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TMI Tax Updates - e-Newsletter November 30, 2020 Case Laws in this Newsletter: GST Income Tax Customs Central Excise Indian Laws Articles PROFITEERING UPHELD ON SUPPLY OF ‘AFTER SHAVE LOTION’ News Online filing of application (Form GST EWB 05) by the taxpayer for un-blocking of E-Way Bill (EWB) generation facility DGGI Gurugram arrests one for illegally manufacturing and supplying cigarettes and tax evasion Auction for Sale (Re-issue) of ‘4.48% GS 2023’, Auction for Sale (Re-Issue) of ‘GoI Floating Rate Bond 2033’, Auction for Sale (Re-issue) of ‘6.22% GS 2035’, and Auction for Sale (Re-issue)of ‘6.67% GS 2050’ Notifications Customs 40/2020 - dated 27-11-2020 - ADD Seeks to impose Anti-Dumping duty on Fluoroelastomers (FKM) originating in or exported from China PR for a period of 5 years, in pursuance of sunset review final findings issued by DGTR 109/2020 - dated 27-11-2020 - Cus (NT) Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver GST - States S.O. 190 - dated 25-11-2020 - Bihar SGST Seeks to notify a special procedure for taxpayers for issuance of e-Invoices in the period 01.10.2020 - 31.10.2020 S.O. 189 - dated 25-11-2020 - Bihar SGST Bihar Goods and Services Tax (Eleventh Amendment) Rules, 2020 S.O. 188 - dated 25-11-2020 - Bihar SGST Seeks to amend Notification S.O. 111, dated the 06th May, 2020 S.O. 187 - dated 25-11-2020 - Bihar SGST Seeks to amend Notification S.O. 110, dated the 06th May, 2020 S.O. 186 - dated 25-11-2020 - Bihar SGST Seeks to grant waiver / reduction in late fee for not furnishing FORM GSTR-10, subject to the condition that the returns are filled between 22.09.2020 to 31.12.2020 S.O. 185 - dated 25-11-2020 - Bihar SGST Seeks to amend Notification S.O. 04, dated the 2nd January, 2018 S.O. 184 - dated 25-11-2020 - Bihar SGST Seeks to amend Notification S.O. 129, dated the 09th June, 2020 04/2020- State Tax (Rate) - dated 25-11-2020 - Bihar SGST Amendment in Notification No. 12/2017-State Tax (Rate), dated the 29th June, 2017 CCT/26-2/2018-19/64/1825 - dated 25-11-2020 - Goa SGST Supersession Notification No. 38/1/2017- -Fin(R&C)(178) dated 28th October, 2020 95/GST-2 - dated 17-11-2020 - Haryana SGST Haryana Goods and Services Tax (Thirteenth Amendment) Rules, 2020 86/2020—State Tax - dated 12-11-2020 - Maharashtra SGST Seeks to rescind Notification 76/2020—State Tax dated the 20th October, 2020 Circulars / Instructions / Orders IBC IBBI/CIRP/36/2020 - dated 27-11-2020 Filing of list of creditors under clause (ca) of sub-regulation (2) of regulation 13 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 Customs PUBLIC NOTICE No.66/2020 - dated 4-11-2020 Scheme for Rebate of State Levies(RosL) Trade Notice No. 20/2020 - dated 3-11-2020 Procedure for replying to query or for submitting addition documents for a Bill of Entry Public Notice No. 35/2020 - dated 27-10-2020 Permission of Bonded Trucking for transportation ( import/Export) of Valuables and General Cargo from ACC Jaipur to CELEBI& DCSC- IGI Airport- New Delhi, and vice-versa to M/s. the Rajasthan Small Industries Corporation Ltd. (RAJSICO Jaipur) PUBLIC NOTICE NO. 136/2020 - dated 21-10-2020 Implementation of QR code based Sampling Solution at JNCH PUBLIC NOTICE NO. - 135/2020 - dated 16-10-2020 Faster assessment and clearance of goods under Faceless Assessment PUBLIC NOTICE No. 63/2020 - dated 13-10-2020 Faceless Assessment - Measures for timely assessment of Bills of Entry and clarification on defacement of physical documents PUBLIC NOTICE NO.62/2020 - dated 12-10-2020 Advisory for filing amendment for adding supporting Docs to a Bill of Entry PUBLIC NOTICE NO. 36/2020 - dated 12-10-2020 Implementation of the Sea Cargo Manifest and Transhipment Highlights / Catch Notes GST Detention of goods alongwith vehicle - Allegation of attempt to sale goods in between - Any defect, if any, in the documentation accompanying the goods for purpose of levy of tax and penalty has to be looked at also in terms of the Circular dt. 13.4.2018 and Circular dt. 14.09.2018 issued by the CBIC - Admittedly, the vehicle was found at weigh bridge, IDA Jeedimetla and it is not the case of the 1st respondent that at the time of it's detention or check at that location, there was sale of goods being done without paying applicable tax. In fact there is no material placed on record by 1st respondent to show that any attempt was being made by petitioner to sell the goods in local market at IDA Jeedimetla on 22.1.2020 evading CGST and SGST - The detention of the vehicle at IDA Jeedimetla in spite of the vehicle carrying tax invoice and the e-way bill is in violation of the provisions of the Act, in particular Rule 68 - HC Visit to Get Source Confiscation of goods - proceeding simultaneously u/s 129 & 130 - except arguing that the authorities cannot invoke both the sections simultaneously, the petitioners have not produced any case law which militates against the views expressed in the above judgment. - While interpreting the Tax Statutes and applying to the facts and holding that the provisions thereof are violated, the authorities must give cogent reasons. Unfortunately, in the instant case, the reasons, are a casualty - the impugned order does not stand to legal scrutiny and liable to be set aside. - HC Visit to Get Source Profiteering - base prices of 1383 goods had been increased by the Respondents after the rate of tax was reduced - allegation that the Respondents had not passed on the benefit of reduction in the rate of GST - Based on the findings it is abundantly clear that the Respondents are liable to pass on the benefit of GST rate reduction from 28% to 18% as was notified by the Central and the State Governments vide Notification No. 41/2017-Central tax (Rate) dated 14.11.2017 w.e.f. 15.11.2017. It is also established that the Respondents have not passed on the benefit of above tax reduction to the ultimate customers in terms of Section 171(1) w.e.f. 15.11.2017 to 39.09.2018. - NAPA Visit to Get Source Income Tax Adhoc Addition on account of personal use of car, on account of tour and travelling expenses and on account of telephone expenses - When undisputedly assessee has claimed the expenses on the basis of its audited financials which have not been disputed by the AO, the ad hoc addition on the basis of surmises is bad in law. Moreover, when it is not case of the AO that these expenses have not been made wholly and exclusively for the purpose of business by the assessee there is no ground to disallow the same. Ld. CIT(A) has rightly deleted the addition - AT Visit to Get Source Assessment u/s 153A - Bogus claim of LTCG - the assessee has discharged the necessary onus cast on him in terms of claim of exemption of long term capital gains u/s 10(38) of the Act by establishing the genuineness of transaction of purchase and sale of shares and satisfying the requisite conditions specified therein and the gains so arising on sale of shares therefore has been rightly claimed as exempt u/s 10(38) - AT Visit to Get Source TDS u/s 195 - TDS on salary as per provisions of section 40(a)(i) - payment made from India to the employees of Head Office - the assessee is not liable to deduct tax at source from the salary paid to the non resident and has not committed any default in not deducting tax at source from the reimbursement to the head office on account of salary expenses. - AT Visit to Get Source Validity of the assessment framed under section 158BD - In the absence of the basic documents evidencing accommodation entry being provided to the assessee, the bank account number or the person from whom entry received can be of no assistance to the Assessing Officer of the assessee for assessing the undisclosed income of the assessee. Therefore in the present case even specific information was not passed to the Assessing Officer of the assessee as contended by the Revenue and therefore the contention that passing on of specific information constituted or was equivalent to handing over seized material, merits no consideration and is rejected. - AT Visit to Get Source Condonation of delay in filing an appeal - eligible reasons to delay - The conduct of the assessee does not inspire the confidence and hence, we are of the considered opinion that the assessee has grossly failed to explain the reasonable cause in filing the appeal belatedly. Accordingly, we decline to condone the delay of about 18 months in filing the present appeals - AT Visit to Get Source Customs Smuggling - Gold - Foreign Currency - Baggage Rules - The statements and circumstantial evidences of the case proved that the appellant had knowingly and intentionally attempted to illegally carry out the Foreign currency out of India while departing for Dubai on 30.07.2018 - Penalty u/s 114AA upheld. - Commissioner Visit to Get Source Indian Laws Dishonor of Cheque - acquittal of accused - Privity of Contract - The complainant has not made out a case and the presumption was rebutted by the accused in effectively cross-examining P.W.1 and plausible evidence has been placed before the Court that there was no liability on the part of the accused in issuance of those two cheques. The second mode of rebutting the case of the complainant has been successfully made out by the accused and rebutted the case of the complainant - HC Visit to Get Source Dishonor of Cheque - legally recoverable debt or not - The Trial Judge ought not to have come to the conclusion that the source has not been proved and non- examination of two witnesses from whom the complainant has received the money to advance the same in favour of the accused is not fatal - the Trial Court has committed an error in acquitting the accused and not drawn the presumption in favour of the complainant and therefore, it requires an interference of this Court. - HC Visit to Get Source Dishonor of Cheque - If the learned Magistrates are allowed to convert the complaints filed alleging an offence punishable under Section 138 of the said Act of 1881 into a warrant triable case, the consequence will be disastrous as the trial will be prolonged. Lot of time will have to be devoted for hearing of discharge application and for framing of charge. It will amount to defeating the very object of introducing Chapter XVII containing Sections 138 to 142 in the said Act of 1881 with effect from 1st April 1989. - The power of the learned Magistrate to convert the trial of a complaint under Section 138 of the said Act of 1881 under the second proviso to sub-section (1) of Section 143 is confined only to converting the case into a summons triable case - HC Visit to Get Source Dishonor of Cheque - The object of statutory notice is to protect an honest drawer of the cheque by providing him a chance to make the fund sufficient in his bank account and correct his mistake. The accused petitioner could have availed this opportunity by accepting the demand notice instead of repeatedly avoiding its service. He could have accepted the notice and projected his case that he already made the repayment of the loan, had this case of him been true. - HC Visit to Get Source Case Laws: GST 2020 (11) TMI 921 Detention of goods alongwith vehicle - transportation in one segment not being covered by a valid e-way bill - HELD THAT:- If the petitioner furnishes a bank guarantee for the amount demanded in Ext.P9 notice, then the respondents shall permit a clearance, and thereafter proceed to pass the final adjudication order under Section 129(3) of the GST Act. Petition disposed off. 2020 (11) TMI 920 Detention of goods alongwith vehicle - reason for detention is mis-match in the value of the goods transported, as shown in the e-way bill and job work invoice that accompanied the transportation of the goods - HELD THAT:- Inasmuch as the detention of the goods was during the return journey from the job-workers premises to the petitioner's premises, the documents that ought to have accompanied the transportation were the job work invoice, the delivery challan and the e-way bill. In the instant case, it is not in dispute that the consignment was covered by the job-work invoice, an e-way bill as also the delivery challan that originally accompanied the goods on its transportation from Ernakulam to the job worker's premises in Salem. As per the statutory provisions, when goods are sent to other premises for job work, it is the same delivery challan that has to accompany the transportation for the onward and return journey as well. At any rate the objection of the respondents is only with regard to the value shown in the e-way bill that accompanied the goods on its return journey. In as much as there could be no doubt with regard to the identity of the goods that were being transported, and the difference in the value shown in the e-way bill (from that shown in the original delivery chalan) was only on account of the requirement of maintaining uniformity in the value shown in the tax invoice raised by the job worker and the e-way bill generated by him, the detention in this case was wholly unjustified. The respondents are directed to release the goods and the vehicle to the petitioner on his producing a copy of this judgment before the respondent - petition allowed. 2020 (11) TMI 919 Direction to respondents to issue necessary instructions, directions and orders to the jurisdictional officers to give effect to the rectified GSTR-3B returns filed manually by the petitioner for the months of July to September 2017 - HELD THAT:- Issue notice. List the matter on 13th January, 2021. 