TMI Tax Updates - e-Newsletter
November 23, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. ACCOMMODATION SERVICES TO SPECIAL ECONOMIC ZONE

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Monitoring System for Steel Imports

2. Certifying Agency for Organic Foodgrains

3. Export Development Fund

4. CBDT Chairman inaugurates Web Portal for exchange of information on Income Tax Website

5. Growth Rate of Industrial, Core and Manufacturing Sectors

6. GeM Signs MoU With Government of NCT Delhi

Notifications

GST

1. 26/2019 - dated 22-11-2019 - CGST Rate

Seeks to insert explanation regarding Bus Body Building in Notification No. 11/2017-Central Tax (Rate) dt. 28.06.2017

2. 25/2019 - dated 22-11-2019 - IGST Rate

Seeks to insert explanation regarding Bus Body Building in Notification No. 8/2017-Integrated Tax (Rate) dt. 28.06.2017

3. 26/2019 - dated 22-11-2019 - UTGST Rate

Seeks to insert explanation regarding Bus Body Building in Notification No. 11/2017-Union Territory Tax (Rate) dt. 28.06.2017

GST - States

4. 46/2019- State Tax - dated 20-11-2019 - Delhi SGST

Seek to prescribed the due date for furnishing of return in Form GSTR 1 for registered person having turnover more than 1.5 Crore rupees for the month of OCT 2019 to march 2020

5. 44/2019- State Tax - dated 20-11-2019 - Delhi SGST

Seek to prescribed due date for furnishing of returns in form GSTR-3B for the month of OCT, 2019 to march 2020

6. 955/2019/10(120)/XXVII(8)/2019/CTR- 24 - dated 14-11-2019 - Uttarakhand SGST

Amendment in Notification No. 420/2019/04(120) /XXVII(8)/2019/CTR-07 dated 31st May, 2019

7. 953/2019/10(120)/XXVII(8)/2019/CTR- 22 - dated 14-11-2019 - Uttarakhand SGST

Amendment in Notification No. 526/2017/9(120)/XXVII(8)/2017 dated 29th June, 2017

8. 952/2019/10(120)/XXVII(8)/2019/CTR-21 - dated 14-11-2019 - Uttarakhand SGST

Amendment in Notification No. 530/2017/9(120)/XXVII(8)/2017 dated 29th June, 2017

9. 947/2019/10(120)/XXVII(8)/2019/CTR-17 - dated 14-11-2019 - Uttarakhand SGST

Amendment in Notification No. 87/2019/14(120)/ XXVII(8)/2018/CTR-26 dated 24th January, 2019

10. 922/2019/4(120)/XXVII(8)/2019/CT- 49 - dated 8-11-2019 - Uttarakhand SGST

UttaraKhand Goods Service Tax (Sixth Amendment) Rules, 2019

11. 921/2019/4(120)/XXVII(8)/2019/CT- 47 - dated 8-11-2019 - Uttarakhand SGST

Notification regarding annual return of dealers having turnover upto 2 crores

12. 920/2019/4(120)/XXVII(8)/2019/CT-45 - dated 8-11-2019 - Uttarakhand SGST

Seeks to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of up to 1.5 crore rupees for the quarters from October, 2019 to March, 2020

Law of Competition

13. L-3(2)/Regln-Gen. (Amdt.)/2019/CCI - dated 20-11-2019 - Competition Law

Competition Commission of India (General) Amendment Regulations, 2019

Circulars / Instructions / Orders

GST

1. 126/45/2019 - dated 22-11-2019

Clarification on scope of the notification entry at item (id), related to job work, under heading 9988 of Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017

Highlights / Catch Notes

GST

• Search Operation Criticized for Inappropriately Monitoring Family Phone Calls During Seizure.

  Case-Laws - HC : Search and Seizure - the officers had stayed at the premises and had examined the phone calls that were received by the family members and had recorded their phone calls - the action of the concerned officers required to be deprecated in the strictest terms.
  Visit to Get Source

  ---

Income Tax

• CIT(A) Error: Accommodation Entries Deleted Without In-Depth Inquiry, Case Restored for Further Examination u/s 68.

  Case-Laws - AT : Powers of the CIT(A) - Deletion of accommodation entries without indepth inquiry - addition u/s 68 - it was gross error, on the part of the Ld. CIT(A), having himself been of the view that further inquiries / investigation / verification - Matter restored before CIT(A)
  Visit to Get Source

  ---

• Proprietorship Firm's Car Depreciation Disallowed Due to Personal Account Payment; Business Asset Status Unchanged.

  Case-Laws - AT : Disallowance of depreciation on the car purchased by the assessee - Proprietorship firm - Merely because assessee has made payment for purchase of car from his personal account does not mean that it is not the business asset of the assessee.
  Visit to Get Source

  ---

• Lease Rentals Denied as Revenue Expenditure Due to Disguised Asset Purchase; Depreciation Allowed for Equipment.

  Case-Laws - AT : Deduction of lease rentals for the equipment - lease rentals agreed between the parties were so crafted that they substantially cover present fair value of equipment - it is a case of purchase of asset by the assessee from CARE in the garb of lease agreement - Cannot be allowed as Revenue expenditure - However, depreciation to be allowed.
  Visit to Get Source

  ---

• Section 271(1)(c) Penalty Overturned: Bank Account Belongs to HUF, Not Assessee, Penalty Deemed Inappropriate.

  Case-Laws - AT : Penalty u/s 271(1)(c) - Since the addition itself ought not have been made in the hands of the assessee, because this bank account did not belong to the assessee, rather it belonged to HUF, therefore, for the purpose of penalty, we are satisfied that the assessee does not deserves to be visited with penalty in these circumstances.
  Visit to Get Source

  ---

• Taxpayer's Claim for Interest on Delayed Refund Denied; Tribunal Decision Finalized Refund, Delay Condonation Rejected.

  Case-Laws - AT : Granting interest on interest on the delayed refund - admittedly, the claim for refund is crystallized only after decision of the Tribunal and the application is made by the assessee to the CBDT for condonation of delay. - Claim of assessee was rightly rejected.
  Visit to Get Source

  ---

• CIT Questions Large Sales Promotion Expenses; Section 263 Revision Order Upheld Due to Insufficient Verification.

  Case-Laws - AT : Revision u/s 263 - CIT observed that huge sales promotion expenses has not been looked into deeply. Although a 5% disallowances has been made, but no meaningful verification has been made so as to enquire its genuineness and reason for huge increase in the present year - Revision order sustained.
  Visit to Get Source

  ---

• Mistake in Penalty for Income Concealment u/s 271(1)(c) Can't be Rectified via Section 154 of Income Tax Act.

  Case-Laws - AT : Rectification of mistake - Penalty u/s 271(1)(c) - Since the concealment of income referred to in 271(1)(c) of the Act is in respect of tax sought to be evaded is defined in Explanation 4 w.r.t. the income and the potential tax effect, the issue is required to be debated by long drawn process to decide the issue and cannot be adjudicated u/s 154 of the Act.
  Visit to Get Source

  ---

• Commission to Directors Allowed u/s 36(i)(ii) of Income Tax Act for Five Years; No Change This Year.

  Case-Laws - HC : Addition u/s.36(i)(ii) - Commission paid to directors - whether in the nature of Dividend - the payment of commission made by the assessee Company to its Directors has been allowed for five continuous assessment years. Nothing has been pointed out to show that the position has changed in the year under consideration.
  Visit to Get Source

  ---

Customs

• Respondents Must Remove Alert on Petitioner's Importer Exporter Code After Bond Submission, Following Natural Justice Principles.

  Case-Laws - HC : Principles of natural justice - alert raised against the petitioner's Importer Exporter Code - Recovery of Duty Drawback - On receipt of personal bond (as directed), the respondents are directed to remove the alert, as exists against the petitioner in the Customs EDI System immediately.
  Visit to Get Source

  ---

Central Excise

• Excise Office Cannot Reopen Investigation or Deny Benefits After Eligibility Certificate Issued, Lacks Jurisdiction.

  Case-Laws - AT : Recovery of erroneous refund - cancellation of eligibility certificate - where the Committee already applied its mind before issuing the certificate and nearly took one year to grant the same after seeking full verification report from the jurisdictional excise office, the jurisdictional excise office including investigating agency has no jurisdiction whatsoever to initiate fresh inquiry and deny the benefit of notification.
  Visit to Get Source

  ---

VAT

• Penalty u/s 27(3) of Tamil Nadu VAT Act Challenged; Excess Stock Found, No Tax Levy Issued.

