TMI Tax Updates - e-Newsletter
November 30, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Medical Insurance premium for employees, pensioners and their family members are taxable under GST

   By: Bimal jain

News

1. Auction for Sale (re-issue) of (i) ‘6.69% GS 2024’, (ii) ‘7.10% GS 2029’, (iii) ‘7.54% GS 2036’, (iv) ‘7.40% GS 2062

Notifications

Customs

1. 30/2022 - dated 28-11-2022 - ADD

Modification of the quantum of duty imposed on the imports of “Cast Aluminum Alloy Wheels or Alloy Road Wheels (ARW) used in motor vehicles" originating or exported from China PR - Seeks to amend notification no. 17/2019-Customs (ADD) dated 9th April, 2019

DGFT

2. 45/2015-2020 - dated 29-11-2022 - FTP

Export policy for Cereals - Incorporation of new policy condition against HS Code 1006 40 00

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/IMD-1 DOF2/P/CIR/2022/164 - dated 29-11-2022

Introduction of credit risk based single issuer limit for investment by mutual fund schemes in debt and money market instruments

GST - States

2. Trade Circular No. 14 T of 2022. - dated 25-11-2022

Guidelines for verifying the Transitional Credit in light of the order of the Hon’ble Supreme Court in the Union of India vs. Filco Trade Centre Pvt. Ltd., SLP(C) No. 32709-32710/2018, order dated 22.07.2022 & 02.09.2022

3. Instruction No. 01/GST-II - dated 21-11-2022

Instructions regarding Constitution of Internal Review Cell.

4. Trade Circular No. 1/2022 - dated 21-11-2022

Mandatory furnishing of correct and proper information of ineligible / blocked Input Tax Credit and reversal thereof in return in FORM GSTR-3B –instructions issued

5. 14/2022-TNGST - dated 12-11-2022

Procedures for initiation of action on non-filers of returns under TNGST Act, 2017 - instructions issued

GST

6. INSTRUCTION NO. 04/2022 - dated 28-11-2022

Manner of processing and sanction of IGST refunds, withheld in terms of clause (c) of sub-rule (4) of rule 96, transmitted to the jurisdictional GST authorities under sub-rule (5A) of rule 96 of the CGST Rules, 2017

Customs

7. 24/2022 - dated 28-11-2022

Improvements in SWIFT: Integration of ICEGATE with AQCS-ICS (Animal Quarantine and Certification Services-Import Clearance System) effective 01.12.2022

Highlights / Catch Notes

GST

• Guidance on Processing IGST Refunds Withheld u/r 96(4)(c) and Transmitted per Rule 96(5A) CGST Rules 2017.

  Circulars : Manner of processing and sanction of IGST refunds, withheld in terms of clause (c) of sub-rule (4) of rule 96, transmitted to the jurisdictional GST authorities under sub-rule (5A) of rule 96 of the CGST Rules, 2017 - Clarifications
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• High Court Quashes Show Cause Notice Under GST Act Over CENVAT Credit Dispute, Preventing Confusion in Tax Proceedings.

  Case-Laws - HC : Validity of Show Cause notice issued under the GST Act instead to erstwhile Central Excise / Service Tax Laws - Recovery of wrongfully availed CENVAT Credit - transitional credit - If proceedings for transition of CENVAT Credit alleged to be inadmissible is permitted to be carried under the C.G.S.T. Act, it may lead to uncertainty not only in the minds of the ordinary citizen but also in the minds of the Tax authorities - adjudication proceedings and the order in original quashed - HC
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• ITC not allowed on canteen charges under CGST Act per Section 17(5)(b)(i) and 17(5)(b)(iii); clauses are independent.

  Case-Laws - AAR : Input Tax Credit - Canteen service - The two clauses in Section 17(5)(b)(i) and 17(5)(b)(iii) of the CGST Act, which governs the supply of goods and services, are not related by the punctuation used at the end of the provisions. “Colons and semicolons are two types of punctuation,” according to the concept, and “Semicolons are used to unite two independent clauses/sub clauses, or two complete thoughts that might stand alone as entire sentences.” Hence it can be said that ITC is not allowed on canteen charges even though it is obligatory under any other law. - AAR
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Income Tax

• Court Sends Tax Stay Case for Review Due to Missing Factors: Prima Facie Case, Financial Stringency, Balance of Convenience.

  Case-Laws - HC : Stay of demand - recovery proceedings - pre-condition for grant of stay of recovery - the actual tax to be demanded, ranging from 0% to 100%, would depend upon the existence of three factors, viz., (i) prima facie case, (ii) financial stringency and (iii) balance of convenience and it is only upon a consideration of the aforesaid factors that the officer would dispose an application for stay. - This discussion does not find place in the present impugned order - Matter restored back - HC
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• Court Rules No 'Transfer' u/s 2(47)(v) of Income Tax Act; No Capital Gain for Tax Purposes.

  Case-Laws - HC : Capital gain - 'Transfer' - in the absence of any recital in the aforesaid three documents, much less any recital to the effect that possession of the property in question was delivered in part performance of the contract, the three documents executed by the petitioner cannot be construed or treated as constituting a 'Transfer' within the meaning of Section 2(47)(v) of the IT Act. - HC
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• Revenue Authorities Limited to Initial Issues in Scrutiny Assessments Unless Exceptional Circumstances Arise.

  Case-Laws - AT : Limited Scrutiny assessment - Revenue Authorities are not allowed to travel beyond the issues involved in limited scrutiny cases, except in exceptional circumstances and by completing the relevant formalities before proceeding to other issues - AT
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• Charitable societies motivated by religious beliefs qualify for tax exemption u/s 11 of the Income Tax Act.

  Case-Laws - AT : Benefit of exemption u/s 11 - society or trust draws its inspiration for certain charitable activities from religious tenents - merely because it bears its activities on the basis of a religious calling, there is no reason to hold that section 13 (1) (b) of the Income Tax Act would be attracted to it. Therefore, in considered opinion, the assessee society is eligible to claim exemption u/s 11 of the Income Tax Act - AT
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• Tax Authority's Decision u/s 154 Challenged; Assessee's Arguments Dismissed Due to Time Limit Expiry.

  Case-Laws - AT : Rectification of mistake u/s 154 - expiry of time limit prescribed u/s 154(7) - we beyond any iota of doubt are inclined to hold the orders of both the tax authorities free from any infirmity, ergo the ground number 3 and its counter parts stand adjudicated against the assessee. - AT
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• Unexplained Cash Deposit Explained as Bank Withdrawals: No Justification for Income Addition, Rules Commissioner of Income Tax (Appeals).

  Case-Laws - AT : Unexplained cash deposit for settling credit card bills - How much cash an assessee keeps cannot be reason for dismissing the explanation regarding payment made in cash. In the present case, the assessee having explained the cash deposits as withdrawals from his bank account, CIT(A) having not found any infirmity in this explanation of the assessee, we see no reason for upholding the addition - AT
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• Section 263 Revision: Unverified Transactions Must Be Uniformly Classified as Genuine or Bogus, Not Selectively Evaluated.

  Case-Laws - AT : Revision u/s 263 - unverified URD purchases - All these transactions are interconnected and linked with each other. If any of the transaction is doubted then corresponding transaction should also be carrying same shadow of doubt - part of the transactions cannot be accepted as genuine and part of the transaction cannot accepted as bogus. Either the entire transaction to held as bogus or should be treated as genuine without making any cherry pick-up. Thus, for this reason as well, the assessment order cannot be held either erroneous or prejudicial to the interest of revenue.- AT
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• Assessee's Rental Income Distributed Among Co-Owners; Denial of Section 57 Deduction Prevents Double Taxation.

  Case-Laws - AT : Treatment to rental income - income from other sources - Since the income received by the assessee has been distributed amongst the co-owners of the property and the co-owners had declared the income in their respective income tax returns, the non allowability of deduction to the assessee u/s 57 will amount to double taxation of the same income which is not permissible. - AT
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Customs

• Invoice Declared Value Rejected for Lacking Transaction Elements; Goods Confiscation Upheld Due to Incomplete Documentation.

  Case-Laws - AT : Valuation - rejection of declared value - Confiscation of goods - the value declared on the invoice was inclusive of freight and other charges - the value declared do not have any ingredients of the “transaction value” and should have been outright rejected, which have been done by the authorities below. The invoice has been issued without referring to any purchase order stipulating the terms of the supply including the terms of payment. Appellant have no answer to any of these questions which are so essential to determine the validity of the transaction and the declaration made on the Bill of entry. - confiscation of goods upheld - AT
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• Section 112(a) of Customs Act: Evidence Needed for Abetment Charges Against Officers; Duty Dereliction Handled by CCS Rules.

  Case-Laws - AT : Penalty u/s 112 (a) of Customs Duty - Penalty on customs officers - Charge of Abatement - Positive evidence to that effect is required to be placed and charge of abetting needs to be proved in positive manner. - The charges of dereliction of duty cannot be adjudicated in terms of the provisions of Customs Act, 1962 and need to be considered as per CCS Rules. - AT
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FEMA

• Appointment of Adjudicating Authority Required for FERA Offences u/s 49(3) of FEMA; Proper Authorization Essential.

  Case-Laws - HC : Offences committed under the repealed FERA - Appointment of Adjudicating Authority - For the purpose of Section 49(3) FEMA, there has to be a proper authorization of the ‘Adjudicating Officer’ who issues the notice of contravention under the provisions of FERA. Only because an officer has been appointed for the purpose of acting in terms of the provisions of an act, the same would not by itself entitle an officer to discharge all or any of the functions of the Central Government, unless specifically authorized. - HC
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IBC

• Promoters Ordered to Assist Liquidator and Forensic Auditors in Reviewing Pre-Insolvency Transactions Beyond Two Years from ICD.

  Case-Laws - AT : Undervalued Transactions - Preferential Transactions - Fraudulent Transaction - ‘Transactions’ executed or entered into by the ‘Corporate Debtor’, beyond two years from the ICD - the Adjudicating Authority has affirmed that the Promoters should give the necessary documents to the Liquidator and cooperate to enable the Forensic Auditors M/s. KPMG to complete the Audit - AT
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PMLA

• High Court Grants Bail in Money Laundering Case; Applicant Not Arrested During Investigation or After Charge Sheet Filed.

  Case-Laws - HC : Seeking grant of bail - Money Laundering - The investigating agency as mentioned hereinabove consciously preferred not to arrest the applicant during investigation or post filing of charge sheet. The arguments advanced and case law relied on by the Special Counsel for the respondent are considered in right perspective to the given facts and circumstances but they do not provide much legal help to the respondent in opposing present bail application. - The applicant is admitted to bail - HC
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• Court Discusses Returning Unrelied Documents Seized in Money Laundering Case Pre-Charge; Petitioners Can Request Document List.

  Case-Laws - HC : Money Laundering - Return of unrelied upon documents seized during raid - There is no doubt that every accused has a right to fair trial but in the present case the trial has not commenced as yet. The charges have not been framed in the present case and the petitioners are seeking supply of unrelied upon documents at the pre-charge stage and therefore, considering the aforesaid judgment of the Hon'ble Supreme Court, the petitioners can at the most be permitted to file an appropriate application for supply of list of unrelied upon documents, if they so require and so desire. - HC
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Service Tax

• High Court Overturns Tax Determination; Department's SCN Reliance Contradicts Previous CESTAT Acceptance of Lower Amount.

  Case-Laws - HC : SVLDRS - etermination of tax - The stance taken by the Department in relying upon the SCN for determining the tax dues at Rs. 1.34 Crores is contrary to its stand before the CESTAT, wherein it accepted the determination of tax dues at Rs. 1.11 Crores - The inconsistency of the stance of the Department is further evident from the fact that if the appeal had been pending when the Scheme was announced the Petitioner’s tax dues would have been admittedly, determined by the Respondent as per the order-in-original and not SCN. - The determination of tax by the Designated Committee in Form No. SVLDRS-3 is set aside. - HC
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• Section 70 Late Fee Penalties Not Applicable: Appellants Exempt from Service Tax Under Mutuality Principle.

