications dated 13 January, 2012 and 19 January, 2017 issued by the Government of India in exercise of the provisions of Section 9A(5) of the Customs Tariff Act, 1975 - HELD THAT:- The Division Bench of this Court in Gima Manufacturing Pvt. Ltd. Anr. [ 2017 (8) TMI 630 - BOMBAY HIGH COURT ], wherein referring to the decision of the Supreme Court in Union of India Anr. vs. M/s. Kumho Petrochemicals Company Ltd. [ 2017 (6) TMI 526 - SUPREME COURT ] has held that wo things which follow from the reading of the Section 9A(5) of the Act are that not only the continuation of duty is not automatic, such a duty during the period of review has to be imposed before the expiry of the period of five years, which is the life of the Notification imposing anti-dumping duty. Even otherwise, Notification dated January 23, 2014 amends the earlier Notification dated January 02, 2009, which is clear from its language, and has been reproduced above, However, when Notification dated January 02, 2009 itself had lapsed on the expiry of five years, i.e. on January 01, 2014, and was not in existence on January 23, 2014 question of amending a non-existing Notification does not arise at all. As a sequitur, amendment was not to be carried out during the lifetime of the Notification dated January 02, 2009. The High Court, thus, rightly remarked that Notification dated January 02, 2009 was in the nature of temporary legislation and could not be amended after it lapsed. The law as laid down by the Supreme Court under Article 141 of the Constitution of India is the law of land. Once the principle of law has been laid down by the Supreme Court, it is binding on all the Courts in the country, which would also include this Court and the Tribunal. For such reason, the petitioner is not agreed with, when he submits that such a position in law is not likely to be considered in the proceedings which are pending before the CESTAT. In the present case the CESTAT is already seized of the matter. There are several grounds on facts and law which are raised - it is required to observe that the petitioner is not precluded from urging all contentions as raised in this petition before the Tribunal including to assert its contentions that by virtue of the principles of law as laid down by the Supreme Court, if applicable in the facts of the present case, the petitioner would become entitled to refund of duty. Petition disposed off. 2023 (11) TMI 623 Valuation of imported goods - enhancement of value based on NIDB data - it is submitted by appellant that appellant's import is under a contract and the contract was also not considered by the Adjudicating Authority - Violation of principles of natural justice - HELD THAT:- The entire basis for enhancement of the value is one NIDB Data. However, the said NIDB Data was not provided to the appellant during the Adjudication process, therefore the appellant did not get opportunity to defend their case countering the NIDB Data. It is admitted fact that the NIDB Data was enclosed as Annexure A to order-in-original and the same was not provided before passing the order to the appellant. Moreover, the appellant vehemently argued that the supply is under a contract. He also referred to the contract made with the supplier of imported goods. It is observed that the said contract was also not considered while passing the adjudication order. There is grave violation of principles of natural justice in adjudication process and said faulty adjudication was upheld by the Commissioner (Appeals). Therefore, in the interest of principles of natural justice and fair play in the adjudication, the matter needs to be remitted back to the Adjudicating Authority. Appeal allowed by way of remand. 2023 (11) TMI 622 Levy of penalty u/s 114 (i) of the Customs Act, 1962 on Merchant Exporter - smuggling of Red Sanders - mis-declaration of exported goods viz. food articles such as wafers, cumins seeds, far far, roasted matti, mamra etc. stuffed in container, which after sailing having recalled by the officers of DRI, contained 387 logs of Red Sanders - prohibited goods or not - HELD THAT:- It is a matter of record that One-time bottle seals of the central excise were affixed after stuffing of container at the ware house/factory of the appellant which has been found untampered upon examination and recovery of wooden logs prima facie appearing to be red sanders. On this backdrop, an apparent case of mis-declaration of exported goods by the appellant is appearing on record. In this regard, it is noticed that jurisdictional central excise officers namely Shri Devendra Singh Inspector and Smt. DaminiLakhia have signed examination report of the goods stuffed in which para 13 states net weight of the stuffed container as 16610 Kgs and gross weight 16820 kgs; the report also states Bottle seal bearing No. TAS278658 and central excise seal bearing No. 0031757; the officer of Customs namely Chavda A. R. has signed the shipping bills and permitted exports after verification of the shipping bills which also states the aforesaid details. The above-named officers of department were responsible for supervising the stuffing of goods and affixing the seal and verification of the cargo as per the shipping bill, however, they have not been made party to show cause notice nor they have been examined by the adjudicating authority in terms of section 138B of the Act. Similar observation of tempering of seal and substitution of cargo enroute are noticed in the case of NILESH KATIRA AND M/S. MARATHON CORPORATION VERSUS COMMISSIONER OF CENTRAL EXCISE ST, NAGPUR [ 2022 (3) TMI 238 - CESTAT MUMBAI] and in the case of MAHESHWARI ROCKS (I) PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [ 2009 (10) TMI 803 - CESTAT CHENNAI] . It is observed that miscreants looking for bonafide exporters for booking a container to load the red sanders from a regular exporter of low value food items to ensure smooth clearance is not unknown. The documentary evidences