  Case-Laws - HC : Imposition of penalty u/s 27(3) of the TN VAT Act,2006 without levying any tax - excess stock found on inspection - Assessing Authority has no jurisdiction to impose penalty by a separate and independent order.
  Visit to Get Source

  ---

Case Laws:

• GST

• 2019 (11) TMI 1032
  Search and Seizure - the officers had stayed at the premises and had examined the phone calls that were received by the family members and had recorded their phone calls - HELD THAT:- It appears that the Chief Commissioner of G.S.T. has taken a very lenient view in the matter and instead of examining the action of the concerned officers in the context of the relevant provisions of the Goods Services Tax Act, has tried to justify the action of the concerned officers, which is required to be deprecated in the strictest terms. The matter is adjourned to 11th December 2019.

  ---

• Income Tax

• 2019 (11) TMI 1031
  Revision u/s 263 - Taxability of foreign assignment allowance received - HELD THAT:- Finding recorded by the AO, cannot be termed as a case of no-enquiry at all in respect of foreign assignment allowance of the assessee. Therefore, CIT s view that the action of the AO in allowing the amount of Rs. 42,97,092/- as exempt from taxation is in violation of the provision of sec. 5(2) without any enquiry, is factually incorrect. This issue was considered by the AO and after enquiry he has taken a view to allow the claim of the assessee that this foreign assignment allowance is not taxable in India. We therefore hold that the AO s view cannot be held to be erroneous for want of enquiry. When confronted with the reasons set out in the SCN, the assessee had led before the ld. CIT sufficient documentary evidence which proved that the SCN had proceeded on assumption of incorrect facts and wrong interpretation of applicable legal provisions. It was also established before the ld. CIT that before completion of assessment, the AO had indeed made enquiries into the foreign assignment allowance and after being satisfied about its non-taxability, the order u/s 143(3) was passed. On receipt of these objections, though the CIT did not agree with the submissions, we find that ultimately the reasons on which the CIT proceeded to pass the order did not contain any substantive legal or factual material by which he was able to prove that the said explanations suffered from any infirmity. Instead we note that the CIT ultimately merely set aside the assessment order directing AO to pass the order afresh in accordance with law which in our opinion was nothing but giving the AO second innings without establishing that the AO s order was erroneous as well as prejudicial to the interests of the Revenue Not only did the AO enquire into the issue of taxability of foreign assignment allowance received by the assessee but had consciously applied his mind to the facts made available before him and adopted the permissible view in law. We are of the considered view that the assessment order is not the result of non-enquiry or non-application of mind or assumption of wrong facts. While passing the assessment order the AO had followed the permissible view in law which cannot be said to be unsustainable in law . Jurisdictional facts for usurping the jurisdiction u/s 263, being absent, we hold that the action of CIT was without jurisdiction and all subsequent actions are null in the eyes of law. We therefore quash the order impugned before us. Since all the appeals itself has been decided, therefore, the stay applications become infructuous and stands dismissed.

  ---

• 2019 (11) TMI 1030
  Addition of bogus purchase - CIT(A) restricted addition only to the extent of profit element therein - HELD THAT:- For Revenue s pleadings, we find that the department itself has been fair enough in not disputing the assessee s corresponding sales in electrical equipments supplied to M/s Coal India Ltd. and its subsidiaries. It thus appears to be an instance of assessee s purchases made from unregistered dealers. Hon ble Bombay high court s recent decision in PCIT vs. Mohammad Haji Adam [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] ; after taking into consideration hon ble apex court s decision in N. K. Proteins Ltd. vs. DCIT [ 2017 (1) TMI 1090 - SC ORDER] holds that the right approach in such an instance of bogus/unverifiable purchases is that of assessment of profit element than the entire amount. We therefore decline the Revenue s argument by adopting the very reasoning herein as well. Assessee s grievance also deserves to be rejected as their lordships held therein that it is the gross profit and not the net profit including all operative costs available to be disallowed in case of bogus purchases. We accordingly affirm the CIT(A) findings for making subject-matter of challenge in all these four crossappeals filed at Revenue s and assessee s behest.

  ---

• 2019 (11) TMI 1029
  TP Adjustment - administrative services and administrative and technical training services addition - determining the ALP of such services at nil was that the assessee did not need the services as the same were duplicative and that the assessee did not derive any tangible benefit from such expenditure - HELD THAT:- Revenue is admitting that certain services have been received by the assessee from its AE. We find from the order of the TPO/AO that the only reason cited for determining the ALP of such services at nil was that the assessee did not need the services as the same were duplicative and that the assessee did not derive any tangible benefit from such expenditure. We find in the case of CIT vs. EKL Appliances Ltd. [ 2012 (4) TMI 346 - DELHI HIGH COURT] has decided somewhat identical issue and held that so long as the expenditure or payment has been demonstrated to have been incurred or laid out for the purposes of business, it is no concern of the TPO to disallow the same on any extraneous reasoning. Since, in the instant case, the incurring of the expenditure is not in dispute and since the only reason given by the Revenue authorities is that the assessee did not need the services as the same were duplicative and that the assessee did not derive any tangible benefit from such expenditure and did not file sufficient details to establish that it has, in fact, received some benefit or that the AE has rendered some services, therefore,direct the A.O./TPO to delete the addition. - Decided in favour of assessee.

  ---

• 2019 (11) TMI 1028
  Powers of the Commissioner (Appeals) - Deletion of accommodation entries without indepth inquiry - addition u/s 68 - CIT(A) admitted additional evidences and went on to delete the aforesaid addition on the basis of additional evidences so admitted - HELD THAT:- CIT(A) was of the view that further inquiry / investigation / verification in these aspects were desirable but, according to the Ld. CIT(A), the AO failed to do this. CIT(A) even directed the AO to make further verification. Similarly, in paragraph 9.3.1. of the aforesaid impugned appellate order dated 27.03.2008, he commented that the AO would have to issue letters u/s 133(6) and if required summons u/s 131. He went on to state, that the AO can still make indepth inquiry, in case he finds it worthwhile and that the AO would have to take pains to issue notices u/s 131, and take further action. Once CIT(A) taken the view that further inquiries / investigation / verification are necessary, it is incumbent upon the Ld. CIT(A) to have the necessary inquiries / investigation / verification carried out during the appellate proceedings before him either by himself or by remand to the AO. A perusal of Section 251(1)(a) shows that in an appeal against an order of assessment, Ld. CIT(A) may confirm, reduce, enhance or annul, the assessment. However, w.e.f. 1.6.2001, as a result of amendment to Income Tax Act, the power of Ld. CIT(A) to set aside an order of assessment has been withdrawn. Therefore, any necessary inquiry / investigation or verification is required to be carried out during pendency of the appellate proceedings before Ld. CIT(A). Perusal of Section 250(4) shows that Ld. CIT(A) has powers, before disposing off any appeal, to make such further inquiry as he thinks fit, or he may direct the AO to make further inquiry and report the result of the same to the Ld. CIT(A). It is well settled that powers of CIT(A) are coterminus with powers of the AO. We may refer to the order of Apex Court decision in CIT vs. Kanpur Coal Syndicate [ 1964 (4) TMI 18 - SUPREME COURT] in which it was held that AAC has plenary powers in disposing off an appeal; that the scope of his power is co-terminus with that of the ITO, and that he can do what the ITO can do and can also direct him to do what he failed to do. Considering the statutory position as discussed, that it was gross error, on the part of the Ld. CIT(A), having himself been of the view that further inquiries / investigation / verification; to not ensure that such further inquiries / investigation / verification were done during the pendency of appellate proceedings before the Ld. CIT(A); and in accordance with Section 250(4) We set aside the order of the CIT(A) in respect of aforesaid additions (subject matter of ground 1 of appeal) and the aforesaid addition (subject matter of ground 2 of this appeal); and direct the CIT(A) to pass fresh order on these issues, after further inquiries, in accordance with Section 250(4) of I.T. Act. CIT(A) has admitted additional evidences - HELD THAT:- Provisions regarding admission of additional evidences by the Ld. CIT(A) are contained in Rule 46A of Income Tax Rules, 1962 . CIT(A), in accordance with Rule 46A(2) of I.T. Rule, was duty bound to record in writing the reasons for admission of additional evidences. From perusal of records, we find that the Ld. CIT(A) has failed to record any reasons for admission of additional evidences. In accordance with Rule 46A(3) of I.T. Rules, the Ld. CIT(A) was duty bound to allow a reasonable opportunity to the Assessing Officer to examine the evidence or documents or to cross-examine the witness produced by the appellant or to produce any evidence or document or any witness in rebuttle of the additional evidence produced by the appellant. However, from perusal of records, we find that no such opportunity was provided by the Ld. CIT(A) to the Assessing Officer. Order passed by the Ld. CIT(A), as far as the aforesaid addition of Rs. 1,18,63,549/- (subject matter to ground 3 of appeal) is in gross violation of the requirements prescribed under Rule 46A(2) and 46A(3) of I.T. Rules. Therefore, we set aside the order of the Ld. CIT(A) on the issue of aforesaid addition of Rs. 1,18,63,549/- and direct him to pass a fresh order on this issue while ensuring full adherence to Rule 46A of I.T. Rules. Ground no. 3 of appeal is disposed off accordingly, and is treated as partly allowed for statistical purposes.