  Case-Laws - AT : Enhancement of late fee/penalty levied u/s 70 of FA - only the persons who are liable to pay service tax, have to file the return on time else they are liable to pay penalty. But as discussed in the preceding paragraphs applying the principle of mutuality, the appellants are not liable to pay service tax at all and once it has been held that they are not liable to pay service tax then section 70 ibid itself has no application. - No penalty - AT
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• Refund Entitlement: Claim Service Tax Refund Within One Year of Invoice Date for Payments Made by June 27, 2017.

  Case-Laws - AT : Refund of amount paid erroneously - time limitation - one year from the date of invoices - Appellant is entitled to get refund against all those tax paid erroneously, whose challans were showing the date of payment within one year from the date of filing of refund application on dated 27.06.2017. - AT
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Central Excise

• Valuation Dispute Over Packaged Water Sold to Institutions; Duty Shortfall Alleged as MRP Compliance Questioned Under 1977 Rules.

  Case-Laws - AT : Valuation of goods - Recovery of short paid duty - packaged drinking water - goods sold to institutional buyers - the goods were not being consumed by ABCTC themselves but further sold in retail and as such in terms of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 the goods were required to be sold on the declared and printed MRP only - AT
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VAT

• Court Rules Pipes in Drip Irrigation Systems Retain Classification; Impacts VAT and Sales Tax Application.

  Case-Laws - HC : Classification of goods - Drip Irrigation materials and installation of the system for the buyers - Pipe remains a pipe when it is integrated for use along with pumps and nozzle in a Drip Irrigation System. - HC
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Case Laws:

• GST

• 2022 (11) TMI 1267
  Constitutional validity of the amended Section 140 of the CGST Act - Constitutionality, vires and legality of Section 28 of the Central Goods and Services Tax (Amendment) Act, 2018 - retrospective disallowance of transaction and carry forward of credit of Education Cess and Secondary and Higher Education Cess into the GST regime - HELD THAT:- The grievance on the part of the applicant is that the Adjudicating Authority has not awaited the outcome of the challenge which has already been made by questioning the constitutional validity of the amended Act. And now, there will be a requirement to pay the penalty and the interest, which according to learned advocate Mr. Modh would be around Rs.9,00,000/- in the instant case. It is only one time that the said amount needs to be paid. He, therefore, has also urged to stay that requirement till the Court finalizes the constitutional validity. As the Court is yet to apply its mind to the challenge which has been made before this Court and as the appeal is already statutorily provided, the applicant shall be at liberty to file an appeal and can make a request for stay of appeal. Any further proceedings, at the instance of the appellate authority shall be subject to the final outcome of the main matter. If the issue of limitation is the reason for hampering the chance of the applicant in preferring the appeal, let that not be raised against him. Application disposed off.

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• 2022 (11) TMI 1266
  Validity of Show Cause notice issued under the GST Act instead to erstwhile Central Excise / Service Tax Laws - Recovery of wrongfully availed CENVAT Credit - transitional credit - disallowance of CENVAT credit carried forward by the petitioner by filing TRAN-1, in terms of Section 140 of the C.G.S.T. Act, 2017 - HELD THAT:- From the chronology of facts borne from the pleadings on the record, it is not in dispute that the impugned order in original dated 30th March, 2022 passed under Section 73 (9) of the C.G.S.T. Act, 2017 relates to availment of CENVAT Credit which was allegedly inadmissible under the C.E.A. and Finance Act read with C.C.R. It is also not in dispute that no SCN or order in original has been passed under the existing law, i.e. the C.E.A. and Finance Act read with C.C.R. either at the time of filing of TRAN 1 or thereafter in respect thereof. The writ petition has been preferred purely on the question of legality and jurisdiction of Respondent No.1 to initiate a proceeding under Section 73 (1) of the C.G.S.T. Act for transition of CENVAT Credit which was allegedly inadmissible under C.E.A. and Finance Act read with C.C.R. The show cause notice under which the instant adjudication proceedings were initiated is worded allege similar contraventions under the CEA, Finance Act, 1994 and the CCR as the previous show cause notices issued under the existing law against the petitioner relating to contravention of the C.E.A., Finance Act and C.C.R. - the contraventions which have been alleged and the proceedings which have been initiated under Section 73 (1) of the C.G.S.T. Act are in relation to violation of the C.E.A. and Finance Act read with C.C.R. The gist of the imputation is that the petitioner could not claim the CENVAT credit in lieu of invoices raised by its Bokna mines as both of them were independent entities. Similar was the imputation in respect of the previous show cause notices issued under the existing law which are pending adjudication before the learned CESTAT or the Commissioner (Appeals) for different periods and in some of which the petitioner has already got a stay by the learned CESTAT. The repeal of the existing laws upon coming of the G.S.T. law regime did not leave a vacuum as to past transactions which were not closed. The repeal and saving clause (e) under Section 174(1) of the C.G.S.T. Act allowed such legal proceedings to be instituted in respect of inchoate rights except rights under transactions which were past and closed. Petitioners also admit that proceedings for availing CENVAT Credit which were allegedly inadmissible under the C.E.A., Finance Act, read with C.C.R., 2004 could have been initiated under the existing laws - the duty of the constitutional courts is to interpret the law and also to ensure that there is certainty about the law not only in the minds of the law enforcement agencies but also in the common person as to where he stands in the eye of law. If proceedings for transition of CENVAT Credit alleged to be inadmissible is permitted to be carried under the C.G.S.T. Act, it may lead to uncertainty not only in the minds of the ordinary citizen but also in the minds of the Tax authorities. In some cases a jurisdictional proper officer under the C.G.S.T. Act may initiate proceedings under the provisions of the C.G.S.T Act for such contravention. The Order in Original dated 30th March, 2022 passed by the respondent no. 1 being without jurisdiction cannot be sustained in the eye of law. The impugned adjudication proceedings and the order in original dated 30th March, 2022 are accordingly quashed. Petition disposed off.

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• 2022 (11) TMI 1265
  Levy of GST - Supply or not - nominal amount of recoveries made by the Applicant from the employees who are provided food in the factory canteen - eligibility for input tax credit on GST charged by the Canteen Service Providers for providing the catering services of the factory where it is obligatory for the Applicant to provide the same to its employees as mandated under the Factories Act, 1948 - input tax credit on GST charged by the Canteen service providers. Supply or not - HELD THAT:- The supply made by a taxable person in the course or furtherance of business is an Outward supply . It has been brought out above, that establishing canteen is in the furtherance of business of the applicant and supply of food to the employees when the same is not contractually agreed, is not an allowance as a part of the employment. Thus, the provision of food in the canteen for a nominal cost is a Supply for the purposes of GST. Schedule II to the CGST Act, 2017 describes the activities to be treated as supply of goods or supply of services - the supply of food is a Supply of Service . Whether the amount received from the employees is in the nature of recovery and not consideration as the recovered amount is directly paid to the third-party vendor without any profit element in the hands of the Applicant? - HELD THAT:- The running of canteen in the factory of the applicant is in the course of furtherance of business. The applicant has chosen to run the canteen through a third party vendor in the factory. It is also clear that in running of such canteen, the employer, i.e., the applicant is mandated to bear certain costs - Provision of canteen facility and bearing certain costs in running of canteen are mandated on the part of the employer as per the Factories Act. Accordingly, such canteens are provided. It has been established that the supply of food in the canteens are Supply of Service by the applicant - the third party vendor has entered into agreement with the applicant for running of canteen in their unit and is paid service charges which is a supply made by the third-party-vendor to the applicant. The supply of food by the employer, i.e. the applicant to their employees is composite supply of food held as Supply of service as per Schedule-II of the GST Act and the amount collected by the applicant is a Consideration on which GST is liable to be paid. Eligibility of ITC on the GST paid by the applicant on the services of canteen services by the canteen service provider - HELD THAT:- The Input Tax Credit on Goods and Services Tax paid on Canteen Facility is barred credit u/s 17(5)(b)(i) of the Central Goods and Services Act, 2017 and hence inadmissible. The two clauses in Section 17(5)(b)(i) and 17(5)(b)(iii) of the CGST Act, which governs the supply of goods and services, are not related by the punctuation used at the end of the provisions. Colons and semicolons are two types of punctuation, according to the concept, and Semicolons are used to unite two independent clauses/sub clauses, or two complete thoughts that might stand alone as entire sentences. Hence it can be said that ITC is not allowed on canteen charges even though it is obligatory under any other law. The Authority for Advance Ruling, Gujrat in the case of M/s Tata Motors Limited [ 2021 (8) TMI 735 - AUTHORITY FOR ADVANCE RULING, GUJARAT ] held that Input Tax Credit on Goods Services Tax charged by canteen service provider will not be available even when the same is obligatory in terms of Factories Act, 1948 - In the case at hand, as brought out, the applicant who runs factory, wherein more than 250 workers are employed is mandated to provide the canteen facility in the premises and bear certain costs the provision of food at nominal rate and recovery of such nominal rate is not as per the employment contract. In view of the stated factual matrix of the case, the case laws relied upon by the applicant do not have even persuasive values to this case and therefore not elaborated individually.

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• Income Tax

• 2022 (11) TMI 1264
  Addition based on seized document - addition on account of receipt of rent - As stated as per the Seized Document, the Vasant Square Mall was in the possession of the Assessee before 01st October 2006 and the rent started with effect from 01st October 2006 - ITAT has held that the additions made by the AO are factually incorrect, illegal and arbitrary - HELD THAT:- In view of the factual finding returned by ITAT in the assessment proceedings to the effect that no fresh material was taken into account by the AO for making additions in the present proceedings and the sole basis for making the additions was the Seized Document, we find that the issues raised in the present appeal are covered in favour of the assessee and against the Revenue by the judgment of this Court VINITA CHAURASIA [ 2017 (5) TMI 992 - DELHI HIGH COURT] - The additions were deleted by the Court after detailed examination of the merits. The Special leave petition filed against the said judgment also stands dismissed. We therefore find that no substantial question of law arises from the impugned order of the ITAT. The appeals is dismissed.

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• 2022 (11) TMI 1263
  Reopening of assessment u/s 147 - order passed under Section 148A(d) - Non supply of incriminating material / information against the petitioner - HELD THAT:- As we have perused the reply dated 29th March, 2022 filed on 30th March, 2022 with the Assessing Officer. In the said reply, the petitioner has only asked to be served with the information / documents in possession of the respondent-revenue. The petitioner has given no reply on merits. This Court is of the view that if the petitioner desired the requisite information / documents in possession of the respondent-revenue, he should have asked for the same on the day one and certainly not waited for seven months to approach this Court. Since the matter has now progressed to the next stage i.e. Section 148 stage, this Court disposes of the present writ petition with a direction to the respondent-revenue to supply the incriminating material / information against the petitioner within four weeks.

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• 2022 (11) TMI 1262
  Stay of demand - recovery proceedings - pre-condition for grant of stay of recovery - pre-condition for deposit of 20% of the total demand - HELD THAT:- The stay application has come to be dismissed by way of impugned order that contains a fatal flaw, being that the Assessing Authority proceeds on the basis that there is a pre-condition for deposit of 20% of the total demand for the grant of stay till disposal of first appeal. This view patently erroneous insofar as the Income Tax Act does not provide for any pre-condition for grant of stay of recovery, as this Court has made clear on several occasions. Office Memorandum (OM) referred to by the Assessing Authority in F.No.404/72/93-ITCC dated 31.07.2017 only increases the rate of disputed demand from 15% as set out under Instruction No.1914 dated 21.03.1996 to 20%. However, the actual tax to be demanded, ranging from 0% to 100%, would depend upon the existence of three factors, viz., (i) prima facie case, (ii) financial stringency and (iii) balance of convenience and it is only upon a consideration of the aforesaid factors that the officer would dispose an application for stay. This discussion does not find place in the present impugned order and rather, the Assessing Authority proceeds on the basis that 20% is the standard demand that the petitioner must be called upon to remit. Thus impugned order is quashed. The stay petition is restored to the file of the Assessing Officer, who shall call upon the assessee, consider materials, if any, placed by the assessee before him in support of the aforesaid three conditions and pass orders upon the stay application, within a period of six (6) weeks from today.