viz. stuffing of cargo in form of Annexure/examination report verified and signed by the central excise officers and verification of the shipping bill by the officer of Custom would prevail over the aforesaid oral statements. Consequently, no case of mis-declaration can be said to have been established on the part of appellant. Red Sanders have been found from the same container bearing no. GATU 8007720 and seal bearing no. TAS278658 and Excise Seal No. 0031757 found to be intact, is evidence of occurrence of illegal attempt to export red sanders, however, person who carried out the said act is not identified; particularly, in view of fact that penalty has also been imposed on person called Shailesh from Chennai who is stamped as kingpin in export of red sanders, however, investigation could not trace him. It is also observed that no evidence put forth as regards antecedents of the exporter of irregular exports in the past, nor there is any evidence of appellant s role in procurement of red sanders; as such there is no evidence of appellant s connection with such activities - Since the role of the appellant in the illegal attempt to export red sanders is not established with cogent evidence, penalty upon appellant, imposed under section 114(i), is liable to be set aside. Penalty set aside - appeal allowed. 2023 (11) TMI 621 Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - under-valuation of goods in import of furniture, lighting fixtures, wood treatment chemicals, resins, varnishes, lacquers etc., by two persons through mis-use of various Import-Export Codes (IECs) - taking on lease/rent from the IEC holders illegally for the purpose of duty evasion - violation of Regulations 11(a), 11(d), 11(e), 11(m) and 11(n) of CBLR, 2013 - HELD THAT:- The appellants CB had declared the description of the imported goods and value in the various B/Es for aforesaid imports as given in the invoices supplied by the respective importers. Further, the appellants were not aware of the under valuation of the imported goods as there was no evidence to the claim of the department that the appellants knew about undervaluation and further all incriminating documents were recovered only from the two persons namely S/Shri Purav Mehta and Pratik Mehta. Even at the time of clearance of goods for various importers in the past, the Customs assessing group and the Commissionerate did not find out any discrepancy in valuation or any misdeclaration. The action taken under CBLR, 2013 against the appellants CB is a follow up/ further action taken consequent to the customs offence case made out by DRI, MZU, and thus the present proceedings are only for the violations under the specific sub-regulations under CBLR, 2013. It is not the case of the Revenue that the description of the imported goods or classification of such goods under customs tariff was mis-declared in order to undervalue these imported goods. Further, any allegation of mis-declaration of imported goods in terms of its description or value could only be established, if the declaration in the Bill of entry has been different from the commercial invoice or other supporting documents. Violation of Regulation 11(d) ibid - HELD THAT:- There is definitely a mention that the parallel invoices which are incriminating in nature for subject goods were found out during the search proceedings conducted at the premises of S/Shri Purav Mehta and Pratik Mehta. However, at the same time it is also on record that neither the customs authority at the time of import not the appellants were aware of such under-valuation - the conclusion arrived by the Principal Commissioner of Customs (General) on this valuation issue in the impugned order is not supported by any evidence or factual detail, to fasten the liability for such under valuation on the part of the appellants CB and thus the impugned order stating that the appellants have violated Regulation 11(d) ibid is also not sustainable. Violation of Regulation 11(e) ibid - HELD THAT:- In the absence of any specific evidential document or factual record it cannot be stated that the information on under valuation have been withheld by the appellants, and more specifically under this issue of under valuation was brought on record only when the search operation of DRI, MZU was conducted at the premises of S/Shri Purav Mehta and Pratik Mehta resulting in recovery of parallel invoices and telegraphic transfer of foreign remittances. Thus, it is not feasible to sustain such a charge on the appellants that they did not exercise due diligence to impart correct information to their clients and thus the conclusion arrived at by the Principal Commissioner of Customs (General) is without any basis of documents or facts, in the impugned order with respect to Regulation 11(e) ibid, is not sustainable. Violation of Regulation 11(m) ibid - HELD THAT:- From the plain reading of the requirements under Regulation 11(m) ibid, it is clear that there should be some grounds of inefficiency or unavoidable delay in clearance of the imported goods - neither, is there is any such claim of undue delay nor any demonstration of inefficiency in clearance of goods by the appellants. Thus, there are no merits on the grounds and the conclusion arrived on this point by the Principal Commissioner of Customs (General) in the impugned order. Thus, the conclusion that the appellants have violated Regulation 11(m) ibid is not sustainable. Violation of Regulation 11(n) ibid - HELD THAT:- In the present case, the appellants CB had obtained the KYC documents and submitted the same to the Customs Department. Thus, there are no legal basis for upholding of the alleged violation of Regulation 11(n) ibid by the appellants in the impugned order on the above issue. Violation of of regulation 11(a) of CBLR, 2013 - HELD THAT:- The appellants could have been proactive in fulfilling their obligation as Customs Broker for exercising due diligence, particularly when the import