Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 22, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Refund of GST - Scope of the contract terms - post GST era - Mere replacement of Sales Tax, Excise Duty, VAT and other similar taxes by the GST regime does not change such parameters in any manner - Price escalation, being not provided for in the contract, cannot be read into the contract just because a new taxation regime has replaced the earlier one. - Petition dismissed - HC
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Levy of GST on Human Hairs - Action of Human Hairs by Devasthanam - Maintainability of writ petition - Scope of tender / auction notice - Outright sale or contract for collection of hairs - Writ petition dismissed on various grounds - HC
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Refund of IGST - DTA unit supplying goods / services to SEZ - supply for authorized operation or not - Refund cannot be denied for inordinate delay in obtaining the endorsements - the respondent-Department cannot insist that that endorsement must state that goods supplied, were for authorized operations, and such other endorsement - HC
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Condonation of delay in filing appeal before the first appellate authority - delay on medical grounds - reasonable cause - Violation of principles of natural justice - the delay of 112 days in filing the appeal is condoned subject to the petitioner depositing 20% of the disputed tax - HC
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Classification of goods - HSN Code - rate of tax - Urban Roots - Bio kavach - Immunity Booster, Avinja 7 - This is a commodity which is not specified in Schedule I, II, IV, V or VI of the Notification No. 01/2017 dt. 28.06.2017 and therefore would fall in residuary entry at Serial No. 453 of Schedule III and attract the tax at the rate of 9% CGST & 9% SGST each. - AAR
Income Tax
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Statement of Financial Transaction (SFT) for Mutual Fund Transactions - Frequency for submitting the statement and Minimum period of holding for different assets classes, modified - Notification
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Statement of Financial Transactions (SFT) for Depository Transactions - Method for computation of "The Estimated Sale Consideration for the debit transaction" and Frequency for submitting the statement of financial transactions data modified - Notification
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Reopening of assessment - Scope of new section/regime u/s 148A - Sense that one gets upon a holistic reading of the backdrop in which the new regime for reopening assessments was enacted is that where escapement of income was below Rs. 50 lakhs, the normal period of limitation, i.e., three (03) years was to apply. In comparison, the extended period of ten (10) years would apply in serious tax evasion cases where there was evidence of concealment of income of Rs. 50 lakhs or more in the given period. - HC
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Offence punishable u/s 276CC - mens rea of the petitioner - non filing of the income tax return for the assessment year 2012-2013 - It is for the petitioner to rebut the presumption under Section 278E of the Income Tax Act which provides culpable mental state of mind of the accused - The mens rea of the petitioner is clearly established by the respondent - HC
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Unexplained investments/ amounts deposited in the foreign bank account - Amount belong to Nephew of the assessee - The assessee being an agriculturist and only having a small holding of land apparently could not be in possession of such huge amounts, which were also in foreign currency. Nothing as such was produced on record that the same was transferred from India where he was doing some business. It is neither the case of the revenue that the amounts were credited from his income while doing business at abroad - Additions were rightly deleted by ITAT - HC
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Seeking permission to file Modified return u/s 170A filled post amalgamation scheme sanctioned/approved by NCLT - Due date of filing of ITR has already expired - Apprehension of the revenue that, it could not process the return as it would be time barred - Direction issued with liberty to make scrutiny assessment within stipulated time frame - HC
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Addition u/s 56(2)(viib) r.w. Rule 11UA - Deemed public company - Issue of preference shares at premium to its holding company - the assessee company qualifies as a subsidiary of Allcargo Logistics Ltd. and will be regarded as deemed to be public company. Therefore it will not come within the ambit of section 56(2)(viib) of the Act. - AT
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Accrual of income - Recognition of income - Additions based on Final Projections while making application u/s 197 - Actual financial results were to be accepted. Assessee was unable to complete the project it had estimated and accordingly, it has recognized revenue only for the portion of the work that has been completed and certified. The same, in our considered opinion, is correct methodology. - AT
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Penalty u/s 271(1)(c) - difference between the income declared in the return by the assessee under the provisions of section 115JB of the Act and income assessed by the Ld. AO - No penalty can be levied on the addition/disallowance made on the basis of retrospective amendment under the law.- AT
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LTCG - Deduction u/s 54 on investment made in five house properties - Amendment made available on the statute, vide the Finance (No. 2) Act, 2014 w.e.f. 01.04.2015 pursuant whereto the term “a residential house” had been substituted by “one residential house in India”, rather supports the fact that the restriction of making the investment in only one residential house had been made available on the statute only with effect from A.Y. 2015-16, and as such cannot be extended to the years prior to that. - AT
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Reopening of assessment - The onus lies on the Revenue to point out that there is a failure on the part of the assessee to disclose material facts fully and truly indeed. The onus placed by 1st proviso has been clearly overlooked in the instant case. It is apparent that Pr.CIT has also acted perfunctorily while granting approval sought by AO under the shelter of Section 147(b) as pointed out on behalf of the assessee. - AT
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Estimation of notional interest income for making the disallowance out of interest expenditure - The ld. AO ought to have not over emphasized about the conduct of the assessee for not charging the interest. It is just a normal business incident and in the absence of any interest income, according to the assessee, the notional interest income cannot be estimated for making the disallowance out of interest expenditure. We allow this ground of appeal and delete the addition. - AT
Customs
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Power of assessing authority to assess the IGST u/s 28 of Customs Act - Import of ‘Wet Dates’ (Processed dates) - Claim of exemption from payment of IGST - Section 28 therefore is not only in respect of duty which means customs duty but, it is in respect of duties which may be applicable on imported item/goods. - Writ petition dismissed - HC
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Adjudication of SCN after considerable delay - barred by limitation in terms of Section 28(9) of the Customs Act, 1962 or not - it was on account of non-appearance of the petitioner that the matter was kept adjourned and the same was not concluded - since the petitioner itself has taken time, after issuance of notices for filing reply, the delay cannot be attributed to the respondent for not adjudicating show cause notices. - HC
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Validity of Show Cause Notice (SCN) = Jurisdiction of Joint Commissioner of Customs (Port) to issue SCN u/s 124 of the Customs Act, 1962 - Item imported is free or not - No relief - Petitioner directed to submit the reply and let the SCN be adjudicated first. - HC
DGFT
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Import of Gold - Valid India-UAE TRQ holders as notified by IFSCA can import gold through IIBX against the TRQ and can obtain physical delivery of the same through IFSCA registered vaults located in SEZs as per the guidelines - Notification
Service Tax
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Nature of transaction - Classification of services - Supply of Tangible Goods Services or GTA Services - the same transaction could not be levied to service tax both at the hands of the service recipient and the service provider under different category of services. In this case, if these transactions were to be taxed under the category of SOTG, as has been held by the impugned order entire amount paid by the service recipient under the category of GTA services on the reverse charge basis should have been refunded - Demand set aside - AT
Central Excise
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CENVAT Credit - input service - the appellant would be entitled to avail CENVAT credit of the input service received in relation to renovation or repairs of factory and merely because w.e.f. 01.04.2011 the construction of a building or a civil structure or a part thereof has been excluded from the definition of input service would not mean that any service used in relation to renovation or repairs of factory would stand excluded from the definition of input service. The exclusion part would cover constructions at the time of setting up of the plant and would not include the repairs or renovation works. - AT
Case Laws:
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GST
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2023 (11) TMI 778
Refund of GST - Scope of the contract terms (tender) - post GST era - Refund of the payments made by way of Goods and Services Tax (GST) by the petitioners in respect of the different work orders - effective alteration in the contract between the parties or not - who is liable to pay GST? - HELD THAT:- The price quoted as per the rate contract and accepted by the petitioners/suppliers was inclusive of all duty, levies such as VAT, Excise Duty, etc., and there shall not be any deviation permissible on any ground. Merely because the VAT/Excise Duty has been abolished which was there at the relevant time when the prices were quoted and the rate contract was executed and thereafter has been substituted by the GST, the petitioner cannot be permitted to change the rate contract/rates and cannot be permitted to have the price revision. Hence, from the perspective of the contract between the parties, it is the petitioner/supplier who is to bear taxes in the GST regime as well - Even considering from a different perspective, the petitioner also has a statutory obligation under the GST Act, as a supplier, to bear GST. In the present case, no new liability is being imposed on the petitioner which was not contemplated in the original contract and the tender document. The petitioner was clearly to bear VAT, Sales Tax and similar other statutory levy, including all indirect taxes payable for the service chain. The expression similar other statutory levy/cess in the relevant clause of the contracts makes it abundantly clear - The GST regime has only introduced a common taxation for the entire supply chain which subsumes and does not add to the previous taxes payable on such count. Hence, the argument that the petitioner is saddled with a new liability beyond the contract is untenable in law and in fact. Thus, it is the petitioner who is liable to pay the GST - In the present case, there is no reason to deviate from the literal rule of construction, since the plain meaning of the relevant taxation clause in the contracts is unambiguous. Secondly, even if the autonomy of the contractual parties and their joint intent is gathered, the unerring intent was for the contractor/bidder to bear all indirect taxes such as VAT, Sales Tax and the like, which has been merely replaced by the GST Act now. Essentiality of price was never an issue between the parties from the inception and, since not taken at the inception of the contract or the tender but only subsequently, cannot be permitted to be agitated by the petitioner in the circumstances of the present case at all. All commercial contracts obviously include an element of calculated business risk which includes the enhancement or reduction in taxes. Even if the petitioner argues that the taxes have been enhanced, the same was factored into the original clauses of the contract. Mere replacement of Sales Tax, Excise Duty, VAT and other similar taxes by the GST regime does not change such parameters in any manner - Price escalation, being not provided for in the contract, cannot be read into the contract just because a new taxation regime has replaced the earlier one. There is no scope of directing refund of the GST paid by the petitioner in respect of any of the work orders/contracts involved in the four connected writ petitions - Petition dismissed.
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2023 (11) TMI 777
Maintainability of writ petition - Scope of tender / auction notice - Levy of GST on Human Hairs - Action of Human Hairs by Devasthanam - Nature of transaction - Outright sale or contract for collection of hairs - Legality and constitutional validity of insisting to pay an amount of Rs. 25,23,638/- towards GST Payment @18% in favour of the 4th respondent for collection of human hair from the 3rd respondent - direction to 3rd respondent to handover the human hair collected by the petitioner - HELD THAT:- Undisputedly there was an auction notification issued so far as collection of human hair from premises of the respondent No. 3 and the tender was finalized in the name of the petitioner herein. In terms of Annexure P1, tender condition No. 25, it was clear that the person in whose name the bid would be finalized would be liable to make payment of GST @ 18%. The petitioner quite aware of the said condition and with wide open eyes, participated in the tender process and quoted his price. The bid was finalized in favour of the petitioner as he was the highest bidder. In terms of the finalization of the bid, the petitioner started collecting human hair from the effective date i.e. 01.08.2021 and did collection for more than eleven (11) months. During the said period, the petitioner never objected the tender condition of requiring payment of 18% GST. It was only when the tender period was coming to a fag end, the petitioner raised an objection with the respondent No. 3 so far as their claim for 18% GST is concerned. There is sufficient force in the arguments of the learned counsel appearing for the respondent-Department so far as the objection on the maintainability of the writ petition of the petitioner is concerned. Now at this belated stage after having participated in the tender process, wherein the clause of payment of 18% GST was categorically envisaged, the petitioner having accepted, participated in the tender process, quoted his price, declared successful and having collected human hair from the premises of the respondent No. 3 in terms of finalized tender conditions, the petitioner now cannot be permitted to turn around and question the payment of GST or any of the tender conditions. What is also relevant at this juncture to take note of the fact is that the respondent No. 3 Devasthanam have filed their Counter and have not disputed the levy of GST on the human hair that was being collected from the temple premises. On the contrary, respondent No. 3 has categorically stated that in fact there is no outright sale which is being carried out by the respondent No. 3 - It is only a right to collect human hair has been offered in the tender and which has been accepted by the petitioner and thus the nature of function performed by the petitioner and the respondent No. 3 is not one which could be brought within the ambit of sale of goods, but is one within the ambit of petitioner providing services to the Devasthanam for collecting of human hair that falls in the temple premises. In the light of the stand of the respondent No. 3 also, the case of the petitioner gets weakened. There are no merits in the present writ petition - petition dismissed.
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2023 (11) TMI 776
Exercise of Jurisdiction by Centre and the State simultaneously - Section 6 of the CGST/SGST Act - HELD THAT:- Issue notice. Issue notice of the stay application also. Till the next date, the respondents shall not pass any final order in the proceedings initiated pursuant to the show cause notices dated 26.09.2023, 27.09.2023 and 06.10.2023.
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2023 (11) TMI 775
Permission to transfer the business and the Input Tax Credit lying un-utilized in its Electronic Credit Ledger - HELD THAT:- Essentially the case of the petitioner is that the show-cause notice is unwarranted inasmuch as but for the non-availability of Form ITC-02 under GST Portal, it was only possible for the petitioner to file the Form manually for transferring the Input Tax Credit to the transfaree and therefore the show-cause notice is misconceived. Having perused the show-cause notice dated 29.09.2023, the petitioner is directed to file a response to the show-cause notice within 2 weeks from the date of receipt of copy of this Court. As soon as the petitioner responds to the show-cause notice, the respondents are directed to consider the case of the petitioner in light of its own case which was decided by the Division Bench of Allahabad High Court in Writ Tax No. 859 of 2023 [ 2023 (8) TMI 46 - ALLAHABAD HIGH COURT] . Considering the identical issue where the Division Bench of the Allahabad High Court held the petitioner has been non suited on the ground that Form ITC-02 for transfer of input tax credit was not available on the GST Portal which was in nascent stage during the initial months after its implementation on 01.07.2017 and it was incumbent upon the petitioner to have raised a proper grievance on the GST portal help-desk and ought to have waited for the relevant Form to go live on the GST portal instead of making illegal adjustment by use of the Form GSTR-3B of the transferor and the transferee company and mere shortage of working capital cannot be an excuse to bypass the legal procedure laid down under the law. The respondents are directed to consider the case of the petitioner in light of the decision passed by the Allahabad High Court and pass an appropriate order in accordance with law especially considering the findings of the Allahabad High Court as to non-availability of the Form ITC-02 on online portal of GST - Petition is disposed of.