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• 2022 (11) TMI 1261
  Capital gain - Transfer within the meaning of Section 2(47)(v) - recital to the effect that possession of the property in question was delivered in part performance of the contract - HELD THAT:- As in order to attract Section 2(47)(v) of the IT Act, it is absolutely essential that possession of the property in question should be delivered in terms of Section 53-A of the T.P. Act. In the instant case, a perusal of the Sale Agreement, Agency Agreement and GPA, will clearly indicate that possession of the said property covered under the said documents has not been delivered as mandatorily required under Section 53-A of the T.P. Act. In fact, the contents of the said documents will clearly indicate that there is no recital with regard to the petitioner handing over possession or putting the party in possession in part performance as required under Section 53- A of the T.P. Act. Sale Agreement under which, the petitioner is said to have agreed to sell the said land in favour of the third party is also not a registered document as required under Section 17(1-A) of the Registration Act and on this ground also, it cannot be said that the petitioner had delivered or put the other party in possession in part performance for the purpose of Section 53- A of the T.P. Act. Thus in the absence of any recital in the aforesaid three documents, much less any recital to the effect that possession of the property in question was delivered in part performance of the contract, the three documents executed by the petitioner cannot be construed or treated as constituting a Transfer within the meaning of Section 2(47)(v) of the IT Act. Thus so long as the documents do not constitute a Transfer within the meaning of Section 2(47)(v) of the IT Act, the petitioner cannot be made liable to pay capital gains tax on the amount received by him. Thus the impugned Assessment order deserves to be quashed and the matter remitted back to respondent 1- Assessing Officer for reconsideration afresh in accordance with law.

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• 2022 (11) TMI 1260
  Assessment proceedings maintainable against the dead person - Intimation from legal heir - HELD THAT:- Bachuji Balaji Thakor died on 22.10.2018 in whose name, notice was issued by the income tax authorities on 31.3.2021 under Section 148 of the Act seeking to reopen assessment in respect of Assessment Year 2016-2017. The petitioner herein who happens to be the legal representative intimated to the income tax officer concerned that the noticee Bachuji Balaji Thakor had died long back and that the notice was without jurisdiction. The Income Tax authorities did not pay heed to the said intimation. The facts of the case did not offer any fact or circumstances to suggest that the legal representative of the deceased assessee in any manner submitted to the jurisdiction of the income tax authorities or in any way participated in the proceedings. On the contrary, communication dated 22.3.2022 was sent to the income tax officer by the legal representative that the noticee Bachuji Balaji Thakor had died. the present petition deserves to be allowed. It is hereby allowed by holding that the impugned notice, which was against the dead assessee, could not have been sustained.

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• 2022 (11) TMI 1259
  Addition under the head commission paid to others - commission expenses incurred by the Assessee, being a Medical Doctor by profession - claim of the Assessee that the Assessing Officer had made addition by completely misunderstanding and misinterpreting the facts of the case is frivolous and totally unwarranted - HELD THAT:- We are unable to accept the contradictory stand of the Assessee taken before the L. Commissioner because the contradictory stand of the Assessee clearly seems to be concocted story, twisting facts, erratic, vague and superfluous and thus liable to be depreciated. Even otherwise as per the judgements referred to above, the payment of commission by the Assessee for referring patients to it by any stretch of imagination, cannot be accepted as legal or as per public policy of India, hence such commission is not an allowable expense. Consequently the Assessee in any case is not entitled for any relief on merit, we are thus inclined not to interfere in sustaining the addition. Jurisdiction of the Assessing Officer to extend the assessment proceedings beyond the points of limited scrutiny - As the case of the Assessee was selected for limited scrutiny and the addition in hand does not emanate from the grounds on which the case of the Assessee was picked up for limited scrutiny. Though the Ld. Commissioner, in the impugned order incorporated the legal contention of the Assessee objecting to the jurisdiction of the Assessing Officer to extend the assessment proceedings beyond the points of limited scrutiny, but the ld. Commissioner has not adverted to decide this contention of Assessee in the impugned order. As it is settled law that the Revenue Authorities are not allowed to travel beyond the issues involved in limited scrutiny cases, except in exceptional circumstances and by completing the relevant formalities before proceeding to other issues, which in the instant case does not appears to have adhered to. Hence, we deem it appropriate to delete the addition in hand. Consequently, the appeal of the Assessee is liable to be allowed.

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• 2022 (11) TMI 1258
  Deduction u/s 80P(2)(a)(i) - Claim denied as it is only a Urban Co-operative Bank then a cooperative society and the said interest income represents deposits made in a cooperative bank and thus not entitled for the relief in issue as per section 80P(4) - HELD THAT:- Section 80P(2)(d) of the Act allows whole deduction of income by way of interest or dividend derived by Cooperative Society from its investments with any other co-operative society. This provision does not make any distinction with regard to the source of investment because this section envisages deduction in respect of any income derived by cooperative society from in his investment with a cooperative society. So the Revenue is not required to look another of investment whether it was formed as required within time or otherwise. As heard the considered of the case of Totagars Co-operative Sales Society Ltd [ 2010 (2) TMI 3 - SUPREME COURT] which was relied by the Ld. DR and find that the Hon ble Apex Court has dilapidated on the issue of deduction u/s 80P(2)(a)(i) but not on section 80P(2)(d). We also observed that in the case of Totagars Cooperative Sales Society Ltd, [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] itself the Hon ble High Court of Karnataka has allowed the claim of deduction u/s 80P(2)(d). Considering all the judgments we hereby hold that the investment of assessee in cooperative bank is eligible investment u/s 80P(2)(d) of the Act. The interest of the said investment related to Cooperative Society, assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act. Accordingly the appeals of the assessee are allowed. Appeal of assessee allowed.

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• 2022 (11) TMI 1257
  Addition u/s 68 - unexplained cash credit - Non establishing identity, creditworthiness and genuineness of the transaction - HELD THAT:- DR has fairly agreed that the Assessing Officer in the remand report has reported that the assessee has duly established the identity, creditworthiness of the creditors and genuineness of the transaction and he has also fairly agreed that the issue is also squarely covered by the Decision of AMBITION AGENCIES PRIVATE LIMITED [ 2021 (11) TMI 750 - CALCUTTA HIGH COURT] and SMT. B. JAYALAKSHMI [ 2018 (8) TMI 208 - MADRAS HIGH COURT] - Decided against revenue. Addition u/s 14A - expenditure incurred towards tax exempted income - HELD THAT:- As held in many decisions where the assessee has not derived any tax exempt income from investments, then no disallowance is attracted u/s 14A of the Act. - Decided against revenue.

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• 2022 (11) TMI 1256
  Validity of re-opening of assessment - reasons to believe - change of opinion - fresh materials subsequent to completion of original assessment - Eligibility of exemption claimed u/s.10AA - HELD THAT:- Although, the original assessment has been completed u/s.143(3) of the Act, on 29.09.2011, but the AO has not considered the issue of exemption claimed u/s.10AA of the Act, in right perspective of law and thus, we are of the considered view that, when the AO has not expressed any opinion, the question of concept of change of opinion does not arise. AO has formed reasonable belief of escapement of income on the basis of fresh materials subsequent to completion of original assessment order and said materials may come from the assessment records also. Therefore, we are of the considered view that there is no merit in the arguments of the assessee that there is no fresh tangible material in the possession of the AO to form reasonable belief of escapement of income and thus, we reject the arguments of the assessee and uphold the reopening of assessment. Computation of deduction u/s.10A / 10AA - AO has not accepted the claim of the assessee on the ground that no proper evidence has been filed to substantiate the claim - We find that if assessee is able to explain reduction in export turnover with necessary evidences, then the AO is bound to consider the turnover declared in revised return of income for the purpose of assessing income and also for claiming deduction u/s.10A / 10AA of the Act. As regards the second observation of the AO with regard to non-eligibility of the assessee for claiming such deduction, the assessee has filed necessary copies of approval from STPI under the provisions of Sec.10A / 10AA - From the above, it appears that the assessee is eligible for claiming deduction u/s.10A / 10AA of the Act. Since, the assessee has declared net loss for the year, the question of claiming deduction u/s.10A / 10AA of the Act, does not arise. Deduction u/s.10A / 10AA of the Act, cannot be rejected, in case, the assessee is entitled for claiming such deduction. Therefore, we are of the considered view that the issue needs to go back to the file of the AO for fresh consideration and thus, we set aside the issue and direct the AO to re-consider the claim of the assessee in light of various averments including justification for reduction in export turn over and consider the issue of computation u/s.10A / 10AA of the Act, in accordance with law after providing reasonable opportunity of hearing to the assessee. Appeal filed by the assessee is partly allowed for statistical purposes.

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• 2022 (11) TMI 1255
  Capital Gain on sale of land - liability to be taxed in the hands of the appellant - appellant requests your honour to kindly direct the learned assessing officer to allow the credit of income tax paid by the company on the capital gain on sale of land against the income tax payable by the appellant on the capital gain arises from the sale of said land - HELD THAT:- We hardly see any reason to accept the assessee s instant latter argument in light of hon ble apex court s landmark decision in CIT vs., Ch Atchaiah [ 1995 (12) TMI 1 - SUPREME COURT] that the correct amount of income has to be assessed in right person s hands only. Faced with this situation, we hardly see any reason to entertain the assessee s instant remand request seeking credit of the alleged taxes payment by the company in this appellant s hands. Rejected accordingly.

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• 2022 (11) TMI 1254
  Addition u/s 68 - bogus LTCG - Penny stock purchases - HELD THAT:- Directorate of Income Tax (Investigation), Kolkata unearthed a racket of penny stock companies, which are managed by entry operators and brokers, wherein share prices are rigged, abnormally high so as to provide accommodation entries in the form of bogus long-term capital gain to various beneficiaries. The investigation report mentioned the list of 84 companies, which were found to be penny stock companies and all these companies have poor financial, no regular business activity was carried out and the share prices increased abnormally with the help of entry operators and brokers. Recently Hon ble Jurisdictional High Court in the case of Swati Bajaj Others[ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] dealing with the similar facts and the issue relating to the penny stock companies decided against the assessee thereby confirming the addition under section 68 of the Act as well as confirming the revisionary proceedings under section 263 - Appeal of the assessee is dismissed.

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• 2022 (11) TMI 1253
  Benefit of exemption u/s 11 - society or trust draws its inspiration for certain charitable activities from religious tenents - Claim denied as activities carried out by the society during the instant assessment year were not found to be covered by any limb of charitable purpose as defined in section 2 (15) - CIT-A allowed the exemption - HELD THAT:- As decided in own case [ 2018 (3) TMI 1903 - ITAT DELHI] imparting of education in theology, of the nature given in the New Theological College, is very much an education within the meaning of education as defined by the Hon ble Supreme Court in the case of Sole Trustee LokShikshan Trust [ 1975 (8) TMI 1 - SUPREME COURT] and which would entitle an institution to claim exemption under the beneficial provisions of the Income Tax Act. It also flows that merely because a society or trust draws its inspiration for certain charitable activities from religious tenents, as long as charitable activities of the society are not confined to the benefit of any particular community, it is entitled to exemption u/s 11 of the Income Tax Act. In the present case of the assessee, while the donors to the society may have been giving to it in the belief that they were propagating and promoting Christianity, the society itself has confined its activities to the aims and objectives laid down in the Memorandum of Association in as much as in Theology can be described as vocational training and the school, run by it, impart a secular education. Accordingly, merely because it bears its activities on the basis of a religious calling, there is no reason to hold that section 13 (1) (b) of the Income Tax Act would be attracted to it. Therefore, in considered opinion, the assessee society is eligible to claim exemption u/s 11 of the Income Tax Act. - Decided against revenue.

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• 2022 (11) TMI 1252
  Addition on account of share application money by invoking the provision u/s 68 - HELD THAT:- The appellant undoubtedly has failed in course of assessment and appellate proceedings to establish the identity and creditworthiness of the so-called share applicants and genuineness of transactions. AO has rightly invoked the provisions of the section 68 to make addition on account of share application money and added it back to the total income of the appellant. Thus, hold that the action of the AO in making addition on account of share application money is justified and therefore the addition u/s 68 made by the AO is confirmed. Appeal of the assessee is dismissed.