documents were obtained from the importers through an intermediary in ensuring that all documents relating to imports are genuine, the KYC documents given by the importer are also genuine and that these are not fake or fabricated. Thus, to this extent we find that the appellants CB are found to have not complied with the requirement of sub-regulation 11(a) and thus forfeiture of security deposit for failure in not being proactive for fulfilling of regulation 11(a) of CBLR, 2013 alone, is appropriate and justifiable. There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants; and for forfeiture of security deposit, inasmuch as there is no violation of regulations 11(d), 11(e), 11(m) and 11(n) ibid, and the findings in the impugned order is contrary to the facts on record. However, in view of the failure of the appellants to have acted in a proactive manner in fulfillment of the obligation under sub-regulation 11(a) ibid, particularly when they have received the documents from importer through intermediary, it is justifiable to forfeit the entire security deposit given by the appellants, which would be reasonable - appeal allowed in part. 2023 (11) TMI 619 Recovery of duty from the Surety - Demand of duty from the appellant to the extent the main noticee fails to pay the duty - Levy of penalty u/s 117 of the Customs Act on director of the company - recovery of dues of the company can be proposed against the present appellant being whole time director of the company as he executed the bond on behalf of the company, or not - HELD THAT:- It is not disputed that Laser had imported the goods as a 100% EOU and obtained a Customs bonded warehouse licence for its premises. It is also not in dispute that the duties would have been payable but for the exemption available to the 100% EOUs. It is also not in dispute that the exemption is available to some conditions including the main condition that the importer manufactures and exports goods and thereby achieves the Net Foreign Exchange (NFE) requirement and that Laser failed to achieve it and therefore, requested to de-bond the goods. It is undisputed that in such a case, duties have to be paid as appropriate. Therefore, the duties were recoverable from Laser. It is undisputed that at the time of import of goods, the exemption was allowed subject to execution of bonds on which the appellant signed as the surety. Needless to say, if the main person fails to pay the amounts (duties in this case) due, they can be recovered from surety. The impugned order confirmed the demands only against the importer and the duties were ordered to be recovered from the appellant only to the extent that they could not be recovered from Laser - thus, insofar as the recovery of dues from the appellant is concerned, the order is legally correct and is also fair and balanced and it calls for no interference. Penalty of Rs. 1,00,000/- imposed on the appellant under section 117 of the Customs Act - HELD THAT:- Considering the facts recorded in the impugned order, (which are not disputed) that the appellant was the whole time director of Laser and was responsible for its operations and Laser violated section 58 of the Act and the appellant mislead the department, there are no reason to interfere with the penalty imposed on the appellant under section 117. Appeal dismissed. PMLA 2023 (11) TMI 618 Maintainability of Revision petition - impugned order is an interlocutory order - Allowing release of property in lieu of fixed deposit - Money Laundering - HELD THAT:- On going through the analysis in entirety, it is explicitly evident that the order passed by the Courts regarding handing over the custody of property would be considered as final order since they are finally adjudging the possession of the property. However, when the order is challenged on the basis of violation of law, without applying proper procedure and passed without jurisdiction, the revision certainly lies. Accordingly, the contentions of respondents regarding non-maintainability of this revision deserves to be and is dismissed. The learned Special Judge, in impugned order, has not mentioned anything with regard to the said manner specified in the Rules 3 and Rule 3A of PMLA Rule, 2016. Likewise, learned Special Judge has not clarified as to how the applicant coming into purview of definitions of ' claimants ' mentioned in Rule 2(b) of PMLA Rule, 2016 and first proviso of Section 8(8) of the PMLA, 2002. Virtually, the impugned order is a sear violation of the respective provisions of PMLA, 2002 and PMLA Rule, 2016. Thus, it can be safely held that the impugned order has been passed by the Special Judge without proper appreciation of the provisions of PMLA, 2002 and the PMLA Rule, 2016. As such, this order is suffering from gross infirmity and illegality. As a result thereof, this revision petition is allowed. 2023 (11) TMI 617 Money Laundering - case has been registered in continuation of a predicate offence which is registered for offence under Sections 120-B, 406 and 420 of IPC - It is contended by the petitioner that an offence under 2002 Act, cannot be dealt with before the scheduled offences have been tried and proved - HELD THAT:- In the present case, the petitioner himself has admitted his acquaintance with the 1st accused. The FIR in the predicate offence may not of course reveal the involvement of the petitioner. However, the statement obtained from the witnesses who were examined in connection with the predicate offence would show how the petitioner was introduced to the bank officials as person who is the authorised signatory of the business concern of the 1st accused. Though the learned counsel for the petitioner pointed out that the petitioner was not a Partner or a share holder in the business concern and the account was purely in the name of the enterprises, which is not connected with the petitioner, the case of the petitioner that he has no connection with the predicate offence under Section 3 