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2023 (11) TMI 774
Refund of IGST - DTA unit supplying goods / services to SEZ - Inordinate delay in obtaining the endorsements - supply for authorized operation or not - Mismatch in the Statement-4, which cannot be relied on - POD was made not at the time of filing applications but at the time of filing reply/personal hearing. Inordinate delay in obtaining Endorsement - HELD THAT:- A conjoint reading of Section 16 (3) of IGST Act, 2017 and Rule 30 (4) of SEZ Rules, 2006 would make it clear that the goods can be supplied to SEZ under two situations. One in terms of Section 16 (3)(a) and another in terms of Section 16 (3) (b). In terms of Section 16 (3) (a), goods can be supplied without payment of tax, upon execution of bond or letter of undertaking. In terms of Section 16 (3)(b), goods can be supplied on payment of tax. Rule 30 (4) of SEZ Rules deals with issue of endorsement by the AO to ensure that the goods have been admitted in full into the SEZ and to treat the same as proof of export. Once the endorsement is made, it would be considered that the goods have been exported. In any event, any duty has been paid in terms of Section 16 (3) (b) of the Act, the assessee would be entitled for refund. In the present case, the question of payment of tax does not arise since the petitioner has paid IGST but there was delay in obtaining the endorsement. Thus, once the assessee had paid the tax and the goods have entered SEZ and obtained endorsement to that effect and furnished the same for the purpose of refund, at any cost, refund cannot be denied for any reason whatsoever. The Officer, who is processing the refund should be concerned only about the aspect as to whether the goods have reached SEZ zone and whether tax for such entry has been remitted or not. In the present case, there is no doubt on the aspect of payment of tax by the petitioner and also entry of goods into SEZ and endorsement also obtained. The delay in obtaining the endorsement and producing the same at any cost would result only in a delay of entertaining the application for refund and in which case, the affected party would only be the petitioner and the interest of the Department not going to be affected in any way. The denial of refund claim by citing that endorsement obtained was not within 45 days and therefore, claim is barred by limitation and said findings to such effect are liable to be set aside since the failure of obtaining endorsement in time is only due to the fault of AO and the petitioner cannot be denied the claim on the ground of inordinate delay in obtaining endorsement. Inappropriate Endorsement - HELD THAT:- As rightly pointed out by the learned counsel for the petitioner, as per SEZ Act or Rules, the AO is not required to make endorsement in any particular manner, since the invoices submitted by the petitioner were endorsed by AO, there is no doubt that the goods were supplied to SEZ units under Section 16 of IGST Act, and the petitioner is entitled for zero-rated tax benefit and delay in obtaining the endorsements, or mistake, if any, in such endorsements are all technical irregularity and so long as the signature is not doubted, the petitioner cannot be penalized for the actions of AO, which is beyond the control of the petitioner and by such means, deprive the petitioner's right to claim benefit under 16 (3) (b) of IGST, instead, the respondent-Department should have assisted the assesseee in rectifying the defects, rather than rejecting the petitioner's applications by citing technical reasons. Endorsement does not state that the goods supplied were for authorized operations - HELD THAT:- The provisions of Section 16 of IGST Act does not contemplate that use of goods is for authorized operation and submission of such endorsement as proof and the amendment to Section 16 stipulating the rules for use of goods for authorized operations was made prospectively w.e.f. 01.10.2023 onwards only and since the petitioner made claim with regard to the supply made to SEZ unit prior to 01.10.2023, the respondent-Department cannot insist that that endorsement must state that goods supplied, were for authorized operations, and such other endorsement - this Court holds that the rejection of the petitioner's claim on the reason that the endorsement does not specifically states that the goods that have been admitted in full was for authorized operations, and it only states that the goods were received in full and that the endorsement is incomplete/insufficient/inappropriate, is not tenable. Hence, the findings rendered by the respondent-Department with regard to the denial of claim by citing the delay in obtaining endorsement, endorsement is inappropriate, etc., are set aside. Rejection of claim as barred by limitation since POD was made not at the time of filing applications but at the time of filing reply/personal hearing - HELD THAT:- In the present case, admittedly, the second respondent in respect of the claim made for the month of January 2020 has issued an acknowledgment indicating that the application has no deficiencies but thereafter, issued a show cause notice in Form RFD-08 proposing to reject the claim for refund to an extent of Rs. 84,80,988, which is incorrect. If it is the case of the respondent-Department that the petitioner has filed the applications with deficiencies, the respondent-Department ought to have issued any memo pointing out such deficiency under Rule 90(3), instead the second respondent has accepted the petitioner's applications and issued acknowledgment, and therefore, it is not open to the respondent to contend that the supporting documents were filed with a delay. On a reading of the Circular issued by the Central Board of Direct Taxation, bearing CBDT No.14 of 1955 dated 11.04.1955 would make it clear that when the taxpayer made a claim for refund and if there is any discrepancies or defects in the application made for such claim, the Officer concerned should come forward to assist the assessee bearing in mind the above principles laid down by the CBDT. This Court also expects the Officer concerned to assist the assessee, whenever, the assessee intends to make a claim for refund or any other issue in line with the Circular issued by CBDT. Even in terms of Rule 90 (3), the Officer is supposed to have intimated the deficiencies contained in the application and allowed the assessee to rectify those deficiencies and thereafter, he shall proceeded to consider as to whether the claim for refund is just and proper. But, in the present case, it is seen that the respondent-Department has acted in a way, which is totally contrary to the Circulars issued by the CBDT. Had the respondent-Department intimated about the deficiencies at the point of time, when the applications were entertained by issuing any deficiency memo, obviously, the petitioner would have rectified those defects pointed out by the respondent-Department and would have made fresh application. In the present case, the application was filed within two years and therefore, the question of making claim after two years does not arise even assuming AO made endorsement after two years, the same would in no way debar the claim as barred by limitation. Further, even Rule 90 (3) of CGST Act permits to make fresh application, which means that in appropriate cases, the Officer concerned can permit the refund application even beyond the period of limitation. Therefore, there are no substance in the submission made by the learned Senior Standing Counsel for the respondent and both respondents have miserably failed to consider the said aspect while passing the impugned orders and hence, the same are liable to be set aside - in terms of notification issued by Central Tax dated 05.07.2022, vide No.13/2022, which excludes the period from 01.03.2020 to 28.02.2022 for computation of period of limitation for the purpose of filing refund application under Section 54 of the CGST Act. Thus, the petitioner's claim cannot be rejected on the ground of limitation. Mismatch of details, as the endorsement date mentioned in the invoices differs from the endorsement date mentioned in Statement-4 - HELD THAT:- Though the respondent-Department pointed out that the date of endorsement in the invoices is different from the date of endorsement mentioned in Statement-4, in respect of the claim for refund made for the month of December 2019, since said defect was rectified by the petitioner at the time of filing of reply on 28.01.2022 and the petitioner also furnished revised Statement-4, and the same is also accepted by the learned Senior Standing Counsel for the respondent-Department, findings rendered by the respondent-Department on the ground of mismatch are also liable to be eschewed. This Court is of the view that both the first and second respondent have committed a serious flaw in the decision making process and therefore, the impugned orders have to be held to be unsustainable - Petition allowed.
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2023 (11) TMI 772
Validity of assessment u/s 74 - Ascertaining Tax liability - Violation of principles of natural justice - failure to consider the reply filed by the petitioner - HELD THAT:- In the present case, due to the failure on the part of the respondent/Assessing Officer to consider the reply filed by the petitioner and deal with the same while passing the impugned order, by which, the petitioner will deprive of their right to defend before the Assessing Authority if the matter is remanded to the Appellate Authority. In the present case, the respondent/Assessing Officer, admittedly, has failed to consider the reply/objections made by the petitioner pursuant to the show cause notice and passed a non-speaking order. The learned counsel also brought to the notice of this Court certain paragraphs mentioned in the show cause notice were re-produced in the impugned order. Therefore, failure on the part of the respondent/Assessing Officer to address the reply/objections of the petitioner/assessee by a speaking order, would vitiate the impugned proceedings. Since the reply/objections made by the petitioner pursuant to the show cause notice remained undecided, this Court feels that the petitioner is entitled to have a considered opinion of the Assessing Officer after taking into consideration the reply filed by the petitioner. Thus, this Court is inclined to set-aside the impugned order and remit the matter back for re-consideration. Accordingly, the Assessing Officer is directed to pass a detailed order after taking into consideration the reply filed by the petitioner. The matter is remitted back to the respondent for reconsideration of its order, taking into consideration the reply filed by the petitioner dated 17.1.2022. Needless to say that principles of natural justice shall be followed - Petition allowed by way of remand.
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2023 (11) TMI 771
Rejection of refund claim - Principles of natural justice - scope of impugned order and reply to SCN - grievance of the petitioner is that none of the contentions as urged by the petitioner in its reply filed to the show cause notice are addressed in passing the impugned order - HELD THAT:- Attention is drawn to paragraph 5 of the impugned order, contents of which according to Mr. Raichandani, can hardly be called to be any reasons to reject, any of the contentions as urged by the petitioner, as also without considering the documents which were placed on record of the Assistant Commissioner. Learned counsel for the revenue, considering the contentions as urged on behalf of the petitioner, fairly accepting that the impugned order fails to consider materials, makes a statement that the respondents be permitted to withdraw the impugned order with liberty to issue a fresh show cause notice, on the refund application, to be adjudicated in accordance with law, after considering the reply of the petitioner as also after granting an opportunity of hearing to the petitioner. The impugned order dated 03 February, 2023 stands withdrawn as per statement as made on behalf of the respondents and accordingly stands set aside as withdrawn - Petition disposed off.
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2023 (11) TMI 770
Refund of IGST - Zero Rates Supplies - Amendment to shipping bills - HELD THAT:- It is undisputed that an application for amendment of shipping bills has been made to the respondent on 30.01.2023 which is placed on record by the petitioner through an additional affidavit affirmed on 07.02.2023. The respondents are directed to decide the application so made within a period of six weeks from today - Petition disposed off.
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2023 (11) TMI 769
Return or transfer of goods - HELD THAT:- It is agreed between the parties that the petitioner shall appear before the respondent- GST Authority at Surat for return of the goods as stated in Schedule-I annexed to the affidavit. Learned AGP Mr. Trivedi submitted that a panchana shall be drawn for handing over the goods as stated in Annexure-I to the affidavit and the same shall be placed on record before the Court. It is agreed between the parties that the petitioner shall appear before the respondent authority on 16.09.2023. Stand over to 20th September, 2023.
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2023 (11) TMI 768
Condonation of delay in filing appeal before the first appellate authority - delay on medical grounds - reasonable cause - Violation of principles of natural justice - validity of assessment order - HELD THAT:- On perusal of the record, it is observed that the adjudicating authority passed impugned order on 13.04.2022. The order was served on Mr. V. Dhanesh on the very same day. The petitioner ought to have filed the Appeal by 12.07.2022, but the petitioner filed the appeal on 01.11.2022, with a delay of 112 days. As per clause (4) of Section 107 of the Act, the period of one month of delay in filing the appeal, can be condoned, for any sufficient reasons. After deducting the period of one month, which is a condonable period as per the Act, still the delay of 81 days in preferring the appeal is visible from the record. Respondent No. 2 passed order impugned, rejecting the appeal at the admission stage, on the point that the appeal has been filed with a delay beyond the condonable period of limitation. The medical certificate of Mr. V. Dhanesh is placed on record. No contrary material is filed, refuting the contents of the medical certificate. Indeed, the right of appeal of a party is creature of statute and since, it is a statutory remedy. The right of appeal under Section 107 of the Act is also subject to certain conditions. It is not in dispute that, the 2nd respondent has no authority to admit the appeal, when it is filed beyond the condonable period of one month of limitation as per the statute. The petitioner herein expressed her difficulty in filing the appeal within the time, since she has no knowledge about service of adjudication order on the accountant viz., Mr. Dhanesh. This writ petition is allowed and the impugned order dated 07.01.2023 passed by the 2nd respondent rejecting the appeal filed by the petitioner on the ground that the same was filed beyond the condonable period is set aside and consequently, the delay of 112 days in filing the appeal is condoned subject to the petitioner depositing 20% of the disputed tax in addition to the amount if any already deposited at the time of filing the appeal and paying costs of ₹10,000/- with the High Court Legal Services Committee within six weeks from the date of receipt of copy of the order, upon which, the 2nd respondent shall admit the appeal filed by the petitioner and after affording an opportunity of hearing to both parties, dispose of the appeal in accordance with the governing law and rules expeditiously. Petition allowed.
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2023 (11) TMI 767
Seeking release of seized goods along with truck - HELD THAT:- Recently, this Court passed an order in Special Civil Application No. 5900 of 2023, Dated: 28.04.2023 [ 2023 (5) TMI 1144 - GUJARAT HIGH COURT] , whereby, the rule is issued and interim relief is also granted - In view of the above, RULE, returnable on 2ND AUGUST, 2023. By way of interim relief, it is directed that the goods of the petitioner as well as the conveyance / vehicle, bearing registration No. GJ-02-VV-7845, shall be RELEASED, subject to the petitioner complying with the conditions imposed - application allowed.
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2023 (11) TMI 766
Non-filing of the certified copy of the order within seven days of online submission of appeal - violation of principles of natural justice - HELD THAT:- It is undisputed fact that that the appeal was filed on-line within the statutory period along with the copy of the order. So, if an appeal has got merit it should not be dismissed on such hyper-technical ground of non-filing of certified copy within the statutory period when the appeal itself was filed within the time along with copy of the order on-line. Considering the facts and circumstances of the case, submission of the parties and in the interest of justice the impugned order dated 22nd March, 2023 is set aside and the appeal is remanded back to the Appellate Authority concerned to consider and dispose of the appeal on merits and in accordance with law subject to fulfilment of all other formalities, within a period of three months from the date of communication of this order after observing the principles of natural justice. Petition allowed by way of remand.
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2023 (11) TMI 765
Classification of goods - HSN Code - rate of tax - Urban Roots - Bio kavach - Immunity Booster, Avinja 7 - to be classified under HSN Code 30039011 or HSN Code 31010092? - HELD THAT:- The description of the product by the applicant does not indicate any cure therefore will does not fall under chapter 30 and hence will not attract a lower rate of tax - Further immunity boosters are not specified either in schedule I or schedule II as seen from the above table hence this is a commodity which is not specified in Schedule I, II, IV, V or VI of the Notification No. 01/2017 dt. 28.06.2017 and therefore would fall in residuary entry at Serial No. 453 of Schedule III and attract the tax at the rate of 9% CGST 9% SGST each. The questions raised by the applicant are clarified as below: 1. HSN Code of Urban Roots and its Rate of tax - Serial No 453 of Schedule III of Notification No. 1/2017. Rate of Tax 9% CGST 9% SGST. 2. HSN Code of -Bio kavach and its Rate of tax - Serial No 453 of Schedule III of Notification No. 1/2017. Rate of Tax 9% CGST 9% SGST. 3. HSN Code of Immunity Booster - Avinja 7 and its Rate of tax - Serial No 453 of Schedule III of Notification No. 1/2017. Rate of Tax 9% CGST 9% SGST.
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Income Tax
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2023 (11) TMI 779
Deduction u/s 80P(2)(d) - petitioners made investments with the Cooperative Bank from which, they received interest - HELD THAT:- 'Co-operative Society' means a Co - operative Society registered under Co-operative Societies Act, 1912. Thus, a Co-operative Society referred therein is only a co-operative society as defined under the Act, be it a Co-operative Society carrying on banking business or Co-operative Society carrying on the other businesses or a Co-operative bank. As decided in The Salem Agricultural Producers Co-operative Marketing Society Ltd [ 2016 (9) TMI 699 - MADRAS HIGH COURT] the respondent therein, which is a Co-operative society, is entitled to avail the benefit under 80P(2)(d) of the Act. Since the impugned orders are passed without considering all these aspects, this Court is of the view that the same are liable to be set aside. Accordingly, the Writ Petitions are allowed and all the impugned notices are set aside.
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2023 (11) TMI 764
Validity of assessment u/s 143(3) r.w.s 144C(1) and s.144B - Draft assessment order OR final assessment order - demand notice issued u/s 156 of the Act as well as the notices issued for initiation of penalty proceedings under Section 274 r.w.s. 270A, 271AA, 271G 271BA - revenue, says that he has received instructions to the effect that the impugned assessment order can be treated as a draft assessment order, with an opportunity being given to the writ petitioner to file objections within the statutory period i.e., 30 days - HELD THAT:- The impugned assessment order shall be treated as a draft assessment order. Consequently, it will shed attributes of a final assessment order, such as the reference to the initiation of penalty proceedings. As a result, such parts of the order shall stand excised The petitioner will have liberty to file its objections within 30 days of receipt of the order passed today. The writ petition is disposed of, in the aforesaid terms. Consequently, the interim order dated 19.05.2021, which was made absolute on 10.01.2023, shall stand vacated.