  ---

• 2019 (11) TMI 1027
  Assessment u/s 153A - Addition u/s 68 - assessment framed by the A.O. in pursuant to the search and seizure action u/s 132 - HELD THAT:- CIT(A) has considered all the relevant facts as well as binding precedents on this point and given the finding that an assessment framed U/s 153A of the Act in respect of a year which was not pending as on the date of search and which does not abate the same can be disturbed only on the basis of incriminating material. CIT(A) has held that in absence of incriminating material, the completed assessment can be reiterated and cannot be interfered with by the A.O. while making the assessment U/s 153A of the Act without any incriminating material unearthed during the course of search. The relevant facts leading to the conclusion that the A.O. has repeated the addition while framing the assessment U/s 153A of the Act pursuant to the search dated 22/07/2015 without any incriminating material found or seized during the course of search action is not in dispute. The revenue has supported its case only on the statements recoded by the A.O. during the course of assessment proceedings which in our considered view do not constitute incriminating material found or seized during the course of search. Further even those statements recorded by the A.O. have not resulted any fact or material to indicate any undisclosed income or unexplained cash credits which can be added U/s 68 of the Act. Accordingly, in the facts and circumstances of the case, we do not find any error or illegality in the impugned order of the ld. CIT(A) in deleting the addition - Decided against revenue

  ---

• 2019 (11) TMI 1026
  TP Adjustment - provision of corporate guarantee as an international transaction - HELD THAT:- After considering the decision of this Tribunal in Glenmark Pharmaceuticals Vs ACIT [2013 (11) TMI 1583 - ITAT MUMBAI ] the DRP in principle accepted that the adjustment on account of corporate guarantee is to be restricted by applying ALP at 0.53%, however, the DRP has not passed directions in conformity of the decision of this Tribunal in assessee s own case. This is a clear case of judicial indiscipline on the part of the DRP who was performing quasi-judicial functions while passing the directions U/s 144C(5) of the Act. The DRP is supposed to decide the matters independently and as per the law and not supposed to act as a guardian or revenue collecting authority like tax authorities. Thus, we find that this action of the DRP is highly contradiction to the object for which the said panel was constituted under the provisions of the Act. Accordingly, ground No. 1 of the assessee s appeal is dismissed and ground No. 2 of the appeal is allowed. Disallowance of loss on sale of shares of the subsidiary company M/s Jewel Jems USA Inc. - HELD THAT:- For the A.Y. 2012-13, the Tribunal in assessee s own case has considered the issue of loss in respect of investment made in the equity shares of the subsidiary and after considering and analyzing the facts as well as the law on the point has held that the USA subsidiaries were set up to expand its business and the expenditure was purely for business expansion of the assessee s product. Thus, the investment made were held to be out of commercial expediency and business interest and consequently the loss of such investment in the 100% subsidiary not recoverable was an allowable business loss. Interest on income tax refund - assessee objected this addition before the DRP on the ground that no such interest was received by the assessee on the refund of income tax - HELD THAT:- DRP directed the A.O. to verify this fact of receipt of interest on refund and then compute the income. Since there is a typographical mistake in mentioning the Section which is 234D instead of Section 244A of the Act the A.O. has repeated the addition. It is apparent that the A.O. while passing the final order has not given effect to the directions of the DRP, accordingly, we direct the A.O. to verify the fact whether this interest was actually paid to the assessee or not and then decide this issue after giving an opportunity of hearing to the assessee.

  ---

• 2019 (11) TMI 1025
  Reopening of assessment u/s 147 - recourse to the provisions of Section 149(1)(c) - HELD THAT:- We note that the language of Explanation (3) to Section 115JB is somewhat similar to the language of the Explanation below Section 149. In both places it is provided that the Explanation is inserted for removal of doubts and the Explanation is applicable to assessment years beginning on or before 01-04-2012. Yet the UNION BANK OF INDIA, MASHREQ BANK PSC, BANK OF INDIA, M/S THE NEW INDIA ASSURANCE CO. LTD., CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK [ 2019 (5) TMI 355 - BOMBAY HIGH COURT] held that since the principal provision of the Act was not amended retrospectively, by applying the Explanation (3), the principal provisions of Section 115JB cannot be made applicable to banking companies retrospectively. In our considered opinion, the same principle applies to the present appeals as well. Issue involved in the present appeal is squarely dealt with by the Hon ble Delhi High Court in the case of Brahm Datt Vs UOI [ 2018 (12) TMI 832 - DELHI HIGH COURT] . In this case a search was conducted against the assessee in July 2011. In the statement recorded during the course of search the assessee had admitted of settling a substantial amount on a trust established outside India in the year 1998. The assessee admitted that he was one of the beneficiary of the Trust which had a bank account with HSBC, Geneva, Switzerland. Based on such information, the Revenue reopened his income-tax assessment for AY 1998-99 taking recourse to the provisions of Section 149(1)(c) of the Act. The assessee challenged the legality of the notice u/s 148 and consequent proceedings by filing writ petition. We further note that the Revenue s SLP against the decision of the Hon ble Delhi High Court was dismissed by the Hon ble Supreme Court [ 2019 (7) TMI 351 - SC ORDER] . We also find that following the judgment of the Hon ble Delhi High Court (supra), the coordinate Benches of this Tribunal in the following cases similarly quashed the reassessment proceedings u/s 148 which were initiated for assessment years prior to AY 2006-07 taking aid of Section 149(1)(c)

  ---

• 2019 (11) TMI 1024
  Disallowance of royalty and model fees - HELD THAT:- Neither side has brought any distinguishing facts and circumstances, legal points or decided precedents for our consideration to persuade us to take a view different from view already taken on the issue by Co-ordinate Bench of ITAT, Delhi and by Hon ble Delhi High Court in aforesaid orders [ 2017 (8) TMI 1535 - ITAT DELHI] AND [ 2019 (5) TMI 1008 - DELHI HIGH COURT] respectively. Respectfully following above we also decide the disputed issue regarding royalty and lump sum fee in favour of the assessee. Accordingly, we decline to interfere with the aforesaid impugned order of the Ld. CIT on this issue and dismiss the first ground of appeal in the appeal filed by Revenue. As we are not adjudicating any other ground in the present appeal, for statistical purposes the appeal is dismissed, as far Ground No. 1 of appeal is dismissed.

  ---

• 2019 (11) TMI 1023
  TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee as engaged in the business of providing Capital Software Services and Marketing Support Services to its Associated Enterprises (AEs) need to be deselected from final list. Deduction u/s 10A - claim of expenditure is foreign currency from export turnover and not from total turnover - HELD THAT:- Following the aforementioned decision of the Hon ble High Court of Karnataka in the case of Tata Elxsi Ltd. [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] we find the ld. CIT (Appeals) has relied on judicial decisions and we uphold the order of the learned CIT (Appeals) in directing the Assessing Officer to reduce the expenditure from both export turnover and total turnover for the purpose of computing the deduction under section 10A of the Act and dismissed the grounds of appeal of the Revenue.

  ---

• 2019 (11) TMI 1022
  Disallowance of depreciation on the car purchased by the assessee - Proprietorship firm - assessee purchased the car in his personal name and the payment of the purchase of the car was also made from the personal account - HELD THAT:- As assessee is an individual so naturally the assessee will purchase the car in his own name only. Therefore, we do not find any reason that assessee should not be allowed depreciation on the car, which is used for the purposes of his business. Merely because assessee has made payment for purchase of car from his personal account does not mean that it is not the business asset of the assessee. AO has not found any expenditure debited to the profit and loss account, but it cannot be said that depreciation on the asset is not allowable to the assessee. Assessee is owning an asset, which is used for the purposes of the business of the assessee. AO has presumed that assessee is not using motor car for his business purposes, which cannot be the basis of disallowance of depreciation. Accordingly we direct the learned assessing officer to delete the disallowance of depreciation. Addition being cash deposited in savings bank account - HELD THAT:- We have carefully considered the rival contention and found that assessee has sold his old car for INR 90,000 and has also shown two cash receipts of INR 45,000/ each against the sale of old car and therefore the addition made by the lower authorities deserves to be deleted. Merely because the assessee has not made any application under rule 46A for admission of the additional evidence the learned CIT(A) has not considered the above evidence and confirmed the disallowance. We do not find the confirmation of the above addition by the learned CIT(A) in accordance with the law. Therefore we direct the learned assessing officer to delete the above addition. Low household withdrawal of the assessee - HELD THAT:- We find that appellant s family consists of 4 persons wherein the children s are independent. Therefore the assessee has to bear the expenditure of self and his wife. For this purpose the assessee has shown the total withdrawal of INR 190,000 per annum. Before the learned assessing officer as well as before the learned CIT(A) assessee has stated that he is residing in a colony where the cost of livelihood is less. However, the lower authorities have confirmed the above addition. We do not find any reason to sustain the above addition because of the reason that no expenditure was found to have been incurred by the assessee outside the books of accounts. In view of this, we direct the learned assessing officer to delete the addition because of low also withdrawal.