of the 2002 Act, cannot be accepted. Despite the fact that the petitioner was not shown in any of the documents relating to the business concern of the 1st accused, the petitioner himself has admitted that substantial amount that was mobilised following the predicate offence alleged to have been committed by the 1st accused, was transferred to the accounts of the petitioner. The learned counsel for the petitioner submitted that the statement of the petitioner under Section 50(2) and (3) of 2002 Act, was given under coercion and hence, it cannot be the basis for prosecution. This Court is of the view that it is for the trial Court to decide the said issue and this Court cannot adjudicate this issue in the instant quash petition. This Court is unable to find any one of the circumstances indicated in the judgment of the Hon'ble Supreme Court to quash the complaint as against the petitioner. Therefore, finding that there is no merit in this quash petition, the Petition is dismissed. 2023 (11) TMI 616 Seeking grant of bail - Money Laundering - predicate offence - taking bribes, illegal commissions and unaccounted monies etc. in the State of Chhattisgarh - discharge of burden to prove - admissibility of statement under Section 50 of the PMLA - twin conditions under Section 45 of the PMLA, satisfied or not - HELD THAT:- On going through the statements recorded in various cases of Arunpati Tripathi and Vidhu Gupta wherein role of Arunpati Tripathi has been stated and specially in the statement of Vidhu Gupta the role of Arunpathi Tripathi has been elaborated. Likewise in the case of Nitesh Purohit, apart from the statement of Nitesh Purohit under Section 50 of the PMLA, Arvind Singh had stated the modus operandi which shows that for commission of Part A, B C, the money of the commission was distributed by nine shareholders, which shows that all the persons are influential one, few of them are part of system. In case of Trilok Singh Dhillon statement of Sanjhiv Fatehpuria Kamlesh Kumar Kesharwani was seen wherein the specific role played by Trilok Singh Dhillon has been explained - In respect of Anwar Dhebar all the witnesses have named him in their respective statements and attributed the role played. Section 45 of the PMLA envisages that when the Public Prosecutor opposes the application and the Court is satisfied that there are reasonable grounds for believing that the applicant is not guilty of such offence; and that he is not likely to commit any offence while on bail, the bail can be granted - after going through the statements of witnesses, filed with reply, the ways and means have been disclosed which inculpate the applicant, at this stage, the first part of condition of Section 45 that applicants are not guilty of offence of money laundering cannot be presumed. In the case in hand, the complaint has already been registered in pursuance of registration of scheduled offence, proceeds of crime has also been recovered and after enquiry the complaint has been filed and it is pending before the competent Court. Apart from it is not a case of defence that scheduled offence has not been registered with the jurisdictional police. Applicants have not been finally absolved of their offences by a Court of competent jurisdiction by an order of discharge, acquittal or quashing of a criminal case of a scheduled offence, therefore, the attempt to take a guard would be a misinterpretation. There is a legal presumption envisaged under Section 23 of the PMLA, which speaks that where money laundering involves two or more inter-connected transactions and one or more such transactions is or are proved to be involved in money laundering, then for the purposes of adjudication or confiscation under Section 8 or for the trial of the money laundering offence, it shall unless otherwise proved to the satisfaction of the Adjudicating Authority, be presumed that the remaining transactions form part of such inter-connected transactions - there is a reverse burden of proof under Section 24 of the PMLA that in the case of a person charged with the offence of money-laundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering. Thus, on the basis of conclusion laid down by the Supreme Court in the matter of Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ], it is evident that action taken under the PMLA falls under the definition of enquiry . The enquiry is like a judicial proceeding (Section 50 of the PMLA) and further since the authorities are not police officers, the statement of person including accused recorded during the enquiry can be seen at the stage of grant of bail and presumption can also be made by the Court if the statement so recorded contains facts constituting the offence of money laundering as envisaged under Section 3 of the PMLA. The present is not a fit case to grant bail to the applicants - all the bail applications are liable to be and are hereby rejected. Service Tax 2023 (11) TMI 615 Rejection of Refund Claim - Exemption from payment of Service Tax towards GTA expenses - transportation of food stuff - reverse charge mechanism - belated filing of the refund claim - Refund claim being hit by time bar in terms of Section 11B or not - violation of principles of unjust enrichment - HELD THAT:- The co-ordinate Benches in various cases have held that refund claims filed on account of Service Tax paid by mistake, are not governed by the time limit specified under Section 11B - reliance can be placed in COMMISSIONER OF CENTRAL EXCISE (APPEALS), BANGALORE VERSUS KVR CONSTRUCTION [ 2012 (7) TMI 22 - KARNATAKA HIGH COURT] and M/S. 3E INFOTECH VERSUS CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, COMMISSIONER OF CENTRAL EXCISE (APPEALS-I) [ 2018 (7) TMI 276 - MADRAS HIGH COURT] . Coming to the point raised by the Learned AR with regard to non-addressing of the unjust enrichment by the lower authorities, as observed in the previous paragraphs, the Adjudicating Authority has failed to address this