2020 (11) TMI 918 Reimbursement of differential tax amount arising out of change in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) with effect from 01.07.2017 - grievance of the petitioner is that in view of the introduction of the GST, petitioner is required to pay tax which was not envisaged while entering into the agreement - HELD THAT:- The Government has now come out with a revised guidelines in this respect in supersession of the guidelines issued vide Finance Department letter dated 07.12.2017. Additional Counter Affidavit of O.P.-authority has been filed in similar cases annexing the revised guidelines relating to works contract under GST issued by the Government of Odisha, Finance Department vide Office memorandum No. FIN-CTI-TAX- 0045-2017/38535/F Dated 10.12.2018. Petitioner shall make a comprehensive representation before the appropriate authority within four weeks from today ventilating the grievance. If such a representation is filed, the authority will consider and dispose of the same, in the light of the aforesaid revised guidelines dated 10.12.2018 issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by 21.01.2021 - If the petitioner(s) will be aggrieved by the decision of the authority, it will be open for the petitioner(s) to challenge the same. No coercive action shall be taken against the petitioner till 21.01.2021 - Petition disposed off. 2020 (11) TMI 917 Detention of goods alongwith vehicle - Allegation of attempt to sale goods in between - detention on the ground that prima facie the 'documents tendered were found to be defective' - mismatch between the goods in movement and the documents tendered - remedy of appeal under Section 107 of the TGST Act - HELD THAT:- Without there being any order/decision passed by the 1st respondent and communicated to the petitioner, the petitioner cannot be expected to file appeal invoking Section 107 of the TGST Act, 2017 - the plea of the 1st respondent that the petitioner should avail the remedy of appeal under Sec. 107 of the TGST Act is rejected. Any defect, if any, in the documentation accompanying the goods for purpose of levy of tax and penalty has to be looked at also in terms of the Circular dt. 13.4.2018 and Circular dt. 14.09.2018 issued by the Central Board of Indirect Taxes and Customs, New Delhi - In the instant case, one of the grounds for detention in Form GST MOV-06 is that 'the documents which were tendered are found to be defective'. From the very contents of the Form GST MOV-06, wherein it is alleged that the 'documents tendered are found to be defective', it is clear that the documents available with the driver were actually tendered to the 1st respondent. They clearly showed that the goods were to be delivered at Secunderabad. Therefore as mentioned in the Circular dt. 13.4.2018, the vehicle should be allowed to proceed further and the movement of goods cannot be stopped prima-facie - The explanation offered by the petitioner in reply dt. 23-01-2020 to the notice in Form GST MOV-06 dt. 22-01-2020 that generally material from Salem, Tamil Nadu purchased by various dealers at Hyderabad which is to be delivered at Hyderabad at various destinations do come in groups and assemble at IDA Jeedimetla; that the vehicles through Outer Ring Road reach Jeedimetla as there is no entry for heavy vehicle into the city through main roads; and the person in charge from SAIL (TN) reaches IDA Jeedimetla and directs the vehicle drivers to the respective delivery points, cannot be said to be unbelievable. The fact that the said explanations have not even considered by the 1st respondent is also glaring. Whether 'checking of the vehicle at IDA Jeetimetla, Hyderabad' is ground for detention of goods under Section 129 of the Act or Rules made under the Act or as per the Circulars issued by Central Board of Indirect Taxes and Customs, GST Policy Wing? - HELD THAT:- It is not the case of the 1st respondent that mere checking of a vehicle or it being found at a different place without anything more, is by itself a 'taxable event' under the CGST Act/Telangana GST Act, 2017 - under these Acts, it is not permissible to detain a vehicle carrying goods or levy penalty on the sole ground that the vehicle is found at a wrong destination without anything more. Admittedly, the vehicle was found at weigh bridge, IDA Jeedimetla and it is not the case of the 1st respondent that at the time of it's detention or check at that location, there was sale of goods being done without paying applicable tax. In fact there is no material placed on record by 1st respondent to show that any attempt was being made by petitioner to sell the goods in local market at IDA Jeedimetla on 22.1.2020 evading CGST and SGST - the reasons given for detaining the goods and the vehicle they were being carried in do not indicate any violation of the provisions of the Act by petitioner warranting levy of tax and penalty on the petitioner under the Act. The detention of the vehicle at IDA Jeedimetla in spite of the vehicle carrying tax invoice and the e-way bill is in violation of the provisions of the Act, in particular Rule 68 of the Rules framed under the Act and the Circulars dt. 13.4.2018 and 14.9.2018 of the Central Board of Indirect Taxes and Customs which are binding on the 1st respondent and that the 1st respondent was not justified in collecting tax and penalty from the petitioner - the 1st respondent cannot rely on the fact that after release of goods on 25-01-2020 at 6.15 p.m., the petitioner generated another e-way bill dt. 26-01-2020 on the same vehicle for the same value of the goods and marked it to be delivered to M/s. Nanabhai Steels in IDA Jeedimetla, Telangana. The action of the 1st respondent in detaining the vehicle carrying the goods purchased by petitioner on 22-01-2020 and forcing the petitioner to pay on 25-1-2020 a sum of ₹ 9,40,618/-towards tax and penalty is declared as illegal, arbitrary and violative of Article 14 and 265 of the Constitution of India apart from Article 301 of the Constitution of India and also the provisions of the Act and Rules made thereunder - Petition allowed. 2020 (11) TMI 916 Confiscation of goods - solver ornaments - unaccounted stocks - Section 67 of the Central Goods and Service Act, 2017 - Whether the 1st respondent is authorised to pass the impugned proceedings dated 04.02.2020? - HELD THAT:- The argument of the petitioners that the 1st respondent is not legally authorised to issue the impugned proceedings is not correct in view of the Gazette notification No.37 of Revenue Department (CT-II) dated 30.06.2017 filed by the learned Government Pleader. Section 68(3) of the CGST Act confers power on the Proper Officer to intercept any conveyance on the way and require the person in-charge of the said conveyance to produce the documents prescribed under sub-section (1) of Section 68 and the devices for verification in which case the said person shall be liable to produce the same and also allow the inspection of goods. While so, in the Gazette notification No.37, the Chief Commissioner of State Tax notified certain officers as Proper Officer occurring in different sections of the SGST Act. In Serial No.23, certain officers viz., (i) Goods and Service Tax Officer (ii) Deputy Assistant Commissioner (iii) Assistant Commissioner (iv) Deputy Commissioner and (v) Joint Commissioner having jurisdiction and/or (i) Deputy Assistant Commissioner (ii) Assistant Commissioner and (iii) Deputy Commissioner as authorised by the additional Commissioner/Commissioner in case of State Enforcement Wing are authorised as Proper Officers to act under Section 68(3). While so, by an amendment vide Ref.No.CCW/GST/74/2015 dated 28.03.2018 the Commissioner of Commercial Taxes authorized the officer not below the cadre of Deputy Assistant Commissioner of State Tax as Proper Officer for the purpose of Section 68(3). In the instant case, the confiscation proceedings are issued by the Deputy Assistant Commissioner (ST)-I, Hindupur, the first respondent herein, who is authorised as per the above Gazette notification. Whether the 1st respondent is legally justified in proceeding simultaneously under Section 129 130 of the CGST Act against the petitioners? - HELD THAT:- We have gone through the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT] and it was held therein that both the sections, though commenced with a non obstante clause, yet are mutually exclusive and independent. It implies that the confiscation proceedings can be taken up by the authorities after exhausting the measures under Section 129(6) and also simultaneously along with Section 129 and there is no bar. However, since the phrase with an intent to evade the payment of tax is employed in Section 130 of the Act, before invoking the confiscation proceedings under Section 130 at the threshold, the concerned authority must form a firm opinion that the assessee has deliberately avoided the payment of tax. Such opinion must be an express one and recorded with the reasons. It must be noted that except arguing that the authorities cannot invoke both the sections simultaneously, the petitioners have not produced any case law which militates against the views expressed in the above judgment. Whether the order dated 04.02.2020 of the 1st respondent is legally sustainable? - HELD THAT:- While interpreting the Tax Statutes and applying to the facts and holding that the provisions thereof are violated, the authorities must give cogent reasons. Unfortunately, in the instant case, the reasons, are a casualty - the impugned order does not stand to legal scrutiny and liable to be set aside. While the confiscation order dated 04.02.2020 passed by the 1st respondent is set aside, the 1st respondent is directed to conduct an enquiry afresh and afford an opportunity of personal hearing to the petitioners with reference to their explanation and pass an appropriate order by giving cogent reasons in accordance with law - Petition allowed. 2020 (11) TMI 915 Profiteering - base prices of 1383 goods had been increased by the Respondents after the rate of tax was reduced - allegation that the Respondents had not passed on the benefit of reduction in the rate of GST - contravention of provisions of Section 171(1) of the CGST Act, 2017 - penalty - HELD THAT:- It would be appropriate to state that as has been discussed in paras supra (i) the pre and post reduction base prices have been correctly computed excluding the discounts as per the provisions of Section 15(1) and 15(3)(a) and hence there is no mistake in calculating the same. Therefore, the comparison of prices made by the Respondents as per the Annexure attached with their submissions dated 19.06.2019 is not correct (ii) It is also apparent from the plain reading of Section 171(1) that the benefit of tax reduction has to be passed on by commensurate reduction in price and hence the same cannot be passed by way of discounts. Moreover, the Respondents cannot treat the already existing promotion schemes as passing on of the benefit as such schemes were floated by them to increase their sales in normal course of their business. Hence, the mapping of prices which could have been charged by the Respondents for the SKUs on which promotion schemes were extended and revised profiteering was computed which included the higher benefit passed on, as per the annexure attached with their above submissions is wrong and incorrect and accordingly, an amount of ₹ 61.50 Crore cannot be reduced from the profiteered amount on the above two grounds as has been claimed by the Respondents. (iii) As explained in para supra the Respondents cannot pass more benefit on certain SKUs as per their own convenience and refuse to pass on the same on other SKUs. As per theprovisions of Section 171(1) and Article 14 they are required to pass on the benefit on each SKU to each buyer and therefore, computation of the benefit passed on by way of higher price reduction on certain SKUs as per the annexure attached with the submissions dated 19.06.2019 is incorrect and hence an amount of ₹ 190.36 Crore cannot be reduced from the profiteered amount. (iv) No profiteering has been computed on the SKUs where the Respondents have charged less prices as compared to the average prices. In addition any benefit passed on by claiming higher price reduction on certain SKUs where the actual price charged was less than the average price cannot be set off against the profiteered amount as has been computed by the Respondents vide their above submissions as the benefit has to be passed on each SKU (v) As discussed in para supra the Respondents have not supplied the details to prove that they have passed on the benefit by way of supplying extra quantity, hence, mapping of the normal prices which could have been charged by the Respondents for the products with extra quantity or the higher grammage at the same or lower prices as per the annexure attached with their above submissions is wrong and incorrect and hence the amount so computed cannot be allowed to be deducted from the profiteered amount. As mentioned above no benefit can be passed by introducing new promotion schemes, therefore, the mapping of the benefit as per the annexure attached with the submissions dated 19.06.2019 is wrong and hence, no reduction can be permitted in the profiteered amount. (vi) The Respondents could