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• 2022 (11) TMI 1251
  Mercedes car gifted - Depreciation on car - capital account credited an amount towards value of a Mercedes Benz Car - Allowable business expenditure - HELD THAT:- No infirmity does emerge from the observation of the A.O who had rightly brought the value of the car to tax u/s. 28(iv) of the Act. Apropos, the assessee s claim for depreciation on the aforesaid Mercedez Benz car, find that as observed by the A.O as the assessee had not only claimed any depreciation on the said car during the year under consideration, but had in fact claimed the depreciation on the entire value of the same only from A.Y.2014-15, therefore, the said fact establishes beyond doubt that the said vehicle was not being used for business purposes during the year under consideration. Finding no infirmity in the view taken by the A.O who had rightly declined the assessee s claim for depreciation on the aforesaid Mercedez Benz car as was raised in the course of the assessment proceedings, uphold the same. Thus, the Ground of appeal No.1 raised by the assessee is dismissed in terms of the aforesaid observations. Disallowance u/s 40A(2)(A) of interest charges that were paid by the assessee to her seven family members - AO had while making the aforesaid disallowance resorted to the comparison between the unlikes i.e. comparison between interest rate paid on unsecured loan, as against that paid on loans raised from a bank. As Section 40A(2)(a) of the Act presupposes a comparison between likes on the basis of which it could be gathered that the expenditure booked by the assessee as being excessive or unreasonable, therefore, the very basis leading to the aforesaid disallowance does not find favour for the reason that as in comparison to the loans raised from a bank which involves substantial formalities, hidden charges and offering of collateral securities etc., the raising of unsecured loan from a family member involves neither of such issues. Thus we are unable to concur with the very basis leading to drawing of adverse inference by the lower authorities, and thus, is of the considered view that the matter in all fairness requires to be restored to the file of the A.O, with a direction to re-adjudicate the issue after considering the rates at which unsecured loans at the relevant point of time would be available. Assessee ground allowed for statistical purposes. Difference in the account of MRF Tyres Industries Ltd. - As the assessee had not only failed to reconcile the aforesaid discrepancy before the lower authorities, but also adopting callous approach had not placed on record anything to substantiate the same in the course of the proceedings before me, therefore, as constrained to uphold the said addition. Thus, the Ground of appeal raised by the assessee is dismissed in terms of the aforesaid observations. Ground raised by the assessee is dismissed.

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• 2022 (11) TMI 1250
  Reopening of assessment u/s 147 - reason to believe - tangible material before the AO - additional income offered to the closing stock - assessee has increased the opening stock to the extent of the disclosure made during the course of survey operation - HELD THAT:- As in absence of any tangible material before the AO, he could not have reopened the assessment for the impugned assessment year. In our opinion, mistake, if any has been committed by the assessee in AY 2009-10 and the AO was also aware of the same. Therefore, instead of reopening the assessment for AY 2009-10, AO could not have reopened the assessment for AY 2010-11. We quash the reassessment proceedings and the grounds raised by the assessee on this issue are allowed.

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• 2022 (11) TMI 1249
  Reduction of the land development expenses - Disallowance of unverifiable expenses - AR submitted that the persons to whom the payment was made are not to be found, and their addresses could be culled out only from the sale deeds executed by them in favour of the assessee - HELD THAT:- As no evidence is produced in support of the claim of the assessee. It could be seen from the assessment order, basing on the PAN details, an attempt to verify the claim of the assessee was made, but such persons were not to be found in such address. Subsequently on the orders has been furnished by the assessee, the Income Tax Inspector was deputed to cause enquiries at the address is given by the assessee, but such addresses were found to be incorrect. In the circumstances, there is no course open to the Assessing Officer to verify the alleged expenditure - So also in respect of the other expense said to have been paid to the marketing executive towards salary incentives etc., no occasion for such payments seems to be probable because admittedly the commercial activity of the assessee had not commenced and not even a single plot was sold or book for sale during the relevant assessment year. All the circumstances would go to show that there is no possibility to verify the expenses and therefore it cannot be said that the authorities below went wrong in reducing such expenses. We accordingly find that the grounds of appeal are devoid of merits and the appeal of assessee is liable to be dismissed.

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• 2022 (11) TMI 1248
  Assessment u/s 143(3) - accommodation entries provider - transaction between the appellant and other related concerns as accommodation entry and treating the appellant as alleged accommodation entry provider - as argued assessee is not an accommodation entry provider AND no opportunity of cross examination was provided regarding the alleged credible information received by ld. AO - HELD THAT:- Complete details of the source of the funds received during the year as well as the amounts transferred to other companies has been filed by the assessee. Revenue authorities have failed to find any defect in such details. In the past for AY 2013-14 assessee s case was assessed u/s 143(3) of the Act and the assessee has not been held to be entry provider but has been assessed to be engaged in business of share investment. This plea of ld. D/R that most of the companies are having meagre income and no source of funds is also not correct as in the case of P G Industries Ltd., returned income is 1.14 Cr. and in case of Priceless Overseas Ltd., returned income is 59.97 lakh. It is also not in dispute that the assessee has requested for cross examination but no such opportunity was provided to the assessee to cross examine Mr. Mahendra Sethia who claimed to have been managing the assessee company as an accommodation entry provider. And not providing of such opportunity of cross examination renders the assessment proceedings as invalid and bad in law as held in the case of Andaman Timber Industries v. CCE [ 2015 (10) TMI 442 - SUPREME COURT] Therefore since the assessee has explained the transactions carried out during the year in the bank account held in Vijaya Bank and the complete details of the deposits and withdrawal and the source and the documentary evidences in support thereof, the transactions, in my view are carried out in the regular course of business and by no stretch up imagination, the assessee company can be held as an accommodation entry provider/shell company. Therefore, set aside the finding of ld. CIT(A) and delete the addition of commission income - Decided in favour of assessee.

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• 2022 (11) TMI 1247
  Rectification of mistake u/s 154 - expiry of time limit prescribed u/s 154(7) - claim of additional depreciation made first-time through rectification application after the expiry of time limit prescribed u/s 154(7) - statutory limit of four years from the end of the financial year - whether claim for additional depreciation u/s 32(1)(iia) of the Act is in modification of original claim made in the ITR or a fresh claim to testify its allowance through rectification application? - HELD THAT:- Since, the Ld. AR failed to bring on record any substantial evidence in support of allowability of belated claim made through belated application of rectification and in the absence of any order of relaxation from the CBDT, we beyond any iota of doubt are inclined to hold the orders of both the tax authorities free from any infirmity, ergo the ground number 3 and its counter parts stand adjudicated against the assessee.

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• 2022 (11) TMI 1246
  Excess depreciation claimed - information received from the Investigation Wing and the inference are based on actual findings and evidence gathered during the course of survey action - to support the pricing of cost of acquisition of the assessee, the assessee had relied upon TEV study report of D.K.Jain and Co., who is an independent technical export appointed by State Bank of India and which report has been furnished to the Revenue in the past and has been consistently accepted - CIT(A) observed that as per the provisions of Section 43(1) of the Act, the actual cost means the actual cost of assets to the assessee reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority - HELD THAT:- We find that the ld. CIT(A) had duly applied the provisions of Section 43(1) of the Act which defines actual cost. We find that the ld. CIT(A) had categorically observed that Rs.20,00,00,000/- is the actual cost of acquisition of FFS Machines for the assessee paid to M/s. Anitas Exports Pvt. Ltd. This factual finding and the application of provisions of Section 43(1) of the Act has not been challenged by the Revenue before us. Hence, there is absolutely no merit in the grounds raised by the Revenue before us. In any case, the issue in dispute is squarely covered by the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Karma Energy Ltd. 2015 (6) TMI 216 - BOMBAY HIGH COURT] We hold that the ld. CIT(A) had correctly addressed the issue in dispute in favour of the assessee.

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• 2022 (11) TMI 1245
  Unexplained cash deposits u/s 69A - assessee has made cash deposits into bank account during demonetization period - HELD THAT:- The source of cash deposits have been explained from the withdrawals made by him from his capital account from partnership firm. Assessee had opening balance of Rs. 21,81,141/- and then further withdrawals of Rs. 3,57,920/-. Thus, there was clear cut cash available in the books amounting to Rs. more than 21,41,000/- which was deposited in the bank account. Thus, It cannot be held that the source of cash deposits remain unexplained and accordingly the addition as sustained by Ld. CIT(A) is deleted. Appeal of the Assessee is Allowed.

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• 2022 (11) TMI 1244
  Unexplained cash loan and unexplained interest expenditure - Addition based on excel sheet found in search action carried out - HELD THAT:- As in terms of section 292C of the Act that if any document is found in possession or control of any person in the course of search action under section 132 of the Act, then it is presumed that said document belongs to such person and contents of such documents are true. In the instant case, the ledger account titled as Kalpesh Shah A/c has been found from the possession of Bhoomi Bhumi group and therefore in terms of section 292C, it is presumed that same belongs to Bhoomi Group. This presumption is rebuttable and onus to rebut is on the person from whom possession said document has been found. Nothing on record shows that any enquiry from M/s JHP securities had been carried out by the Assessing Officer or by the CIT(A) to ascertain the connection of the assessee with JHP securities Ltd and Bhoomi Group, though the Assessing Officer reopened the assessment on one of the information that share transactions worth more than Rs.1.5 crore were carried out by the assessee quoting a duplicate PAN. Thus, there is no evidence on record, which could establish that assessee is the same Kalpesh Shah, the ledger account has been titled in whose name. CIT(A) has noted that Mr. Akshay Doshi owned the noting recorded in excel sheet, as his own undisclosed income, therefore the Assessing Officer is not justified in making further addition in the hands of the assessee.Assessing Officer did not bring any record or evidence to show that assessee carried out any property transactions with Bhoomi Group. The addition in the case has been made by the Assessing Officer under section 68 of the Act as unexplained cash credit, but we find that in the case source and nature of the transaction is clear from the seized document itself, nature of which is cash loan transactions and source of said loan is Bhoomi group. - Decided against revenue.

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• 2022 (11) TMI 1243
  Unexplained cash deposit for settling credit card bills - unsatisfactory explanation being given by the assessee of the source of cash so deposited - HELD THAT:- The assessee had explained source of cash deposits as being from his cash on hand, withdrawals made from his bank account in ICICI Bank and SBI Bank. The CIT(A), NFAC surprisingly took no cognizance of this explanation of the assessee at all, and upheld addition for the reason that in assessment proceedings the assessee had given some other explanation of source, as being paid by his friends, who had used his card and this present explanation furnished by the assessee was not sufficient since the assessee had given no valid reason as to why he kept so much in cash, when he was holding bank account. As long as the explanation of the assessee is duly substantiated, the same has to be accepted notwithstanding the fact that a different explanation was offered by the assessee in an earlier point of time. What is relevant is that the assesses explanation is duly substantiated with evidence. Whichever explanation fulfils this criteria is undoubtedly the correct and valid explanation for all purposes. Any other explanation of the assessee is of no relevance. If the assessee is able to demonstrate through evidence, in the appellate proceedings, the source of cash deposits,the same needs to be considered, examined, verified and only then a finding be given on the same. It could not be rejected or dismissed solely for the reason that some other explanation was given in the assessment proceedings. As for the other reason given by the ld.CIT(A) for dismissing assesses explanation that there was no reason for the assessee to keep so much cash with him, thus find the same to be also irrelevant. It is upto the assessee to keep how much cash as he requires, hence, this is not a criterion for making any disallowance in the income tax proceedings. How much cash an assessee keeps cannot be reason for dismissing the explanation regarding payment made in cash. In the present case, the assessee having explained the cash deposits as withdrawals from his bank account, CIT(A) having not found any infirmity in this explanation of the assessee, we see no reason for upholding the addition - Appeal of assessee allowed.