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2023 (11) TMI 763
Period of limitation for invoking reopening of assessment - Scope of new section/regime u/s 148A - what was the period of limitation available to revenue for issuance of notice under Section 148 of the Act? - Whether the impugned order passed u/s 148A(d) and the consequent notice issued u/s 148 of the amended 1961 Act [as obtaining with the enactment of FA 2021], falls foul of the limitation prescribed in Clause (a) of Sub-Section (1) of Section 149? HELD THAT:- As per directions contained in Ashish Agarwal s case [ 2022 (5) TMI 240 - SUPREME COURT] notices issued on or before 31.03.2021 will be governed by the old regime, while those issued on or after 01.04.2021 must be aligned with the new regime. Accordingly, all those notices issued between 01.04.2021 and 30.06.2021 stood converted to notices issued under Section 148A(b) of the new regime and were, thus, subject to the amended Section 149 of the 1961 Act Court noted (which was a matter of fact) that the power of reassessment which existed before 31.03.2021 continued to exist till 30.06.2021, with alteration in procedure brought about upon the enactment and enforcement of FA 2021. This is abundantly clear if one were to read the paragraphs following paragraph 99, i.e., paragraphs 100 to 105 of the judgment. The Court, in no uncertain terms, declared explanation A(a)(ii)/A(b) of Notifications dated 31.03.2021 and 27.04.2021 as being ultra vires the parent statute, i.e., TOLA. The said explanations sought to impose the unamended provisions of Sections 148, 149 and 151 of the 1961 Act, although the substituted provisions had kicked in. The Court refused to countenance a situation that the amended provisions, i.e., Sections 147 to 149 and 151, would not be applicable, firstly, to past AYs and/or would not operate during 01.04.2021 and 30.06.2021, as the Covid-19 pandemic was prevailing in the country. The coordinate bench specifically observed that the Legislature was aware of the situation when it enacted FA 2021. The argument that the stop the clock provision would operate was decried by the coordinate bench. In our opinion, the observations of the coordinate bench make it amply clear that Section 149 of the amended 1961 Act continued to operate despite attempts to the contrary made by the introduction of the aforementioned explanations in Notifications dated 31.03.2021 and 27.04.2021. A careful perusal of the judgment of the Supreme Court rendered in Ashish Agrawal s case and the provisions of TOLA would show that neither the said judgment nor TOLA allowed for any such modality to be taken recourse to by the revenue, i.e., that extended reassessment notice would travel back in time to their original date when such notices were to be issued and thereupon the provisions of amended Section 149 would apply. Apart from anything else, the aforesaid provisions contained in the Instruction dated 11.05.2022 are beyond the powers conferred on the CBDT under Section 119 of the 1961 Act. The paragraphs mentioned above are clearly ultra vires the provisions of Section 149(1) of the amended 1961 Act. A perusal of the judgment of the Supreme Court rendered in Ashish Agrawal s case would show that it did not rule on the provisions contained in TOLA or the impact they could have on the reassessment proceedings. In any event, TOLA conferred no such power on the CBDT. Also as correctly argued on behalf of the assessees, there is no clarity in the aforementioned Instruction regarding the original date when such notices were to be issued . The impugned provisions of the Instruction dated 11.05.2022 are also unsustainable in law because they are vague. Certainty in taxing statutes is one of the grund norms, as ordinarily, they are agnostic to equitable principles. Time limit for reopening under the new regime was reduced from six (06) years to three (03) years and only in respect of serious tax evasion cases , that too, where evidence of concealment of income of Rs. 50 lakhs or more in a given period was found, the period for reopening the assessment was extended to ten (10) years. In order to ensure that utmost care was taken before invoking the extended period of limitation, the proposal was that approval should be obtained from the Principal Chief Commissioner of Income Tax, at the highest hierarchical level of the department. Likewise, the Memorandum emphasized that the new regime was forged with the hope that it would result in less litigation and would provide ease of doing business to tax payers, as there was a reduction in the time limit by which notice for assessment, reassessment and re-computation could be issued. Thus, as per the Memorandum, in normal cases , no notice was intended to be issued if three (03) years had elapsed from the end of the relevant AY. Notice, beyond the prescribed three (03) years from the end of the relevant AY, could be issued only in a few specific cases; one such example which is given in the Bill is where the AO was in possession of evidence that escaped income amounted to Rs. 50 lakhs or more. Sense that one gets upon a holistic reading of the backdrop in which the new regime for reopening assessments was enacted is that where escapement of income was below Rs. 50 lakhs, the normal period of limitation, i.e., three (03) years was to apply. In comparison, the extended period of ten (10) years would apply in serious tax evasion cases where there was evidence of concealment of income of Rs. 50 lakhs or more in the given period. Therefore, the impugned actions, which include orders passed under Section 148A(d) and the consequent notices issued under Section 148 of the amended 1961 Act, concerning AY 2016-17 and AY 2017-18 cannot be sustained. It is ordered accordingly.
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2023 (11) TMI 762
Addition on the basis of statements recorded behind the back of the assessee - Suppressed sales - violation of principles of natural justice - as argued No opportunity provided of cross-examination to the assessee regarding the persons on whose statements the assessing authority had relied on - ITAT allowing relief to the assessee - HELD THAT:- Division Bench of the Delhi High Court in the case of Rajesh Kumar [ 2008 (4) TMI 233 - DELHI HIGH COURT] also has taken a similar view under the provisions of 1961 Act wherein the statements of one Maheshwari had been recorded wherein he had denied that he had nothing to do with the bank account from which the cheques were issued to the assessee. Resultantly, the order of the Tribunal had been upheld on the ground that the said person had not been cross-examined and no opportunity was granted by the Assessing Officer and there was violation of principles of natural justice. Facts herein are similar as noticed above. A perusal of the order of Commissioner of Income Tax would go on to show the Commissioner had noticed that the Assessing Officer without bringing any record or evidence had made the addition on the basis of the statement of the third party which could not be considered as conclusive evidence. It is in such circumstances, we are of the considered opinion that the Tribunal has rightly interfered in the orders passed by the authorities below. Therefore, no question of law arises.
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2023 (11) TMI 761
Offence punishable u/s 276CC - mens rea of the petitioner - rebuttal of presumption u/s 278E - non filing of the income tax return for the assessment year 2012-2013 - accused replied that the delay was due to books of accounts and other materials were seized by the Income Tax Department. It is difficult for the accused to collect details with regard to 18 assessees in the group. He is aged person and suffering from hypertension and diabetes. Therefore, he was unable to file his return of income - HELD THAT:- Relief sought for in this criminal original petition cannot be considered though the penalty proceedings was dropped against the petitioner. Further, in a prosecution for the offence under Section 276C there can be a presumption for existence of mens rea and it is for the accused to prove the contrary and that too, beyond reasonable doubt during the course of trial. Therefore, the grounds raised by the petitioner can be considered only before the trial court during the trial since subsequent act of offering additional income payment after search and after detection is not voluntary compliance and it was only during such proceedings it came to light that the petitioner made an attempt to evade the taxes and interest. Hence, it is for the petitioner to rebut the presumption under Section 278E of the Income Tax Act which provides culpable mental state of mind of the accused. In the case on hand, the petitioner failed to file his return of income. After inspection, seized the materials and found that the petitioner concealed the income. Therefore, he was issued notice under Section 153A of Income Tax Act. It was also proved that the petitioner subsequently filed income tax return for the assessment year 2012-2013 on 20.11.2015 showing his income. He suppressed and concealed the said income in the income tax return filed by him on 18.04.2013. Therefore, the above judgment is not applicable to the case on hand. In the case on hand, as stated supra, the mens rea is categorically proved against the petitioner. In his income tax return, he failed to disclose a major portion of income. Therefore, after inspection and seizure of documents, found that there was concealment of income by the petitioner. As such, he was issued notice u/s 153A of Income Tax Act. Thereafter, he was also issued show cause notice. Only thereafter, the petitioner filed his second income tax return for the assessment year 2012-2013 on 20.11.2015. Therefore, the respondent rightly prosecuted the petitioner for concealment of income. There was clear concealment by the petitioner while filing his first return of income for the assessment year 2012-2013. In fact, the levying of penalty was already dropped in view of the order passed by the tribunal. However, the petitioner is now facing prosecution under Section 276CC of Income Tax Act. That apart, the mens rea of the petitioner is clearly established by the respondent and as such, the above judgment is also not helpful to the case on hand. Decided against assessee.
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2023 (11) TMI 760
Compounding of offences punishable u/s 276C(1), 276D and 277 - petitioner s application was rejected as, according to the concerned officer, the petitioner had failed to furnish the complete bank statements of the accounts maintained by him in the Geneva Branch of HSBC Bank - it is the stand of the petitioner that consent waiver forms were, in fact, provided - HELD THAT:- We are informed by the petitioner that, in any event, bank statements for the period spanning between 31.12.1993 and 24.03.2011 of the accounts maintained by the petitioner with the aforementioned branch of the HSBC Bank are available. Revenue, says that had the petitioner straightaway given the bank statements before the compounding application was considered, the matter would not have come to this pass. We are informed that, the petitioner had furnished the bank statements in November, 2019 as well, albeit after the impugned order was passed. Given the aforesaid position, we are of the view that the best way forward would be to direct the concerned officer to decide the petitioner s compounding application afresh, since, in any event, the bank statements are now available with the respondents/revenue. Accordingly, the impugned orders are set aside. The concerned authority will adjudicate the petitioner s compounding application dated 22.02.2016 afresh. In case any further information is required, written communication(s) in that behalf will be addressed to the petitioner. Petitioner and/or his authorised representative will also be accorded personal hearing in the matter by the concerned officer.The concerned officer will endeavour to dispose of the compounding application at the earliest, though not later than eight (8) weeks from the date of receipt of the order. Till such time the concerned officer disposes of the compounding application dated 22.02.2016 and for a period of three (3) weeks thereafter, in case an adverse order is passed, the interim order dated 18.11.2019 will continue to operate. Writ petition is disposed of in the aforesaid terms.
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2023 (11) TMI 759
Unexplained investments/ amounts deposited in the foreign bank account - no concrete evidence to establish either the ownership of the alleged bank account or the alleged disputed deposits in those accounts to be belonging to the assessee - assessee submitted that the amounts deposited in the foreign bank account was by the nephew of the assessee namely Rajinder Singh Chatha, who was residing in U.K who was the beneficiary of the account - HELD THAT:- The profile of the bank as such would go on to show that name of the assessee was struck off from the said account on 11.06.2004, even prior to his visit in the year 2006 and notice was issued in the year 2014. We are of the considered opinion that the explanation offered by the assessee regarding the amounts belonging to his nephew was justified. It is not disputed that the documents as such which were filed showing the certificate of the C.A. whereby the said person had paid taxes on the outstanding amount in this impugned bank account to the revenue authority of U.K under specific disclosure facility. Only in the absence of explanation about the nature and source of income, the explanation offered by the assessee in the opinion of the AO is not satisfactory and the sum so credited may be charged to income-tax as the income of the assessee of the previous year. The assessee had given the explanation about the nature and source of the investments and the explanation offered by him was wrongly not accepted by the AO and the CIT. Once the Tribunal as such noticed the said background and had rightly come to the conclusion that the name of the assessee was withdrawn even prior to the notice being served upon him, the addition could not be made by the AO The factual matrix could not be disputed regarding this aspect by the counsel for the revenue. The justifiable explanation as such is given that the nephew had got his signatures. Sufficient explanation has been given regarding this fact by filing an affidavit, which has not been taken into consideration by the Assessing Officer or by the Commissioner of Income Tax. The assessee being an agriculturist and only having a small holding of land apparently could not be in possession of such huge amounts, which were also in foreign currency. Nothing as such was produced on record that the same was transferred from India where he was doing some business. It is neither the case of the revenue that the amounts were credited from his income while doing business at abroad and neither he was based abroad for such long periods to generate that kind of income. Decided against revenue.
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2023 (11) TMI 758
Scope of Second proviso to Section 40(a)(ia) - retrospective or prospective effect - HELD THAT:- The purpose of Section 40(a)(ia) of the Act is to disincentivize non-deduction of tax at source by disallowing, as deduction, the amount paid to the resident/payee. The second proviso appended to it, however, relaxes the rigour of the said provision by making its application dependent on the assessee being declared as assessee in default under Section 201(1) of the Act. It is not in dispute that, in this case, no adverse findings were returned by the AO concerning fulfilment of conditions stipulated in the first proviso appended to Section 201(1) of the Act; an aspect which is noted both by the CIT(A) and the Tribunal. As to the retrospective applicability of the second proviso to Section 40(a)(ia) and first proviso to section 201, the court in the Ansal Land Mark Township Pvt. Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT ] is of the view that the above reasoning of the Agra Bench of ITAT Rajiv Kumar Agarwal [ 2014 (6) TMI 79 - ITAT AGRA ] as regards the rationale behind the insertion of the second proviso to Section 40(a) (ia) of the Act and its conclusion that the said proviso is declaratory and curative and has retrospective effect from 1st April 2005, merits acceptance.
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2023 (11) TMI 757
Seeking permission to file Modified return u/s 170A - Post amalgamation scheme sanctioned/approved by NCLT - Due date of filing of ITR has already expired - Apprehension of the revenue that, it could not process the return as it would be time barred - HELD THAT:- Having regard to the position taken by the respondents/revenue and given the fact that the modified return, as noticed above, has already been filed by the petitioner, we are inclined to dispose of the writ petition with the following directions: (i) The AO will have liberty to carry out scrutiny assessment; (ii) The time taken between the date when the proceedings were stayed and up until today will stand excluded; (iii) In terms of the first proviso appended to Explanation 1 of Section 153 of the Income Tax Act, 1961 [in short, Act ], the AO will have available to him 60 days for completion of assessment proceedings, which will commence from the date of receipt of a copy of the order passed today, and (iv) The assessment proceedings will be carried out having regard to the modified return filed by the petitioner.
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2023 (11) TMI 756
Revision u/s 263 - Allowability of provisions of construction expenditures - As per CIT provision for construction expenditure is an un-ascertainable liability and is not allowable u/s. 37(1) above expenditure allowed by the AO in the assessment order is not in order - HELD THAT:- As during the assessment proceedings, these expenses have been examined and scrutinized and question was asked by the Assessing Officer and the assessee has replied to the AO. The assessee has submitted its reply stating that provision for construction expenditures (Flat Sale) represent the proportionate expenditure apportioned to the units sold and this expenditure has been really paid in the subsequent financial year 2017-18. Therefore, these are the real expenses for which the assessee has made the provision and Ao examined the issue and took a possible view and completed the assessment. Therefore, such assessment order should not be considered as erroneous and prejudicial to the interest of revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the Ld. PCIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of revenue unless the view taken by the Assessing Officer is unsustainable in law. Herein, AO has conducted sufficient inquiry, as noted above. Besides, the Ld. PCIT has not set out as to why this item of provision for expenditure need to be investigated and as to what type of inquiry ought to have conducted by the AO - A mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the Assessing Officer did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. - Decided in favour of assessee.