not have reduced their prices post supply by extending discounts as the benefit was required to be passed on by way of commensurate reduction in the prices upfront. Therefore, computation of benefit on account of post supply rate reductions as per the annexure attached with their submissions dated 19.06.2019 is wrong and incorrect and hence an amount of ₹ 69.55 Crore cannot be reduced from the profiteered amount. Based on the above reasons an amount of ₹ 139.99 Crore in respect of M/s. PGHP Ltd. cannot be reduced. The Respondents have also claimed that they have passed on an amount of ₹ 7.12 Crore in respect of M/s. GIL on account of correction in the base prices, extension of pre rate reduction promotion schemes and introduction of new promotion schemes as has been computed vide their submissions dated 19.06.2019. However, the claim of the Respondents is wrong. Therefore, the above amount of ₹ 7.12. Crore cannot be deducted from the profiteered amount. Moreover, the Respondents are required to pass on the benefit at the level of each SKU and therefore, any claim of passing on the benefit at the entity level is wrong and against the provisions of Section 171(1) and Article 14. Therefore, all the mappings and computations made by the Respondents through their submissions dated 19.06.2019 are frivolous, incorrect, illogical and against the provisions of Section 171(1) and Article 14 and hence they are liable to be rejected. The profiteered amount in respect of all the 3 Respondents is further determined as (i) ₹ 181,51,46,262/- in respect of the Respondent No. 1 i.e. M/s. Proctor Gamble Home Products (PGHP) Pvt. Ltd. (ii) ₹ 2,00,30,807/- in respect of the Respondent No. 2 i.e. M/s. Proctor Gamble Hygiene Health Care (PGHH) Ltd. and (iii) ₹ 57,99,37,416/- in respect of the Respondent No. 3 i.e. M/S Gillette India Ltd. (GIL), on the sale transactions made by the above Respondents w.e.f. 14.11.2017 to 30.09.2018, which has been individually and collectively computed in respect of all the 33 States and Union Territories as per Annexure-6 attached to the Report of the DGAP dated 31.01.2020. The total profiteered amount of ₹ 2,41,51,14,485/- is computed - Also, the Respondents are directed to reduce prices of all the SKUs commensurately in respect of which profiteering has been computed as per Annexure-6 forthwith in terms of Rule 133 (3) (a) of the above Rules read with Section 171(1) of the Act. The Respondents are also directed to deposit 50% of the profited amount of ₹ 2,41,51,14,485/- (₹ 181,51,46,262/- in respect of Respondent No. 1 + ₹ 2,00,30,807/- in respect of Respondent No. 2 + ₹ 57,99,37,416/- in respect of Respondent No. 3) in the Central Consumer Welfare Fund and the balance 50% in the Consumer Welfare Funds of the 33 States/UTs mentioned supra as per the provisions of Rule 133 (3) (c) of the above Rules read with Section 171(1) as per Annexure-6, since the recipients who are millions of ordinary customers are not identifiable. The above amounts shall be deposited along with 18% interest payable from the dates from which the above amount was realized by the Respondents from their recipients till the date of deposit in the respective Consumer Welfare Funds. Penalty - HELD THAT:- The Respondents have denied benefit of rate reduction to the buyers of their SKUs in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and they have thus resorted to profiteering. Hence, they have committed an offence for violation of the provisions of Section 171 (1) during the period from 15.11.2017 to 30.09.2018 and therefore, they are apparently liable for imposition of penalty under the provisions of Section 171 (3A) of the above Act. However, perusal of the provisions of Section 171 (3A) under which penalty has been prescribed for the above violation shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 15.11.2017 to 30.09.2018 when the Respondents had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondents retrospectively. Accordingly, notice for imposition of penalty is not required to be issued to the Respondents. As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this order was required to be passed within a period of 6 months from the date of receipt of the Report from the DGAP under Rule 129 (6) of the above Rules. Since, the present Report has been received by this Authority on 31.01.2020, the order was to be passed on or before 30.07.2020. However, due to prevalent pandemic of COVID-19 in the Country this order could not be passed on or before the above date due to force majeure. Accordingly, this order is being passed today in terms of the Notification No. 65/2020-Central Tax dated 01.09.2020 issued by the Government of India, Ministry of Finance (Department of Revenue Central Board of Indirect Taxes Customs under Section 168 A of the Central Goods Services Tax Act, 2017. Application disposed off. 2020 (11) TMI 914 Refund of excess tax paid - principles of natural justice - appellant has mainly contested in their appeal memo that the adjudicating authority has passed the impugned orders in original without granting sufficient opportunity of personal hearing in the matter - HELD THAT:- The adjudicating authority while rejecting the refund claims of the appellant neither considered their first request for seeking of some other date as per adjudicating authority's convenience nor discussed any relevant provisions of law/rules for rejection of their refund claims. It is also found that non-passing of speaking order indeed amount to denial of natural justice. Before passing of orders atleast their request for seeking of some other date for personal hearing in the matter should have been considered and at least speaking order should have been passed by giving proper opportunity of personal hearing in the matter to the appellant and detailing factors leading to rejection of refund claims. Such orders are not sustainable in the eyes of law and accordingly set aside. The appellant is directed to submit all relevant documents to the adjudicating authority and the claims will be processed by the adjudicating authority as per the provisions and procedure as prescribed under CGST Act, 2017 and CGST Rules. Appeal disposed off. Income Tax 2020 (11) TMI 913 Revision u/s 263 - out of provision made for depreciation on investment by the assessee AO has added only investments in India and excluded a sum pertaining to investments outside India - Also audit report in Form 3D sated that expenditure of capital nature were charged to profit and loss account and Assessing Officer did not take into account the aforesaid aspect of the matter - HELD THAT:- Tribunal by placing reliance on the order passed by it in the case of assessee for Assessment Year 1996-97 and 1997-98 inter alia held that the revenue as well as assessee are bound by the decision rendered by the tribunal and therefore, in the light of decision rendered by tribunal, CIT committed an error in holding that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of the revenue. Accordingly, the order passed by the Commissioner of Income Tax was set aside. The Supreme Court in G.M.Mittal Stainless Steel (P.) Ltd. [ 2002 (12) TMI 13 - SUPREME COURT] has held that power u/s 263 has to be exercised on the basis of the material, which was available at the time when CIT passed an order, the order passed by the tribunal was operative and therefore, the AO's order could not have been termed as erroneous. Merely because the order of the AO was passed relying which was subsequently reversed by this court cannot justify the order passed by the Commissioner of Income Tax under Section 263 of the Act. - Decided against revenue. 2020 (11) TMI 912 Cash sales unaccounted - Peak negative cash balance -Interest income addition as it cannot adjusted and set off against other cost/business expenditure after setting up of business - turnover reflected as per cash book does not reflect the sales as per bill book and the assessee has not been able to reconcile the same with evidences during the course of assessment proceedings and appellate proceedings - Tribunal deleted the additions - HELD THAT:- From a perusal of paragraph No.10 of the Order passed by the Tribunal, it is evident that the Tribunal has not assigned any reasons worth naming for confirming the finding recorded by the Commissioner of Income-Tax (Appeals). From a perusal of paragraph No.6 of the Order passed by the Tribunal, it is evident that the Tribunal has remitted the matter to the Assessing Officer with regard to the substantial question of law No.3 involved in this appeal. We find that substantial questions of law No.1 and 2 are inextricably involved with substantial question of law No.3. Since the Order of the Tribunal, which is a final fact finding authority is cryptic and suffers from the vice of non-application of mind, the same is hereby quashed. The matter is remitted to the Tribunal to consider the substantial questions of law No.1 and 2 afresh by assigning reasons. Since the matter has been remitted to the Tribunal for decision afresh, it is not necessary for us to answer the substantial questions of law framed in this appeal. 2020 (11) TMI 911 Fringe benefit tax in respect of reimbursement of medical expenses to the employees - revenue submitted that the tribunal has set aside the disallowance in respect of reimbursement of medical expenses granted by the assessee to its employees by ignoring the fact that the same is excluded as per proviso to viii of Section 17(2) of the Act read with Rule 3 - HELD THAT:- Effect of Proviso (v) to Section 17(2) is that reimbursement of the amount in excess of ₹ 15,000/- would be taxable as part of the salary in the hands of the employee, whereas, amount less than ₹ 15,000/- would not be taxable in the hands of the employee. However, such reimbursement nevertheless would perquisite as defined under the Act but would remain untaxed in the hands of the employees and therefore, untaxed amount is taxed as fringed benefits in the hands of the employer. Thus, if the medical reimbursement exceeds ₹ 15,000/- relating to unapproved hospital, then under Section 17(1) of the Act the employees are taxed beyond ₹ 15,000/- and if ₹ 15,000/- which is exempt in the hands of the employees is not liable for fringe benefit tax but over and above the aforesaid amount is liable for fringe benefit tax. Expenses incurred by the assessee on bundling of product - HELD THAT:- Effectively the bundling is not done free of cost as customer pays for the bundled project indirectly. The Delhi High court while considering the aforesaid issue in the case of T T Motors Ltd. [ 2012 (1) TMI 96 - DELHI HIGH COURT] has held that expenses incurred in bundling of products are not exigible to levy of fringe benefit tax. Expenditure for the purpose of business not connected to employees cannot be brought to tax under the fringe benefit tax. Therefore, we hold that the expenses incurred by the assessee on bundling of the product is not exigible to fringe benefit tax. Assessee has also incurred expenses for sponsoring Science Graduates to Post Graduate courses. From perusal of the document placed on record, it is evident that the assessee has enrolled the student in computer applications in the academy of the assessee viz., Wipro Academy of Software Excellence. The student is not an employee of the company and the payment was made to the Birla Institute of Technology for expenses, thus, the expenses incurred by the assessee in respect of payment made to Birla Institute of Technology for imparting training to the students cannot be subjected to fringe benefit tax. 2020 (11) TMI 910 Benefit of Vivad Se Vishwas Scheme (' VVS Scheme') - assessee has already filed the declaration under Section 4 of the Act on 14.10.2020 - HELD THAT:- The assessee has already availed the benefit under the Act, no useful purpose would be served in keeping this appeal pending. At the same time, safeguarding the interest of the assessee in the event the order to be passed by the Department under the Act is not in favour of the assessee. Accordingly, the Tax Case Appeal stands disposed of on the ground that the assessee has already filed a declaration and the Department shall process the application at the earliest in accordance with the said Act and communicate the decision to the assessee at the earliest. As observed, the assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders. 2020 (11) TMI 909 Addition u/s 69A - unexplained money - HELD THAT:- AO has accepted the return of the assessee thereby accepting the turn over from the sales of papad and snacks. It is the say that counsel for the assessee has been doing this business since past many years and therefore had sufficient funds to explain the source of cash deposit. Per contra the DR strongly supported the findings of the lower authorities - once the business of the assessee has been accepted by the AO by accepting her return of income there should not be any doubt in accepting the source of cash deposit. Assessee has successfully explained the source of cash deposit of ₹ 10 lacs. We accordingly direct the AO to delete the impugned addition. The appeal filed by the assessee is allowed. 