  ---

• 2019 (11) TMI 1021
  Deduction of lease rentals for the equipment - Disallowance of claim of lease payment as revenue expenditure primarily on the ground that at the end of lease period, the asset would be transferred to the assessee and the value of asset at which it is transferred to the assessee is disproportionate to the written down value computed under the provisions of the Act - Revenue for disallowing assessee s claim is that the two trustees of CARE are the Directors of holding company of assessee company. Thus, provisions of section 40A(2)(b) are attracted - HELD THAT:- In the instant case, as we have pointed earlier, lessee has no option of refusal to own leased asset. We further observe that lease rentals agreed between the parties were so crafted that they substantially cover present fair value of equipment. In so far as the objection raised by the Revenue that some of the trustees of CARE were the Directors of holding company of assessee and hence, provisions of section 40A(2)(b) are attracted, we do not find merit in rejecting assessee s claim of this ground. A bare perusal of provisions of section 40A(2) would show that there is no mention of trust in the list of persons mentioned in clause (b) of sub-section (2). The Hon ble Delhi High Court in the case of Shanker Trading (P) Ltd. Vs. Commissioner of Income Tax [ 2012 (7) TMI 282 - DELHI HIGH COURT] has held that the provisions of section 40A(2) are not attracted in the case of trust. After examining the lease agreement we are of considered view that it is a case of purchase of asset by the assessee from CARE in the garb of lease agreement. Accordingly, ground No. 1 of the appeal by assessee is dismissed. Alternate prayer of allowing depreciation and interest on the full value of asset as agreed between the parties - value of asset mutually agreed as per the terms of agreement - HELD THAT: -In the instant case we observe that the Assessing Officer in the assessment order has failed to satisfy both the conditions. Neither actual cost as envisaged under section 43(1) was determined by the Assessing Officer, nor satisfaction was recorded by the Assessing Officer to the effect that the transfer of asset at a rate higher than the written down value was with ulterior motive of reducing tax liability by claiming depreciation on enhanced cost. Since, the conditions set out for invoking the provisions of Section 43(1) and Explanation 3 are not fulfilled, the department cannot take support of the said provisions for rejecting assessee s claim. Hence, the value of underlying asset/equipment as set out in the agreement should be accepted for the purpose of determining depreciation in the hands of assessee. Assessee is eligible for depreciation on the value of asset mutually agreed as per the terms of agreement dated 14-10-2010. In so far as interest component in lease rentals is concerned, the same is allowable under the provisions of Section 36(1)(iii) of the Act. The ground No.2 of the appeal is allowed

  ---

• 2019 (11) TMI 1010
  Assessee deemed in default - Recovery of Outstanding Tax demands - HELD THAT:- A plain reading of the impugned letter dated 12th September, 2019, reveals that the writ petitioner has been asked to make an upfront payment of Rs. 20 lacs before 15th September, 2019 and from October, 2019, it has been directed to pay monthly instalments of Rs. 7 lacs for a period of 12 months or decision of the pending First Appeal, whichever is earlier. Whether the Deputy Commissioner of Income Tax, Central Circle, Meerut, while issuing the letter dated 12.09.2019, gave any cogent or justifiable reason in order to substantiate the payment requirement in order to have the assessee s bank account released? - Certainly, the Deputy Commissioner of Income Tax, Central Circle, Meerut, is well within his right to impose conditions for release of the bank account, provided the same conforms to the applicable instructions/circulars/ guidelines, issued by the CBDT from time to time. In the facts of the instant case, however, it is palpably evident that the conditions imposed upon the assessee for release of its bank account is bereft of any reason, not to mention, absence of cogent or justifiable reasons. As such, the impugned letter dated 12th September, 2019, cannot be sustained in law and is liable to be set aside and quashed and is, accordingly, set aside and quashed. The concerned AO is directed to take a fresh decision in the matter upon considering the letter of the writ petitioner dated 22nd August, 2019 addressed to the DCIT, Central Circle, Room No. 319, 3rd Floor, Central Circle, Meerut. Such decision, needless to mention, shall be supported with cogent and justifiable reasons and shall conform to the applicable written instructions/circulars/guidelines, issued by the CBDT from time to time.

  ---

• 2019 (11) TMI 1009
  Review petition - Registration u/s 12AA denied - Charitable purpose u/s 2(15) - Payment of pension to the retired employees of the GCDA - the finding in the judgment sought to be reviewed that the employees of the GCDA are contributing to the Pension Fund and from out of that contribution, the employees and their dependents are getting pension, would not constitute a mistake apparent from the face of the record, coming within the review jurisdiction of this Court under Order XLVII Rule 1 of the Code of Civil Procedure, 1908. HELD THAT:- In Thungabhadra Industries Ltd v. Government of Andhra Pradesh [ 1963 (10) TMI 25 - SUPREME COURT] the Apex Court held that, review is, by no means an appeal in disguise, whereby an erroneous decision is reheard and corrected, but lies only for correcting patent errors. Later, in Lily Thomas v. Union of India [ 2000 (5) TMI 1045 - SUPREME COURT] the Apex Court reiterated that, the power of review can be exercised for correction of a mistake but not to substitute a view. The review cannot be treated like an appeal in disguise. The mere possibility of two views on the subject is not a ground for review. Whilst exercising the power of review, this Court cannot be oblivious of the provisions contained in Order XLVII, Rule 1 of the Code of Civil Procedure, 1908 and that, the limits within which this Courts can exercise the power of review have been well settled in a catena of decisions. Review petition dismissed.

  ---

• 2019 (11) TMI 1008
  Addition u/s.36(i)(ii) - Commission paid to directors - whether in the nature of Dividend - rule of consistency - AO was of the view that the payment to Directors/shareholders was hit by the provisions of section 36(1)(ii) as the said commission would have been payable to the Directors as dividend and accordingly, disallowed the same - ITAT deleted the additions - order passed by the Tribunal, to point out that such payment of commission made by the assessee to the Directors since assessment year 2006- 07 was allowed up to assessment year 2010- 11, that is, continuously for a period of five years, whereafter the dispute has been raised HELD THAT:- Where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and the parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. In the present case, the payment of commission made by the assessee Company to its Directors has been allowed for five continuous assessment years. Nothing has been pointed out to show that the position has changed in the year under consideration. Under the circumstances, the Tribunal was wholly justified in allowing the ground of appeal. The said ground of appeal, therefore, does not give rise to any question of law, much less, a substantial question of law, warranting interference. Bogus purchases - HELD THAT:- This court concurred with the findings of the Commissioner (Appeals) and the Tribunal and held that the estimate made by the two appellate authorities did not warrant interference as, even otherwise, whether the estimate should be at a particular sum or at a different sum, can never be an issue of law. This court is in agreement with the concurrent findings recorded by the Tribunal and the Commissioner (Appeals), namely, that the assessee had shown purchases as well as sales. If the sales were accepted, the Assessing Officer could not have rejected the purchases. Once the purchases are accepted, the difference between the inflated and actual price of purchases would be required to be disallowed and as to what would be the extent of difference would be a matter of estimate. Commissioner (Appeals) has estimated this difference at 3% of the bogus purchases and the Tribunal has accepted the same. As has been held by this court in Sanjay Oilcake Industries v. Commissioner of Income tax [2008 (3) TMI 323 - GUJARAT HIGH COURT] whether an estimate should be at a particular sum or at a different sum can never be an issue of law. Under the circumstances, this ground of appeal also does not give rise to a question of law, much less, a substantial question of law. Disallowance of insurance expense - Allowable revenue expenditure - HELD THAT:- Tribunal was of the opinion that insurance premium paid by the assessee on the purchase of an old or new car is an expenditure of revenue nature, which should be allowed in the year when it has been incurred and that under the provisions of section 31(ii) of the Act, any premium paid in respect of any insurance against the risk of damage or destruction to machinery, plant or furniture, which includes car, is allowable as revenue expenditure and accordingly, held that the disallowance of insurance expense by the Assessing Officer and Commissioner (Appeals) is against the mandate of the section. The Tribunal, accordingly, allowed the ground of appeal. This court is in total agreement with the view adopted by the Tribunal, namely, that insurance premium paid by the assessee towards purchase of new car is revenue in nature, which should be allowed in the year in which it is incurred. Under the circumstances, the said ground of appeal also does not give rise to any question of law. It cannot be said that the impugned order passed by the Tribunal suffers from any illegality or infirmity so as to give rise to any question of law