issue. No further Appeal was filed by the Department before the Commissioner (Appeals). The Commissioner (Appeals) has upheld the order passed by the Adjudicating Authority. The Revenue has not filed any Appeal by their grievance, if any about non-addressing of the unjust enrichment issue. This being so, when the Department itself has not addressed this issue at lower stages nor agitated by way of proper Appeal, such submissions made during the Final Hearing cannot be entertained by the Tribunal at this juncture. Therefore, the objection with regard to Unjust Enrichment cannot be sustained. Even otherwise, in the cited decision of the Tribunal in the case of M/S CREDIBLE ENGINEERING CONSTRUCTION PROJECTS LTD. VERSUS COMMISSIONER OF CENTRAL TAX, HYDERABAD GST [ 2022 (9) TMI 844 - CESTAT HYDERABAD] , it is held that Section 11B Provisions are not applicable which would also include the provisions of Unjust Enrichment under Section 11B also not being applicable in respect of such refund cases. Appeal allowed. 2023 (11) TMI 614 Levy of service tax - reverse charge mechanism - payments made by the appellant to USFDA as fees for obtaining approval - time limitation - penalty - HELD THAT:- On identical matter in the case of Vidhi Dyestuff Mfg. Ltd. versus Raigad [ 2016 (4) TMI 111 - CESTAT MUMBAI ], a bench of this Tribunal held in similar set of facts the Tribunal in the case of M/S. KG. DENIM LTD. VERSUS CCE, SALEM [ 2014 (9) TMI 544 - CESTAT CHENNAI ] had held that payment of charges for textile processing to M/s Testex, Swiss will not fall under the category of reverse charge mechanism. The ratio of the said judgment squarely covers the issue in the case in hand. As is evident from paragraph 3 of CBEC Circular No. 89/7/2006-ST dated 18.12.2006 even according to the Board, if an authority performs a service, which is in the nature of statutory activity and a fees is levied for the purpose it does not fall within the ambit of a taxable service, but if a service is performed by the authority, which is not in the nature of statutory activity it will be exigible to service tax. There cannot be any two opinions that USFDA is a statutory authority mandated by the US laws to regulate the import of pharmaceuticals into the country. It is the counterpart of the Drugs Controller General of India without whose approval pharmaceuticals manufactured abroad cannot be imported into India. Therefore, any fees paid to obtain the approval will get squarely covered even as per the CBEC Circular. The distinction drawn by the lower authorities between statutory authorities within India and the statutory authorities outside India has no legal basis. As the issue is found in favour of the appellant on merits itself, the submissions on the limitation and penalty need not be examined - Appeal allowed. 2023 (11) TMI 613 Classification of services - Clearing and Forwarding Agents Services or Custom House Agent service - Appellants are undertaking work of facilitating of shipping of goods through various Shipping Lines or Airlines - HELD THAT:- The appellants have been paying service tax on the charges recovered by them for undertaking work of custom clearances from their clients. The customs clearance work was being done by them through the some other person who are appropriately registered as custom house agent with the customs department - the activity undertaken by the appellant cannot be categorized under Clearing And Forwarding Agent Service since in the appellants own case this tribunals in GUDWIN LOGISTICS VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2011 (12) TMI 262 - CESTAT, AHMEDABAD ] has held that the activity under taken by the appellant do not fall under the category of Clearing And Forwarding Agent Service. Thus, the activity undertaken by the appellant do not fall under the category of clearing and forwarding service. The impugned Commissioner (Appeal) s order is set aside as it has traveled beyond the charges elicited in the show cause notice and in the impugned Order-In-Original - appeal allowed. 2023 (11) TMI 612 Levy of Service Tax - handling charges received by the Appellant and recovered as part of goods sold, subjected to VAT, Business Auxiliary Services or not - paints procured by the Appellant and used for repairing activities, management, maintenance and repair services or not - design charges paid by the Appellant to the companies outside India, under reverse charge, consulting engineering service or not. Business Auxiliary services - Management, maintenance and repair service - HELD THAT:- First of all, benefit of Notification No. 12/2003 would be available to the Appellant since, clearly in the present case invoice has been raised and VAT has been paid including on handling charges. As submitted by the learned Counsel, there is no basis to come to the conclusion that the value shown in the invoice should be equal to the cost and cannot be having any other additional element/ margin - In this case, there is no dispute that the Appellants undertake maintenance and repairs of ships and that is the main activity. When that is the main activity, procurement of paint would be for the purpose of providing the service of MMRS and therefore procurement alone, may not be chargeable separately for tax. Hence, this stand cannot be sustained. Consulting Engineer service - HELD THAT:- The Commissioner has recorded finding that the amount was paid in 2006-07, but there is no specific finding that the services were also received in 2006-07. In the absence of such finding and also in view of the submission made by the learned Counsel that service was received prior to 18.04.2006, it is found that Appellant has made out a case for deletion of demand, as Sec 66A was brought on statute w.e.f. 18.04.2006. Appeal allowed. 