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• 2022 (11) TMI 1242
  Addition u/s 68 - bogus LTCG - bogus share application money including premium - HELD THAT:- Here is a clear connection between both the share applicant company and the assessee company and, therefore, the transaction of making investment in equity share of the assessee company cannot be regarded as ingenuine. We, therefore, is of view that the assessee has successfully explained the identity and creditworthiness of M/s. KHPL and genuineness of the transaction carried on by it in the year under appeal. We would like to further make it clear that our this finding about the alleged transaction is only on the basis of the facts in the year under appeal and the same should not be taken as a precedence for any subsequent year unless the facts of the particular year/case indicate so. Therefore, this ground of appeal on merit filed by the assessee is also allowed.

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• 2022 (11) TMI 1241
  Revision u/s 263 - unverified URD purchases - As per CIT no evidence submitted by the assessee or culled out by the AO that the 10% of URD expenses were made from commission agent - AO merely on the basis of assumption made addition of commission expenses instead of making the addition of entire unverified or non-genuine URD purchases - HELD THAT:- The assessee before the investigation wing of the Income Tax Department has also made a detailed reply - Thereafter, the proceedings were initiated under section 147 of the Act by issuing notice u/s148 - Finally the assessment was framed by the AO under section 147 of the Act after considering all the facts with respect to URD purchases which can be verified from the assessment order available on record. Thus it can be inferred that there was due application of mind of the AO while framing the assessment under section 147 - Accordingly, we are of the view that the assessment order on hand cannot be held as erroneous insofar prejudicial to the interest of revenue on account of non-verification as alleged by the CIT u/s 263 of the Act. Whether the purchase shown by the assessee represents the bogus transaction in the absence of supporting documents ? - We note that whatever purchases are made by the assessee, become part of stock in trade and subsequently sold to the parties. Thus the impugned amount of purchases were either shown by the assessee in the stock in trade in the year under consideration or sales were made against such purchases. The learned CIT has not disturbed either the stock in trade of the purchases The entire exercise becomes tax neutral, in the sense that if the purchases are disbelieved and corresponding closing stock and the sale of the subsequent year should also be disbelieved on the same parameter. As such the revenue cannot take different stand with respect to the common transactions having impact on purchases, closing stock and the sales. All these transactions are interconnected and linked with each other. If any of the transaction is doubted then corresponding transaction should also be carrying same shadow of doubt - part of the transactions cannot be accepted as genuine and part of the transaction cannot accepted as bogus. Either the entire transaction to held as bogus or should be treated as genuine without making any cherry pick-up. Thus, for this reason as well, the assessment order cannot be held either erroneous or prejudicial to the interest of revenue. Contention of Assessee that the order of the AO got merged the order of the learned CIT-A is not agreeable - It is for the reason that the issue before the learned CIT-A was with respect to the deduction of the TDS. There was no issue with respect to the purchases from the unregistered parties. Thus, the issue raised by the learned PCIT with respect to the addition for the URD purchases wasn t other before the learned CIT-A. I Thus we hold that the order of the assessment does not suffer from any infirmity on account of non-verification as alleged by the CIT u/s 263 - Accordingly we quash the order framed under section 263 - Appeal of the assessee is allowed.

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• 2022 (11) TMI 1240
  Treatment to rental income - income from other sources - ownership of the property - distribution of income by assessee amongst the co-owners - AO held that the claim of the assessee that property was owned by other family members was not substantiated and therefore, he assessed the income as income from house property in the hands of the assessee and allowed deduction u/s 24 of the Act and made the addition in respect of rest of the income - HELD THAT:- The name of Shri Paras Mehrotra, Shri Vineet Mehrotra, Smt. Asha Mehrotra and Shri Amit Mehrotra and Ashish Mehrotra are appearing in this sale deed as owners of the property therefore, the finding of the Assessing Officer that no evidence was filed before him, substantiating the ownership of the property, is wrong. CIT(A) has also not considered all the submissions of the assessee in right perspective. Since the income received by the assessee has been distributed amongst the co-owners of the property and the co-owners had declared the income in their respective income tax returns, the non allowability of deduction to the assessee u/s 57 will amount to double taxation of the same income which is not permissible. The receipt of income in the hands of the assessee had only occurred due to the fact that the assessee had entered into an agreement with United Spirits for letting out the godown but merely letting out the property, belonging to others, by one of the family members, does not entitle the assessee to earn the rental income. The rental income received by assessee in fact belongs to these persons who are owners of that part of the property. We direct the Assessing Officer to allow the deduction to the assessee u/s 57 of the Act as the distribution of income by assessee in this case is equivalent to amount spent for earning of the income which is allowable deduction u/s 57 - Appeal of the assessee stands allowed.

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• 2022 (11) TMI 1239
  Reopening of assessment u/s 147 - Unexplained bank deposits - assessee contended that the assessee is an Insurance Agent received premium from his clients and same were deposited in the bank account and later withdrawn for making of payment of premium - HELD THAT:- The name appearing in the list of policy holders recorded in the diary are not matching with the names of the persons who have issued the receipts. Further, the receipts are in the nature of certain amount received by those persons and not the amount given or deposited by those persons in the bank account of the assessee. AO reproduced one of the receipts and all the receipts are identical in language except the name and amounts and dates which are separately filled up. Therefore, neither the list of the policy holders nor the receipts are supporting the claim of the assessee that the cash in the bank account of the assessee was deposited by the policy holders for payment of the policy premium. The assessee has not produced a single document showing the payment of premium on behalf of the any of the policy holders. The assessee has not filed a single receipt issued by the insurance company to show that the assessee paid the premium of the amount which was received in the bank account. Therefore, the facts analyzed by the CIT(A) in the impugned order are found to be correct and proper. Accordingly, No infirmity or error in the order of the CIT(A), the same is upheld.Appeal of the assessee is dismissed.

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• Customs

• 2022 (11) TMI 1238
  Confiscation of goods - Classification of imported goods - glass stone - to be classifiable under CTH 71049090 or nor - rejection of declared value - change in classification based on the NIDB for the goods - Classification - redemption fine - penalty - HELD THAT:- There are no hesitation in holding that both the authorities have concluded that the appellant have grossly mis-declared the consignment imported by them from the China both in respect of value and description. It is not the case of misclassification of goods but purely the case of misdeclaration of the goods. Appellant have in the B/E and the import documents declared the goods to be Glass Stone stones whereas on examination and assessment the same have been found to be Cubic Zirconia and synthetic Ruby . These findings are supported by the test reports of GLL and Panel Member Report to whom the matter was referred as per the Public Notice 30/2018 dated 19.12.2018. The defence put forth by the appellant do not inspire any confidence in this regard. It cannot be accepted that the appellants were importing the goods without knowing the true nature of the goods. Appellants submission that they have opted for first check, also cannot be said to be valid defence for the reason that first check is a facility to determine the exact nature of the goods, and not a facility to mis-declare. The invoice of the Chinese Supplier is not having any details to infuse any confidence. Hence in our view the appellant have deliberately misdeclared the goods. The goods were sought to be cleared on the value as per the invoice. The Bill of Entry was filed declaring the value as per invoice. To the query raised by the bench, the counsel for the appellant affirmed that the value declared on the invoice was inclusive of freight and other charges - the value declared do not have any ingredients of the transaction value and should have been outright rejected, which have been done by the authorities below. The invoice has been issued without referring to any purchase order stipulating the terms of the supply including the terms of payment. Appellant have no answer to any of these questions which are so essential to determine the validity of the transaction and the declaration made on the Bill of entry. Redemption fine - HELD THAT:- The misdeclaration made with intent to evade the payment of the duty goods have been rightly held to be liable for confiscation under section 111 (m) of the Customs Act, 1962 - there are no merits in the submission of the appellant that the redemption fine imposed for redeeming the goods is excessive. Commissioner (Appeal) has in her order already reduced the redemption fine from Rs 6,00,000/- to Rs 4,00,000/-. Penalty imposed under Section 114 AA of the Customs Act, 1962 - HELD THAT:- Further from plain reading of the Section 114AA of the Customs Act, 1962, we do not find any such stipulation in the said Section that it applies only to the cases of export. There are no reasons to interfere with the fine and penalties imposed on the appellants - appeal dismissed.

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• 2022 (11) TMI 1237
  Penalty u/s 112 (a) of Customs Duty - Penalty on customs officers - Charge of Abatement - Smuggling - re-assessment of imported goods - exoneration of the charges of abetting in the clearance of the impugned goods - HELD THAT:- Appellant 1 has been exonerated of the charge of abetting by the disciplinary authority. That being so, in my the impugned order which hold the appellant 1 guilty of abetting, for imposition of penalty under Section 112 (a) cannot stand. Reliance placed in the case of CC, AMRITSAR VERSUS SHRI PARMINDER JIT SINGH, INSPECTOR AND OTHERS [ 2013 (7) TMI 377 - CESTAT NEW DELHI ] where it was held that when the disciplinary proceedings against the respondents under CCS (CCA) Rules have been dropped, the proceedings for imposition of penalty against them under Section 112(a) of Customs Act, 1962 which are based on the same charges and the same evidence, would also not survive. Reliance placed in the case of SURAJ PRAKASH VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2015 (8) TMI 1282 - CESTAT NEW DELHI ] where it was held that there is an error which calls for exercise of jurisdiction of the Tribunal under Section 35C(2) for rectification. The adjudicating authority has imposed penalty on the said Inspector on the ground that he has failed to discharge his official duty properly. We are afraid that the said reasoning cannot be adopted for imposition of penalty in terms of Section 114 of the Act, inasmuch as there is nothing on record to show that there was any mens rea on the part of the said appellant so as to abet the illegal export - The Hon ble Supreme Court in the case of [ 1979 (3) TMI 205 - SUPREME COURT ], has held that lapses or lack of efficiency would not ipso facto constitute a misconduct to attract the penal provisions. As such, in the absence of any evidence to suggest that the appellant had connived with the exporter, we are of the view that non-performance of the duty, by itself, would not call for any penal action on the said appellant. Accordingly, the penalty imposed upon him is set-aside. Positive evidence to that effect is required to be placed and charge of abetting needs to be proved in positive manner. The paragraphs of Show Cause Notice and the impugned order in para 4,2. And 4.3 have been reproduced and any such positive evidence or even the allegation whereby the charge abetting can be sustained, cannot be found - It is also worth noting that the entire case of misdeclaration is based on the forged documents produced for the clearance of impugned goods as have been recorded by the disciplinary authority in para 10.4 of his order by relying on para 16.1 (iv) of the show cause notice. In view of these facts charge of abetting cannot be sustained against the two officers who are appellant. These pronouncements should not be held to mean that officers are not guilty of dereliction of duties as assigned to them as officer of Customs, while allowing the clearance of imported goods. The charges of dereliction of duty cannot be adjudicated in terms of the provisions of Customs Act, 1962 and need to be considered as per CCS Rules. If appellants in the proceedings initiated under the said rules, are found guilty of dereliction of duties assigned in any manner, disciplinary authority is free to proceed against the said officers in manner prescribed, without referring to exoneration of these officers by this order by the charge of abetting for imposition of penalty under Section 112 (a) of the Customs Act, 1962. Appeal allowed.

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• Corporate Laws

• 2022 (11) TMI 1235
  Approval of scheme of Amalgamation - Section 230-232 of the Companies Act, 2013 - HELD THAT:- In view of the judgment in IN RE : MOHIT AGRO COMMODITIES PROCESSING PVT LTD., GUJARAT AMBUJA EXPORTS LTD. [ 2021 (6) TMI 1031 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] this Tribunal held that we are of the considered view that when the Transferor and Transferee Company involve a parent Company and a Wholly Owned Subsidiary the meeting of Equity Shareholders, Secured Creditors and Unsecured Creditors can be dispensed with as the facts of this case substantiate that the rights of the Equity Shareholders of the Transferee Company are not being affected. The instant Appeal is allowed with modification of para 10 of the impugned order dated 17.02.2021 passed by the National Company Law Tribunal (Mumbai Bench-IV) to the extent that the secured creditor is hereby directed to raise objection, if any, to the Scheme within 30 days of the Notice of amalgamation before the NCLT failing which it shall be presumed that the said secured creditor has No Objection to the amalgamation.