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2023 (11) TMI 755
Revision u/s 263 - as per CIT Inadequate enquiry made on the issue of sundry creditors balance outstanding - HELD THAT:- CIT have noted, has held that since the assessee had not furnished bank statement of the sundry creditors, inquiry regarding their genuineness and credit worthiness was incomplete, casting prejudice to the Revenue. We are unable to agree with the ld.Pr.CIT in this count. It is not the case of the ld.Pr.CIT that no inquiry was conducted by the AO on the issue of sundry creditors balance outstanding. His case of the assessment order being erroneous on this count, rests on inadequacy of inquiry. It is not denied that the assessee has furnished complete details of sundry creditors giving their names, addresses, their PAN and the details of the transaction undertaken with them during the year. The assessee had also stated that it was not possible for him to procure the bank statement of these sundry creditors. CIT has not pointed out as to why more inquiry needed to be conducted regarding sundry creditors. There is no reason given by him as to why the sundry creditors reflected by the assessee needed to be doubted. There is no financial analysis done by the ld.Pr.CIT leading to create a doubt regarding existence of this quantum of sundry creditors. Except for stating that huge sundry creditors were outstanding as at the end of the year, there is no basis given for stating so. There is no comparison of the turnover of the assessee or of the purchases made by the assessee with the outstanding creditors; there is no finding by the ld.CIT(A) that considering low volume of operation conducted by the assessee, the extent of sundry creditors outstanding is too huge so as to cast a doubt on the existence of such outstanding sundry creditors as at the end of the year. No exercise worth its name has been carried out by the ld.Pr.CIT so as to justify the need for further inquiry to be done regarding the sundry creditors. Hon ble Delhi High Court in the case of CIT vs Sunbeam Auto Ltd. [ 2009 (9) TMI 633 - DELHI HIGH COURT] while dealing with issue of adequacy of inquiry by AO for the purposes of section 263 has held that inadequate inquiry alone is not sufficient for holding assessment order erroneous unless it is found by the Ld.CIT /PCIT to have resulted in error causing prejudice to the Revenue. Thus where details were filed to the AO and the Commissioner was unable to point out defects conclusively in the material for arriving at a conclusion that particular income had escaped assessment on account of non application of mind by AO, order for revision of assessment order on account of the same u/s 263 of the Act was not sustainable in law. See Anil Kumar Sharma [ 2010 (2) TMI 75 - DELHI HIGH COURT] The order passed under section 263 of the Act is set aside. Decided in favour of assessee.
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2023 (11) TMI 754
Addition u/s 56(2)(viib) r.w. Rule 11UA - Issue of preference shares at premium to its holding company - AO held that the assessee company is a company in which public are not substantially interested and hence section 56(2)(viib) of the Act is squarely applicable - whether the assessee company is a company in which public are substantially interested? - HELD THAT:-On examination and consideration of the definition of company in which public are substantially interested as per section 2(18) of the Act, the definition of public company as given in section 2(71) of the Companies Act, 2013 and the definition of subsidiary company as per section 2(87) of the Companies Act, 2013, the Ld. CIT(A) reached the conclusion, with which we agree that the assessee company is a subsidiary company of Allcargo Logistics Ltd. by virtue of clause (a) of the Explanation of section 2(87) of the Companies Act, 2013 and as per proviso of section 2(71) of the Companies Act, 2013 a company which is a subsidiary of a pubic company, is deemed to be a public company. Therefore, the assessee company qualifies as a subsidiary of Allcargo Logistics Ltd. and will be regarded as deemed to be public company. Therefore it will not come within the ambit of section 56(2)(viib) of the Act. Only grievance of the Revenue is that the Ld. CIT(A) has stretched the scope of deeming provision under section 2(71) of the Companies Act, 2013 for further deeming which is beyond its originally intended purpose - In our humble opinion this stand of the Revenue is not legally tenable as the provisions of section 2(87) of the Companies Act, 2013 cannot be overlooked. It is well settled that full effect must be given to the statutory fiction and it should be carried to its logical conclusion.
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2023 (11) TMI 753
Revision u/s 263 by CIT - difference between the claim made by the assessee under the head General Expenses and disallowance made by the Ld. AO. - HELD THAT:- Case selected for complete scrutiny and assessment is completed after issue of notice u/s 143(2) and 142(1) of the Act along with questionnaire and after duly examining the submissions of the assessee. If that be so, it is rather naive to assume that it is a case in which assessment order is passed without making enquiries or verification which should have been made. The import of the Ld. PCIT s order is that cent percent general expenses claimed by the assessee be disallowed as against 20% thereof as per the decision of the Ld. AO for the reason that complete details were not filed and that veracity thereof could not be verified. By no stretch of imagination, the decision of the Ld. AO to disallow 20% out of the claim of the assessee can be termed as erroneous . This is because the Ld. AO has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion. Such a conclusion cannot be termed to be erroneous because the Ld. PCIT does not feel satisfied with the conclusion as held by the Hon ble Bombay High Court in CIT vs. Gabriel India Ltd. [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] Erroneous order does not mean an order with which the Ld. PCIT is unable to agree as observed in Smt. Lila Chaudhary[ 2006 (3) TMI 112 - GAUHATI HIGH COURT] . Prejudicial to the interest of Revenue would mean an erroneous order which goes against the interest of revenue collection. Both the conditions i.e. erroneous as also prejudicial to the interest of revenue must pre-exist to enable the Ld. PCIT to exercise the power under section 263. The revisional power under section 263 of the Act is a quasi-judicial power hedged in with limitations and has to be exercised subject to the same and within its scope and ambit. The impugned order of the Ld. PCIT is not sustainable both on facts and in law. It is hereby vacated. Decided in favour of assessee.
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2023 (11) TMI 752
Accrual of income - Recognition of income - AO made the additions as Short Contract Revenue accounted based on the applications filed u/s 197 - Final Projections while making application u/s 197 - assessee is a foreign company incorporated in Singapore - Allegation of deviation from the accounting standard - HELD THAT:- We find that in the application made u/s 197, the assessee has merely projected the contract revenue and these estimations could not be taken to be the turnover of the assessee disregarding the actual revenue earned by the assessee. No defect in books of accounts has been pointed out by Ld. AO. The deviation in estimation and actual revenue stood explained by the fact that the duration of the project got extended to financial year 2020-21 which is much beyond the agreed original contract period. The revenue projections submitted in the course of Sec. 197 proceedings are merely based on the estimated work completion whereas the revenue shown in financial statements is based on actual work certified by contractor on the basis of survey of work performed. Therefore, the financial results were to be accepted. Assessee was unable to complete the project it had estimated and accordingly, it has recognized revenue only for the portion of the work that has been completed and certified. The same, in our considered opinion, is correct methodology. Also aggregate contract revenue has been offered to tax over the life of the contract period starting from financial years 2012-13 to 2022-23 which is evidenced by the details of invoices as placed on record. The same supports the argument of Ld. AR that there is no leakage of contract revenue and taxing more amounts in this year would result into bringing to tax contract revenues much more than the fixed price contract value to be received by the assessee over the life of contract. The same could not be held to be justified, in any manner. Thus we would hold that the impugned additions are unsustainable - Decided in favour of assessee.
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2023 (11) TMI 751
TP adjustments - Arm''s length price - Benchmark analysis on Deduction u/s 80IC - Profit split method - inter-unit transactions have to be benchmarked as per section 92CA read with section 80-IA(8)/80IC - whether the assessee has claimed deduction u/s 8IC for the present year or not? - HELD THAT:- TPO has returned a finding that Unit V is eligible for deduction u/s 80IC as per claim of the assessee and its inter-unit transactions have to be benchmarked as per section 92CA read with section 80-IA(8)/80IC of the Income Tax Act, 1961 and there cannot be any dispute in this regard. TPO has noticed that the assessee has declared profit of Rs. 8,45,95,489/- for Unit V which has been adjusted by brought forwarded earlier years' losses of Rs. 10,65,85,348/- and carried forward loss of Rs. 2,19,89,859/- as per the information filed and any downward adjustment made in the present order u/s 92CA(3)/80- lA(8)/80IC would lead to reduction in profit for the current year and increase in carried forward of loss for the purpose of deduction u/s 80IC. TPO thereafter has proposed an adjustment and which has been upheld by the DRP. The effect of such an adjustment would therefore be reduction in profits of the Unit V for the current year and increase in its carried forward losses by equivalent amount. Further, given that there are past accumulated losses and no profits available for the year after such setoff, there is no claim which has been made by the assessee u/s 80IC in the return of income prior to such adjustment. Even post such adjustment, no profits will become available which has been considered by the AO for allowing deduction u/s 80IC - Thus, the adjustment so made by the TPO and upheld by the DRP cannot lead to enhancement by way of addition to the returned income as has been done by the AO while passing the final assessment order. The adjustment will lead to increase in carry forward of losses to the subsequent years. In light of aforesaid discussions, we agree with the contention advanced by the ld AR in this regard and the addition is hereby directed to be deleted.
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2023 (11) TMI 743
Non-deduction of Tax u/s 194A on the bill discounting charges/factoring charges deducted by the NBFC Company - Alternatively TDS u/s 194H on Commission or brokerage - TDS u/s 194C on Freight Charges - Default u/s 201(1) 201(1 A) - HELD THAT:- , it has been held by various courts that factoring/bill discounting charges do not fall within the definition of interest u/s 2(28A) and thus are also not eligible for tax deduction u/s 194A. Further, the addition made by AO and confirmed by CIT(A) on account of non-deduction of tax u/s 194H by holding that bill discounting charges are in the nature of commission and liable for tax deduction 194H is bad and liable to be deleted. TDS u/s 194C on Freight Charges - HELD THAT:- There is no dispute with regard to the fact that once the assessee submits declaration to substantiate that the transporters did not own more than 10 goods carriages, question of deductibility of tax u/s 194C does not arise. Thus, in the present case, assessee has duly submitted declarations and PAN of the transporters. Thus, in light of the above mentioned facts and circumstances of the case, addition made by AO and confirmed by CIT(A) on account of non-deduction of tax u/s 194C is bad and liable to be deleted. Appeal of assessee allowed.
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2023 (11) TMI 742
Penalty u/s 271(1)(c) - difference between the income declared in the return by the assessee under the provisions of section 115JB of the Act and income assessed by the Ld. AO - HELD THAT:- It is not in dispute that the assessee company is a Public Sector Undertaking engaged in the business of generation of power. Therefore, no malafide intention can easily be attributed to the company that it has consciously furnished inaccurate particulars of income in filing the return. We cannot be oblivious of the fact that the assessee is not a private businessman but it is a Govt. statutory organisation. No such allegation is justified in the absence of reliable evidence in support thereof. There is no such evidence forthcoming from the records except the bald statement of the Ld. AO which is bereft of any material on facts or in law establishing malafide intention on the part of the assessee. Element of conscious furnishing of inaccurate particulars of income by the assessee is absolutely lacking. Reliance on various decisions by the CIT(A) is off the mark. The income declared by the assessee in the revised return under the normal provisions of the Act is the same as assessed by the Ld. AO. It is testimony of the bonafide intention of the assessee to file return reflecting the true state of affairs of the company. Difference between the income declared in the return by the assessee under the provisions of section 115JB of the Act and income assessed by the Ld. AO is attributable to adjustment of provision for ex-gratia leave salary, gratuity and that of provision for doubtful debts. Record reveals that in quantum appeal the held that provision for ex gratia leave salary is an ascertained liability which can not be adjusted while working out the book profit under section 115JB of the Act reversing the finding of the Ld. CIT(A) in this regard .Finding (supra) of the Tribunal has been overlooked by the Ld. AO/CIT(A) for the purpose of levy of penalty under section 271(1)(c) of the Act. This is not fair. No penalty for furnishing of inaccurate particulars of income is exigible if the disallowance itself has been deleted by the Tribunal in quantum appeal. As regards the disallowance on account of provision for doubtful debts under the provisions of section 115JB of the Act, confirmed by the Tribunal in the decision (supra) in quantum appeal, it is observed that the Tribunal confirmed the said disallowance due to retrospective amendment in law brought by the Finance (No.2) Act, 2009 w.e.f 01.04.2001. It is thus obvious that at the time when the assessee company filed its return for the AY 2005-06 on 31.10.2005 and revised return on 23.05.2006, the amended law introduced in the statute book by the Finance (No.2) Act, 2009 w.e.f. 1st April, 2001 had not come into existence. No penalty can be levied on the addition/disallowance made on the basis of retrospective amendment under the law. Thus as relying on Eastern India Powertech Ltd [ 2014 (11) TMI 374 - ITAT DELHI] , M/S DCM SHRIRAM CONSOLIDATED LTD., [ 2012 (7) TMI 941 - ITAT DELHI] , M/S. CHAMBAL FERTILISERS CHEMICALS LTD. [ 2014 (10) TMI 152 - ITAT JAIPUR] levy of the impugned penalty by the Ld. AO and confirmation thereof by the Ld. CIT(A) is wholly unwarranted, unjustified and is unsustainable on merits. Decided in favour of assessee.
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2023 (11) TMI 741
LTCG - Deduction u/s 54 on investment made in five house properties - partial deduction allowed as two flats purchased on the same floor cannot be considered as one unit as another flat is located between these two flats - investment in multiple houses - scope of amendment - HELD THAT:- In this case, the assessee had entered into an agreement with the builder and as per the development agreement, the assessee (land owner) parted from land and she was to receive 43.75 per cent of built up area, which was translated to 5 flats. The Hon ble High Court in Smt. V.R. Karpagam [ 2014 (8) TMI 899 - MADRAS HIGH COURT] held that the said five flats in the same building can be construed as a single unit and therefore, exemption u/s 54F can be allowed in respect of these multiple units. Amendment to section 54/54F whereby the words a residential house has been replaced with the words one residential house in India is applicable with effect from 01.04.2015 and prior to the amendment, the earlier legal position will continue to hold. It is also inferred that post amendment, i.e. after 01.04.2015, the exemption u/s 54 will be available only in respect of one residential house in India and not in respect of multiple houses. Amendment made available on the statute, vide the Finance (No. 2) Act, 2014 w.e.f. 01.04.2015 pursuant whereto the term a residential house had been substituted by one residential house in India , rather supports the fact that the restriction of making the investment in only one residential house had been made available on the statute only with effect from A.Y. 2015-16, and as such cannot be extended to the years prior to that. We find that our aforesaid view is fortified by the judgment of Hon ble High Court of Karnataka in the case of CIT Vs. Khoobchand M. Makjija [ 2013 (12) TMI 1525 - KARNATAKA HIGH COURT] Since the issue pertains to assessment year 2013-14 i.e. before the amendment in the statute the appeal of the assessee is hereby allowed.