2023 (11) TMI 611 Extended period of limitation - export of service under Joint Venture - revenue neutrality - Extended period of limitation - suppression of facts or not - HELD THAT:- The Appellant has provided services, being BAS, in Joint Venture or partnership, to M/s MS of Romania. As the service has been provided in respect of marketing of products manufactured by M/s MS of Romania, the Joint Venture partner - M/s KSE cannot be the recipient of such service in the first instance. Further, the element of partnership is present in the MoU between the Appellant and M/s KSE, as they have agreed to share the profits from the commission earned by providing service to the foreign principal located at Romania. Further, it is an admitted fact that the service in question has been received by M/s MS of Romania who have paid for the same in convertible foreign exchange - it is further held that it does not make any material difference that the Appellants have received their share of commission through M/s KSE. Extended period of limitation - suppression of facts or not - HELD THAT:- There is no element of fraud, suppression, misdeclaration, etc. The Appellant was registered with the Department and have disclosed such turnover or receipt of commission for BAS, and they have rightly claimed the same to be exempt, being export of service. Accordingly, extended period of limitation is not invokable, in the facts and circumstances of the case. The impugned order set aside - appeal allowed. 2023 (11) TMI 604 Issuance of Writ of Mandamus directing the Respondent to consider the Petitioner's Rectification Application - seeking to pass an appropriate order by taking into consideration Section 74 of Finance Act 1994. The contention of the petitioner is that the petitioner has filed a Rectification Application, dated 24.06.2023, but the respondents have not considered the same. HELD THAT:- Without going into the merits of the case, this Court simply directing the respondents to consider the petitioner's Rectification Application, dated 24.06.2023 in accordance to law, within a period of six weeks from the date of receipt of a copy of the Order. This Writ Petition is allowed. Central Excise 2023 (11) TMI 620 Time Limitation - Cenvat entries were properly reflected in the ER-1 Returns and Stocks and Cenvat details were properly recorded in the RG 23 A Part 1 and Part II Records or not - suppression of facts or not - reversal of CENVAT Credit in respect of five Bills of Entry - demand alongwith interest and penalty - HELD THAT:- Admittedly the Range Officials of Pansukra Unit have certified on 20/05/2010 and on 10/06/2011 that no input materials under the Bills of Entry in question were received by that unit nor any Cenvat Credit was taken by them. This combined with the fact that the Appellant unit at B. T. Road has mainlined full records towards receipt and issue of the materials would clarify that the Appellants had received the imported goods at their B. T. Road unit and were correct in taking the Cenvat Credit based on the Bills of Entry. The endorsement behind the Bills of Entry can be ignored as a unintended clerical error. Further it is seen that the Show Cause Notice has been issued after more than 3 years of Cenvat being taken by the Appellant. When Cenvat taken has been reflected in the ER 1 Return and non-taking of Cenvat at Pansukra unit has been verified and certified by the Range Superintendent, the Department cannot allege any suppression on the part of the Appellant. Therefore, the impugned order is not sustainable even on account of limitation. Appeal filed by the Appellant allowed both on merits as well as on account of limitation. 2023 (11) TMI 610 Seeking approval of price list by including the JPC Cess in the assessable value - belated SCN - HELD THAT:- It is seen that the Price List was provisionally assessed on 10/3/1992 and was Finally Approved on 11/12/1992. The Assistant Commissioner has passed an Order allowing deduction of JPC from the assessable value. The Appellant has followed this Order for their clearance during March 1992 to May 1993. In the absence of any Stay or adverse Order against this OIO during the period March 1992 to May 1993, it has to be concluded that the Appellant has followed the finalized price list which was available with them during that period. This being so, the Commissioner (Appeals) has set aside the OIO dated 11/12/1992 vide his OIA dated 19/04/1994. On going through this OIA, it is seen that he has given direction to the Assistant Commissioner to approve the price list after adding the JPC Cess. The Department has not brought out any evidence that this was done by the Assistant Commissioner by passing a suitable order to this effect. The Show Cause Notice dated 22.02.1996 was issued in belated manner after about 3 years 8 months from the date of initial finalization done by AC on 11/12/1992. If it is taken that the Department had challenged this OIO and the price list approved by the Assistant Commissioner was finalized only after the OIA was passed on 19/04/1994, even from this date of OIA i.e. 19/04/1994, there is delay of more than 22 months in issuing the Show Cause Notice. After going through the relevant paragraph of the judgment of the Hon ble Supreme Court, in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] , it is seen that the Apex Court has made it clear that what is applicable to the assesse is made equally applicable to the Revenue also. Therefore, the Revenue cannot take the pleading that the provisions of Section 11A are not applicable to them in case of finalization of provisionally assessed RT-12 Returns. There are force in the Appellant s arguments that the Show Cause Notice issued on 22/02/1996 has to be assumed as premature if the RT-12 assessment date is taken as the date of final assessment - the impugned OIA is legally not sustainable - appeal allowed. 