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• Insolvency & Bankruptcy

• 2022 (11) TMI 1236
  Seeking permission from this Tribunal, to file additional documents - True Copy of the Board Resolution dated 25.06.2014 - True Copy of the File Sample Applications filed by Mr. B. Nageswara Rao, the Authorised Signatory of the Respondent / Company for opening of LCs with the Appellant / Bank subsequent to the Board Resolution dated 25.06.2014 - presumptions of law - requirements of the documents to find out the truth - appellant points out that the Adjudicating Authority, is not empowered at the pre-admission stage, to venture into matters, in respect of the Value of the Assets of the Corporate Debtor, or its Business or the possibility of attracting a Viable Resolution Plan under the Code. HELD THAT:- A Judicial Discretion, is to be regulated resting upon known Rules of Law, and not just Caprice or Whim of an Individual, for whom it is given, as opined by this Tribunal. No wonder, the Discretion, is to be exercised, as per Common Sense, and according to Justice, and if there is a Miscarriage, in the exercise of the same, it can be reviewed, by the Appropriate Authority concerned. In the Section 7 Application (Form I of the Code), under Part IV (Particulars of Financial Debt), it was mentioned that the Amount claimed to be in Default was Rs.146,93,93,281.78 as on 31.01.2019, on which, includes Principal of Rs.113,37,61,348.78 and interest of Rs.33,56,31,933. The Total Outstanding was Rs.146.93 Crore and the Date of Default on 20.10.2016 when the Account of the Respondent / Corporate Debtor, became an irregular one. The Date of NPA was on 17.01.2017. A perusal of the CIBIL Report of the Appellant / Bank shows that the Borrower / Delinquent Outstanding, was Rs.1,13,37,61,349/-. Further, the Statement of Account of the Appellant / Bank, in respect of the Respondent / Corporate Debtor from 02.12.2015 to 31.12.2016, shows that the Balance was Rs.1,23,53,90,795.03. A perusal of the contents of the Letter of the Appellant / Bank dated 18.05.2009, addressed to the Respondent / Corporate Debtor mentions that the Sanction of Rs.50 Crore Credit Facilities (Cash Credit Proposed Limit Rs.10.00 Cr., Total FBWC NFB Rs.10.00 Cr., Letter of Credit Rs.40.00 Cr., Total Non-Fund Based Rs.40.00 Cr. and in all Rs.50.00 Cr. (Fund Non-Fund Based), subject to terms and conditions, therein - An Agreement of Loan for Overall Limit in Form C.1, was dated 21.05.2009, was executed by the Respondent / Corporate Debtor / Borrower and the Appellant / Bank. The Letter for Grant of Individual Limits dated 21.05.2009 was executed by the Chairman Managing Director and the Director of the Respondent / Corporate Debtor, wherein the Overall Limit of Rs.50,00,00,000/- was mentioned. The Adjudicating Authority in the impugned order at Paragraph 41, had observed that the `Disputes raised, the lack of clarity of the actual figures of debt, if any, and whether after the settlements offered by the Corporate Debtor and the payments made since 2012, and its belief that its entire CC account of Rs.45 crore had been liquidated after the payment of Rs.10.63 crore and adjustment of its FDs, require a detailed scrutiny and audit of the demands raised on account of both Fund based and Non-Fund based facilities and the amounts paid/settled, which cannot be conducted in these summary proceedings, etc. The Right to Apply under Section 7 of the I B Code, 2016, accrues to the Bank when the I B Code, 2016, came to force. The amounts borrowed by the Respondent / Corporate Debtor from the Appellant / Bank is a undoubtedly a Debt due and payable in fact and in Law - the pendency of proceedings before the Debts Recovery Tribunal in Law, is not a Bar for the Petitioner / Financial Creditor / Bank to initiate Corporate Insolvency Resolution Process against the Respondent / Corporate Debtor, in the considered opinion of this Tribunal. Also that, an Adjudicating Authority, is not required to go into the details of fabrication and forgery of documents, etc., admitting an Application, under Section 7 of the Code. In the instant case on hand, the Adjudicating Authority, (Tribunal), in the impugned order dated 22.12.2020 in CP(IB) No. 112/BB/2019, had issued directions (vide Paragraph 42), to the Appellant / Bank / Financial Creditor to reconcile Entry by Entry, the Accounts maintained by it, with the bills raised/transactions undertaken, in respect of all the Working Capital Facilities, provided to the Corporate Debtor, etc., which are beyond the Power and Jurisdiction of the Adjudicating Authority. This Tribunal, is of the cocksure opinion that the Adjudicating Authority, had committed an error, in traversing upon the merits of the matter and he is not supposed to examine / go into the each and every aspects of the Default, much less in issuing directions to the Parties to Reconcile / Scrutinise the Default, with reference to Entry by Entry with the Accounts, maintained by the Appellant / Bank, with the Bills raised / Transaction undertaken, in respect of all the Working Capital Facilities, provided to the Respondent / Corporate Debtor. This Tribunal, in the light of foregoing detailed qualitative and quantitative deliberations, on a careful consideration of respective contentions, considering the facts and circumstances of the instant case, in an integral and conspectus manner and on going through the impugned order dated 22.12.2020 in CP(IB) No. 112/BB/2019, passed by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench), comes to a consequent conclusion that the exercise of discretion, by the Adjudicating Authority, in not Admitting, the Section 7 Application in CP (IB) No. 112/BB/2019, filed by the Appellant / Bank and Issuing Observations / Directions (as mentioned in the Paragraph 42 of the impugned order), is not based on sound legal principles (especially, in the teeth of the Appellant / Bank through several documents, had exhibited that the Respondent / Corporate Debtor, was unable to pay its Debt with no possibility of payment and its operations were shut) and they are clearly unsustainable in the eye of Law. Hence, this Tribunal, is perforced to interfere with the impugned order dated 22.12.2020 in CP(IB) No.112/BB/2019, passed by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench) and sets aside the same, to prevent an aberration of justice and to promote substantial cause of justice. The Adjudicating Authority, (National Company Law Tribunal, Bengaluru Bench), is directed to Restore the CP(IB) No.112/BB/2019 (filed by the Appellant / Bank), to Admit the same, by initiating Corporate Insolvency Resolution Process, under I B Code, 2016, and the Regulations made thereunder, against the Respondent / Corporate Debtor, and to proceed further, in the manner known to Law and in accordance with Law, within 10 days from the date of this Judgment. Appeal disposed off.

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• 2022 (11) TMI 1234
  Undervalued Transactions - Preferential Transactions - Fraudulent Transaction - it is alleged that these transaction had been carried out by the Members of the Suspended Management though two years prior to the Insolvency Commencement date - HELD THAT:- Though the relevant time is provided for under the Code, the fact remains that unless the Liquidator, scrutinises and peruses the material which is relevant, to determine whether the Preferential Transactions or Undervalued Transactions took place at the relevant time , he cannot come to a conclusion as to whether these transactions took place during the relevant time . There are force in the contention of the Liquidator that unless he is in the possession of all the material documents, he cannot determine whether they are Undervalued Transactions or Preferential Transactions , during the relevant period of time, and therefore, the Corporate Debtor cannot deny these documents at the threshold itself. There is no provision in the Code for the Appellant to invoke the clause concerning relevant period of two years solely on the ground of denying documents/information directed to be given to the Liquidator - this Tribunal, is of the earnest view that the Adjudicating Authority has rightly invoked its Inherent Power under Rule 11 of the Company Law Rules, 2016 in the interest of justice to direct the Promoters to provide the relevant information. On an Application preferred by the Liquidator, seeking clarification as to whether the Liquidator was allowed to investigate the Transactions executed or entered into by the Corporate Debtor , beyond two years from the ICD and relevant records can be asked for from the Promoters, the Adjudicating Authority has affirmed that the Promoters should give the necessary documents to the Liquidator and cooperate to enable the Forensic Auditors M/s. KPMG to complete the Audit - there is no illegality or infirmity in the Order of the Adjudicating Authority having exercised its Inherent Powers under Rule 11 of NCLT Rules, 2016 and hence this Appeal fails. Appeal dismissed.

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• FEMA

• 2022 (11) TMI 1233
  Offences committed under the repealed FERA - Appointment of Adjudicating Authority - Classes of officers of Enforcement - proper authorization of the Adjudicating Officer - Scope of corresponding provisions of FEMA - Whether Mr. A.K.Bal (Respondent No.2) was specially empowered under Section 50 of FERA to be the Adjudicating Officer? - HELD THAT:- All offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed. Anything done or any action taken or purported to have been taken or done under repealed Act shall, in so far as it is not inconsistent with the provisions of FEMA, be deemed to have been done or taken under the corresponding provisions of FEMA. When an Adjudicating Officer had been appointed before the repeal of FERA but, as could be seen from the Notification dated 1st June 2000 read with Office Order dated 20 th November 2002, Mr. A. K. Bal had not been appointed before the repeal of FERA but has been appointed under the provisions of FEMA, therefore, this appointment in our view is not valid in any event to be appointed as an Adjudicating Officer under Section 50 of FERA. Notably, Section 50 FERA refers to an officer of enforcement specifically empowered in this behalf by order of the Central Government. The Impugned Notification states that the Adjudicating Officer was deemed to have been empowered. A plain reading of Section 50 FERA shows that there must be a specific empowerment. A deemed empowerment is impermissible in law. The Impugned Notification is issued in continuation of earlier notification dated 10th July 2001 (appointing Mr. A.K. Bal as the Adjudicating Authority) and also bears reference to Section 49(5)(a) FEMA. It would be pertinent to point out that Section 49(5)(a) seeks to continue the actions under FERA (and not inconsistent with FEMA) under the corresponding provisions of FEMA and not vice versa. Besides this, there is nothing in FEMA authorizing Adjudicating Authority to issue notice for violations under any provision of FERA. It is well settled that where a statute provides for a thing to be done in a particular manner, then it has to be done in that manner, and in no other manner. For the purpose of Section 49(3) FEMA, there has to be a proper authorization of the Adjudicating Officer who issues the notice of contravention under the provisions of FERA. Only because an officer has been appointed for the purpose of acting in terms of the provisions of an act, the same would not by itself entitle an officer to discharge all or any of the functions of the Central Government, unless specifically authorized. In the circumstances, we will have to hold that Mr. A. K. Bal had no authority to issue the show cause notices and consequently no order based on the show cause notices could have been passed. Whichever party has deposited any penalty or any amount pursuant to the show cause notices issued or the impugned order, the amounts to be refunded together with interest, if any, within 8 weeks from today.

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• PMLA

• 2022 (11) TMI 1232
  Seeking grant of bail - Money Laundering - diversion/misappropriation of the public money and causing huge loss to YES Bank - allegations of granting various credit facilities to several companies by not following the banking norms thereby causing huge amount of losses to the YES Bank in lieu of illegal gratification - applicability and interpretation of case of SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION ANR. [ 2022 (8) TMI 152 - SUPREME COURT] - HELD THAT:- The Supreme Court in Satinder Kumar Antil [ 2022 (8) TMI 152 - SUPREME COURT] took note of the continuous supply of cases seeking bail after filing of the final report on a wrong interpretation of Section 170 of the Code and an endeavor was made to categorize the types of offenses to be used as guidelines for the future. The Supreme Court in Siddharth V State of UP, [ 2021 (8) TMI 977 - SUPREME COURT] clarified that it is not necessary for the police to arrest the accused prior to filing of chargesheet nor could the Court direct that the accused be arrested and be produced before it at the time of filing of chargesheet. The applicant is implicated in PMLA which was enacted to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto. Section 45 provides that offences punishable under PMLA are cognizable and non-bailable also provides stringent conditions in grant of bail. The applicant was implicated in present criminal complaint filed by the respondent/ED and arrayed as accused no 2. The investigating officer consciously did not arrest the applicant. The applicant participated in investigation as his three statements under section 50 PMLA were recorded. The respondent also did not allege that the applicant neither participated nor cooperated in investigation. The concerned Special Court after taking cognizance on present criminal complaint ordered for summoning of the accused persons including the applicant. The investigating officer even after filing of present complaint did not apply for custody of the applicant - There is legal force in argument advanced by the learned Senior Counsel of the applicant that applicant is entitled to bail in view of observations/legal proposition as laid down by the Supreme Court in Satinder Kumar Antil. It is not mandate of section 170 of the Code that if the accused is not taken into custody or arrested during investigation can be arrested or taken into custody after appearance in court post summoning order particularly when neither investigation agency nor prosecution agency sought arrest of accused. The arguments advanced by the learned Special Counsel for the respondent that the applicant has misinterpreted para no 65 of Satinder Kumar Antil is misplaced. There is no force in argument advanced by the learned Special Counsel for the respondent that the applicant before grant of bail required to pass test of 45 of PMLA. The position would have been different, had the applicant arrested during investigation. The investigating agency as mentioned hereinabove consciously preferred not to arrest the applicant during investigation or post filing of charge sheet. The arguments advanced and case law relied on by the Special Counsel for the respondent are considered in right perspective to the given facts and circumstances but they do not provide much legal help to the respondent in opposing present bail application. The applicant is admitted to bail on furnishing a personal bond in the sum of Rs.10,00,000/- with one surety of the like amount to the satisfaction of the concerned trial court on the conditions imposed - the present bail application is allowed.