  ---

• 2019 (11) TMI 1007
  Rectification of mistake - Penalty u/s 271(1)(c) - Addition u/s 68 - Rectification petition u/s 154 by assessee for cancellation of penalty levied u/s 271(1)(c) stating that there is no sanction in the act for levy of penalty as per normal provisions, when the assessee paid the tax u/s 115JB - HELD THAT:- From plain reading of section 271(1)(c), before amendment, the words used are the concealed income or the income relating to which the assessee has furnished the inaccurate particulars. In the Finance Act, it was mentioned that where concealment of income was computed under the general provisions have taken place, penalty under 271(1)(c) should be leviable even if the tax liability of the assessee for the year has been determined under the provisions of section 115JB or 115JC of the Act. There were diverging decisions with regard to levy of penalty u/s 271(1)(c) prior to the amendment. As per the pre amended provisions, the concealment of income generally referred to the general provisions of the Act, since, 115JB is always referred to as book profits and the tax paid under the scheme of 115JB is given credit in regular taxes. From the plain reading of the penalty order, there is no mistake which is visible from the order. The issue with regard to amendment made vide Finance Act, 2015 has no application in the assessee s case. Since the concealment of income referred to in 271(1)(c) of the Act is in respect of tax sought to be evaded is defined in Explanation 4 w.r.t. the income and the potential tax effect, the issue is required to be debated by long drawn process to decide the issue and cannot be adjudicated u/s 154 of the Act. No infirmity in the order of the Ld.CIT(A) and the same is upheld. The appeal of the assessee is dismissed.

  ---

• 2019 (11) TMI 1006
  Revision u/s 263 - CIT observed that huge sales promotion expenses has not been looked into deeply. Although a 5% disallowances has been made, but no meaningful verification has been made so as to enquire its genuineness and reason for huge increase in the present year - It appears from the past asstt. records that no books of accounts were produced during assessment proceedings. For this reason also, a thorough probe, Into genuineness of books being maintained by you need to be verified. HELD THAT:- CIT-A has passed speaking order on merits. Relevant portion of the impugned order of the Ld. Pr. CIT had already been reproduced in foregoing paragraph (B) of this order. We find that the Ld. Pr. CIT has given detailed reasons for his decision in the aforesaid impugned revision order dated 28.03.2017. During appellate proceedings in Income Tax Appellate Tribunal ( ITAT , for short) no material has been brought for our consideration to persuade us to take a view different from the view taken by the Ld. Pr. CIT in the impugned order. Therefore, after hearing the CIT (DR) and after perusal of materials on record, and further, in view of the foregoing discussion, we decline to interfere with the aforesaid impugned appellate order dated 28.03.2017 of Ld. CIT(A). In view of the foregoing discussion, the appeal filed by assessee is dismissed.

  ---

• 2019 (11) TMI 1005
  Deduction of interest expenditure U/s 57(3) disallowed - set off with interest income - as held that the said loan was taken by the assessee for construction of hospital and therefore, the expenditure incurred by the assessee is not wholly and exclusively for earning the interest income accordingly, the A.O. capitalized the interest expenditure to the hospital building account and assessed the entire interest income to tax - The assessee challenged the action of the A.O. before the ld. CIT(A) but could not succeed - HELD THAT:- We find that when there is no dispute that the loan was taken for construction of the hospital i.e. for bringing an asset into existence then the interest on such loan till the asset is put to use has to be capitalized as per the decision of Tuticorin Alkali Chemicals Fertilizers Ltd. v. CIT [ 1997 (7) TMI 4 - SUPREME COURT] . On similar footings, when the said amount was to remain ideal with the assessee due to the reason that there was a delay in sanction of the building plan and borrowed fund could not be used for construction of the hospital then the interest received by the assessee has a direct nexus with the construction of the hospital and consequently it would be capitalized and to be used to reduce the cost of construction of the hospital. Accordingly, when the net of the interest received and interest payment would be finally capitalized then the income offered by the assessee to tax as net interest income cannot be disturbed. In view of the above facts and circumstances, the disallowance and addition made by the A.O. is deleted and the net income offered by the assessee to tax is allowed. - Decided in favour of assessee.

  ---

• 2019 (11) TMI 1004
  Excess of amount which is provided in the books to the credit of GAIL disallowed u/s 37 - Assessee itself has offered the cessation of liability to tax in the year of crystallization - HELD THAT:- A provision can be allowed as a deduction only if it is an ascertained liability and if it is computed on actuarial basis or on the basis of past experience and the provision is made on a scientific basis. The Hon ble Supreme Court in the case of Rotork Controls India (P) Ltd [ 2009 (5) TMI 16 - SUPREME COURT] has laid down 4 tests for allocating a provision. It held that as per the recognized practice when a party has the present obligation as a result of the past events, settlement of which is expected to result in an outflow of resources and in respect of which a reliable estimate of the amount of obligation is possible, then a provision made to meet such an obligation is allowable u/s 37(1) of the Act. In the case before us, we find that there is a case for the assessee to collect the charges from the customers at $5.73 per MMBTU w.e.f. 1.12.2008, because as per the intimation dated 29.10.2008 from GAIL to the assessee, Ravva Satelllite JV was likely to revise the price and that such revised price to $5.73 per MMBTU is applicable w.e.f. 1.12.2008. After such intimation, the assessee had agreed to pay at the finally agreed revised price and also received the fuel from Ravva Satellite JV thereafter. Therefore, there is an implicit obligation of the assessee to pay the revised price, subject to the maximum of $ 5.73 per MMBUT. Liability had accrued during the relevant A.Ys. The discussions between GAIL and Ravva JC on revision of price continued, but remained inconclusive till Feb.2017, when it was finalized that the GAIL shall charge the assessee at US $ 4.30 per MMBTU only, till 2014 and thereafter at $5.73 per MMBTU. Therefore, the liability of the assessee to pay at the revised price is an ascertained liability and not a contingent liability as held by the Revenue. The assessee was liable to pay the revised charges w.e.f. 1.12.2008 but the revised charges were not finalized though the maximum price which could be revised or increased was mentioned in the communication from GAIL DR s submissions that the price is fixed by the Govt. is also strictly not correct. From copy of the new domestic natural gas price 2014, dated 25.10.2014, it is seen that the cost of the price shall be determined in accordance with the formula given therein and it was also clarified that the cost of the price so determined under these guidelines was not to be applicable where prices have been fixed directly for a certain period of time, till the end of such period. Therefore, we are of the opinion that the claim of the assessee u/s 37(1) is allowable particularly since the assessee itself has offered the cessation of liability to tax in the year of crystallization. Therefore, the appeals of the assessee are allowed.

  ---

• 2019 (11) TMI 1003
  Assessment u/s 153A - Addition of milk purchase tanki - facts were disclosed in the P L A/c - assessee submitted that the additions made in the impugned assessment orders are not at all based on any incriminating material/documents found during the course of search conducted. - HELD THAT:- In the Schedule the Profit and Loss Account under the head Purchases a detailed bifurcation of milk purchases under different heads have been mentioned and milk purchase tanki is specifically found in the details. Purchases have been shown at Rs. 17,27,01,506.74. It is the same amount which has been added by the Assessing Officer while framing assessment order u/s 143(3) r.w.s 153A When the entries have been duly made in the books of account, which have been subjected to audit and the audited financial statements of account were part of the return of income filed much before the date of search, which have been used by the Assessing Officer while framing the assessment order dated 28.07.2010 as mentioned hereinabove, such additions and such assessment orders cannot be accepted as the same are devoid of any incriminating material/documents found at the time of search. Addition on account of commission paid - HELD THAT:- A perusal of the audited report in Form No. 3CD, which is placed at page 31 of the paper book shows that under the details Books of account maintained , it is mentioned Cash Book, ledger, stock register, bank book , etc. Books are maintained on tally accounting software. It seems that this tally accounting software was seized during the search and the same has been treated as incriminating material. In our considered opinion, regular books of account of the assessee, by any stretch of imagination, cannot be treated as incriminating material forming basis of framing assessment u/s 153A r.w.s 143(3) Unexplained expenditure u/s 69C - Unexplained salary expenditure - HELD THAT:- We find that no independent material or evidence had been brought on record by the Assessing Officer to establish that the notings/jottings recorded on the loose sheet of paper represented unaccounted transaction. Initial onus is upon the assessee as the said document was found from his possession but at the same time, some logical inference has to be drawn from the seized document which, in the present case we are unable to draw. In our humble view, the said document can only be considered as a dumb document as the said document does not contain full details about the dates of payments and the recipient of the payments nor there is mention of any name of the employee. For want of details, the impugned document can only be considered as a dumb document. Considering the nature of document and jotting/notings made thereon, we are of the view that no addition can be made on the basis of such dumb document and addition is, accordingly directed to be deleted.