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2023 (11) TMI 740
Additions u/s 69B - Unexplained cash payments towards purchase of land - As argued assessee was never allowed to cross examine the seller of the land or Shri JM(who is maintaining the records and claimed to be arbitrator of the deal and was searched) though request during the assessment proceeding was made - AO tried to correlate the impugned Agreement for Sale with the excel sheets recovered from the digital data impounded from the premises of Shri JM whereas the Ld. AO finalized the assessment of Shri Mori accepting that transaction as per excel sheet not material transaction and no addition was made though proposed by the ADIT - HELD THAT:- AO was of the opinion that as the cheque payment in the account has been treated as genuine, then, cash deposit appears in the same file should earned same treatment. But the persons name figured in the agreement in question never admitted of making payment in cash. Moreso, the agreement for sale doesn t correspond to the market value of the land as such. Time and again, we have said that no independent materials are in the possession of the Revenue so as to prove that cash payment made for the land in question. The material found from Shri Mori was neither prepared by him nor known to him as the same was sent by Raghuvir Buildcon Pvt. Ltd. for their personal use via Shri Mori; no counter statement to this effect has been forthcoming from any of the parties during search or post search. Non-filing of the complaint against false allegation/charge in regard to cash exchanged hands with mutual consent of both the parties by the assessee as alleged by the Ld. AO is of no consequences in the absence of any provision under the Act of filing any complaint against the reopening of assessment based on belief of escapement of income. We find that this particular aspect of the matter has duly been taken care of by the Ld. CIT(A). Such an allegation made by the Ld. AO as said to be premature and not sustainable at all is found to be proper. When the assessee was never a party to the deal as per the alleged agreement for sale dated 05.05.2011 neither there any mentioning of the assessee having paid cash on-money in any of the impounded materials, particularly, when the assessee entered into deal after the alleged agreement to sale, the question of interest payable for delayed payment by her doesn t and cannot arise as the very basis of alleged original agreement to sale dated 05.05.2011 is not binding on her. Relevant to mention that the husband of the assessee became the director of the company much after the agreement for sale, only in the month of January 2014. Apart from that the Ld. AO neither referred the matter to the Ld. AO for ascertaining the valuation of the land before making addition. We find that the entire aspect of the matter has already discussed by us hereinabove were duly taking into consideration in its proper perspective by the Ld. CIT(A) and deleted the addition made by the Ld. AO, which in our considered opinion is just and proper so as to warrant interference. With the above observation, the Revenue s appeal is, therefore, found to be devoid of any merit and thus dismissed. Reopening of assessment on the basis of recording of reasons on admittedly incorrect facts is, in our considered opinion, does not have legs to stand. The same is found to be not maintainable and void ab initio. Thus, the entire proceeding is quashed. Undisclosed capital gain - Reopening being made on incorrect fact recorded by the Ld. AO to this effect that the assessee is a seller and has escaped assessment of capital gain is found to be absolutely wrong. The very basis, if, found to be incorrect the further proceeding cannot be said to be justified standing on wrong footing and thus, liable to quashed. In that view of the matter, we are inclined to accept the case made out by the assessee in holding the entire proceeding is bad as the same was originally based upon the wrong recording of fact by the ITO while reopening the assessment. Thus, proceeding is thus void ab initio and therefore quashed. The Assessee s appeal is allowed. On money payment - CIT(A) in deleting addition as the assessees were never a party to the deal as per the disputed Agreement for Sale dated 05.05.2011 and the husbands of these assessees became the Directors of the company much after the disputed date of Agreement for Sale. If that be so, the assessees cannot be said to be the party to on money payment as alleged by Revenue, particularly, when there was no mentioning of paying cash on money in those impounded materials. Apart from that, the assessee entered into the deal as subsequent to the Memorandum of Agreement, the interest on delayed payment as alleged to have been made by these assessees cannot be accepted as the same is not attributable to them. The original Agreement to Sale is not binding on them. Neither District Valuation Officer was referred in respect of valuation of the land by the Ld. AO. Under these premises, the deletion of addition made by the Ld. CIT(A) is found to be logical.
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2023 (11) TMI 739
Net profit determination - DR submitted that in the line of business of the assessee, the net profit is not less than 8% and, therefore, the learned Assessing Officer rightly estimated the same - HELD THAT:- According to the assessee, the commission he gets in fertilizer business itself is less than 8% and after meeting the expenditure, his net profit is around 3% of gross sales; whereas according to the Revenue, estimation of net profit @8% is reasonable. Neither of them produced any evidence to support their figures. Keeping in view the smallness of amount involved, we deem it just and proper not to restore the issue to the file of the learned Assessing Officer to conduct the entire exercise of assessment de novo, but instead, it is better to put a quietus to the issue by taking a pragmatic view as to the net profit in this case. We deem it reasonable to adopt the net profit @6% and it would meet the ends of justice. direct the learned Assessing Officer to adopt net profit in this case @6% of the gross sales. Addition u/s 69A - deposits into bank cash including demonetized currency - HELD THAT:- Assessing Officer does not dispute the genuineness of deposit of cash in the entire year and during demonetization period. The natural inference that must have been drawn by the learned Assessing Officer is that such cash forms part of the gross sales. Then, there is no reason for the learned Assessing Officer to dispute the genuineness merely because it was in specified notes. Revenue does not say that there was no cash in hand in the business conducted by the assessee. In these circumstances, having regard to the volume of business and also cash deposits in the entire year and also during the demonetization period relating to such business, there is no reason not to believe that the deposits in specified notes was also part of cash sales. Since the net profit is estimated, this particular deposit cannot be brought to tax separately. Hence, the learned Assessing Officer is directed to delete the same. Appeal of the assessee is allowed in part.
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2023 (11) TMI 738
Deduction u/s 80IA - rate of electricity transferred by the three captive units to the assessee and the rate which ld. TPO has applied and corresponding adjustment - whether sale of electricity by an eligible unit entitled for deduction u/s. 80IA which has supplied power from its three captive power plants, can the market value be the price which is available for purchase in the open market by manufacturing units? - HELD THAT:- This issue has been dealt in detail by the Tribunal in the case of M/s. Tata Chemicals Ltd [ 2023 (10) TMI 654 - ITAT MUMBAI ] in detailed which has been finally concluded wherein the Tribunal has clearly held that for the purpose of 80IA(8), clause (i) of Explanation would apply with reference to price at such goods or services would ordinarily fetch in the open market and since power purchaser of power in the facts of the present case is the consumer of the power and not a distributor of the power, the open market rate to be considered in the market where electricity sold to the consumers. Here the assessee has paid the purchase power to DISCOMs at the same rate which it has paid to its captive power plants. Thus, this contention raised by the Revenue is dismissed. Application of safe harbour rules - As held that there is no application of safe harbor rules to Clause (i) of the Explanation to Section 80IA and accordingly, the decision of the Hon ble Jurisdictional High Court in the case of Reliance Industries Ltd. [ 2019 (2) TMI 178 - BOMBAY HIGH COURT ] would clearly apply. Can rate of supply of power by the DISCOMS can be held to comparable with the captive power plants unit of the assessee? - As average market value in Indian Energy Exchange platform is less than Rs. 7.64 and Rs. 8.46 adopted by the assessee and therefore, the rate of purchase of power by DISCOMs is more than fair, however, there is no such data which has been provided to us and apart from that, the rates on which power is available through Indian Energy Exchange cannot be applied, because these are not the rates to the consumers but rates to the DSICOMs. Thus, our same reasoning given in the decision of M/s. Tata Chemicals Ltd. [ 2023 (10) TMI 654 - ITAT MUMBAI ] will apply to the case of the assessee , this issue is decided in favour of the assessee and consequently the entire adjustment made by the ld. TPO is directed to be deleted. Disallowance of interest paid on Perpetual Non-Convertible Debentures (PNCDs) - HELD THAT:- As decided in assessee own case [ 2022 (12) TMI 1477 - ITAT MUMBAI] interest paid on debentures is allowable deduction u/s 36(1)(iii). Disallowance of expenditure incurred on compensatory aforestation - case of the assessee was that, whenever an authorised land is required to be diverted for non-forest purposes, i.e. industry or mining etc., the forest clearance is required to be obtained by lessee or user agency in accordance with the applicable provisions of Forest Conservation Act, 1980 and various guidelines issued by the Ministry of Environment, as forest climate changes from time to time - HELD THAT:- As CIT(A) elaborated various prior approvals and procedure laid down by the Ministry as well as Hon ble Supreme Court direction in case of T.N. Godavarman Thirumulipad vs. Union of India Ors [ 2006 (5) TMI 550 - SUPREME COURT ] wherein it was observed that compensatory aforestation fund was to be created in which of the monies received from the user agency towards compensatory aforestation, etc., same shall be deposited and such fund can be utilized for undertaking for aforestation and re-generation and production of forest. We find that this issue has been decided in A.Y. 2016-17 and 2017-18 [ 2023 (2) TMI 1215 - ITAT MUMBAI] in the favour of assessee as held it is not a case of equity and the issue of perpetual bonds is only borrowing made by the assessee. Since the said borrowing has been used for business purposes of the assessee, the interest paid thereon would be squarely allowable as deduction u/s 36(1)(iii). Disallowance of provision for leave encashment - HELD THAT:- We find that assessee in the computation of income has added back sum in the manner provided above. In so far as the amount which has been claimed which has been certified by the auditor comprises of amounts actually paid during the year before the filing the return for A.Y. 2019-20 which is also evident from note 2 of the TAR. Once the claim has been made towards leave encashment on payment basis alone and there is no excess claim of the amount which has been paid during the year and the same has to be allowed. Disallowance u/s 14A r.w.r 8D - computation and allocation of particulars of expenses - assessee has given the entire basis of computation of disallowance which was based on allocation of administrative and management expenses which included employee cost, rent expenses, electricity charges, maintenance expenses and other office overheads and other allocable expenses - HELD THAT:- From the perusal of the allocation of expenses, it is seen that assessee has classified cadre of employees involved in investments functions, their roles and responsibilities, their functions, designations, salary and time allocated to investment activity. Apart from that, assessee has also taken proportionate disallowance of rent, electricity, maintenance expenses and other office overheads. On such details and analysis of expenditure and allocation, nowhere ld. AO has rebutted or recorded his satisfaction as to what was the defect in any such allocation having regard to the accounts maintained by the assessee and has given his general remark, like investments cannot be managed without monitoring and research, etc. and has given various observations of the kind of cost which are involved without any further analysis, whether these cost can be allocable for the earning of exempt income when most of the investments have been made in group companies. Such an approach of the ld. AO completely overlooking the detailed analysis and allocation given by the assessee for offering suo moto disallowance and without even examining them having regard to the nature of expenses and accounts maintained by the assessee, cannot be upheld. It is imperative that AO has to record his satisfaction on the claim made by the assessee having regard to the accounts. Certain remarks of the AO that lot of expenses are incurred on market research and survey before making the investments is not applicable on the facts of the present case. Moreover, he has not even analysed the entire working and allocation of the cost given by the assessee and therefore, he cannot proceed to make disallowance mechanically under rule 8D for purpose of section 14A. Accordingly, such a disallowance made by the ld. AO is deleted. Addition u/s. 14A to book profit u/s. 115JB - This issue is now stands covered by the decision of assessee s own case for the A.Y. 2016-17 and 2017-18 [ 2023 (2) TMI 1215 - ITAT MUMBAI] and the decision of Hon ble Bombay High Court in the case of CIT vs. Bengal Finance Investment P. Ltd. [ 2015 (2) TMI 1263 - BOMBAY HIGH COURT ] Thus, disallowance u/s. 14A in the book profit is deleted. Computation of book profit u/s. 115JB - As assessee submitted that already rectification application u/s 154 has been filed before the ld. AO which is pending. He thus requested that direction to be given to the ld. AO to dispose of the rectification application. Accordingly, we direct the ld.AO to dispose of the rectification application filed by the assessee.
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2023 (11) TMI 737
Assessment orders communicated without mentioning DIN - HELD THAT:- It mandates that on or after 1st day of October, 2019, no communication will be issued without a computer generated DIN, which has to be quoted in the body of the communication In the facts of the present appeal, admittedly, though, the assessment orders have been issued without mentioning the DIN, however, in the body of the assessment orders, the AO has neither provided reasons for issuing the assessment orders without DIN, nor he has mentioned the number and date of approval of the competent authority. Paragraph 4 of the extant circular states that any communication, which is not in conformity with paragraphs 2 and 3 of the circular shall be treated as invalid and shall be deemed to have never been issued. Thus, keeping in view the clear language of the aforesaid Circular, the assessment orders have to be declared as non-est and deemed to have never been issued. While coming to such conclusion, we find support from various judicial precedents cited before us by learned counsel for the assessee, including the decision of Brandix Mauritius Holdings Ltd [ 2023 (4) TMI 579 - DELHI HIGH COURT] .
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2023 (11) TMI 736
Net profit estimation of firms involved in cheque discounting and commission earned thereon - Disallowance of expenditure claimed against gross commission income while allowing only 5% of the expenditure claimed - as argued in case of similar business of cheque discounting in case of group Company Jalaram Finvest Limited, the same AO has accepted the net profit in the range of 9.50% to 12.50% of the gross commission income and hence estimation of 95% net profit by the CIT(A) without any evidence or comparable case is bad in law and illogical - HELD THAT:- It is an admitted position that the assessee is keeping the record of commission income and from the statement it emerges that the commission paid to other shroffs is also reflected from various statements. The fact in case of Jalaram Finvest Limited, net profit which was shown at 9.5% to 12.5% should have been adopted in assessee s case is justifiable as the assessee is also dealing with the cheque discounting and commission on not just directly but through various other shroffs for whom the assessee has to pay commission in part. The net profit at 25% of gross commission adopted in Dahyalal I. Thakkar, the same rate should be adopted in the case of assessee as well as the same is justifiable through various records of commission income earned as well as commission paid to other shrifts by the assessee. Observation of the CIT(A) that there is no documentary evidence appears to be incorrect as the assessee has given clarification to that extent by giving the modus operandi of the working of the cheque discounting and commission paid thereon. The Revenue at no point of time disputed that the assessee is also providing cash to various parties on cheque and also taking cash for which the assessee is issuing cheque. Thus, the expenditure worked out at Rs. 75,388/- appears to be not justifiable and it is hereby directed to the Assessing Officer to give credit of the expenditure by allowing the same at 25% of gross commission as expenditure and quantify the same.
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2023 (11) TMI 735
Exemption u/s 11 - adjustment u/s 143(1) by CPC - trust has not e-filed the audit report in Form 10B one month prior to the due date for filing return u/s. 139(1), hence exemption claimed u/s. 11(1)(d) and Sr. No. 4i to 4viii of Part B- TI is not allowable - Assessee argued audit report could not be filed within the stipulated date due to several glitches in the New E filing portal and also the CA faced technical glitches in filing the same. The filing of audit report is directory and not mandatory and exemption cannot be denied merely for that reason. HELD THAT:- As intimation u/s. 143(1) deals only with prima facie adjustments in respect of apparent information in the return and when a claim requires further inquiry, it cannot be disallowed without giving opportunity to the assessee. This issue is settled in the case of Veerappampalayam Primary Agricultural Co-op. Credit Society [ 2021 (4) TMI 1169 - MADRAS HIGH COURT] in favor of the revenue, accordingly this ground is dismissed. Assessee submits that the income has to be computed on the total income and not on the entire gross receipts - Tax should be charged on the total income and not on the entire gross receipts. Further, intimation is passed u/s. 143(1) by the CPC. Assessee has filed return declaring income which has not been examined by the lower authorities and therefore for computation of income as per the Act, the matter should go back to the AO for computation of total income in the above terms. Accordingly, this issue is remitted to the AO for the purpose of verification and computation of total income as per law after giving reasonable opportunity of being heard to the assessee. The assessee is directed to file necessary documents and not to seek unnecessary adjournment. Claiming benefit of exemption duirng regular assessment or Appellate Stage - Audit report could not be filed in time due to technical glitch in the e-portal of the department - The assessee has submitted the reasons for non-filing of audit report within the stipulated date due to technical glitches in filing the audit report on the e-portal of the department and this grievance was submitted to the CPC. The ld. AR placed reliance on the judgment of the Hon ble Supreme Court where it is held that period from 15.3.2020 to 28.2.2022 shall stand excluded and in cases where limitation would have expired during the above period, time limit of 90 days or actual balance time (whichever is higher) shall be available from 01.03.2022 for filing appeals etc. Form 10B which was filed along with return on 15.03.2022 due to technical glitches in filing the Form 10B in the e-portal of the department as explained above by the assessee. In view of Hon ble Supreme Court judgment cited supra there is no delay in filing of Form 10B by the assessee and it is within the time allowed. The AO is directed to grant exemption claimed by the assessee in accordance with law. Appeal by the assessee is partly allowed for statistical purposes.