2020 (11) TMI 908 Disallowance u/s 80IC - whether assessee is entitled for deduction under 80IC @ 100% after substantial expansion carried out during financial year 2011-12? - HELD THAT:- When assessee has carried out substantial expansion in the existing unit immediately on the completion of first five years i.e. in FY 2011-12 and duly complied with the conditions laid down in clause (ix) sub section 8 of Section 80-IC it is entitled for deduction for the year under assessment @ 100%. Ld. CIT(A) by threshing the facts of this case relied upon order passed by coordinate bench of Tribunal in Tirupati LPG Industries Ltd. [ 2014 (1) TMI 1689 - ITAT DELHI] has rightly deleted the addition made by the AO on account of disallowance u/s 80-IC. So we find no scope to interfere into the findings returned by Ld. CIT(A). - Decided against revenue. Addition on account of personal use of car, on account of tour and travelling expenses and on account of telephone expenses respectively made by the AO on ad hoc basis @ 10% - HELD THAT:- AO has proceeded to make ad hoc disallowance without assigning any reasons but on the basis of surmises the disallowance is not sustainable in the eyes of law. When undisputedly assessee has claimed the expenses on the basis of its audited financials which have not been disputed by the AO, the ad hoc addition on the basis of surmises is bad in law. Moreover, when it is not case of the AO that these expenses have not been made wholly and exclusively for the purpose of business by the assessee there is no ground to disallow the same. Ld. CIT(A) has rightly deleted the addition - Decided against revenue. 2020 (11) TMI 907 Undisclosed Receipts from ECIL BEL - undisclosed turnover - Accrual of income - HELD THAT:- We are satisfied that the assessee has correctly shown the amounts certified by the respective authorised supervisors and as we have noted above that ld CIT(A) after considering the entire facts and circumstances and relevant books of account and financial statements of the assessee for A.Y. 2012-13 has rightly concluded that the expenditure booked by him for assessment year 2012-13 was against the income received only and no expenses has been booked against much higher contract receipts as picked up and assessed by the AO. Inflated amounts are not the actual amount accrued to the assessee by ECIL and BEL, respectively and are not the amount of actual turnover which has accrued to the assessee for assessment year 2012-13. Since the assessee has satisfactorily established that the amount of work certified by the respective supervisors has been claimed and shown as turnover and the expenditure booked by the assessee for assessment year 2012-13 was against the income received and shown in the profit and loss account, no expenditure has been booked against impugned higher contract amount as assessed by the AO, therefore, we decline to accept the contention of ld CIT DR that the ld CIT(A) in the last sentence at top para 6 has considered and appreciated wrong fact that the assessee has not shown these receipts as income and not claimed expenses linked with them. CIT(A) after observing that the assessee has claimed higher TDS in the compelling circumstances under the given totality of the facts and circumstances of the case, it would be appropriate to levy an appropriate rate of net profit on the differential amount between the bill raised by the assessee and the amount claimed by it and compute the profit element embedded in these gross receipts. Estimation of profit - percentage of net profit - CIT(A) should have directed the AO to adopt the gross profit rate (before salary interest to partners) of 39.87% instead of net profit rate of 16.22% (after salary interest to partners) on the undisclosed turnover - HELD THAT:- In the facts and circumstances of the present case, the total impugned amount from the respective service receivers and the amount of work which was not certified by the authorized officers of ECIL and BEL cannot be treated as income of the assessee, only an element of income calculated on the logical percentage of net profit can be taxed in the case of unaccounted sales/turnover pertaining to which expenditure has not been claimed by the assessee in calculating the net profit of a particular assessment year. Therefore, in our humble opinion, the ld CIT(A) was right in directing the AO to calculate and tax only profit element embedded in the impugned amount of turnover. CIT(A) directing the AO to estimate only 16.22% on the undisclosed receipts based on the net profit rate disclosed by the assessee - HELD THAT:- In F.Y. 2010-11 to 2017-18 pertaining to assessment year 2011-12 to 2018-19, respectively, that the assessee provided service to private customers including ECIL and BEL and in the case of ECIL and BEL, some mismatch is there which has been observed by the authorities below but in the last, the total amount of turnover as per assessed income and as per balance sheet submitted by the assessee is almost similar. Therefore, if the figures of turnover is disturbed in one year then that would have consequent effect on the subsequent year and since the assessee is in the highest tax slab rate, therefore, such an exercise would be revenue neutral and there is no loss of revenue to the exchequer in this regard. Therefore, the ld CIT(A) was right in directing the AO to estimate and calculate the net profit embedded in the undisclosed turnover/receipts. Unexplained expenditure u/s 69C - HELD THAT:- Merely mismatch between the amount of TDS claimed by the assessee and amount of turnover shown by the assessee does not raise a question about the expenditure incurred by the assessee against the part receipts/turnover which was not shown in the P L account and balance sheet due to non-certification by the Supervisors of the service recipients and non receipt of payment during the relevant financial period. Therefore, the contention of the AO in the grounds that the amount of expenditure should be included and taxed in the hands of the assessee u/s.69C of the Act being unexplained expenditure has no legs to stand in the totality of the facts and circumstances of the case as noted above and hence, we dismiss the same. Estimation of percentage of net profit in the hands of the assessee - HELD THAT:- Percentage picked up by the AO, ld CIT(A) and percentage of calculation submitted by the assessee is not similar and there is vast difference between them, therefore, this requires examination and verification at the end of the AO. Ld Representatives of both the parties have agreed that the percentage of net profit of undisclosed receipts/turnover has to be estimated before payment of salary and interest on capital to partners. Therefore, we direct the AO to estimate the net profit before payment of salary and interest on capital to partners on the amount of undisclosed turnover/receipts. Accordingly, Ground Nos.1 to 5 of appeal of revenue are dismissed. Unexplained unsecured loan - FAA right or indeed the duty to admit additional evidence which is wilfully withheld from the Assessing Officer - HELD THAT:- As alleged by ld CIT DR, has been considered by the ld CIT(A) at appellate stage without confronting the same with the Assessing officer, we deem it fit and proper to remit the issue back to the file of the Assessing officer with the direction to the assessee to furnish the contracts/agreements alongwith confirmations with the three service providers and all other relevant documents before the Assessing officer. AO is directed to consider the said contracts/agreements duly entered into by the assessee with the service providers and all other relevant documents without being prejudiced from earlier assessment order. AO is also directed to examine and verify the relevant contracts and all other relevant documents entered into by the assessee with service providers and also verify that as to whether these service providers were hired to assist the assessee in carrying out the biometric enrolment programme in the State of West Bengal and often times, expenditure incurred by these service providers on behalf of the assessee were subsequently reimbursed by the assessee and in fact, these are business/ sundry creditors and no loans were taken and repaid by any one of the three parties. AO is also directed to verify the explanation of the assessee submitted during first appellate proceedings and after verification of the correctness of the same pass an appropriate and justified order considering the entire facts and circumstances related to this issue. 2020 (11) TMI 906 TDS u/s 194H - expenses incurred under the head Sales Promotion, Marketing development, promotional expenses and MR expenses - HELD THAT:- Under Explanation (iv) to Section 194H requires that where any income is credited to any account, whether called 'suspense account' or by any other name, in the books of account of the payer, such crediting shall be deemed to be credit of such income to the account of the payee for purposes of deduction of tax at source. The controversy arises in the given facts and circumstances whether the stakeholders are the payees as contemplated under Explanation (iv) to Section 194H - The answer stands in negative. Undisputedly, the payees in the present facts and circumstances are not the stakeholders but the other parties. There cannot be any question of deducting the TDS under the provisions of Section 194H Act in the present facts and circumstances. In holding so we draw support and guidance from the order of Mumbai tribunal in the case of Industrial Development Bank of India [ 2006 (7) TMI 248 - ITAT BOMBAY-H] which has been reproduced somewhere in the preceding paragraph. Thus, in view of the above detailed discussion and after considering the facts in totality, the grounds of appeal of the assessee are allowed whereas the grounds of appeal of the revenue are dismissed. 2020 (11) TMI 905 Exemption u/s 11 - rejection of registration u./s.12AA and denial of claim of exemption u/s.10(23C) (iii)(ad) - trust is not eligible for exemption u/s.10(23C)(iiiad) having its total receipts of more than ₹ 1 crore - CIT(E) observed that in the absence of bills and vouchers, the genuineness of the activities of the assessee trust could not be verified - HELD THAT:- The scope of enquiry contemplated u/s 12AA is limited to the extent of Commissioner getting himself satisfied about object of the Trust and the genuineness of its activities so as to grant or refuse the registration u/s 12A - A perusal of the impugned order of the ld. CIT (Exemptions), however, shows that he has not recorded any adverse comment or dis-satisfaction about the object of Trust or genuineness of the Trust activities. Only he has observed some lacuna in the amendment and dissolution clauses. In our opinion, the ld. CIT (Exemptions) thus has clearly gone beyond the scope of enquiry contemplated u/s 12A of the Act and has refused to grant the registration u/s 12A of the Act to the assessee Trust on a totally irrelevant ground without pointing out as to how he was not satisfied either about the amendment clause and dissolution clauses of the Trust or the genuineness of its activities. Contention of the assessee that some bills and vouchers were not produced due to time constrained by ld CIT(E) for appearing before him from a distance of more than 250 kms and also other unavoidable reasons, we find that there is genuine cause for not furnishing bills and vouchers - we direct the assessee to produce the bills and vouchers and books of account before the ld CIT(E) for verification as per Rule 17A in respect of the claim and after getting the same, ld CIT(E) is also directed to examine and verify the genuineness of the activities of the trust keeping in view trust deed and its relevant clauses and decide the issue afresh as per law after affording due opportunity of hearing to the assessee and without being prejudiced his earlier order challenged in this appeal. Appeal of the assessee is allowed for statistical purposes. 2020 (11) TMI 904 Estimation of income - Bogus purchases - disallowance of 12.5% of purchases as non-genuine/bogus - CIT-A restricting addition to 5% of purchases - HELD THAT:- CIT(A) followed the order of the Tribunal in assessee s own case for the earlier as well as subsequent assessment years on identical issue and decided partly in favour of the assessee by directing the AO to estimate the profit element in alleged non-genuine purchases at 5%, facts being similar, we do not find any infirmity in the order passed by the Ld.CIT(A) in restricting the addition to 5% of the value of purchases made. Grounds raised by the revenue are dismissed. 