  ---

• 2019 (11) TMI 1002
  Validity of the Re-opening of assessment u/s 147 - reason to believe to initiate the proceedings u/s 147 - addition u/s 68 - HELD THAT:- AO has questioned the cash deposit amounting to Rs. 38 lakhs. I also find that the Assessing Officer has categorically mentioned that no return of income was filed for Assessment Year 2012-13. The bank deposit details shows that total cash found to be deposited on various dates amounts to Rs. 28.50 lakhs. This means that the AO is contradicting himself. Secondly, the Assessing Officer says that no return of income was filed whereas, at second para of his order, the Assessing Officer himself states that the assessee has furnished copy of return of income electronically filed on 24.12.2013 declaring total income of Rs. 5,84,130/-. Reasons given by the Assessing Officer are devoid of any application of mind since not only the Assessing Officer assumed incorrect figure of cash deposits but also completely ignored the fact that return for the year under consideration was already filed on 24.12.2013. These facts can be gathered from the body of the assessment order itself - assumption of jurisdiction by the Assessing Officer by issuing notice u/s 148 of the Act is bad in law - Decided in favour of assessee.

  ---

• 2019 (11) TMI 1001
  Granting interest on interest on the delayed refund - HELD THAT:- Section 244A of the Act governs payment of interest on refund due. This provision of law came on the statute book w.e.f. 1.4.1989. However, section 244 was on the statute book even prior to section 244A. As per this section, the refund was required to be paid within a period of 3 months from the end of the month in which the order is passed in appeal or other proceedings. Assessee has heavily relied upon the judgement of the Hon ble Supreme Court, which was rendered in the case of CIT Vs. Narendra Doshi [ 2001 (7) TMI 10 - SUPREME COURT] . We find that the controversy regarding claim of interest on interest in respect of the refund due has been decided by the Hon ble Supreme Court in the case of CIT Vs. Gujarat Flouro Chemicals [ 2013 (10) TMI 117 - SUPREME COURT]. Facts of the case laws as relied by the assessee are clearly distinguishable. As in those cases there was an excess payment of tax and there was inordinate delay by the revenue for making payment for refunding the amount u/s 214 of the Act. But in the present case, admittedly, the claim for refund is crystallized only after decision of the Tribunal and the application is made by the assessee to the CBDT for condonation of delay. Under these undisputed facts, we find no infirmity in to the order of the Ld. CIT(A) rejecting the claim of the assessee. However, before parting, we wish to clarify that from the facts of the present case, it cannot be inferred that delay was solely attributable to the assessee. In our view, the revenue authority should settle the claim of the refund expeditiously to avoid unnecessary litigation and harassment to the tax payer. The grounds raised in this appeal are dismissed.

  ---

• 2019 (11) TMI 1000
  Revision u/s 263 - pendency of issue before the Ld. CIT(A) - HELD THAT:- In the present case there is no dispute with regard to the fact that the same issue i.e. valuation of land is pending consideration of the Ld. CIT(A). Ld. Pr. CIT heavily relied on the explanation (1) to clause (c) to section 263 of the Act. As per this clause, jurisdiction u/s 263(1) of the Act would extend to the matters as had not been considered and decided. Admittedly, the issue has not been decided as the matter is still pending consideration before the Ld. CIT(A) as submitted by the Ld. representatives of the parties. Whether the pendency of issue before the Ld. CIT(A) for consideration would oust the jurisdiction of Ld. Pr. CIT for invoking jurisdiction u/s 263 of the Act, this issue was under consideration before the Hon ble High Court of Madras in the case of Renuka Philip Vs. ITO [ 2018 (12) TMI 129 - MADRAS HIGH COURT] wherein the Hon ble High Court decided the issue against the revenue In the present case as well, the larger issue regarding valuation adopted by the A.O. is pending before the Ld. CIT(A). Therefore, respectfully following the judgement of the Hon ble Madras High Court, we hold that Ld. Pr. CIT was not justified to invoke the jurisdiction u/s 263(1) of the Act when the similar issue was pending before Ld. CIT(A). Therefore, the impugned order is set aside and the ground raised qua this issue is allowed. Moreover, the revenue has not brought to our notice any other contrary binding precedents. However, it is made clear that the revenue would be at liberty to approach Ld. CIT(A) for expediting disposal of the appeal. The other objections of the assessee are on merit of addition made by the assessing officer.

  ---

• 2019 (11) TMI 999
  Claim of exemption u/s 10(23C)(vi) - Allegation of diversion of Funds to relatives - D.R.argued that CIT(A) is not justified in allowing the claim without giving opportunity to the A.O - HELD THAT:- It is true that it is a settled position of law that the revenue authority should not deny claim of exemption, if it is available under the facts of a particular case. In such a case, the assessee is required to demonstrate that he is eligible for the benefit available under the law. A.O. is not expected to allow each and every claim in a casual manner. For the purpose of availing benefit of exemption u/s 10(23C) the assessee is required to prove that all the conditions as set out in the letter granting registration has been fulfilled and also the assessee conducted its affairs in accordance with the statutory obligation as mandated under the law. In the present case, the A.O. has noticed that the assessee Trust had diverted its funds for the benefit of the related person. As the assessee Trust has not claimed any interest in respect of the advances given to the related person for purchase of her property, this inference is drawn on two grounds. One that there is inordinate delay for registration of sale deed of the property and secondly in the interregnum period i.e. the date when the advance was given and sale deed was executed, no interest was charged on the amount so advanced. The fact that no interest was charged on advance made to Smt. Urmila Jain is not disputed by the assessee Trust. A.O. in fact had noted the fact that the assessee Trust is registered u/s 10(23C) of the Act. Despite having recorded this fact, the A.O. did not give any specific finding as to why the assessee would not be entitled for exemption u/s 10(23C) of the Act. We therefore, under these undisputed facts, do not see any reasons to interfere into the finding of Ld. CIT(A). The grounds raised in this appeal are dismissed.

  ---

• 2019 (11) TMI 998
  Penalty u/s 271(1)(c) - Addition u/s 68 - HELD THAT:- The bank account is in the name of HUF, and the HUF is a separate taxable independent entity. If an account is being maintained by the HUF, then the assessment in the hands of HUF ought to have been made. In the present case that has not been done. Since the quantum is not open before us, we cannot touch it. The assessee has to pay tax on the addition made by the AO. But penalty is a separate proceedings, and on account of any technical issue, if an assessee can absolve himself from visiting with penalty, then, all those plea are available with the assessee. Since the addition itself ought not have been made in the hands of the assessee, because this bank account did not belong to the assessee, rather it belonged to HUF, therefore, for the purpose of penalty, we are satisfied that the assessee does not deserves to be visited with penalty in these circumstances. We allow the appeal of the assessee, and delete penalty - Decided in favour of assessee.

  ---

• 2019 (11) TMI 997
  Assessment u/s 153A - Validity of search u/s 132 - HELD THAT:- In pursuance of warrant of authorization issued by DIT(Inv.), Patna and Addl. DIT(Inv.), Ranchi, a search and seizure operation was carried out on 03.07.2014 at the business premises of the appellant-assessee situated at Joda, Banaikela, Barbil, Orissa. Accordingly, the CIT(A) rejected the plea of the assessee that no search was carried out in the case of the assessee. In our opinion, this issue must have been raised by the assessee before the constitutional bench. In the present case, we also noted that this issue has not been raised before the AO. However, when raised before the CIT(A), the CIT(A) on receiving remand report from the AO confirmed that the search was duly conducted in the premises of the assessee. So far as our considered opinion, the Tribunal has no power to hear the validity of search. In the totality of facts and circumstances of the case, we decline to accept the ground No.1 taken by the assessee regarding validity of search proceedings. Therefore, this ground of appeal is dismissed. Assessee has not received notice u/s.143(2) at his registered office or place of search - HELD THAT:- It is clear from the above observations of the CIT(A) that there was no mandatory to issue notice u/s.143(2) of the Act and served to the assessee for completion of assessment u/s.153A of the Act. The provisions of Section 153A of the Act is a special provision to unearth the escaped income by the assessee. Ld.CIT(A) has decided this issue after relying on the various judgments as quoted by him, which are applicable in the present case also. The ld AR was also unable to controvert the findings recorded by the CIT(A) in this regard. He just submitted that issuance of notice u/s.143(2) of the Act is mandatory for assuming jurisdiction for completion of assessment. It is also settled position of law that there is no mandatory requirement of issuance of notice under section 143(2) of the Act in respect of assessment proceedings u/s.153A of the Act as decided in TARSEM SINGLA VERSUS DEPUTY COMMISSIONER OF INCOME-TAX [ 2016 (7) TMI 703 - PUNJAB AND HARYANA HIGH COURT] .Thus issuance of notice under section 143(2) of the Act in respect of assessment proceedings u/s.153A Assessment u/s 153A - Assessee has contested that during the course of search no any incriminating material/document whatsoever was found relating to the assessee - HELD THAT:- In the instant case, on perusal of the assessment order, it was noticed that the AO has not disallowed any specific amount of expenses on account of any incriminating materials found at the time of search. It is pertinent to note that the assessee had filed the return of income on the basis of audited trading profit and loss account and balance sheet. AO has made addition only on the basis of tax evasion petition filed by somebody else. Copy of the tax evasion petition is placed on record at page Nos.102 to 107. It is pertinent to mention here that completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A of the Act only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. In the case in hand, the AO has not referred to any incriminating material found during the course of search while framing the assessment. Section 153 A of the Act, 1961 provides for the scheme of assessment of income in case of a searched person. Assessing Officer, while framing assessment under section 153A of the Act cannot make the addition/disallowance dehors any incriminating material. No reasonable opportunity of hearing provided to assessee - Assessment years 2013-2014 to 2015-2016 - HELD THAT:- The search was conducted on 3rd July, 2014 and for selection of scrutiny u/s.143(2) of the Act was not expired on the date of search, therefore, this year s assessment would be completed as a regular assessment u/s.143(3) of the Act. The ld. AR of the assessee was also unable to controvert that on the date of search, the assessment for the impugned year has been completed. Our this view is supported by plethora of judicial decisions. Accordingly, on perusal of the assessment order and considering the request of the ld. AR of the assessee, to which ld. DR has not objected, we are of the considered opinion that the assessee in this case was deprived of reasonable opportunity of hearing. Therefore, we remit the matter back to the file of AO for making de novo assessment after depth examination as per provisions of Income Tax Act, 1961 after providing reasonable opportunity of being heard to the assessee. The assessee is also directed to cooperate with the department for early disposal of the case and also directed to not to seek any adjournments because the assessee has been given many opportunities of being heard by the AO during the original assessment proceeding. Thus, the grounds of appeal of the assessee for A.Y.2013-2014 are allowed for statistical purposes.