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2023 (11) TMI 734
Reopening of assessment - reopening after a period of four years - assumption of jurisdiction u/s 147 r.w. Section 148 r.w. Section 151 - Original assessment was made u/s 143(3) - HELD THAT:- A perusal of the case record would show that a completed assessment has been reopened on the grounds of purported misuse of National Stock Exchange Platform to obtain contrived loss and siphon out profits earned having regard to the information disseminated by ADIT (Inv.) Ahmedabad. AO has neither incorporated transaction-wise detail in the reasons recorded alleging fictitious losses nor it has been recorded anywhere in the reassessment proceedings. The so called belief formed towards escapement and initiation of vexatious proceedings is apparently without any elementary details. On a reading of reasons recorded, it gives an impression that AO has acted on dotted lines at the dictate of investigation wing without application of mind on the basic and elementary facts. While recording the reasons, AO has not taken cognizance of the fact that assessment has already been framed u/s 143(3) of the Act in the past. Once the assessment has been carried out u/s 143(3) of the Act, the 1st proviso casts exemplary burden on the Revenue to shun embargo of limitation. The onus lies on the Revenue to point out that there is a failure on the part of the assessee to disclose material facts fully and truly indeed. The onus placed by 1st proviso has been clearly overlooked in the instant case. It is apparent that Pr.CIT has also acted perfunctorily while granting approval sought by AO under the shelter of Section 147(b) as pointed out on behalf of the assessee. We have thus no hesitation to hold that the jurisdiction assumed u/s 147 in the instant case suffers from multiple jurisdictional defects and hence such assumption of jurisdiction is outside the legal framework so provided. The action invoked by the AO and Pr.CIT are justiciable the jurisdiction assumed cannot be reactivated beyond the particular stage and after a lapse of time limit. It is evident that notice issued u/s 148 is without jurisdiction and consequent reassessment framed for Assessment Year 2009-10 in question is bad in law and hence quashed. Assessee appeal allowed.
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2023 (11) TMI 733
Addition u/s 69A - unexplained deposits/credit entries - HELD THAT:- As money belongs to assessee also as the assessee failed to file satisfactory explanation or reply in regard to the deposits/credit entries in his saving bank accounts is treated as assessee's unexplained income in term of Section 69A of the Income tax Act, 1961 and added to the returned income of the assessee. In first appeal, the ld. CIT(A) has confirmed the action as narrated above. The Bench has meticulously gone through the entire episode in this case and where his grievance is that the Assessing Officer was not justified in making assessment in his hands and not making the same in the hands of the actual owner of the money. The Bench feels that the object of the Court is to provide adequate justice to the assessee and it will be in the interest of equity and justice to restore the matter to the file of the AO to decide it afresh but providing adequate opportunity of being heard to the assessee. The Assessee is also directed to submit all the necessary details / submissions including the submissions produced before us before concerning the issue before the AO to dispel the doubt in the case. Hence, the appeal of the assessee is allowed for statistical purpose.
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2023 (11) TMI 732
Estimation of profit when books of accounts are rejected - determining the total assessable income - HELD THAT:- We find it to be most suitable and reasonable to apply the average profits earned by the assessee itself in the comparable years under which the business activities of the assessee firm were identical. We, therefore, are of the considered opinion that average percentage of profit for the FY 2011-12 to 2016-17 (except FY 2012-13) which comes to 0.57% (average of 0.91+0.09+0.37+0.68+0.81) shall be the most reasonable percentage of profit to be applied on the sales turnover of the assessee for AY 2013-14. However, since the assessment u/s 143(3), wherein certain additions were made, resulting the profit of the assessee assessed at Rs. 4.04 crore i.e. 2.21% of total sales turnover of Rs. 183.35 Crores. We find it appropriate to apply the rate of 2.21% on the sales turn over of the assessee firm to estimate its net profit margin from business of assessee for the AY 2013-14. Income from Interest and commission to added separately as directed by the order of Ld CIT(A). No infirmity in the order of Ld CIT(A) apart from rate of profit adopted for estimation of net profit margin while rejecting books of accounts u/s 145(3) of the Act, thus, we modify the order of Ld CIT(A) by scaling down the percentage of net profit margin to 2.21% on sales turnover for estimating the same while determining the total assessable income. Ld AO is directed to work out the estimated income from business accordingly. In the result appeal of the assessee is partly allowed .
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2023 (11) TMI 731
Estimation of notional interest income for making the disallowance out of interest expenditure - AO reproduced the details of eight entities to whom the assessee has given loan between 01.04.2013 and 31.03.2014 on which interest rate was determined but not charged - HELD THAT:- As the assessee has demonstrated that it is in the business of finance. It has earned interest income on the loans advanced by it at Rs. 2.38 crores during this activity, there could be certain situation, where it failed to receive interest from all its loanees. The ld. Assessing Officer ought to have not over emphasized about the conduct of the assessee for not charging the interest. It is just a normal business incident and in the absence of any interest income, according to the assessee, the notional interest income cannot be estimated for making the disallowance out of interest expenditure. We allow this ground of appeal and delete the addition. Disallowance of garden visit expenses - AO has disallowed 10% of such expenditure on the ground that certain payments have been made through self-made vouchers without any addresses of the recipients - HELD THAT:- AO has unnecessarily disbelieved the vouchers of petty expenses for adopting a method of disallowing expenditure on adhoc basis. He has not specifically pointed out which vouchers were doubtful and how the nature of expenses could be construed as not related to the business. Therefore, the findings of the ld. Assessing Officer is not sustainable. Disallowance out of the first head of expenditure is deleted. Disallowance of car expenditure - It has pointed out which car is being used by which partners or the employees - We find that the assessee has been maintaining details and ld. Assessing Officer has not pinpointed any specific thing except observing that log-book is not maintained. It is to be appreciated that nowadays facility of small cars is not a luxury, rather a necessity and it is quite difficult to maintain log-book by a businessman. The ld. Assessing Officer ought to have not devoted much energy on such type of petty issues. Disallowance of telephone expenses - There is no disallowance out of telephone charges because it is not the era of old days when thirty rupees was required to pay by talking on STD for a minute. Every individual is having mobile phone number and the data is quite cheap. Therefore, this type of disallowance is not sustainable. We allow all these three grounds of appeal and delete the disallowances. Appeal of the assessee is partly allowed.
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Customs
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2023 (11) TMI 773
Jurisdiction - Power of assessing authority u/s 28 of Customs Act to assess the IGST - Import of Wet Dates (Processed dates) - Claim of exemption from payment of IGST under the Notification No.02/2017-Integrated tax (Rate) dated 28.06.2017 - whether the order impugned in Exhibit P-1 is without jurisdiction and void ab initio? - HELD THAT:- Sub-section (15) of Section 2 defines duty which means customs duty. Section 28 empowers the assessing authority to assess and recover the duties not levied, not paid, short levied or short paid or erroneously refunded. Section 28 therefore is not only in respect of duty which means customs duty but, it is in respect of duties which may be applicable on imported item/goods. Even otherwise, the assessment order is defined under Sub-section 2 of Section 2 of the Customs Act empowers the assessing authority to determine the dutiability of any goods and the amount of duty/tax, cess or any sum so payable under the Customs Act or Customs Tariff Act, 1975 (51 of 1975) or under any other law for the time being in force, with reference to exemption or concession of duty, tax, cess or any other sum, consequent upon any notification issued therefor under the said Act or under the Customs Tariff Act or under any other law for the time being in force. The petitioner has claimed exemption from payment of IGST under the Notification No.02/2017-Integrated tax (Rate) dated 28.06.2017. Therefore, the competent authority is empowered to make assessment regarding claim of exemption from the IGST under Section 28 of the Act. There are no substance in the writ petition. This writ petition appears to be wholly misconceived, and it is hereby dismissed.
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2023 (11) TMI 730
Refusal of bail - offences under the provisions of the Customs Act, 1962 read with Section 120B IPC - petitioner has been in custody for more than 15 months and also deposited the penalty amount which he was required to by the adjudicating Authority - HELD THAT:- This Court is of the opinion that the petitioner deserves to be enlarged on bail. The petitioner is directed to be enlarged on bail subject to such terms and conditions as the Trial Court may impose including the one that he shall not contact the other accused. Petition disposed off.
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2023 (11) TMI 729
Seeking writ of prohibition restraining the respondent from adjudicating SCN - barred by limitation in terms of Section 28(9) of the Customs Act, 1962 or not - conclusion of proceedings in view of second proviso of Section 28(9) of the Act, 1962 - HELD THAT:- As per the facts given by the petitioner in the writ petition, the petitioner was aware about the notice dated 05.12.2022 (Annexure P-3) and, thereafter, adjournments were sought by the petitioner for personal hearing as well as for filing reply, as per details given in para No. 7 of the writ petition. The petitioner appeared for the first time for personal hearing on 01.02.2023 and it was made aware of the extension granted for adjudication of the case by Chief Commissioner of Customs under Section 28 (9) of the Act, 1962, vide letter dated 15.12.2022 (Annexure R-1). The said facts clearly make out that it was on account of non-appearance of the petitioner that the matter was kept adjourned and the same was not concluded. As per the petitioner, it had placed on record the submissions dated 31.01.2023 (Annexure P-8) and additional submissions dated 01.02.2023 (Annexure P-9). These submissions were placed on record by the petitioner after the extension was granted vide letter dated 15.12.2022 (Annexure R-1) and since the petitioner itself has taken time, after issuance of notices both dated 28.01.2022 (Annexures P-1 and P-2) for filing reply, the delay cannot be attributed to the respondent for not adjudicating show cause notices. Moreover, the extension was rightly granted, keeping in view letter dated 09.12.2022 (Annexure P-12), placed on record by the petitioner. There are no ground to entertain the present writ petition and restraining the respondents from adjudicating show cause notices is made out - petition dismissed.
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2023 (11) TMI 728
Maintainability of petition - principles of Territorial Jurisdiction of High Court - Where the cause of action arisen? - Validity of notifications restricting benefit of exemption - Denial of exemption from customs duty on export of goods - Payment in cash instead of letter of credit as a pre-condition as per the notification - whether a cause of action, wholly or in part, has arisen for exercise of power conferred under Article 226(1) of the Constitution of India has been laid down, in various facts and circumstances, having universal application, in series of decision by the Hon'ble Supreme Court? HELD THAT:- In the case of UNION OF INDIA VERSUS ADANI EXPORTS LTD. [ 2001 (10) TMI 321 - SUPREME COURT] , somewhat similar facts as in the present case, had arisen for consideration. On facts, that was a case where claim of the benefit of the Passbook Scheme contained in Import Export Policy in relation to certain credits to be given on export of shrimps was involved. The respondents therein claimed benefit on the basis of export of prawns and import of the inputs. It was an admitted fact that the benefits, which the respondents therein were seeking, were to be extended through the port situated at Chennai. As those benefits were not admitted for various reasons, the respondents therein filed special civil applications before the High Court at Ahmedabad. Had it been a case that the respondents have refused to grant the benefit of exemption from payment of customs duty only on the ground of payment through cash mode, it would have been an integral part of cause of action as the petitioner was required to prove this fact, unless traversed, to succeed in getting the relief sought in the writ petition. All other facts stated in the petition, indisputably, which otherwise could be treated as integral part of cause of action, even according to the petitioner, have arisen outside the territorial jurisdiction of this Court. In the writ petition, it has been stated that a mail was sent for grant of clearance of goods, but the same has not been accepted. It has not even been averred categorically in the writ petition that the only operative reason was difference in mode of payment. It, therefore, appears that though the petitioner's grievance is mainly on account of non-clearance of goods despite fulfillment of the conditions incorporated in notification no. 50/2023-Customs dated 25.08.2023, on an assumption, without any factual basis, writ petition has been filed before this Court that benefit of exemption has been disallowed only on the basis of difference in mode of payment. Keeping that fine, but clear distinction as also applying the principle that the issue of territorial jurisdiction has to be decided on the pleadings as made in the writ petition, this Court lacks territorial jurisdiction to decide the merits of the case and the petitioner ought to have approached the appropriate forum. The objection to the maintainability of the writ petition on the ground of lack of jurisdiction is sustained - the writ petition is dismissed.
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2023 (11) TMI 727
Validity of Show Cause Notice (SCN) = Jurisdiction of Joint Commissioner of Customs (Port) to issue SCN u/s 124 of the Customs Act, 1962 - Item imported is free or not - HELD THAT:- The petitioner should have responded to the aforesaid show cause notice by giving reply and make out a case before the adjudicating authority. At this stage, no relief granted to the petitioner in this writ petition except extending the time to give reply to the aforesaid impugned show cause notice for a period of two weeks from date and directing the respondent adjudicating authority concerned to consider and dispose of such reply to be filed by the petitioner on the issue of the jurisdiction to issue impugned show cause notice, on the basis of notification dated 15th July, 2020 being Annexure P-2 to the writ petition, by passing a reasoned and speaking order after giving an opportunity of hearing to the petitioner or his authorized representatives within four weeks from the date of receipt of such reply to the impugned show cause notice and till such final order is passed on the issue of preliminary jurisdiction of the adjudicating authority there will be no further proceeding and any further proceeding in the impugned proceeding will depend upon the final order to be passed on the reply to such show cause notice. At the time of hearing, petitioner will be entitled to raise all the points with regard to the impugned show cause notice - petition disposed off.
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Insolvency & Bankruptcy
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2023 (11) TMI 726
Approval of Resolution Plan - waterfall mechanism - HELD THAT:- The claim filed by the Appellant was as Operational Creditor and it is not shown that Operational Creditor was entitled for any more amount as per Section 30(2)(e) under which the Operational Creditor is entitled for the amount equivalent to the amount which could have been paid to the Operational Creditor in event of liquidation as per waterfall mechanism under Section 53. In judgment of this Tribunal in in Department of State Tax, Through the Dy. Commissioner of State Tax vs. Zicom Saas Pvt. Ltd. Anr. [ 2023 (2) TMI 1170 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] , the submission on the basis of Rainbow Paper was considered and repelled and it was held that The Appellant having been treated as Operational Creditor allocation of amount in the Resolution Plan cannot be said to be in violation of Section 30 (2)(b). There are no grounds have been made to interfere with the order approving the Resolution Plan - appeal dismissed.