2023 (11) TMI 609 Valuation - related person - inter-connected undertakings - seller and alleged buyers of the goods are related persons in terms of Section 4(3)(b) of the Central Excise Act or not - mutuality of interest - HELD THAT:- It is clear that only if the parties are related in terms of Clause (ii), (iii), (iv) of Section 4(3)(b) of Central Excise Act, they would be treated as related persons - In the present matter, it is found that show cause notice alleges that the Respondent and buyers are related in terms of sub-clause (i) and (iv) of Section 4(3)(b) of the Central Excise Act, 1944. In the present matter it is not disputed by the respondent that the respondent and other buyers are related in terms of sub-clause (i) of Section 4(3)(b) of the Central Excise Act 1944 as interconnect undertaking and impugned show cause notice only rely the clauses (i) and (iv) of the Section 4(3)(b) of the Central Excise Act, 1944, therefore the Ld. Commissioner in impugned order in-original has correctly examined whether the Respondent and other buyers are related in terms of sub-clause (iv) of Section 4(3)(b). In the present matter it is rightly pointed out by the Ld. counsel that the argument of the revenue that the respondent and other buyers are related in terms of sub-clause (ii) or (iii) of Section 4(3)(b) would be beyond the scope of show cause notice inasmuch as the same is never alleged in the show cause notice. Hence, the same is also not acceptable at this stage - In the facts of the present case, the relationship is based on the fact that when Sub-Clause (ii) and (iii) were not invoked, the facts related thereto were also neither required to be examined nor the Adjudicating Authority has rightly examined. Therefore, by making ground of Sub-Clause (ii) (iii) holding the appellant and their buyer are related person is completely beyond the SCN as well as the impugned order, which is not permissible. The Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS M/S BALLARPUR INDUSTRIES LTD [ 2007 (8) TMI 10 - SUPREME COURT ], has held that the SCN is the foundation in the matter of levy and recovery of duty, penalty and interest. As per Rule 9 and 10 of Central Excise Valuation Rules, 2000 it is clear that Rules shall apply only when the goods are sold through person who are related in terms of sub-clause (ii), (iii) or (iv) of clause (b) of Section 4 (3) of the Act. Further the provisions of Rules also suggest that merely because buyer is interconnected undertaking that alone is not sufficient for holding as related person - the show cause notice and revenue have not brought any material to establish that the relationship between respondent and buyers company are one of the relationship as prescribed under sub-clause (ii), (iii) or (iv) of Section 4(3)(b) of Central Excise Act therefore, even if it is accepted that the buyers company are interconnected undertaking of the respondent company it cannot be treated as related person in terms of Section 4(3)(b) in absence of relationship as specified under sub-clause (ii), (iii) or (iv) of Section 4(3)(b). The respondents and the buyers are also not covered by Sub-Clause (iii) of Section 4 (3)(b) of Central Excise Act 1944. In terms of Sub-Clause (iii) of Section 4(3)(b) a person shall be deemed to be related if amongst them the buyer is a relative and distributor of the assessee or distributor of such distributor - only natural person can be treated as relatives since the first condition itself of Sub Clause (iii) is not satisfied, the 4 buyers and the respondent cannot be considered as related under Sub-Clause (iii) of Section 4 (3)(b). In any case, the respondent and the 4 buyers are not holding or subsidiaries Companies of each other, therefore the second condition of Sub-Clause (iii) is also not fulfilled in the present case. This issue has been considered time and again in various judgments. The Hon ble Supreme Court has considered the issue similar in the present case in UNION OF INDIA OTHERS VERSUS ATIC INDUSTRIES LTD. [ 1984 (6) TMI 51 - SUPREME COURT ]. In this case, M/s Atik Industries was manufacturing dyes. The entire production was sold to two companies namely, Atul products Ltd and ICI India Ltd. Atul products was holding 50% of share capital in M/s. Atik Industries Ltd ICI, UK was holding balance 50% share capital of Atik Industries. ICI India ltd was a wholly owned subsidiary of ICI, UK since 1978, shareholding of ICI, UK in ICI India was reduced to 40 % (shareholding of iCi, UK in Atik Industries continued to be 50%). There is no mutuality of interest in the present case between the respondent an the 4 buyers and the relationship is not covered by Sub-Clause (iv) of Section 4(3)(b) of Central Excise Act 1944S but only Sub-Clause (i) of Section 4(3)(b) of Central Excise Act 1944. The transaction value of the goods between respondent and the so-called interconnected undertaking is correct valuation and the same cannot be disturbed, therefore, there are no merits in the appeal of revenue. The impugned order passed by the Adjudicating Authority is correct, legal and the same has no infirmity - appeal of Revenue dismissed. 2023 (11) TMI 608 Denial of CENVAT Credit - paper transaction - issuing invoices without supplying any goods - who paid the transportation charges? - HELD THAT:- On the basis of evidences placed by the Revenue on record, it is held that the appellant assessee was involved only in paper transactions by taking invoices without any receipt of the goods in their premises and thereafter, enabling the recipient of the appellant assessee to take cenvat credit without proper receipt of the goods. The Revenue has made out a case for denial of cenvat credit to the appellant assessee - there are no infirmity in the impugned order and the same is upheld - the appeal filed by the appellant assessee is dismissed. CST, VAT & Sales Tax 2023 (11) TMI 607 Opening of assessment orders - Section 49(3) of the Chhattisgarh Value Added Tax Act, 2005 - HELD THAT:- It would be worthy to mention here that the provisions of the VAT Act of Orrisa and Chhattisgarh are not pari-materia whereas the provisions of VAT Tax of Madhya Pradesh and Chhattisgarh are analogous. In the present case, subsequent