  ---

• Customs

• 2019 (11) TMI 1020
  Import of consignment from Sri Lanka under the Incentive Scheme - grievance is that the consignment has not been released for the last two months on the alleged ground of verification of certificate of place of region while illegally demanding 100% bank guarantee of the proposed custom duty - HELD THAT:- At the time of resumed hearing today, counsel for the petitioner submits that the present writ petition has become infructuous as the detained goods have since been released without seeking bank guarantee. Petition dismissed as infructuous.

  ---

• 2019 (11) TMI 1019
  Principles of natural justice - alert raised against the petitioner s Importer Exporter Code - Recovery of Duty Drawback - It is the specific case of the petitioner that neither the show cause notice nor the Order-in-Original was served on the petitioner before he got the same by way of application filed under Right to Information Act - Removal of alert made in the Customs EDI system - HELD THAT:- The above said claim made by the petitioner is not an issue to be considered in this case, as admittedly, the petitioner has filed an appeal before the Appellate Authority against the said Order-in-Original and that he further filed a Revision before the Revisional Authority, aggrieved against the order passed in the Appellate Authority in dismissing the appeal - It is not in dispute that the said revision is still pending before the Revisional Authority to consider the claim made by the petitioner and pass orders on the same on merits and in accordance with law. Thus, this Court, is not expressing any view on the merits of the matter. Removal of alert made in the Customs EDI system - duty drawback - respondent is refusing to lift the alert only on the reason that the petitioner is yet to pay interest - HELD THAT:- Considering the fact that the liability of the petitioner to pay the duty drawback, penalty and interest has not attained its finality, as admittedly, the revision filed against the orders of Authority is still pending, this Court is of the view that the interest of both parties will be protected, if the following order is passed without prejudice to the contentions of both the parties before the Revisional Authorities. The petitioner shall furnish a personal bond for a sum of Rs. 4,06,988/- before the first respondent, representing the above said interest amount, within a period of two weeks from the date of receipt of a copy of this order - On receipt of such personal bond, the respondents are directed to remove the alert, as exists against the petitioner in the Customs EDI System immediately. Petition disposed off.

  ---

• 2019 (11) TMI 1018
  Direction to Customs Authorities to clear its two consignments of gold granules imported - SCN not issued till date - HELD THAT:- Without a SCN being issued with regard to the confiscation of the goods or for redemption thereof on payment of fine, the interests of the Revenue may not be jeopardized at all. In that view of the matter, there are no grounds to impose any conditions upon the petitioner firm for undertaking re-export of the gold granules which are now under seizure. The respondent authorities are directed to release the consignments of gold granules which were imported by the petitioner firm - petition allowed.

  ---

• 2019 (11) TMI 1017
  Release on Bail - smuggling of Gold Jewellery - Section 135 of the Customs Act - value of alleged recovered gold is Rs. 32,96,700/-, which is less than one crore of rupees - HELD THAT:- Let the applicant Dhanwant Kumar Agrawal, involved in case crime No. nil of 2019, under Section 135 of Customs Act, Police Station Seema Sulk Nautanava, District Maharajganj be released on bail on his furnishing a personal bond and two local sureties each in the like amount to the satisfaction of the court concerned with the conditions imposed.

  ---

• Securities / SEBI

• 2019 (11) TMI 1016
  Disposal of the complaint on the SCORES platform - appellants are aggrieved by the disposal of their complaints on the SCORES platform by the Securities and Exchange Board of India - contended that the manner in which the complaints of the appellants have been disposed of in a mechanical and summary manner - HELD THAT:- If the complainants are aggrieved by the disposal of the complaint on the SCORES platform the said complainants have a right to file an appeal under Section 15T of the SEBI Act. We are further of the opinion that the computer generated communication by the respondent on the SCORES platform, even though it may be an administrative communication is nonetheless an order since it disposes of the lis between the parties and disposes of the complaint and the issues raised by the complainants. The said communication / order as the case may be, in our opinion, is appealable. In the instant case, we find that written complaints made to SEBI from 2013 onwards has not been disposed of as yet but complaints filed on the SCORES platform has been disposed of without deciding / settling the issue that was raised in the complaints. Thus, disposal of the complaints by the respondents on the SCORES platform is no disposal in the eyes of law. It is merely an eye wash without disposing of the complaints and without settling the controversy involved in the complaints. SCORES is an online platform designed to help investors to lodge their complaints pertaining to the securities market. These complaints are filed online with SEBI against listed companies and SEBI registered intermediaries. All complaints received by SEBI against listed companies are dealt through SCORES The complaint made by the appellants was a serious issue with regard to incorrect disclosures being made by three companies regarding their promoter shareholding and consequently failure of these three companies from complying with the minimum public shareholding requirement as per Rule 19A of the SCRR read with 38 of the LODR Regulations. The disposal of the complaint does not refer to the issues raised by the complainants / appellants with regard to the non-disclosure of the promoters shareholding or violation of the minimum public shareholding requirement under the Rules and Regulations. On the other hand, the communication intimated to the appellants has closed the complaint in a roundabout manner intimating the appellant that the information provided by the complainants would be treated as market intelligence and would also be treated as confidential. Why would the complaint of the appellants be treated as market intelligence or be treated as confidential is not known nor in our view the complaint is such which requires SEBI to treat it as market intelligence or confidential. It is not a price sensitive matter which requires SEBI to keep such matters under wraps or confidential in nature. We also find it strange to note that SEBI in the said order / communication states that the information submitted by the appellants would be analyzed and investigation would be made in a holistic manner but, on the other hand, in the same breath states that SEBI would neither confirm nor deny the existence of any investigation conducted by them. We find that before the Delhi High Court SEBI informed that the matter is under investigation by them. We find it strange that while disposing of the complaint SEBI would neither confirm nor deny as to whether investigation in the complaint is going on or not. Approach adopted by the respondents to be a strange one. Such computer generated disposal of a serious complaint speaks volume on the conduct of the respondents in treating the minority shareholders in this shabby manner. It seems that the respondents have lost sight of the mandate provided to them under Section 11 of the SEBI Act which mandates SEBI to safeguard the interest of the investors. No hesitation in stating that the SEBI as a regulator in the instant case has not performed its duties and has kept the complaint pending for more than six years which speaks volumes by itself. The Tribunal fails to fathom as to why the complaint could not have been decided unless SEBI officials had a vested interest in not deciding the matter. We set aside the communication / order passed by the SEBI on the SCORES platform. The appeal is allowed. We direct the appellants to file a consolidated representation / complaint before SEBI annexing the earlier complaints within four weeks from today.