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• 2022 (11) TMI 1231
  Money Laundering - conspiracy - proceeds of crime - GST violation or not - commission of any scheduled offence in terms of the Scheduled Part A B in terms of Section 2(x) of the PMLA, 2002 or not - admissible statements under Section 50 of the PMLA, 2002 - judicial proceedings within the meaning of Section 193 228 of the Indian Penal Code, 1860 or not. HELD THAT:- The observations in Vijay Madanlal Choudhary Ors. vs. Union of India Ors [ 2022 (7) TMI 1316 - SUPREME COURT ] do not detract from the factum of statements recorded in terms of Section 50(3) of the PMLA, 2002 r/w sub-clause 3 of the said enactment falling within the ambit of judicial proceedings and though, undoubtedly, the consequences of Article 20(3) of the Constitution in Section 25 of the Indian Evidence Act, 1872 may come into play to urge that the statements made after arrest would be in the nature of a confession, the same would relate only to the accused and not to a witness as was the witness Rahul Kasana, who is not an accused in the ECIR. As put forth by the Directorate of Enforcement, the petitioner had hatched a criminal conspiracy with his associates to fraudulently withdraw money from the accounts of companies i.e. M/s. Show Effect Advertisement Pvt. Ltd. (SEAPL), M/s. Essence Cellcom Pvt. Ltd. (ECPL) and M/s. Essence Global Services Pvt. Ltd. (EGSPL) owned and controlled by him through bogus and mala fide transactions with bogus entry operators on the strength of fake bills and used this money to fund the Delhi riots. The witness named Nitesh Kumar Gupta further admitted that the said transfer of Rs. 1.12 Crore from the accounts of ECPL and EGSPL in the garb of payment for supply of manpower was done on the instructions of Tahir Hussain i.e. the petitioner herein and Roshan Pathak, the accountant of Tahir Hussain, assisted Tahir Hussain and facilitated these transactions along with Amit Aggarwal on the instructions of Tahir Hussain - The statements of other witnesses recorded under Section 50 of the PMLA, 2002 already adverted to elsewhere hereinabove as reproduced from the ECIR, all prima facie indicate the alleged complicity of the petitioner with persons to cause an illegal act to be done through illegal means which would fall within the ambit of Section 120A of the Indian Penal Code, 1860 making the offence allegedly committed punishable under Section 120B of the Indian Penal Code, 1860. The offence punishable under Section 120B of the Indian Penal Code, 1860 is a scheduled offence in terms of the Scheduled Para 1 to Section 2(y) of the PMLA, 2002 and falls in Part A of the Schedule. As per Section 2(u) and the explanation thereto, the proceeds of crime include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence, which thus falls within the ambit of proceeds of crime, which proceeds of crime fall withing the ambit of culpability in terms of Section 3 of the PMLA, 2002 making a person who has so allegedly committed such an offence, guilty of the offence of money laundering, which is punishable in terms of Section 4 of the PMLA, 2002 - the contention of the petitioner that what the petitioner was allegedly involved in, can at the most be considered to be a GST violation and that a GST violation may be punishable under the enactment dealing with GST violation and under the Income Tax Act, 1961 but that the same would not amount to the commission of any scheduled offence in terms of the Scheduled Part A B in terms of Section 2(x) of the PMLA, 2002 and thus, no offence described under Section 3 of the PMLA, 2002 punishable under Section 4 thereof, can be held to have been prima facie committed,- cannot be accepted. Thus, the alleged commission of a conspiracy even for the purpose of GST violation in order to avail cash i.e. money through the process of the criminal conspiracy for use of the said proceeds i.e. the commission of the crime to commit riots in the North Eastern part of Delhi between 23/25.02.2020 and to cause unrest, falls prima facie within the ambit of commission of a scheduled offence, in as much as, the offence for commission of a criminal conspiracy is a standalone offence and a scheduled offence in terms of Section 2(y) of the PMLA, 2002 - Apparently thus, the agreement to enter into an agreement to commit a crime, falls within the ambit of Section 120A of the Indian Penal Code, 1860 falling thus, within the ambit of a scheduled offence. There is no infirmity in the impugned order dated 03.11.2022 of the learned Trial Court holding that prima facie case is made out against the accused/ petitioner herein of the alleged commission of the offence under Section 3 of the PMLA, 2002 punishable under Section 4 of the said enactment, in as much as, the petitioner allegedly acted prima facie in conspiracy and engaged in money laundering with the proceeds of crime generated having been put to use for riots by way of fraudulently withdrawing money from the accounts of companies owned or controlled by him through bogus and malafide transactions with bogus entry operators on the strength of fake bills and being the beneficiary of the same and with intent to put the said money to fund the Delhi riots and thus, obtained property as the result of the criminal activity relatable to the scheduled offence as the proceeds of crime to make him prima facie culpable under Section 3 of the PMLA, 2002. Petition dismissed.

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• 2022 (11) TMI 1230
  Money Laundering - seeking supply of the documents which according to the petitioners were seized during the raids by the respondent-ED - relied upon documents - unrelied upon documents. Whether the petitioners are entitled for supply of documents which have been allegedly seized by the Directorate of Enforcement or not? HELD THAT:- The respondent-ED has taken up categorical stand both while replying to the applications made by the petitioners before the learned Special Judge, Gurugram and also before this Court that all the documents relied upon by the Directorate of Enforcement in the present case have already been supplied to the accused persons including the petitioners of the present two cases. Replies filed by the respondent-ED before the learned Special Judge, Gurugram have already been reproduced above. Therefore, so far as the supply of the relied upon documents is concerned, there is no dispute with regard to the same that the same have already been supplied to the petitioners - Since the relied upon documents have already been supplied to the petitioners, the question for determination would now be as to whether the petitioners have any right for the supply of unrelied upon documents or not. Regarding supply of unrelied upon documents, the learned Amicus Curiae before the Hon ble Supreme Court in Re: To Issue Certain Guidelines Regarding Inadequacies and Deficiencies in Criminal Trials Versus The State of Andhra Pradesh and others [ 2021 (4) TMI 1270 - SUPREME COURT] had pointed out with regard to the supply of documents and statements at the time of the commencement of trial and the Hon ble Supreme Court was of the opinion that while furnishing the list of statements, documents and material objects, the Magistrate should also ensure that list of other materials, even if they are not relied upon should be furnished to the accused. During the course of arguments Mr. Raju had submitted that even the Hon ble Supreme Court was emphasizing on the list of statements, documents and material objects and not the supply of the documents which were unrelied upon. In pursuance of the aforesaid judgment the Hon ble Punjab and Haryana High Court amended its Rules and Orders. Amendment was effected in Chapter-1, Part D of Volume III pertaining to Procedure in enquires and trials by Magistrate and Rule 6 was substituted on 10.12.2021 - it has been so provided by the aforesaid Rules that those documents which are not relied upon by the Investigating Officer, qua them a list should be supplied to the accused person. However, there is nothing in the aforesaid Rules that the unrelied upon documents should also be supplied to the accused. As per the aforesaid Punjab and Haryana High Court Rules and Orders, the petitioners may ask for a list of those documents which are not relied upon by the Investigating Officer. However, the petitioners have not prayed for seeking a list of the documents which are not relied upon by the prosecution either in the present petitions or before the learned Special Judge but they have prayed for supply of all the documents. The Hon ble Supreme Court in State of Orissa Versus Debendra Nath Padhi [ 2004 (11) TMI 564 - SUPREME COURT] had observed that at the stage of framing of charges, roving and fishing inquiry was not permissible and in case the contention of the accused is accepted it would mean permitting the accused to adduce his defence at the stage of framing of charge and for examination thereof at that stage which is against the criminal Jurisprudence. It observed that at the stage of framing of charges what is to be considered is only the material filed by the prosecution and the documents submitted therein and nothing more and therefore, what is to be seen at the stage of framing of charges is the relied upon documents and not the unrelied upon documents - In the present case the charges are yet to be framed and therefore, considering the aforesaid judgment of the Hon ble Supreme Court as well as the Punjab and Haryana High Court Rules and Orders, the petitioners would not be entitled for the supply of unrelied upon documents. At the most in case the petitioners so require or demand, then they may file appropriate application for supply of a list of the unrelied upon documents before the learned Special Judge in accordance with law. So far as the judgment relied upon by the learned counsels for the petitioners in CBI Versus INX Media Pvt. Ltd. [ 2021 (11) TMI 1048 - DELHI HIGH COURT] is concerned, the facts of the aforesaid judgment would not be applicable to the present case because the Delhi High Court had allowed inspection of the documents in view of CBI Manual which had provided for the same. So far as the another argument raised by the learned counsel for the petitioners that non-supply of all the documents would prejudice the rights of the petitioners and in so far as the right of fair trial to the petitioners is concerned, the said argument seems to be attractive but does not cut any ice. There is no doubt that every accused has a right to fair trial but in the present case the trial has not commenced as yet. The charges have not been framed in the present case and the petitioners are seeking supply of unrelied upon documents at the pre-charge stage and therefore, considering the aforesaid judgment of the Hon ble Supreme Court , the petitioners can at the most be permitted to file an appropriate application for supply of list of unrelied upon documents, if they so require and so desire. Petition dismissed.

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• 2022 (11) TMI 1221
  Money Laundering - proceeds of crime - predicate offence/scheduled offences - criminal conspiracy hatched for committing large scale rioting - admissibility of statements under section 50 of the PMLA - HELD THAT:- If an accused directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting and claiming it as untainted property, is guilty of offence of money laundering and proceeds of crime would include not only property derived or obtained from the scheduled offence but also directly or indirectly derived or obtained as a result of any criminal activity relatable (associated with/has to do with) to the scheduled offence. Recently, Hon ble Supreme Court of India in DIRECTORATE OF ENFORCEMENT VERSUS PADMANABHAN KISHORE [] on the question of proceeds of crime and money-laundering under PMLA inter alia stated that The offences punishable under Sections 7, 12 and 13 are scheduled offences, as is evident from paragraph 8 of Part-A of the Schedule to the PML Act. Any property thus derived as a result of criminal activity relating to offence mentioned in said paragraph 8 of Part-A of the Schedule would certainly be proceeds of crime . In view of the statutory provisions, the transactions of Tahir Hussain in a conspiracy to fraudulently withdraw money from the accounts of certain companies owned or controlled by him through bogus and malafide transactions with bogus entry operators on the strength of fake bills with him being the beneficiary and with intent putting it to use towards riots, then accused Tahir Hussain would be set to be deriving or obtaining property as a result of criminal activity associated with/relatable to scheduled offence as the proceeds of crime and will be guilty of money laundering. In terms of the contents of the complaint and the accompanying documents and statements, it emerges, prima facie, that accused Tahir Hussain, acting in conspiracy, engaged in money laundering, under the provisions of PMLA. The proceeds of crime generated in the conspiracy was put to use for riots. There is sufficient material on record, prima facie, creating grave suspicion against the accused for framing charge against him and to proceed further with the trial of the case - it is stated that a charge be framed against the accused Tahir Hussain for the offence under Section 3 of the Prevention of Money Laundering Act, 2002 punishable under Section 4 of the Prevention of Money Laundering Act, 2002. Application disposed off.