to the assessment order dated 29.12.2015; the petitioner preferred the appeals before the Appellate Deputy Commissioner, and those appeals were allowed vide orders dated 03.08.2017, 08.08.2017 and 09.08.2017, respectively. Surprisingly, the revenue did not contest the Appellate Deputy Commissioner's orders for a significant period and vide orders dated 29.01.2019 and 05.11.2018, show cause notices were issued to the petitioner while exercising the power under Section 43(3) of the Act, 2005. However, it is worth noting that the orders passed by the Appellate Deputy Commissioner were not challenged before the Tribunal under Section 48(2) of the Act, 2005 and there is no explanation in this regard. Consequently, in the opinion of this Court, the notices issued by respondent No. 2/Commissioner exercising the power under Section 49(3) of the Act, 2005, are legally unsustainable in the eyes of the law. The impugned notices dated 05.11.2018 and 29.01.2019 issued under Section 49(3) of the Chhattisgarh Value Added Tax Act, 2005 by respondent No. 2-Commissioner, Commercial Tax, Raipur are hereby quashed - Petition allowed. Indian Laws 2023 (11) TMI 606 Seeking compliance with the Memorandum of Understanding - exercise of power under Rule 1 of Order XL of the Code of Civil Procedure, 1908 - HELD THAT:- The order passed by the Civil Court in Bihar was appealable under Order XLIII of the CPC. Instead of availing the remedy of the appeal, the first respondent took the extraordinary step of invoking the jurisdiction of the Bombay High Court under Article 226 of the Constitution of India by specifically challenging the order of appointment of the Receiver passed by the Civil Court in Bihar - the first respondent ought not to have filed such a petition when a statutory remedy was available. Moreover, the High Court ought not to have entertained the Writ Petition. The jurisdiction of the High Court under Article 226 is no doubt very wide. But the propriety and judicial discipline required the High Court not to entertain such a petition. The High Court ought to have relegated the first respondent to the statutory remedy while possibly granting a limited protection. A statutory remedy was available to the first respondent before the concerned Court in Bihar. If the High Courts start entertaining Article 226 petitions for challenging the orders passed by the Civil Courts in other states, it will lead to a chaotic situation. Therefore, there are no manner of doubt that the impugned order will have to be set aside. Also, the appellant has indulged in the suppression of material facts while persuading the Trial Court to pass a drastic order for appointing a Court Receiver. There is another feature of the case. In the written statement filed by the defendants in the suit filed by the appellant, an issue of maintainability was raised. The order of the Trial Court noted that the first respondent had mortgaged the properties. The Trial Court did not pay attention to the issue of maintainability as well as the issue of territorial jurisdiction. An order appointing a Court Receiver has very drastic consequences. As noted earlier, such a drastic order was casually passed by the Civil Court. The impugned order dated 27th September 2023 passed by the Bombay High Court set aside - Writ Petition No.7064 of 2023 dismissed on the ground that a statutory remedy was available to the first respondent and therefore, the Bombay High Court ought not to have entertained the Writ Petition under Article 226 of the Constitution of India for challenging the order passed by a Civil Court in another State - appeal allowed in part. 2023 (11) TMI 605 Dishonour of Cheque - accused is before this Court contending that the findings of both orders are contrary to the well settled principles of law and is liable to be set aside - rebuttal of presumption - HELD THAT:- Having regard to the fact that accused admit that the cheque in question is drawn on his account maintained with his banker and it bears his signature, presumption under Sections 118 and 139 of N.I. Act is attracted to the effect that the cheque was issued towards legally recoverable debt or liability. Therefore, the initial burden is on the accused to prove that no consideration has passed i.e, the cheque was not issued towards repayment of any legally recoverable debt or liability and the circumstances in which the cheque has reached the hands of the complainant. Only after the accused rebut the presumption, the burden shifts on the complainant to prove his case, including passing of consideration and his financial capacity to lend such huge sum of money at the relevant point of time. The accused has stepped into the witness box and deposed that the cheque in question as well as the demand Promissory note were given to the son of complainant in connection with the chit fund business run by him and misusing the same, the complainant has filed this complaint. Of course the cross-examination of accused establish the fact that during 2013, he had taken loan of Rs. 16 lakhs from Vijaya Bank and he is repaying the same. Though the demand Promissory Note state and also it is pleaded by the complainant that accused had agreed to repay the said sum along with interest at 2% p.m., there is no explanation for not making any attempts to recover the interest. Both trial Court as well as the Sessions Court has failed to appreciate the oral and documentary evidence placed on record by the complainant in the light of specific defence taken by the accused. Simply on the basis that presumption under Sections 118 and 139 of N.I. Act, they proceeded to convict the accused. The findings of the trial Court as well as the Sessions Court are contrary to the evidence placed on record and as such perverse. It is erroneous and calls for interference by this Court. The Criminal Revision Petition filed under Section 397 r/w 401 Cr.P.C is allowed.
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