  ---

• Insolvency & Bankruptcy

• 2019 (11) TMI 1015
  Revival of the company - Initiation of CIRP - grievance of the Petitioner is that there were a number of investors in VDPL, who had preferred petitions under Sections 529 (A) and 530 of the Companies Act, 1956 before this Court - HELD THAT:- After hearing all the parties and considering the mediation report and the settlement scheme which was agreed to by more than 80% of the creditors, the Court had accepted the first motion and had directed that publication etc. would be made in accordance with the scheme of the IBC - After the scheme was advertised extensively, both in newspapers and on the internet, further hearing was conducted by the Company Court on 13th May, 2019, and judgment has been reserved. The question as to whether the scheme would be finally accepted by the Court and if so, what steps are to be taken, is yet to be pronounced by the Company Court. However, the order of the NCLT, at this stage, has become an interdiction into the proceedings which were pending before the Company Court - What the NCLT has failed to appreciate is that even the judgment in Forech [ 2019 (1) TMI 1442 - Supreme Court ] clearly observes that the objective would be to ensure that there are no parallel proceedings before the High Court and before the NCLT. Though, there is no doubt that the jurisdiction of this Court is not to be exercised under Article 227 if there is an alternate remedy available, in order to avoid conflicting orders from operating in respect of the company, to the detriment of the creditors and other stakeholders, this Court is of the opinion that, while relegating the Petitioner to the NCLAT, the impugned order of the NCLT deserves to be kept in abeyance - In view of the remedy of appeal being available to the Petitioner, to approach the NCLAT, the Petitioner is permitted to approach the NCLAT within four weeks. The NCLAT shall consider the entire matter including the orders passed by the Company Court. All parties who are intervening before the Court today and any other affected parties are permitted to appear before the NCLAT - This Court has not given any opinion on the merits of the revival scheme pending before the Company Court or the order of the NCLT which is under challenge in the present case. Application disposed off.

  ---

• Service Tax

• 2019 (11) TMI 1014
  Remittance of case to CESTAT - service tax for the work of shifting and laying of the water pipelines for the Delhi Metro Rail Corporation - Composite Contract - whether the matter ought not be remitted to the CESTAT for a fresh consideration of the appeal before it? HELD THAT:- The Court is of the view that the matter ought to be remanded to the CESTAT for a fresh consideration of the department s appeal. It is pointed out by Mr. Mittal, learned counsel for the Appellant that all the relevant documents, including the contract in question, were already produced in the enquiry prior to the issuance of the SCN and was already available with the department. Since the enquiry in the matter started in 2007, we request the CESTAT to dispose of the appeal at the earliest convenience, and preferably within six months from the date fixed by this Court for listing of the appeal before it for directions. Impugned order set aside - appeal disposed off.

  ---

• Central Excise

• 2019 (11) TMI 1013
  Scope of SCN - time limitation - No order as to the appellant s challenge to the tax liability on the point of limitation was passed by the Tribunal - Whether the Tribunal having held that the argument with regard to limitation was raised, was justified in rejecting the application on the ground that the point raised was impliedly rejected? HELD THAT:- When a quasi judicial authority considers legality and validity of an order on certain grounds including the ground of limitation, the said ground can never be impliedly rejected. Plea of limitation being an important defence available to the assessee as assessment after certain period is required to be made on certain foundations as provided in Section 11AC of Central Excise Act, 1944 read with Section 73(1) of Finance Act, 1994, the said plea cannot be impliedly rejected as the authorities are required to be satisfied about existence of the pre-requisites as contained in the said provision. Even otherwise, if the matter has been remitted back to the AO for decision afresh, there is no harm in allowing the appellant to raise the plea of limitation before the AO which can be simultaneously decided by the AO. The impugned order dated 24-11-2017 passed by the Tribunal is set aside with a direction that while hearing the matter upon remand by the Tribunal by its order dated 14-6-2017, the AO shall also decide the issue of limitation raised by the appellant.

  ---

• 2019 (11) TMI 1012
  Recovery of erroneous refund - Benefit of N/N. 39/2001-CE Dated 31.7.2001 - grant of exemption to all new units set up on or after 31.07.2001 - scope of the expression set up - benefit of exemption in respect of cement cleared from grinding unit - demand of interest and penalty - extended period of limitation - HELD THAT:- The exemption is available to new industrial unit and same is also defined under the notification. Further, notification provided that the assessee shall produce eligibility certificate from the Committee consisting of Chief Commissioner and Principal Secretary Industry Mines Department who shall issue certificate as to (a) Original value of investment in plant machinery (b) As to date commencement of commercial production by the unit - Notification further provides that in event such declaration as regards to Original investment in plant machinery is found to be incorrect or is less than rupees 20 crore then recovery mechanism along with interest is also provided under clause 3(v)(a) (b). It is an admitted fact that two certificates in terms of para 3(ii) and 3(iv) dated 22.6.2004 were issued after proper deliberation and verification and after obtaining full report from the jurisdictional Commissioner office. Thus, the Appellants cleared the goods under valid certificate - Once, an admitted fact is that the Appellants were holding eligibility certificate issued by the Committee as per the notifications, proceedings initiated to deny exemption are bad in law and same is liable to be set aside. In the facts of the present case where the Committee already applied its mind before issuing the certificate and nearly took one year to grant the same after seeking full verification report from the jurisdictional excise office, the jurisdictional excise office including investigating agency has no jurisdiction whatsoever to initiate fresh inquiry and deny the benefit of notification. Impugned order is thus contrary to law and is liable to be set aside. Power of review - HELD THAT:- It is well settled that no court or authority has inherent power of review. The power of review has to be specifically conferred on the authority. There is no such power conferred on committee under the notification to review such certificate. Cancellation of certificate is thus bad in law. In any case, Ld. Chief Commissioner of Central Excise had no power to cancel such certificate as same was required to be cancelled by Committee alone - In any case, Notification No.39/2001-CE does not provide for cancellation of certificate once issued. In other words there is no power of review conferred on the Committee to revoke certificate subsequently. Entire basis of investigation is mis-placed. Civil construction work started in grinding unit only after 31.7.2001. In any case, notification does not impose any condition of any kind of civil construction work to start only after 31.7.2001. Entire genus of case made out against the Appellants is that the civil construction work at grinding unit started much prior to 31.7.2001 i.e. before the date of publication of Notification No.39/2001-CE Dated 31.7.2001 in official gazette and therefore the appellants are not eligible for benefit of the said notification - HELD THAT:- The said contention of the department is not acceptable and is wholly mis-placed. Notification No.39/2001-CE Dated 31.7.2001 provides that the benefit of this notification shall apply only to new industrial units. Explanation to the notification further provides that the expression set up on or after the date of publication of this notification in the Official Gazette shall mean that any civil construction work on its factory premises and any installation of plant and machinery therein commences only on or after the date of publication of this notification in the Official Gazette. Extended period of limitation - HELD THAT:- There is no suppression of facts by the Appellants. Certificate was issued by Committee after due deliberation and verification. Further, all the facts were within the knowledge of the department. Extended period cannot be invoked. Recovery of erroneous refund - Section 11B of the Central Excise Act, 1944 - HELD THAT:- Section 11B of the Central Excise Act, 1944 provides for grant of refund of any duty of excise paid. Section 11A of the Central Excise Act, 1944 provides for recovery of erroneous refund. Though Section 11A does not refer to Section 11B but the phrase erroneous refund suggests refund granted under Section 11B. Therefore, provision of Section 11A provides recovery of refund erroneously granted under Section 11B of the Act and not otherwise. CBEC vide Circular No.842/19/2006-CX Dated 8.12.2006 had clarified Section 11B of the Central Excise Act, 1944 would not apply to refund granted under Notification No.39/2001-CE Dated 31.7.2001 - Thus, entire proceedings to recover erroneous refund by invoking Section 11A of the Central Excise Act, 1944 is incorrect. The recovery if any has to be strictly in accordance with the machinery provided under Notification. Since the cancellation of certificate is not with the authority of law on that basis demand was not sustainable - the demand of refund confirmed by the adjudicating authority is upheld on the concession made by Ld. Senior Counsel, the penalty imposed under Section 11AC and interest demanded under Section 11AB are set aside. Penalty u/r 26 of CER, 2002 - HELD THAT:- There is no malafide on the part of the appellant company in taking the benefit of Exemption Notification, the director for the same reasoning cannot be penalized - Hence the penalty imposed upon him under Rule 26 of Central Excise Rules, 2002 is set aside and appeal of Director is allowed. Appeal allowed in part.

  ---

• CST, VAT & Sales Tax

• 2019 (11) TMI 1011
  Imposition of penalty u/s 27(3) of the TN VAT Act,2006 without levying any tax - excess stock found on inspection - HELD THAT:- In this case, the Assessing Office has straightaway issued the notice of proposal only for imposing penalty and thereafter, passed the impugned order confirming the proposal. Thus, it is evident that the order impugned in this writ petition is an independent order levying penalty alone without assessing the tax liability. The question as to whether the independent or separate order levying only penalty can be passed or not has been considered by this Court in THE DEPUTY COMMISSIONER (C.T.) , COIMBATORE VERSUS VSR. RAMASWAMI CHETTIAR AND BROS. [ 1975 (8) TMI 114 - MADRAS HIGH COURT] wherein it was held that the Assessing Authority has no jurisdiction to impose penalty by a separate and independent order. Petition allowed - decided in favor of petitioner.

  ---