2020 (11) TMI 903 TDS u/s 194C - hire charges paid to third party vehicle owners - Non deduction of tds - addition made u/s.40[a][ia] - As per assessee there is no agreement or contract between the assessee and the persons from whom the vehicles have been hired - first argument made by assessee that the second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2012 would apply in the instant case - HELD THAT:- If the amount of tax has already been realised from the employees concerned directly, there cannot be any question of further realisation of tax as the same income cannot be taxed twice. If the tax has been realised once, it cannot be realised once again, but that does not mean that the assessee will not be liable for payment of interest or any other legal consequence for their failure to deduct or to pay tax in accordance with law to the revenue. (emphasis supplied) That such was the legal position was accepted by the Central Board of Direct Taxes in its Circular No.275/201/95-IT(B) dated January 29, 1997. The settled position in law is that if the deductee/payee has paid the tax, no recovery can be made from the person responsible for paying of income from which he failed to deduct tax at source. In a case where the deductee/payee has paid the tax on such income, the person responsible for paying the income is no longer required to deduct or deposit any tax at source. In the similar circumstances, we find that the first proviso to section 40(a)(ia) inserted by the Finance Act, 2010, which has been held to be curative and therefore, retrospective in its operation by CIT v Virgin Creations [ 2011 (11) TMI 348 - CALCUTTA HIGH COURT] provides for allowance of the expenditure in any subsequent year in which tax has been deducted and deposited. The intention of the legislature clearly is not to disallow legitimate business expenditure. The allowance of such expenditure is sought to be made subject to deduction and payment of tax at source. In a case where the deductee/payee has paid tax and as such the person responsible for paying is no longer required to deduct or pay any tax, legitimate business expenditure would stand disallowed since the situation contemplated by the first proviso viz. deduction and payment of tax in a subsequent year would never come about. Such unintended consequence has been sought to be taken care of by the second proviso inserted in section 40(a)(ia) by the Finance Act, 2012. We restore this issue to the file of the Assessing officer with the direction that the assessee shall provide all the details to the Assessing Officer with regard to the recipients of the income and taxes paid by them. The Assessing Officer shall carry out necessary verification in respect of the payments and taxes of such income and al so filing the return by the recipient. In case, the Assessing Officer finds that the recipient has duly paid the tax es on the income, the addition made by the Assessing Officer shall stand deleted. Thus this ground is allowed for statistical purposes. TDS u/s 194C(6) - Disallowance of reimbursement of petrol diesel charges on hired vehicles - HELD THAT:- If bills for such expenses incurred by the said cab owners were separately raised by them on the assessee in addition to bills for hire charges and since the amount of bills so raised was towards the actual expenses incurred by them, there was no element of any profit involved in the said bills. It was thus a clear case of reimbursement of actual expenses incurred by the assessee and the same, therefore, was not of the nature of payment covered by section 194C of the Act requiring the assessee to deduct tax at source therefrom, where bills were raised separately by the cab owners for reimbursement of actual expenses incurred by them. The provisions of section 194C of the Act were not applicable to the reimbursement of actual expenses and the assessee was not liable to deduct tax at source from such reimbursement. Accordingly, we direct the A.O. to verify the claim of the assessee in the light of our above observation. See SRI. SINGONAHALLI CHIKKAREVANNA GANGADHARAIAH. [ 2020 (4) TMI 756 - ITAT BANGALORE] 2020 (11) TMI 902 Assessment u/s 153A - Bogus claim of LTCG - Addition made without reference to seized material - HELD THAT:- AO has reassessed the income of the assessee by disallowing the long term capital gains exemption claimed u/s 10(38) without making any reference to any incriminating material found during the course of search. No finding of AO or any other material brought on record that these transactions of sale of shares were concealed and not reported to the Revenue while filing the original return of income on 30.08.2015 for the impugned assessment year. Once these transactions were reported in the return of income furnished before the date of search, the said transactions were duly disclosed to the department and thus, doesn t represent any undisclosed transactions so as to constitute incriminating material found during the course of search in case of the assessee. Therefore, the addition made by the AO by disallowing the claim of exemption u/s 10(38) and reassessment completed u/s 153A is undisputedly not based on any incriminating material found or seized during the course of search and seizure action u/s 132 of the Act. See KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] . - Decided in favour of assessee. Addition u/s 68 on account of bogus LTCG - denial of claim of exemption under section 10(38) in respect of sale of shares - addition u/s 69C made by the AO on account of unexplained commission expenditure for taking bogus accommodation entry in the form of LTCG - HELD THAT:- In the instant case, we note that the assessee satisfies the necessary ingredients and conditions as so specified in section 10(38) of the Act, in terms of transfer of long term capital asset by way of sale of equity shares on which STT has been paid, he shall therefore be eligible for exemption on whole of the income so realized as the provisions talks about any income arising from transfer of such long term capital asset which shall be exempt from tax. We accordingly donot see any infirmity or illegality in the said findings of the ld CIT(A). As relying on SHRI VIJAYRATTAN BALKRISHAN MITTAL, [ 2019 (10) TMI 439 - ITAT MUMBAI] we find that evidence produced by the assessee in support of his claim of purchase and sale of shares on the stock exchange have not been refuted by any adverse findings or material which could demonstrate involvement of the assessee or collusion with so called accommodation entry providers to obtain bogus LTCG as so alleged by the authorities below. As entirety of facts and circumstances of the case, we are of the considered view that the assessee has discharged the necessary onus cast on him in terms of claim of exemption of long term capital gains u/s 10(38) of the Act by establishing the genuineness of transaction of purchase and sale of shares and satisfying the requisite conditions specified therein and the gains so arising on sale of shares therefore has been rightly claimed as exempt u/s 10(38) - Accordingly, in the facts and circumstances of the case, we do not find any error or illegality in the impugned order of the CIT(Appeals) who has rightly allowed the said claim of the assessee - Decided against revenue. 2020 (11) TMI 901 TDS u/s 195 - TDS on salary as per provisions of section 40(a)(i) - payment made from India to the employees of Head Office - assessee is a company registered in Netherlands - DTAA between India and Netherelands - as per asseseee that the salary has been paid abroad by the foreign company to its employees and the head office has apportioned a part of the salary expenses to the assessee which the assessee has debited and has reimbursed the Head Office without any mark up - HELD THAT:- Since the facts of the instant case are identical to the facts of the case decided by MOTHER DAIRY FRUIT, VEGETABLE (P) LTD. [ 2010 (10) TMI 852 - DELHI HIGH COURT] therefore, respectfully following the said decision we hold that the assessee is not liable to deduct tax at source from the salary paid to the non resident and has not committed any default in not deducting tax at source from the reimbursement to the head office on account of salary expenses. Accordingly the order of the Ld. CIT(A) is set aside and the grounds raised by the assessee are allowed. Non deduction of tax at source, on professional fees etc - payment being reimbursement of technical expenses, in turn remitted to foreign professionals located outside India, paid outside India - taxation under Article of 14 of India- Netherlands DTAA - HELD THAT:- As decided in M/S GRANT THORNTON INDIA LLP [ 2019 (7) TMI 1719 - ITAT DELHI] Since the assessee has made the payment outside India to independent professionals, therefore, in view of Article 14 of India Netherlands DTAA the assessee is not liable to deduct any tax from such payment. Therefore, the order of the Ld. CIT(A) is set aside and the grounds raised by the assessee are allowed. Addition being income on account of consultancy services as FTS u/s 9(1) (vii) r.w. Article 12(5) of subject DTAA and taxed the same at 10% - HELD THAT:- A perusal of the order of CIT(A) shows that despite his asking to provide the details of key professional staff/consultants who had worked on the DMIC Project and to explain whether services were rendered from the existing project office for the PSRBDB and the manner in which the services were rendered to the DMRC Project and to furnish the breakup of expenses in the said project, the assessee failed to produce the same before the CIT(A). Considering the totality of the facts of the case and in the interest of justice we deem it proper to restore the issue to the file of the CIT(A) with a direction to give one more opportunity to the assessee to file the above documents and to decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. While doing so, he shall also keep in mind the alternate argument of Ld. Counsel for the assessee to tax the receipt @ global profit rate and not the entire amount as added by the AO and upheld by CIT(A). The grounds raised by the assessee are accordingly allowed for statistical purposes. 2020 (11) TMI 900 Disallowance of employees contribution to Provident Fund and ESI in dispute u/s 36(1)(va) - payment been deposited beyond due date prescribed under the relevant Act, but paid before the filing of the return of income by the assessee - HELD THAT:- We are of the considered view that the issue involved in the present appeal has already been adjudicated and decided in favour of the assessee by the Hon ble Supreme Court of India; Hon ble High Courts including the Hon ble Jurisdictional High Court, as mentioned in the written submissions dated 22.09.2020 filed by the assessee, especially the decision of the Hon ble Supreme Court of India in the case of Alom Extrusion Limited by referring its earlier decision in the case of CIT vs JH Gotla [ 1985 (8) TMI 5 - SUPREME COURT ] and AIMIL Limited [ 2009 (12) TMI 38 - DELHI HIGH COURT ]. Therefore, respectfully following the aforesaid precedents, we delete the addition in dispute by allowing the appeal of the assessee. 2020 (11) TMI 899 Disallowance u/s 80P(2)(a)(i) - AO disallowed the claim of deduction u/s 80P(2)(a)(i) on the reason that the assessee is in the business of Banking - HELD THAT:- As decided in own case M/s. Swabhimani Souharda Credit Co-operative Ltd [ 2020 (1) TMI 831 - KARNATAKA HIGH COURT ] the employment of the word Sahakari in the very title of the 1997 Act is also not sans any significance; Sahakaar in Sanskrit is the equivalent of sahakaara in Kannada which means co-operation ; as already mentioned above both the 1959 Act and the 1997 Act employ this terminology; the 1997 Act is woven with the principles of co-operation; sec.4 of this Act bars registration of an entity unless its main objects are to serve the interest of the members in the area of co-operation and its bye-laws provide for economic and social betterment of its members through self-help mutual aid in accordance with the cooperative principles; this apart, even sub-section (2) of sec.4 is heavily loaded with co-operative substance. These writ petitions succeed; a declaration is made to the effect that the entities registered under the Karnataka Souharda Sahakari Act, 1997 fit into the definition of co-operative society as enacted in sec.2(19) of the Income Tax Act, 1961 and therefore subject to all just exceptions, petitioners are entitled to stake their claim for the benefit of sec.80P - remit the issue in dispute to the file of Assessing Officer to decide afresh in the light of above judgement after giving an opportunity of hearing to the assessee. 2020 (11) TMI 898 Addition u/s 69A - assessee offered a sum of ₹ 3,00,000 as Miscellaneous Receipt in her revised computation of income - Authorities have made and confirmed the instant addition on the ground that this receipt of ₹ 3,00,000 was different from the deposit of ₹ 3,00,000 in the bank account - HELD THAT:- We are unable to appreciate the view point of the authorities below on the ground that once the assessee offered a sum of ₹ 3,00,000 on receipt of the amount, there could have been no occasion of making another similar addition on spending/investing the said amount. If a person earns ₹ 100 from undisclosed sources and thereafter offers it for taxation, its later utilization, and that too, through undisclosed transactions, would not invite any further addition. AO cannot make one addition at the time of earning the undisclosed income and another similar addition at the time of spending the same. Here is a case in which the assessee offered ₹ 3,00,000 as Miscellaneous Receipt , which has been duly taxed also. The utilization of such amount of ₹ 3,00,000 by the assessee by means of deposit in the bank account, cannot, in our opinion, call for any addition. We, therefore, order to delete the addition. - Decided in favour of assessee. 