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PMLA
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2023 (11) TMI 750
Rejection of Bail application - Money Laundering - proceeds of crime - sale of property and receipt of cash - reliability of statement recorded under Section 50 of the PMLA, 2002 - burden of proof to prove non-involvement in the crime of money laundering - requirements under Section 45 of the PML Act, 2002 complied or not - HELD THAT:- It is necessary for the applicant to prima facie establish that he is not involved in the commission of offence under the PMLA, 2002 to enlarge on bail, therefore, this Court is now considering the factual matrix as projected by the applicant and the respondent to substantiate their respective stands. The submission made by learned Senior counsel for the applicant that the applicant has sold the property to Smt. Shanti Devi Chaurasia for consideration of Rs. 2.53 crore through registered sale-deed and through banking channels, which cannot be said to be amount of proceed of crime and his submission that allegations made by the respondent that the present applicant has received cash of Rs. 61.02 lacs over the above sale proceeds, which were then deposited into his bank account, is not proceed of crime, cannot be prima facie considered for releasing the applicant on bail as the applicant in his statement recorded under Section 50 of the PMLA, 2002 has admitted that Mr. Anurag Chaurasia and Smt. Shanti Devi Chaurasia have purchased the land and the sale proceeds of the firm was Rs. 2,53,59,842/- and he was working as Supervisor in the firm and in the further statement, he has admitted that he will submit invoice related to sale proceeds of Rs. 61,02,550/- but he has stated that he has no sale receipt as recorded on 26.10.2022. Taking into consideration the statement recorded under Section 50 of the PMLA, 2002, wherein he has stated that the excess amount of Rs. 61.02 lacs as proceed of sale of fruits but this was denied by one Chandrashekhar Sinha in his statement recorded under Section 50 of the PMLA, 2002 wherein he has stated that the bill produced by the present applicant is bogus. From these statements, it is quite vivid that prima facie involvement of the applicant is also in the commission of offence under the PMLA, 2002. As such, twin conditions which are required for grant of bail, are not available. Considering the records of the case, other material placed on record, which prima facie shows involvement of the applicant in crime in question, therefore, considering entirety of the matter, this Court is of the opinion that the applicant is unable to satisfy twin conditions for grant of bail under Section 45 of the PMLA, 2002, as such, it is not a fit case for grant of bail to the applicant - the bail application filed under Section 439 of the Cr.P.C. is liable to be and is hereby rejected. Application rejected.
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2023 (11) TMI 749
Seeking grant of anticipatory bail - Money Laundering - active member of extortion syndicate - transaction of cash money - non-arresting of the present applicant entitled him to get anticipatory bail in view of Section 19 of the PMLA, 2002 or not - twin conditions for grant of bail under Section 45 of the PMLA, 2002 are available or not. Whether non-arresting of the present applicant entitled him to get anticipatory bail in view of Section 19 of the PMLA, 2002? - HELD THAT:- Considering the fact that as per Section 19 of the PMLA, 2002, it is for the authority who on the basis of material in their possession, and reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person. The authorities while conducting the investigation has not opted for this option which was available with them, but it does not mean that the right of arrest to a person who is involved in the commission of offence under the PMLA, 2002 has come to an end. This can be exercised by them as and when the reasons are available with them for arresting. Thus, the submission that arresting of the present applicant has not been done by the Enforcement Directorate, therefore, the present applicant is entitled to be released on anticipatory bail. Thus, the applicant cannot claim anticipatory bail on the strength that during investigation, he has joined the investigation, though the authorities have power to arrest but they have not arrested him. Whether the twin conditions for grant of bail under Section 45 of the PMLA, 2002 are available on record to release the applicant by granting anticipatory bail? - HELD THAT:- In the present case, prima facie the Enforcement Directorate has collected certain material against the applicant, particularly the role played by him as he was an active member of the extortion syndicate and was focal point as all the extorted cash was deposited, stored and subsequently dispatched for utilization as per the instructions of Suryakant Tiwari. The material so collected by the investigation prima facie reflects that many hand written entries in the diaries were made by the present applicant only. Thus, he was knowingly and actively participated in the extortion racket and acted as the accountant who managed the illegal cash. It is also revealed during the investigation by Enforcement Directorate that the applicant is the brother and a close associate of Suryakant Tiwari who is the mastermind behind the present illegal coal levy scam at ground level, is having strong links with politicians and businessmen in the State of Chhattisgarh as Suryakant Tiwari being closely associated with Ms. Saumya Chaurasia, who is a highly influential individual in Chhattisgarh. The statement of present applicant recorded under Section 50 (2) of the PMLA, 2002, prima facie, involvement of the applicant is reflected. The material collected by the Enforcement Directorate has not been rebutted which also prima facie reflects about involvement of the applicant. The record of the case would further demonstrate that the applicant is unable to fulfill the twin conditions which are required for grant of bail under the PMLA, 2002, is equally applicable for grant of anticipatory bail, which has not been satisfied by the present applicant. Considering the above stated facts and law, gravity of offence, possibility of tempering of the witnesses and prima facie considering the fact that the applicant is unable to satisfy twin conditions of Section 45 of PMLA, 2002 for grant of anticipatory bail, the applicant is not released on anticipatory bail. Thus, the question is answered against the present applicant. The bail application filed under Section 438 of the Cr.P.C. is liable to be and is hereby rejected.
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2023 (11) TMI 725
Money Laundering - scheduled/predicate offence - illegal excavation and theft of coal from the leasehold area of ECL - main grievance of the petitioner is that he has been repeatedly summoned by the Directorate of Enforcement directing him to appear for questioning at the New Delhi office in connection with present ECIR, though he resides in Kolkata, West Bengal and the respondent has a zonal office in Kolkata. HELD THAT:- It is apparent from the reading of Section 50 of PMLA as well as decision in Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ] that the power conferred upon the authorities by virtue of Section 50 of PMLA empower them to summon any person whose attendance may be crucial either to give some evidence or to produce any records during the course of investigation or proceedings under PMLA. The persons so summoned are also bound to attend in person or through authorised agent and are required to state truth upon any subject concerning which such person is being examined or is expected to make statement and produce documents as may be required in a case. The investigation in the present ECIR is still continuing and the petitioner has only been summoned to appear and submit certain documents. Even otherwise, this Court has taken note of the order dated 10.05.2023 wherein the learned ASG had fairly submitted that the respondent will not take any action in respect of summons which have already been issued to the petitioner herein i.e. the nine summons issued to the petitioner till 21.03.2023, out of which the petitioner had appeared and got his statement recorded on one occasion - this Court finds no ground to quash the summons issued under Section 50 of PMLA to the petitioner. Seeking quashing of ECIR - HELD THAT:- This Court notes that the petitioner himself is not aware as to whether he is being summoned under Section 50 of PMLA as an accused or as a witness. It is also important to take note of the contents of the status report and the written submissions filed by respondent, i.e. Directorate of Enforcement in which it has been clearly stated that as of now, the respondent has not filed any prosecution complaint against the petitioner and he is yet not an accused in the present ECIR and it cannot be said that respondent is identifying the petitioner as an accused, in absence of any formal accusation to this effect. Since this Court is of the opinion that the petitioner s prayer for quashing of ECIR itself is premature as the status of the petitioner herein is not yet identified in the ECIR, thus, the contentions regarding cause of action in this case having arisen in State of West Bengal and prosecution complaints in ECIR being filed in New Delhi being illegal and without any jurisdiction, cannot be dealt with at this stage. This Court finds no ground to either quash the impugned summons or the ECIR registered by the respondent - This Court, however, is not deciding any question of law as to whether a man aged above 65 years can be summoned by the Directorate of Enforcement under Section 50 of PMLA at any place and whether the same will be in contravention of Section 160 of Cr.P.C., since the controversy involving applicability of Section 160 of Cr.P.C. to Section 50 of PMLA is pending adjudication before the Hon'ble Apex Court in case of NALINI CHIDAMBARAM VERSUS THE DIRECTORATE OF ENFORCEMENT ORS. [ 2018 (8) TMI 2080 - SC ORDER ]. It is directed that in the present case, the respondent will be at liberty to require the attendance of the petitioner herein (aged about 67 years) in its office situated at Kolkata by giving at least 24 hours notice - The petitioner being the Law Minister of the State of West Bengal itself where he wants to be examined will also ensure that no harm is caused to the officers of Directorate of Enforcement examining him at Kolkata as this relief is being granted to him at his request only. The present petition alongwith pending applications, stands disposed of.
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Service Tax
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2023 (11) TMI 724
CENVAT Credit - input services - place of removal - Training and Coaching Service - IT(Software) Services - CHA and Cargo Handling Services for Export - Warehouse and Storage services - land Survey Service - Hotel Broadway Services - HELD THAT:- The co-ordinate Bench in Maruti Suzuki's case [ 2016 (11) TMI 237 - PUNJAB AND HARYANA HIGH COURT] has held that the service tax was being paid on the Mandap Keeper services and Rent-a-Cab services and resultantly, it was held that it is part of the business expenditure incurred by the assessee to promote the sales and for efficiently running of the business and the appeals of the Revenue were dismissed. Resultantly, considering the fact that the co-ordinate Benches have already examined the aspect of the expansive view which has to be taken and the fact that the service is required as it is not only used in relation to manufacturing but also regarding the advertisement, sales promotion and storage, place of removal including recruitment, quality control coaching and training and computer network. The transportation of inputs or capital goods and outward transportation upto the place of removal are, thus, provided under Section 2(l) - The aspect of removal has also been clarified by the circular dated 28.02.2015 issued by the Ministry of Finance that it is to be given from the Port/ICD/CFS and only when the shipping bill is filed by the manufacturer or exporter or goods are handed over to the shipping line, the exporter would have no control over the goods. The Cenvat Credit has been rightly granted to large extent by the Commissioner and the benefit which had been declined has been rightly allowed by the Tribunal by modifying the order of the Commissioner. There are no question of law arising for consideration as projected by counsel for the appellant-revenue - appeal dismissed.
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2023 (11) TMI 723
Nature of transaction - Classification of services - Supply of Tangible Goods Services or GTA Services - supply of chassis by the appellant on which the specialized tanks/ equipments were mounted by M/s INOX - period from October, 2010 to March-15 - HELD THAT:- Undisputedly, appellant was issuing consignment notes to cover the transportation of the goods from premises of service recipient to various points and for such transportation he was paid tax on the fixed amount and variable amount, nature of payment will not alter the nature of transaction. The transaction continues to be governed by the documents made in this regard which are the consignment notes. These consignment notes clearly established that the service provided by the appellant was the services of GTA and it has been constantly held that once consignment notes are issued then there cannot be any doubt in this regard. In the case of SHRIPAD CONCRETE PVT. LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, SURAT-I [ 2023 (8) TMI 707 - CESTAT AHMEDABAD ], the issue has been examined both for pre-negative list period and post-negative list period and it was held that the appellant s service is correctly classifiable under Goods Transport Agency service for which service recipient M/s. Ultratech Cement Limited have discharged the service tax as required under Rule 2(d) of Service Tax Rules, 1994 under reverse charge basis. Therefore, the demand under the category of Supply of Tangible Goods service shall not sustain. As all the evidences available on record and the decisions as above clearly show that the transactions were of GTA, service tax has rightly paid by the recipient of service i.e. M/s Inox. Admittedly, in the present case entire tax due has been paid in respect of these transactions between the appellant and his client. That being, the same transaction could not be levied to service tax both at the hands of the service recipient and the service provider under different category of services. In this case, if these transactions were to be taxed under the category of SOTG, as has been held by the impugned order entire amount paid by the service recipient under the category of GTA services on the reverse charge basis should have been refunded - There is no scope of double transaction under the statute. The demand made in the present case after noting the payment of tax as the hand of service recipient the same transaction goes contrary to the Article 265 of the Constitution and hence cannot be sustained. The demand cannot be sustained on merits - issues of extended period of limitation, demand of interest and penalties imposed are irrelevant and are not being taken up - appeal allowed.
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2023 (11) TMI 722
Failure to discharge service tax liability - construction of complex service - works contract service or not - composite contract - recovery of service tax with interest and penalty - period January, 2006 to September, 2010 - HELD THAT:- The facts not in dispute are that the appellant being a developer, under an agreement with M/s Amco Batteries Ltd, the land owner, constructed seven residential blocks itself and by engaging subcontractors. The flats/apartments in the said residential blocks were sold to customers by entering into individual agreements with flat owners/buyers. Also, it is not in dispute that the appellant has rendered the services which are composite in nature i.e. comprises of both materials and services and paid state VAT in rendering works contract service. It is appellant s contention that for the period prior to 01.06.2007, the issue of levy of service tax on works contract service is covered by the judgement of Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] . For the period from 01.06.2007 to September, 2010, the appellant has discharged service tax under the category of works contract service . The service tax is not leviable on construction of complex service prior to 01.06.2007, being a composite contract in the nature of works contract service and for the period from 01.06.2007 to September, 2010, the appellant had discharged service tax under the works contract service . The impugned order is set aside - Appeal allowed.
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Central Excise
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2023 (11) TMI 748
Clandestine removal - undeclared production - unexplained income of Rs.1.00 crore - onus/burden to prove - HELD THAT:- On perusal of the show cause notice as well as Order-in-original that the impugned order is based only on the ground that there was unexplained income of Rs.1.00 crore which was detected by the income tax authorities and the Department has presumed that aforesaid income must have been the result of undeclared production and clandestine removal of excisable goods. Further, it is noted that if the Department has raised duty demand, then the onus of proving excess production and clandestine removal of excisable goods is on the Department. It is also noted that the impugned order is prima facie based on assumption and presumption and there is no evidence which may suggest excess production or clandestine removal of excisable goods by the appellant. It is found that in the case of M/S. OSCAR REMEDIES PVT. LIMITED, SHRI NAVDEEP DHINGRA, DIRECTOR VERSUS COMMISSIONER OF CENTRAL EXCISE ST, PANCHKULA [ 2017 (7) TMI 404 - CESTAT CHANDIGARH] , this Tribunal on identical facts relying upon the decision of VARDHMAN CHEMTECH LIMITED VERSUS CCE, CHANDIGARH [ 2016 (7) TMI 1320 - CESTAT, CHANDIGARH] has allowed the appeal of the appellant and set-aside the demand. The impugned order is not sustainable in law and the same are set-aside - Appeal allowed.
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2023 (11) TMI 721
CENVAT Credit - Capital goods and inputs used for Capital goods - Refractory material - invocation of extended period of limitation - suppression of facts or not - HELD THAT:- From the Order passed by the Adjudicating Authority, it is observed that he has been guided by the Larger Bench decision in the case of Vandana Global [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ]. The Appellant has provided proper Chartered Engineer s Certificate clearly specifying the usage of Steel items in various capital goods. The Tribunals/Courts have been consistently holding that when the capital goods that are embedded are required for manufacture of the finished goods, Cenvat Credit cannot be denied. Reliance can be placed in CCE, Trichy Vs India Cements Ltd. 2004 (175) ELT-476 [ 2004 (5) TMI 441 - CESTAT, CHENNAI ] where it was held that the credit would be admissible on Rebar coils, CTD bars, TOR Steel, joists and cement. Refractory items - HELD THAT:- They are required for maintenance of boiler and furnaces without which finished goods cannot be manufactured, hence the Cenvat Credit on the same cannot be denied. Extended period of limitation - suppression of facts or not - HELD THAT:- In the present case, no evidence has been brought in by the Revenue to fortify their allegation of suppression on the part of the Appellant. The Appellant has filed their Monthly Returns properly declaring the Cenvat taken by them on various counts. The Tribunals have been consistently holding that when the issue is that of interpretation, suppression clause cannot be invoked against the assesse. Therefore, the assesse could be having bonafide belief that they are eligible for Cenvat Credit. Accordingly, the demand in respect of the extended period is required to be set aside on account of time bar also. Appeal allowed both on merits as well as on account of limitation also.