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• Service Tax

• 2022 (11) TMI 1229
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - amount of tax determined as payable by the Designated Committee - HELD THAT:- In the facts of this case that in the de novo proceedings the SCN survives only for adjudication of tax dues of Rs. 1,11,35,419/-. We therefore, find merits in the submissions of the learned counsel for the Petitioner that for determining the amount payable by the Petitioner under the Scheme, the amount of tax dues to be taken into consideration would be for Rs. 1,11,35,419/- i.e., the amount confirmed by the original authority in the first round of litigation since the said assessment was accepted by the Department. The Petitioner cannot be prejudiced on account of the order of remand in the appeal filed by it, which resulted in the order-in-original being set aside for re-determination. The case of the Petitioner is also covered by the judgment in JYOTI PLASTIC WORKS PVT. LTD., JAI PLASTICS, N.D. PATEL VERSUS UNION OF INDIA [ 2020 (11) TMI 156 - BOMBAY HIGH COURT] , which has been accepted by the Department. The stance taken by the Department in relying upon the SCN for determining the tax dues at Rs. 1,34,66,456/- is contrary to its stand before the CESTAT, wherein it accepted the determination of tax dues at Rs. 1,11,35,419/- - The inconsistency of the stance of the Department is further evident from the fact that if the appeal had been pending when the Scheme was announced the Petitioner s tax dues would have been admittedly, determined by the Respondent as per the order-in-original and not SCN. Therefore, the submissions of the Respondent cannot be accepted as the same will lead to an absurdity and make the scheme arbitrary. It would also be relevant to refer to the judgment of this Court in SEVENTH PLANE NETWORKS PRIVATE LIMITED VERSUS UNION OF INDIA ORS. [ 2020 (8) TMI 343 - DELHI HIGH COURT] wherein the Court has held that a liberal interpretation has to be given to the scheme as intent is to unload the baggage relating to legacy disputes under the Central Excise and Service Tax and to allow the businesses to make a fresh beginning. In this view of the matter, since the Petitioner herein seeks to avail the benefits of the Scheme and is willing to pay the tax dues determined as per the demand raised in the order-in-original, he cannot be denied the said option and he cannot be put in a worse-off situation for having succeeded in his appeal - it is directed that the disputed tax dues in respect of the Petitioner would be the amount confirmed by the original authority in the first round of litigation of Rs. 1,11,35,419/-. The determination of tax by the Designated Committee in Form No. SVLDRS-3 is set aside. Petition disposed off.

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• 2022 (11) TMI 1228
  Enhancement of late fee/penalty levied u/s 70 of FA on the appellant herein from Rs. 16,100/- to Rs.83,100/- - delayed filing of ST-3 Returns for the period from April, 2009 to March, 2011 and October, 2011 to March, 2012 - taxability of clubs or associations services - doctrine of mutuality - HELD THAT:- The issue whether the services provided by the Housing Society to its members falls within the taxable net, came up for consideration before this Tribunal in the matter of TAHNEE HEIGHTS CO-OPERATIVE HOUSING SOCIETY LIMITED VERSUS COMMISSIONER OF CGST, MUMBAI SOUTH [ 2018 (10) TMI 901 - CESTAT MUMBAI ] and while discussing the principle of mutuality it has been held by the Tribunal that the activities undertaken by the appellant therein should not fall within the scope and ambit of taxable service, for payment of service tax. In the case in hand the penalty u/s. 70 ibid is imposed on the appellant for not filing the ST- 3 return on time. Section 70 ibid provides that every person liable to pay service tax shall himself assess the tax due on the services provided by him and shall furnish to the superintendent of central excise a return in such form and in such manner and at such frequency and with such late fee not exceeding twenty thousand rupees, for delayed furnishing of return, as may be prescribed. Therefore only the persons who are liable to pay service tax, have to file the return on time else they are liable to pay penalty. But as discussed in the preceding paragraphs applying the principle of mutuality, the appellants are not liable to pay service tax at all and once it has been held that they are not liable to pay service tax then section 70 ibid itself has no application. Although the appellants did not file any appeal before the 1st appellate authority against the imposition of penalty of Rs.16,100/- but now since they are in appeal before the Tribunal against the enhancement of the penalty to Rs.83,100/- [which also includes the penalty imposed by the adjudicating authority] and have challenged the entire amount of penalty therefore I am deciding this appeal for the entire amount of penalty imposed on them. Appeal allowed - decided in favor of appellant.

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• 2022 (11) TMI 1227
  Rejection of refund claim - rejection on the ground of being filed pre-maturely - Section 11B of the Central Excise Act, 1944 as made applicable to service tax matters under Section 83 of Chapter V of the Finance Act, 1994 - HELD THAT:- The learned Commissioner (Appeals) has rejected the appeal mainly on the ground that the refund application was prematurely filed by the appellant. It is the fact on record that refund claim in this case was filed by the appellant on February 12, 2016 and the issue of taxability on the disputed service was finally resolved in the year 2020. Thus, there are no infirmity in the impugned order insofar as the Commissioner (Appeals) has held the refund application as premature. There are no merit in the appeal filed by the appellant - appeal dismissed.

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• 2022 (11) TMI 1226
  Refund of amount paid erroneously - time limitation - service recipient of service by way of construction, erection, commissioning or installation of original works pertaining to Port - rejection on the ground that the same was time barred under Section 11B of the Central Excise Act in as much as the claim had been filed beyond one year from the date of invoices - HELD THAT:- The relevant provision contained in Rule 11B of Central Excise Act. A bare reading of sub-clause (e) would clearly reveal that in case of a person, other than the manufacturer, the date of purchase of goods would be the relevant date to determine the period of limitation. However, in the instant case Appellant had not purchased any goods but availed services and it had borne the incidence of tax. Hence for the purpose of determination of limitation the relevant date for the Appellant would fall within the definition of sub-clause (f) of Section 11(5)(B) of the Central Excise Act, for which the date of payment is material. Appellant is entitled to get refund against all those tax paid erroneously, whose challans were showing the date of payment within one year from the date of filing of refund application on dated 27.06.2017. However, having regard to the fact that some errors concerning payment detail is noticeable from the Order-in-Original, refund amount is required to be recalculated. Appeal allowed in part.

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• 2022 (11) TMI 1222
  Denial of refund claim - input/input service used for export of service - renting of immovable property service (car parking) - work contract service - telephone service - club and association service - jurisdiction of tribunal to decided on case of rebate claim - HELD THAT:- It is seen that the order in ROSA IMPEX PVT. LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE (APPEALS) THANE [ 2022 (4) TMI 1476 - CESTAT MUMBAI] arises from claim for rebate of tax paid on inputs/input services utilized for exports of service that are not liable to tax and, thereby, excluded from the ambit of CENVAT Credit Rules, 2004 itself. Tax paid on procurement of renting of immovable property service and works contract service - HELD THAT:- The decision of the first appellate authority for the earlier period, not having been challenged further by Revenue, should have been applied to the impugned period also. Refund of tax on procurement of telecom service to be utilized by employees of the appellant - HELD THAT:- It is seen that the first appellate authority has objected to the claim for refund of tax on procurement of telecom service to be utilized by employees of the appellant even though there is no evidence on record to show the same having been used for personal consumption of the individuals concerned and presumption on that score without evidence does not justify denial of CENVAT credit or for denial of refund claim - The decision of the Tribunal in MANIPAL ADVERTISING SERVICES PVT. LTD. VERSUS CCE., MANGALORE [ 2009 (10) TMI 434 - CESTAT, BANGALORE] makes it amply clear that as long as the address on the invoice is that of the assessee and service tax has been fully discharged there is no ground for rejection of the claim. It is settled law that membership of the trading association is an essential requirement for manufacturers and service providers. Appeal allowed.

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• Central Excise

• 2022 (11) TMI 1225
  Valuation of goods - Recovery of short paid duty - packaged drinking water - goods sold to institutional buyers - requirement to pay duty as per Section 4A or in terms of Section 4? - Circular No. 625/16/2002-CX dated 28.02.2002 - HELD THAT:- It is quite evident that the goods in question were not meant for retail sale but were for the consumption of MCD for their various schemes. MCD was an institutional buyer and thereafter no retail sale was ever envisaged. Commissioner (Appeals) has recorded that the goods were meant for retail sale through the customer only at snack bars owned by ABCTC. There being so, the goods were not being consumed by ABCTC themselves but further sold in retail and as such in terms of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 the goods were required to be sold on the declared and printed MRP only - where the goods were actually sold in retail, Section 4A of the Central Excise Act will become applicable as has been held by Hon ble Supreme Court in the case of JAYANTI FOOD PROCESSING (P) LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, RAJASTHAN [ 2007 (8) TMI 3 - SUPREME COURT ]. Reliance placed by the Revenue on the case of FEDERATION OF HOTEL AND RESTAURANT ASSOCIATIONS OF INDIA VERSUS UNION OF INDIA AND ORS. [ 2018 (1) TMI 1221 - SUPREME COURT ] also does not help the case as the issue involved in the said case was not with reference to the provisions of Section 4A of the Central Excise Act. In the said decision Hon ble Supreme Court has held that the sale of packaged mineral water by hotel to their clients is inclusive of the cost of bottle plus the services provided. Accordingly they have held that the sale at price higher than the affixed MRP is not in contravention of the provisions of Legal Metrology Act. There is no merit in the impugned order - appeal allowed.

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• CST, VAT & Sales Tax

• 2022 (11) TMI 1224
  Works Contract services - work order for supply of Drip Irrigation materials and installation of the system for the buyers - entitlement to deduction under Section 3-B(2)(b) of TNGST Act - discharge of burden to prove - HELD THAT:- During the material period in dispute, when there was no specific Entry in the Schedule, the goods have to be classified in terms of residuary item namely under Entry 63 of Part D of First Schedule and under Entry 67 of Part D of First Schedule for the period from which existed upto 16.07.96 and from 17.7.96 onwards respectively and the petitioner would have been liable to tax. When Drip Irrigation System is installed, the pipes i.e, HDPE and PVC pipes used do not lose their characteristic. They are merely cut and fixed for pumping water through the irrigation system. They do not lose their characteristic. Therefore, the petitioner was indeed entitled for deduction in terms of sub-section 2(b) of Section 3-B of the Act - the petitioner has discharged the burden of proof that is required. Sprinklers and Drip Irrigation Equipment was specifically introduced in Entry 69-A of Part B of First Schedule with effect from 05.03.1997 for the first time. The finding of fact rendered by the Tribunal, need not be interfered while exercising the extraordinary jurisdiction under Article 226 of the Constitution of India. We however, differ with conclusion arrived by the Tribunal. Pipe remains a pipe when it is integrated for use along with pumps and nozzle in a Drip Irrigation System. Therefore, the petitioner was entitled to the benefit of deduction under Section 3-B (2)(b) of the Tamil Nadu General Sales Tax Act, 1959 on the pipes used in the execution of work contract. Petition allowed.

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• 2022 (11) TMI 1223
  Validity of assessment order - gross non-application of mind - stock variation - reasons to reject the submission/explanation offered and documents submitted by the Petitioner, not given - violation of principles of natural justice - HELD THAT:- This Court finds that the order of the 2nd Respondent is liable to be set aside inasmuch as the entire assessment order was made on gross non-application of minds to the Petitioner s objection and despite the Petitioner making a specific reference to the judgment of the Hon ble Supreme Court in the case of GIRDHARI LAL NANNELAL VERSUS SALES TAX COMMISSIONER, MP [ 1976 (3) TMI 51 - SUPREME COURT ], the 2nd Respondent has passed the assessment order, without even a reference to it. Insofar, as stock variation, the Petitioner s objections, revised returns and documents are rejected by merely stating that it is an after thought and fabricated without furnishing/supplying any reason in support thereof. The impugned order is set aside and the Respondents are directed to re-do the assessment keeping in mind the principles laid down in the case of Girdhari Lal Nannelal and also affording an opportunity to the Petitioner and after taking into account the Petitioner s submission and dealing with the same - Petition disposed off.

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