2020 (11) TMI 897 Validity of the assessment framed under section 158BD - assumption of jurisdiction by the Assessing Officer - assessment of undisclosed income of the block period as per section 158BC - Penalty proceedings u/s 158BFA - specific information relating to the accommodation entry taken by the assessee - addition of undisclosed income - HELD THAT:- We hold that the jurisdiction assumed in the present case under section 158BD was not as per law in the absence of fulfilment of the necessary condition of handing over of incriminating material relating to the assessee by the Assessing Officer of the searched person to the Assessing Officer of the assessee. A bare reading of the provisions of the Act clearly bring out that for the assumption of jurisdiction under section 158BD of the Act it is a necessary prerequisite for the incriminating material relating to the third person being handed over to his Assessing Officer by the Assessing Officer of the searched person,. The section clearly states the handing over of all material relating to the third person to his Assessing Officer and only thereafter the Assessing Officer can proceed to frame assessment of undisclosed income relating to the block period on such third person. In the present case Supply of specific information relating to the assessee was sufficient for assuming jurisdiction under section 158BD of the Act even in the absence of seized material relating to the assessee being passed on.Thus it is an uncontroverted fact that seized material relating to the assessee was never handed over to the Assessing Officer as categorically required by section 158BD of the Act. Firstly the fact of accommodation entry through cheque is not a specific information but a conclusion of the AO of the searched per son on the basis of certain document sets found during search proceedings. It is these documents, etc., relating to the assessee which ought to have been handed over to his Assessing Officer by the Assessing Officer of the searched person, as per section 158BD of the Act, so as to enable him to assess the undisclosed income of the assessee. In the absence of the basic documents evidencing accommodation entry being provided to the asses see, the bank account number or the person from whom entry received can be of no assistance to the Assessing Officer of the assessee for assessing the undisclosed income of the assessee. Therefore in the present case even specific information was not passed to the Assessing Officer of the assessee as contended by the Revenue and therefore the contention that passing on of specific information constituted or was equivalent to handing over seized material, merits no consideration and is rejected. In the light of the aforesaid fact and considering the mandate of section 158BD of the Act as interpreted by the hon'ble Supreme Court in the case of Manish Maheshwari [ 2007 (2) TMI 148 - SUPREME COURT] the assumption of jurisdiction by the Assessing Officer in the present case under section 158BD of the Act we hold was not as per law. The assessment framed as a consequence thereof is void and accordingly is quashed. Ground of appeal Nos. 1, 2 and 3 are accordingly allowed. 2020 (11) TMI 896 Condonation of delay in filing of appeal - eligible reasons to delay - Delay of 18 months - vague statement that due to medical problems the appeal could not be filed in time - HELD THAT:- Assessee has neither explained what medical problems be suffered from nor any supporting document is filed. Even the application for condonation of delay is not supported by an affidavit. As manifest from the record that there is inordinate delay even in filing the appeal before the ld. CIT(A). The intimation has issued on 23.12.2013 which was challenged by the assessee by filing the appeal on 29.02.2016 which shows that there is more than two years delay. Even before the ld. CIT(A) the assessee has not explained any cause of delay in filing the appeal. CIT(A) has dismissed the appeal of the assessee as not maintain such being barred by limitation. These facts clearly show that the assessee is not taking tax matter seriously. The conduct of the assessee does not inspire the confidence and hence, we are of the considered opinion that the assessee has grossly failed to explain the reasonable cause in filing the appeal belatedly. Accordingly, we decline to condone the delay of about 18 months in filing the present appeals - Decided against assessee. 2020 (11) TMI 881 Deduction under sections 80I/ 80IA - whether Lean gas is manufactured/ produced only at the two LPG Plants at Vaghodia (Gujarat) and Vijaipur (MP) for the purpose of allowing deduction - HELD THAT:- As decided in own case [ 2020 (11) TMI 871 - ITAT DELHI] appellant is eligible to the deductions/tax holding u/s 80HH/80I and 80IA of the Act on lean gas at the stage of customer terminals. Customs 2020 (11) TMI 895 Second Bail application - Jurisdiction - applicants were intercepted on Faizabad Road but search proceedings were conducted at the office of Lucknow which is much away from the place of interception - HELD THAT:- Considering the facts that the accused are in jail since 7.12.2018, offence is punishable upto seven years of imprisonment, charges have not been framed till date, trial in the case has not proceeded, the department has not been able to produce the punch witnesses before the adjudicating authority and also the fact that in Covid-19 situation, trial is held up which may take sufficient time, case for bail is made out. Let the applicants Manoj Kumar Soni and Sameer Gadtaula involved in Case Crime No. 06/2018 under Sections 104, 110, 111, 135 Customs Act, 1962, registered at Directorate of Revenue Intelligence, Lucknow Zonal Unit, U.P. Lucknow be released on bail on their furnishing a personal bond and two heavy sureties including one local surety, each in the like amount to the satisfaction of the court concerned with the following conditions which are being imposed in the interest of justice - Application allowed. 2020 (11) TMI 894 Smuggling - Gold - Foreign Currency - Baggage Rules - appellant denied having any legal documents or any approval/ permission from the Reserve Bank of India - HELD THAT:- The appellant had improperly attempted to export the foreign currency totally valued at on 30.7.2018 i.e. at the time of his departure, by bring the said impugned goods in Customs Area as well as by taking many such deliberate overt steps such as (i) booking of Air ticket PNR670P21N for 30.07.2018 by Air India Express flight IX 195 to go to Dubai; (ii) His carrying the said foreign currency in a concealed manner in his baggage for avoiding detection in X-ray at the airport; (iii) His name was very much in the Passenger Air Manifest evidencing that he was going from Jaipur to Dubai on 30.07.2018; (iv)the recovery and seizure of impugned goods from his accompanied baggage : and (v) that he admitted in statement that he had agreed to commit this offence of smuggling of foreign currency in greed, all these preparedness are such deliberate overt steps which manifests his clear intention to illegally export foreign and Indian currency. I further find that the impugned goods i.e. the foreign was being carried by the appellant without any legal documents of possession and without any approval/permission of the Reserve Bank of India, thus being prohibited and liable to confiscation. It is quite evident that the appellant attempted to smuggle the impugned currency out of India in contravention of the provisions of Customs Act - the Export of Foreign Currency is not allowed by an Indian resident or foreigner residing in India, going out of India, in terms of Section 3 4 of the Foreign Exchange Management Act, 1999 read with regulation 3, 5 and 76 of the Foreign Exchange Management (Export and Import of Currency) Regulation, 2015, Rule 7 of the Baggage Rules,2016 and Section 77 of the Customs Act, 1962. I therefore, hold that the impugned goods alongwith other goods recovered and seized from the appellant on 30.07.2018 at the International Airport Jaipur have been correctly confiscated under Section 113(d), 113(e) and 119 of the Customs Act, 1962. The contention of the appellant, that the statements recorded have been partly accepted and the part wherein he had mentioned the name of Shri Madan Tawani as the real owner of the currency has been absolved, is not acceptable - In the instant case the impugned goods were recovered from the possession of the appellant while he was going out of India, as the case has been booked on the basis of the corroborative evidence on record and not only the statement. Further the contention of the appellant that there is no provisions in the law which prescribes conditions of/denies or prohibits carrying own earned foreign currency of whatever amount, while going to a foreign destination is not acceptable, as the appellant has himself admitted that the provisions referred do not exactly cater to the situation in the impugned case - the provisions of the law with regard to bringing in or taking out of India Foreign currency or Indian currency are very specific and are to be strictly adhered to in all circumstances and situations. In the instant case the appellant intentionally in contravention of the provisions of law attempted to smuggle Foreign Currency out of India. Penalties - HELD THAT:- The appellant was actively involved in the attempt to illegally export the impugned goods recovered and seized from his possession, which he had full knowledge were liable to confiscation under Section 113 of the Customs Act, 1962, Thus by carrying such an act in contravention of the provisions of the Customs Act, 1962 he has rendered himself liable for penalty - There are no reason to interfere with the findings of the adjudicating authority regarding imposition of penalty on the appellant in the instant case. The statements and circumstantial evidences of the case proved that the appellant had knowingly and intentionally attempted to illegally carry out the Foreign currency out of India while departing for Dubai on 30.07.2018 - Penalty u/s 114AA upheld. Appeal dismissed - decided against appellant. Central Excise 2020 (11) TMI 893 CENVAT Credit - input services - sales commission paid to sister concern - outward transportation from factory to the buyers premises for the period from April 2008 to April 2010 - HELD THAT:- As per clause (3) of the Agreement entered into between the appellant and FMGIL, FMGIL promotes sale of products of the appellant by doing various activities including promotion and marketing of the products of the appellant, seeking orders, assistance in sale of products, maintaining good relations with customers, providing consultation and advice in relation to the above, receiving orders from customers in relation to the products, notifying the customers/prospective customers of all the terms and conditions of sale as determined by the appellants. Further, the input service as defined under Rule 2(l) of CENVAT Credit Rules, 2004 explicitly includes activity of sales promotion and the explanation to Rule 2(l) of CENVAT Credit Rules, 2004 inserted by Notification No.2/2016- CE(NT) dated 3.2.2016 holding that sales promotion includes services by way of sale of dutiable goods on commission basis - also, this explanation added by way of amendment is declaratory in nature and is applicable retrospectively. The Board vide Circular No.96/85/2015-CX dated 7.2.2015 has clarified that decision in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD II VERSUS M/S CADILA HEALTH CARE LTD. [ 2013 (1) TMI 304 - GUJARAT HIGH COURT] applies in case where the agent is undertaking only sales and no sales promotion. Whereas in the present case, it is clearly evident from various terms and conditions contained in clause (3) of the Agreement that M/s. FMGIL undertakes the activity of sales promotion. Hence, we hold that the decision in the case of Cadila Healthcare Ltd. is not applicable in the present case. This issue is no more res integra and it has been consistently held that sales commission fall under definition of input service . By following the ratio of the above said decisions, the denial of CENVAT Credit on sales commission is not sustainable in law. Time Limitation - CENVAT credit on outward transportation from factory to the customers premises - HELD THAT:- On the point of limitation, the Division Bench of this Tribunal in the case of M/S SANGHI INDUSTRIES LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1488 - CESTAT AHMEDABAD] , the Division Bench has dealt with the issue of limitation and has held that the outward GTA was the matter under litigation and for that reason the Government has to come out with clarification thereafter the matter was subject to various litigation before Tribunal, Hon ble High Courts and Hon ble Supreme Court, therefore no malafide intention can be attributed to the appellant, therefore, wherever the demand is for extended period, the same will also not be sustainable on the ground of time bar also. Appeal disposed off. Indian Laws 2020 (11) TMI 892 Dishonor of Cheque - acquittal of the accused - burden to prove - legally enforceable debt or not - contravention of Section 269-SS of the Income Tax Act - view taken by the learned Magistrate thereby acquitting the accused is erroneous and not based on sound legal principles - HELD THAT:- This Court has every power to re-appreciate, review and reconsider the evidence. After re-appreciating the evidence as above, the conclusion has been drawn that the judgment of acquittal rendered by the learned Trial Court is perverse. Now, when this Court has respondent/accused guilty of committing offence punishable under Section 138 of N.I. Act, the further act would ensue regarding imposition of quantum of punishment. It is clear from the aims and object for the enactment of Negotiable Instruments Act, that the penal provision was introduced to enhance the acceptability of cheque in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficiency of funds in the accounts or for the reason that it exceeds the arrangements made by the drawer. Honest drawers' interest who issue cheques is safeguarded in the Act itself. The appellant would also be interested in getting her amount back. Therefore, payment of compensation under Section 357 of the Code of Criminal Procedure to the complainant would be in the interest of justice. The punishment that can be awarded for an offence under Section 138 of N.I. Act is imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or both . The next step would be what could be the amount of fine. Here the cheque Exhibit-37 was drawn for ₹ 80,000/-. The complaint was filed in the year 2013 after the statutory notice. The amount became due to complainant from the date of notice. Accused has utilized the said amount till today. Therefore, some amount needs to be given to her above the cheque amount towards interest. Respondent/accused Aarti Uttam Chavan is hereby convicted for the offence punishable under Section 138 of Negotiable Instruments Act - Respondent/accused is hereby sentenced to pay fine of ₹ 1,10,000/- only. The said amount be deposited by respondent before learned Trial Court on or before 1 st of January 2021. In case of failure on the part of the accused to deposit the said amount within the aforesaid period, she should undergo simple imprisonment of three months - Appeal allowed. 