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2023 (11) TMI 720
Lack of Jurisdiction - principle of comity and doctrine of impossibility - Wrongful availment of CENVAT Credit of service tax paid at Puducherry - credit is attributable to trading activity done at Bangalore unit of the company - nexus of input services to manufacturing activity. The first point argued by the Ld. Counsel for appellant is that Show cause notices issued to the appellant- manufacturing unit at Puducherry is without jurisdiction - HELD THAT:- The Head office situated at Bangalore is registered as ISD and thus distributed the credit to the appellant in terms of Rule 7 of CCR, 2004 - Rule 9 speaks about the documents on which credit can be availed. The main contention of the appellant is that as the Head Office at Bangalore has availed credit and distributed the same to the appellant- manufacturing unit at Puducherry, the excise formation at Puducherry lacks jurisdiction to allege wrong availment of credit, issue notice of demand to disallow the credit or recover the same. In other words, it is argued that the Puducherry unit being the unit which has received the credit which was distributed by Bangalore unit, the eligibility of credit cannot be questioned at the end of recipient unit. From Rule 14, it is clear that the wrongly availed credit is to be recovered from the manufacturer/ service provider. Rule 14 uses the words taken and utilised wrongly . Later, in 2008, the word and was substituted with or . It has to be stated that, whether be it AND or OR the demand can be made against the appellant-manufacturer who has utilised the credit for payment of duty - In the present case, the Bangalore unit is not able to utilise the huge credit. It is only the manufacturing unit that can utilise the credit for payment of duty. For this reason, we have to say that the Show Cause Notice issued to the appellant- Puducherry unit is well within the jurisdiction. The method of ISD registration and distribution between several units of a corporate body is a facilitation by which the availment of credit is made convenient when there are more than one unit. The tax paid on input services is availed as credit by the Bangalore unit (ISD). Usually, the invoices are raised in favour of Head office by the service provider even though the services may be consumed in other units. The ISD unit therefore avails the credit on behalf of the other units and then distributes it as per provisions of law - the appellant manufacturing unit who has received the credit distributed by the ISD unit cannot be said to be a recipient unit in literal sense so as to oust the jurisdiction of the formations at Puducherry - the issue on jurisdiction is answered in favour of Revenue and against assesse. The credit availed on various input services prior to 01.04.2011 have been denied alleging that there is no nexus for input services with the manufacturing activity. Prior to 01.04.2011 all these services the definition of input services had a wide ambit as it contained the words activities relating to business . So for the period prior to 01.04.2011 are availed for activities relating to the credit availed is eligible as these services are business of the manufacturer. For the period after 01.04.2011 it can be seen that in the appellant s own case the credit availed on all services, except Housekeeping services and AMC/warranty services have been allowed. The department having allowed the credit for certain period cannot deny credit for other subsequent/different periods. Credit is availed on exempted services (trading) - HELD THAT:- In the present case, the trading activity takes place mainly at Head office at Bangalore. The credit availed in respect of trading at Bangalore unit is only Rs.9,49,60,261/- on the total turnover. There is a huge balance of unavailed credit or undistributed credit lying in stock with the Bangalore unit. This being so, it cannot be alleged that the credit in respect of trading has been distributed. The Departmnet has not been able to explain as to how Rs.1,73,60558/- pertains to trading when the credit has been distributed to the appellant unit. It is settled law that it is not required that there should be one to one correlation for availment of credit or utilisation. The same would apply for distribution of credit by ISD also. This being so, the explanation put forward by appellant with their consistent plea is tenable and acceptable. The denial of Cenvat Credit for different periods and the demand raised thereon cannot sustain. The issue on merits is answered in favour of assessee and against the Revenue - Appeal allowed.
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2023 (11) TMI 719
CENVAT Credit - input service - services availed by the appellant with respect to renovation, repairs and modernizations of its plant and machinery - case of the department is that the said services relate to industrial and commercial construction services/work contract services pertaining to civil works and would not be input services as defined under rule 2(1) of the CENVAT Credit Rules, 2004 - HELD THAT:- It would be seen from the definition of input service in rule 2(l) of the Rules that while the means part of the definition has continued to remain the same pre amendment or post amendment, but the includes part and the excludes part of the definition of input service have underdone changes. Though services used in relation to setting up of a factory was included in the inclusive part of the definition of input services prior to 01.04.2011 but it was deleted w.e.f. 01.04.2011. The excludes part in the definition of input service was added w.e.f. 01.04.2011 and it provided that services specified in certain sub-clauses of clause (105) of section 65 of the Finance Act in so far as they were used for construction of a building or a civil structure or a part thereof would be excluded w.e.f. 01.04.2011. It is also seen that the excludes part of the definition of input service was further amended w.e.f. 01.07.2012. When input service under rule 2(l) includes any service used in relation to modernization, renovation or repairs of factory either prior to 01.04.2011 or from 01.04.2011 upto 30.06.2012 or w.e.f 01.07.2012, the appellant would be entitled to avail CENVAT credit of the input service received in relation to renovation or repairs of factory and merely because w.e.f. 01.04.2011 the construction of a building or a civil structure or a part thereof has been excluded from the definition of input service would not mean that any service used in relation to renovation or repairs of factory would stand excluded from the definition of input service. The exclusion part would cover constructions at the time of setting up of the plant and would not include the repairs or renovation works. This issue stands decided in favour of the appellant by the Tribunal in M/s. Jai Balaji Industries Ltd. vs. Commissioner of Central Excise, Customs Service Tax, Durgapur [ 2022 (8) TMI 468 - CESTAT KOLKATA ] where it was held that the Appellants have correctly taken credit of service tax paid/borne in respect of all services which were used for the Coke Oven Project as part of the modernization/renovation plan of the existing plant/factory. In view of the decision of the Tribunal rendered in Jai Balaji Industries, the order passed by the Commissioner (Appeals) denying the CENVAT credit to the appellant merely for the reason that though the services that had been rendered were renovation or repair services which the appellant had received would be covered by the includes part of the definition but the appellant cannot avail CENVAT credit because of the exclusion clause cannot be sustained. The order dated 26.08.2020 passed by the Commissioner (Appeals) is, accordingly, set aside - appeal allowed.
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2023 (11) TMI 718
Classification of goods - Salmonella Antigens - classifiable under Central Excise Tariff 3822 or 3002? - HELD THAT:- The classification of product WIDAL-SALMONELLA ANIGENS KIT would be correct by classified under Chapter heading 30.02, as claimed by the assessee. In view of the above decision of this Tribunal which is based on this Tribunal s earlier order dated in the appellant s own case M/S. RECKON DIAGNOSTICS VERSUS COMMISSIONER OF CENTRAL EXCISE, VADODARA [ 2011 (10) TMI 93 - CESTAT, AHMEDABAD] , the issue is no longer res-integra. The impugned order is set aside - Appeals are allowed.
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CST, VAT & Sales Tax
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2023 (11) TMI 717
Stay of Demand / Waiver of pre-dposit - Validity of assessment order - compliance with the condition of pre-deposit of 25% of the additional demand under Section 62 (5) of the PVAT Act - HELD THAT:- The balance sheet for the financial year 2020-21 placed on record by the petitioner (P-6) is not being disputed by the respondent. It is not in dispute that if the petitioner will be forced to pay 25% pre-deposit, he will not be able to pay the instalments of the loan. He is also paying GST regularly to the department and if he will shut down the business, it will lead to cancellation of GST registration. Thus, the condition of 25% pre deposit is liable to be modified, keeping in view the fact that the petitioner is in hug debt. In the present case, the petitioner is in debt and is paying instalments of loan regularly and this fact is not being disputed by the respondents. Hence for all intents and purpose, the petitioner in order to run the business should be able to make the payment of loan, as per detail given in balance sheet (P-6) at page No. 51 of the paper book - In order to avoid cancellation of its GST registration, the petitioner is seeking direction to respondent No. 3 to entertain the appeal of the petitioner on merits without insisting upon the condition of pre-deposit under Section 62 (5) of the Act 2005. Petitioner is ready to pre-deposit 10% of the amount, as observed in the order dated 25.6.2018. Keeping in view the fact that the petitioner is in huge debt and the fact that the petitioner is ready to deposit 10% as pre-deposit instead of 25% of the total demand before the Appellate Authority, this Court by exercising the inherent powers as provided under Article 226 of the Constitution of India and by considering the financial hardship faced by the petitioner, this petition is being disposed of by directing the petitioner (s) to file an appeal and respondent-authorities is directed to entertain the appeal and decide in accordance with law on merits. Petition disposed off.
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Indian Laws
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2023 (11) TMI 747
Dishonour of Cheque - insufficient funds - clubbing of three cheques in a single complaint - Pre-summoning evidence - HELD THAT:- Since it is settled law that the NI Act and the provisions therein, including that of Section 138 NI Act are pertaining to a Special Act, they have to be mandatorily complied with. As per the facts involved, though the first cheque issued on 15.12.2016 was dishonoured on 23.12.2016 and the Legal Notice dated 17.04.2017 qua it was barred by limitation, however, admittedly, since all the subsequent three cheques issued on 15.01.2017, 15.02.2017 and 15.03.2017 were dishonoured thereafter only on 24.03.2017, the same Legal Notice dated 17.04.2017 qua them was well within the prescribed statutory period. The said Legal Notice being valid, the subject complaint qua the said three cheques also being well within the statutory time period, is also very much valid. In the present case, as the Legal Notice dated 17.04.2017 issued by the respondent specifically entails the specific details qua the dates and amounts of all the respective four cheques involved, separately, there can be no dispute qua maintainability of the subject complaint qua them before the learned MM. The said Legal Notice dated 17.04.2017 issued by the respondent is to be read as a whole and not in piecemeal - as neither there is any omnibus demand made by the respondent in the Legal Notice issued within the stipulated time period, nor there is any illegal amount demanded by him, in the facts of the present case, the subject complaint is per se maintainable in the eyes of law. It is also worth noting that the learned MM vide order dated 30.05.2017 issued summons to the petitioners and then rightly framed notice under Section 251 CrPC dated 25.03.2019 to the petitioner no. 2 qua the said three cheques only. Not only that, as the pre-summoning evidence led by the respondent before the learned MM is also based only on the three subsequent cheques dishonoured on 24.03.2017, there is no occasion for this Court to interfere with the proceedings before the learned MM by allowing the present petition. The present petition alongwith the applications, if any, is dismissed and in view of the conduct of the petitioners, with a token costs of Rs. 25,000/- (Rupees Twenty Five Thousand Only) to be paid to the respondent within a period of two weeks.
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2023 (11) TMI 746
Deposit of interim compensation under Section 143-A(2) of the Negotiable Instruments Act, 1881 - HELD THAT:- Perused the Section 143-A of the Negotiable Instruments (Amendment) Act, 2018 (20 of 2018). As per said Amendment Act, trial Court is vested with power to direct accused person to deposit interim compensation not exceeding 20% of the amount of the cheque. Section 143-A (3) provides that interim compensation shall be paid within sixty days from the date of order under Sub-section (1) and Court may also extend the said period if sufficient cause is being shown by the drawer of the cheque. Section 143(4) lays down that if drawer of cheque is acquitted, Court shall direct the complainant to repay to the drawer the amount of interim compensation with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial years, within sixty days from the date of the order. Since, application of Section 143-A of the Negotiable Instruments (Amendment) Act, 2018 (20 of 2018) was held to be prospective in nature and in present case complaint case was filed on 25.08.2018 and amendment was brought into force on 01.09.2018, therefore, trial Court has committed an error in directing payment of interim compensation under Section 143-A of the Negotiable Instruments (Amendment) Act, 2018 (20 of 2018). Petition allowed.
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2023 (11) TMI 745
Dishonour of Cheque - different cause of action for different seven cheques - main ground for impugning the orders is that a single complaint could not be filed for seven cheques which are stated to have been issued by the petitioner/accused as the cause of action for each cheque is different - HELD THAT:- The cheques purportedly issued by the accused form part of a single transaction or different one cannot be finally determined by this Court at this stage though the complainant in the complaint mentions of issuance of cheques in pursuance to the transactions between him and the accused. The provisions of Section 219 Cr.P.C would apply in the case in hand so as to knock out the case of the complainant wherein seven cheques have been mentioned to have been issued and get dishonoured cannot be adjudicated upon in the present petition. The Court is of the view that the revisional court has erred in stating that the facts disclosed in the complaint constitute one offence and that Section 219 Cr.P.C has no application in the present case as it is a matter of trial whether the cheques in question could be clubbed in a single complaint. The Court will not entertain the petition under Section 482 Cr.P.C unless there are exceptional circumstances which the court considers that in case the proceedings before the trial court are allowed to continue, the same shall be abuse of process of law. The Court in exercise of powers vested under Section 482 Cr.P.C cannot determine the disputed questions of fact which may be raised by the party in the criminal proceedings. It is a matter of trial that the argument raised by the petitioner herein carries weight or not cannot be determined in the present petition. Petition disposed off.
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2023 (11) TMI 744
Dishonour of Cheque - seeking permission to compound the offence - Section 147 of the Negotiable Instruments Act, 1881 - HELD THAT:- The offence under Section 138 of the NI Act can be compounded at any stage and overrides the effect of Section 320(9) of the Cr.P.C. (which otherwise provides that no offence shall be compounded except as provided by the Section), in view of the fact that Section 147 of the NI Act was inserted by way of an amendment to a special law and the Section commences with a non obstante clause. Consequently, in light of the compromise Petition filed before this Court, enumerating the terms of consent and the submissions of the Learned Counsel for the parties that the settlement was arrived at between the parties without duress on either party from any quarter, the compromise Petition is accepted and taken on record. The compounding of the offence is allowed. The order of conviction handed out to the Petitioners is set aside. The Petitioners are consequently acquitted of the offence under Section 138 of the NI Act. Learned Senior Counsel for the Petitioners submits that in terms of the Order of this Court, dated 24-10-2019, an amount of ₹ 5,00,000/- (Rupees five lakhs) only, had been deposited before the Learned Trial Court. That, in view of the compromise arrived at by the parties, and as agreed to by the parties before this Court today, the Petitioners be permitted to withdraw the deposited amount of ₹ 5,00,000/- (Rupees five lakhs) only. The prayer of Learned Senior Counsel for the Petitioners is allowed. He is permitted to withdraw the amount of ₹ 5,00,000/- (Rupees five lakhs) only, deposited - Petition disposed off.
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2023 (11) TMI 716
Dishonour of Cheque - insufficient funds - legally enforceable debt or not - accused denied the incriminating circumstances appearing in the evidence against him in the questioning under Section 313 of the Code of Criminal Procedure - HELD THAT:- In the case at hand, admittedly, the accused was a Head Constable in the Kerala Police service. He has alleged that for the business purpose of his brother (DW2), he gave signed blank cheques to DW2, who had business transactions with Anilkumar. The said Anilkumar allegedly trespassed into DW2's shop and stole the cheques. Instead of complaining to the Police, DW2 issued Ext D1 lawyer notice to Anilkumar threatening to initiate proceedings. But no action is seen taken. It is making use of one of the stolen cheques, the complainant launched the prosecution. Therefore, there is no legally enforceable debt payable by the revision petitioner/accused to the first respondent/complainant. The courts below, after appreciating the materials on record, have concurrently concluded that the defence set up by the accused is highly improbable, especially taking into account the fact that he was a Police officer. If at all his cheque was stolen, he would have certainly initiated criminal proceedings. Instead, he remained silent and made his brother(DW2) to issue a lawyer notice to the said Anilkumar. There are no error, illegality or impropriety in the conclusions arrived at by the courts below to take a contrary view - the conviction and sentence passed by the courts below is confirmed - The revision petition is dismissed.
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