2020 (11) TMI 891 Dishonor of Cheque - insufficiency of funds - non-discharge of debt or liability - the accused failed to pay the amount covered under the cheques within fifteen days from the date of receipt of the statutory notice - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- It is well settled law that when concurrent findings of facts rendered by the trial court and the appellate court are sought to be set aside in revision, the High Court does not, in the absence of perversity, upset factual findings arrived at by the two courts below. It is not for the revisional court to re-analyse and reinterpret the evidence on record in a case, where the trial court has come to a probable conclusion. Unless the contrary is proved, it is presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 of the NI Act for the discharge, in whole or in part, of any debt or other liability. In the case at hand, the accused has no case that he has not signed the cheque or parted with under any threat or coercion. That apart, the accused has no case that the cheque had been lost irrecoverably or stolen. The accused failed to prove in the trial by leading cogent evidence that there was no debt or liability. Both the trial court and the appellate court rightly held that the burden was on the accused to disprove the initial presumption under Sections 118 and 139 of the NI Act. The burden is not discharged rightly. The complaint was filed before the trial court in 2007. The complainant has been prosecuting this case for the last 16 years. The accused is sentenced to pay a fine of ₹ 2,00,000/- and in default of payment of fine to undergo simple imprisonment for a period of four months. In view of the situation prevailing in the country due to Covid-19 pandemic, the accused is given six months time from today to pay the fine amount - the criminal revision petition is partly allowed. 2020 (11) TMI 890 Dishonor of Cheque - acquittal of accused - Privity of Contract - main grounds urged in the appeal is that the Trial Court had earlier convicted the accused based on the very same material available on record and there are no changed circumstances - HELD THAT:- The complainant has not made out a case for legally recoverable debt payable by the accused. It is also important to note that in the cross-examination he categorically admitted that while filing the complaint, he did not mention anything about the transaction between him and Srinivas at the instance of the accused and the same was suppressed. Only during the course of cross-examination, it is elicited that all these transactions had taken place between the parties. Even though the accused has taken the contention that the subject matter of the cheque was stolen, which was kept in the bag and also not led any rebuttal evidence, the answers elicited from the mouth of P.W.1 is clear that there was no legally recoverable debt and also the admissions elicited from the mouth of P.W.1 regarding receipt of payment from the said Srinivas and also the accused has paid the amount to Srinivas - the Trial Judge has not committed any error in acquitting the accused considering the material available on record i.e., the admission of P.W.1 and no defence evidence has been adduced. The accused has made out the case that there was no material to disclose that there was a legally recoverable debt from the accused. The Trial Court comes to the conclusion that the said amount is not legally recoverable debt between the complainant and the accused on the date of the issuance of the cheque. The observation that the same is recoverable within three years, is not correct. However, the definite conclusion that there is no privity of contract between the complainant and the accused in respect of this transaction of issuance of cheque in coming to the conclusion that there was no legally recoverable debt. This Court cannot find fault with the reasoning assigned by the Trial Court. The complainant has not made out a case and the presumption was rebutted by the accused in effectively cross-examining P.W.1 and plausible evidence has been placed before the Court that there was no liability on the part of the accused in issuance of those two cheques. The second mode of rebutting the case of the complainant has been successfully made out by the accused and rebutted the case of the complainant - This Court has already held that the findings of the Trial Court cannot be reversed unless the appreciation of the evidence available on record prima-facie is perverse and there was a glaring error on the part of the Trial Court in appreciating the material and the same should be apparent on record and this Court does not find the same. Appeal dismissed. 2020 (11) TMI 889 Dishonor of Cheque - legally recoverable debt or not - rebuttal of presumption u/s 139 of NI Act - complainant in the present appeal who contended that the Trial Court has committed error in not appreciating both oral and documentary evidence and it has erred in casting the burden on the complainant - HELD THAT:- In the case on hand, it has to be noted that there is no dispute with regard to the issuance of the cheque and the same is also not denied by the accused and also has not given any reply notice when the notice was served on him and the defense was set up during the cross-examination that the said cheque was for security purpose to avail the loan by the complainant from the other financier and the same is not proved - there is no dispute with regard to the fact that the primary burden is on the complainant to prove with regard to the transaction and presumption has to be drawn if the cheque is admitted and no reply was given. Whether the probable defense was raised by the accused has to be considered. In the case on hand, the Trial Court has not at all invoked the presumption in favour of the complainant and also not discussed the evidence of the defense, particularly, the evidence of the accused, who has been examined as D.W.1 and also two witnesses, who have been examined as D.Ws.2 and 3 on behalf of the accused. Whether the Trial Court has committed an error in acquitting the accused in coming to the conclusion that the complainant has not proved legally recoverable debt? - HELD THAT:- The defense of the accused that the said blank cheque was given to avail the financial assistance from the financiers and it is not the case of the accused from whom the complainant has borrowed the money to start the business. It is also an admitted fact that the Hotel Business was commenced in the year 2001 itself and this cheque pertains to the year 2005. When the accused admits his signature available on cheque - Ex.P1 and also on Ex.P6 notice served on him, the accused did not setup any defense immediately and during the course of cross-examination after thought set up a defense that the said cheque was given as security. The Trial Judge failed to consider the evidence in toto both the evidence of complainant and DWs.1 to 3 and not considered the documentary evidence available on record and mainly considered the evidence of P.W.1 and particularly, Ex.P14 - the letter and the said letter is not disputed by the complainant himself, he only got marked the document and the trial Court only concentrated on the source of the complainant. The Trial Judge did not consider the evidence available on record in toto and failed to discuss the evidence of DWs.1 to 3 and only considered the evidence of PW.1. It is a settled law that the complainant has to prove his case and in the case on hand, the accused also did not dispute the cheque as well as his signature and also he has not given any reply and no complaint was given when the notice was given. If really the said cheque was mis-used he would have given the complaint and categorically admits that he is not having any impediment to give complaint and also no difficulty to give any reply. When such being the case, the presumption is available in favour of the complainant and no doubt the said presumption is rebuttable presumption and the question before this Court is whether the accused rebutted the presumption and I have already discussed in detail, the evidence of DWs.1 to 3, it is clear that the accused himself has suffered the loss in Hotel business and his house was also brought for sale when the Sales Tax of the Hotel was not paid. The Trial Judge ought not to have come to the conclusion that the source has not been proved and non- examination of two witnesses from whom the complainant has received the money to advance the same in favour of the accused is not fatal - the Trial Court has committed an error in acquitting the accused and not drawn the presumption in favour of the complainant and therefore, it requires an interference of this Court. The accused is convicted for the offence punishable under Section 138 of the NI Act and directed to pay the amount of ₹ 10 lakhs in favour of the complainant within eight weeks from today. If the accused fails to pay the amount he shall undergo simple imprisonment for a period of one year - Appeal allowed. 2020 (11) TMI 888 Dishonor of Cheque - submissions made by the learned counsel for the applicant call for adjudication on pure questions of fact, which may be adequately adjudicated upon only by the trial court and while doing so even the submissions made on points of law can also be more appropriately gone into by the trial court in this case - HELD THAT:- This Court does not deem it proper, and therefore, cannot be persuaded to have a pre-trial before the actual trial begins. A threadbare discussion of various facts and circumstances, as they emerge from the allegations made against the accused, is being purposely avoided by the Court for the reason, lest the same might cause any prejudice to either side during trial. But it shall suffice to observe that perusal of the complaint, and also the material available on record make out a prima facie case against the accused at this stage and there appear to be sufficient ground for proceeding against the accused. If the decision of the Court given in the light of the application does not conclude the proceedings against the accused and he is further required to appear and face the trial, the court shall be at liberty to proceed in accordance with law against the accused and take all necessary steps and measures to procure his attendance as the law permits - It is made clear that no application for extension of time shall be entertained if this order is not availed by the applicant in the stipulated period of time. Application disposed off. 2020 (11) TMI 887 Dishonor of Cheque - validity of criminal proceedings - mortgaged property - present petitioner has entered into a registered partition deed with his brother under which, the mortgaged property had fallen to the share of his brother - case of petitioner is that the liability of repayment of the entire loan amount falls on the shoulder of his brother - HELD THAT:- The admitted fact remains that the petitioner was one among the loanee having availed considerable amount as loan from the respondent-bank. The petitioner herein has not denied or disputed that the said loan account has become a default account and the loan amount with interest is yet to be repaid to the respondent-bank. But the only contention of the present petitioner is that the liability to clear the loan falls upon his brother, since the property upon which the loan was lent has gone to his share - For the said contention, the argument of the learned counsel for the respondent that the alleged partition agreement between the accused brothers would not bind the petitioner in a criminal proceeding, cannot be discarded at this stage in this proceeding. If any such contention is there, then it is open for the petitioner to agitate the same at the appropriate stage before the appropriate forum. Nothing prima facie material is placed by the petitioner to show criminal proceedings initiated against him for the alleged offence under Section 138 of N.I. Act, is prima facie without any merit, as such, has resulted into an abuse of process of law against him - Petition dismissed. 2020 (11) TMI 886 Dishonor of Cheque - acquittal of accused - Specific defense of the accused is that he had not availed loan on 01.12.2000 and he had availed loan only on 01.12.1999 and the cheque for the said amount was collected on 01.12.1999, which was misused - Whether the Trial Judge has committed an error in acquitting the accused in coming to the conclusion that the very transaction between the accused and the complainant is doubtful and whether it requires interference of this Court? - HELD THAT:- In the case on hand accused not denied the signature available in Ex.P.1 cheque. The only contention is that the said cheque was given at the time of getting the loan on 1.12.1999. If he has not borrowed loan on 1.12.2000 what prevented him to give any reply when two notices were issued to him with regard to payment of loan amount and subsequently on bouncing of cheque, which has not been explained by the accused to rebut the evidence. He denied the availment of loan on 1.12.2000 and there is no answer with regard to the admission made by him during the course of cross- examination when a specific question was put to him. He had admitted that he had availed loan of ₹ 50,000/- from the complainant. Suppression of fact of earlier transaction - HELD THAT:- In the case on hand no suppression as contended and the same is in respect of earlier transaction. The complaint is in respect of subsequent loan transaction and accused not paid the amount, hence the contention of the accused cannot be accepted. Accused is directed to pay an amount of ₹ 1,00,000/- in favour of the complainant within a period of 8 weeks from today. If accused fails to pay the amount of ₹ 1,00,000/- within 8 weeks, accused is sentenced to undergo Simple Imprisonment for a period of one year - Appeal allowed. 2020 (11) TMI 885 Dishonor of Cheque - privity of contract - main contention urged by the accused Company is that there was no transaction between the complainant and the accused - Whether the appellate Court has committed error in reversing the finding of the trial Court in coming to the conclusion that the accused ppersons-DWs.1 and 2 are not liable to pay the amount to the complainant? HELD THAT:- It is clear that the Court has to see the wisdom of the legislature in bringing the enactment and while interpreting the law, the Court has to take note of the object and statement in bringing the enactment and the courts are meant to interpret the law with the object of special enactment. This Court has to draw the presumption in favour of the complainant under Section 139 of the Act. Accused Nos.1 and 2 have stepped into the witness box and adduced the evidence. The answers elicited from the mouth of D.Ws.1 and 2 is clear that they have issued the subject matter of cheque Ex.P.1 in discharge of the liability in respect of M/s. IGSL, wherein they were the Directors. The accused persons though set up the specific defence that the cheque was misused by collecting the same from the former employee of M/s. IGSL, the same has not been substantiated by placing any cogent evidence before the Court. The accused failed to place any plausible evidence before the Court to rebut the evidence of the complainant and hence the accused persons have failed in discharging their liability and discharging their burden rebutting evidence of the complainant. The Appellate Court has committed an error in coming to the occlusion that there was no legally recoverable debt and there was no transaction between the complainant and the accused and the admitted document is in respect of ₹ 86,00,000/- and the cheque is for an amount of ₹ 2,30,00,000/-. It is emerged in the evidence that they agreed to pay interest at the rate of 9% and in terms of memorandum to pay an amount of ₹ 36,00,000/- and also to issue the shares in respect of ₹ 50,00,000/-. It is the burden on the accused to show as to under what circumstances he has issued the cheque to the tune of ₹ 2,30,00,000/-, if there was no liability and the same is also not discharged and the accused has not explained in his evidence what made them to issue the cheque to the tune of ₹ 2,30,00,000/-. When such being the case, the Appellate Court ought not to have proceeded to make such an observation and acquit the accused. The Appellate Court failed to draw the presumption and nothing has been discussed with regard to the presumption available in favour of the complainant and whether the accused has rebutted the presumption has also not been discussed in the judgment. Hence, the impugned judgment of the Appellate Court requires to be interfered with and liable to be set aside. Having taken note of the fact that the cheque was issued in 2006 and now we are in 2020, it is not appropriate to interfere with the judgment of the Trial Court. Hence, there are no reasons to interfere with regard to the quantum of amount to be paid, as directed by the Trial Court. Appeal allowed. 2020 (11) TMI 884 Dishonor of Cheque - offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - Power of Court to try cases summarily - Whether in a case for offence punishable under Section 138 of the Negotiable Instruments Act, 1881, the Court of Magistrate exercising its power under the second proviso to Section 143 (1) of the Negotiable Instruments Act, if it appears to the said Court that it is undesirable to try the case summarily, after recording reasons, can proceed to try/hear the said case as a warrant case? HELD THAT:- Only in limited cases where the second proviso to sub-section (1) of Section 143 of the said Act 1881 is applicable, the learned Magistrate can convert the case into a summons case. In view of overriding effect of sub-section (1) of Section 143 of the said Act 1881, a case under Section 138 is not a summons case. It must be tried summarily unless it can be tried as summons case by exercising the power under second proviso to sub-Section (1) of Section 143. The power under Section 259 of Cr.P.C can be exercised only in a case which is triable as a summons case. A case under Section 138 of the said Act of 1881 is not a summons case in view of the fact that sub-section (1) of Section 143 overrides the provisions of Cr.P.C. Therefore, Section 259 of Cr.P.C, cannot be allowed to be invoked by the learned Magistrate after passing an order under second proviso to sub-section (1) of Section 143 of the said Act of 1881. The object of introducing Chapter XVII into the said Act of 1881 containing Sections 138 to 142 by the Act of 66 of 1988 with effect from 1st April 1989 was to enhance the acceptability of the cheques in settlement of liabilities by making the drawer liable for penalties in case of bouncing/dishonor of cheques. If the learned Magistrates are allowed to invoke power under Section 249 of Cr.P.C by adopting the procedure for a warrant case, it will completely defeat the very object of introducing Chapter XVII, as there will not be an expeditious disposal of trial in a complaint filed alleging an offence punishable under Section 138 of the said Act of 1881. Therefore, the power of the learned Magistrate under the second proviso to sub-section (1) of Section 143 of the said Act of 1881 is confined only to converting a complaint under Section 138 of the said Act of 1881 into a summons triable case. The power conferred on the Magistrate under the second proviso to sub-section (1) of Section 143 does not enable the learned Magistrate to exercise power under Section 259 of Cr.P.C and to convert a complaint filed alleging an offence under Section 138 of the said Act of 1881 into a warrant triable case. If the learned Magistrates are allowed to convert the complaints filed alleging an offence punishable under Section 138 of the said Act of 1881 into a warrant triable case, the consequence will be disastrous as the trial will be prolonged. Lot of time will have to be devoted for hearing of discharge application and for framing of charge. It will amount to defeating the very object of introducing Chapter XVII containing Sections 138 to 142 in the said Act of 1881 with effect from 1st April 1989. The power of the learned Magistrate to convert the trial of a complaint under Section 138 of the said Act of 1881 under the second proviso to sub-section (1) of Section 143 is confined only to converting the case into a summons triable case - Application disposed off. 2020 (11) TMI 883 Dishonor of Cheque - Section 138 of the Negotiable Instruments Act, 1981 - existence of debt or not - indemnification of debts - receipt of demand notice - rebuttal of presumption - whether explanation offered by the petitioner is enough to disprove the statutory presumptions under Sections 138 and 139, NI Act? - HELD THAT:- In the case of Hiten P. Dalal [ 2001 (7) TMI 1172 - SUPREME COURT ] it has been held by the Apex Court that the presumptions to be drawn by the court under Sections 138 and 139, NI Act are presumptions of law which cast evidential burden on the accused to disprove the presumptions. In the instant case, apparently the accused petitioner did not lead any evidence in rebuttal of such statutory presumptions. He has also failed to bring on record such facts and circumstances which would lead the courts below to believe that the liability, attributed to the accused petitioner was improbable or doubtful. Apparently there is no reason to disbelieve the case of the complainant. The explanation offered by the accused petitioner on the other hand is not founded on proof and it does not stand to reason. The object of statutory notice is to protect an honest drawer of the cheque by providing him a chance to make the fund sufficient in his bank account and correct his mistake. The accused petitioner could have availed this opportunity by accepting the demand notice instead of repeatedly avoiding its service. He could have accepted the notice and projected his case that he already made the repayment of the loan, had this case of him been true. Therefore, it can be safely held that the prosecution successfully discharged its burden in proving the case against the petitioner with the help of the statutory presumptions under the NI Act, and the accused has failed to rebut those presumptions and prove the contrary by offering provable explanation founded on proof. Service of notice - HELD THAT:- The complainant has led convincing evidence to prove that the postman visited the house of the accused at the known address on 4 dates. Every time the postman was told by the house inmates that he was out of station. The fact is proved by the report [Exbt.4 series] given by the postman. From the overall conduct of the accused, it is clear that he wanted to avoid the service of the notice - it cannot be said that the demand notice was not served on him. This court is of the considered view that the impugned judgment dated 02.11.2017 passed by the learned Sessions Judge of Gomati Judicial District at Udaipur in Criminal Appeal No.47(3) of 2015 whereby he affirmed the conviction of the accused petitioner and modified the sentence passed by the learned trial court does not call for any interference - conviction and sentence of the accused petitioner is upheld. He is directed to deposit the fine of ₹ 4,00,000/- only in the court of the learned Sessions Judge in Gomati Judicial District at Udaipur in terms of the modified sentence within a period of 02 months for disbursement to the complainant respondent namely Shri Tanmoy Krishna Das, failing which the accused petitioner will suffer the default sentence in terms of the said judgment and order of the learned Sessions Judge. Criminal Revision Petition stands dismissed. 2020 (11) TMI 882 Recovery of Loan - petitioner was extended facility of loan on finance of a vehicle by the informant, who is a Collection Manager - It is submitted that if there are any dues against the loan extended in favour of petitioner, then the finance company is having cheques in their possession, which if are dishonored, then the informant has a remedy under Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- FIR has been lodged for cheating and criminal misappropriation of the hypothecated property. Prima facie it cannot be said that no cognizable offence is made out. Hence, no ground exists for quashing of the F.I.R or staying the arrest of the petitioner. The Full Bench of this Court in Ajit Singh @ Muraha v. State of U.P. [ 2006 (7) TMI 723 - ALLAHABAD HIGH COURT ] reiterated the view taken by the earlier Full Bench in Satya Pal v. State of U.P. [ 1999 (9) TMI 997 - ALLAHABAD HIGH COURT ] after considering the various decisions including State of Haryana v. Bhajan Lal [ 1990 (11) TMI 386 - SUPREME COURT ] that there can be no interference with the investigation or order staying arrest unless cognizable offence is not ex-facie discernible from the allegations contained in the F.I.R. or there is any statutory restriction operating on the power of the Police to investigate a case - From the perusal of the FIR, prima facie it cannot be said that no cognizable offence is made out. Hence, no ground exists for quashing of the F.I.R or staying the arrest of the petitioner. Petition dismissed.
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