TMI Tax Updates - e-Newsletter
November 7, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

2. MEDICAL NEGLIGENCE

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Commerce Minister calls for enhancing bilateral trade and deepening cultural relations between India and Kyrgyz Republic

Notifications

GST - States

1. ERTS(T)65/2017/Pt.III/298 - dated 28-9-2022 - Meghalaya SGST

Meghalaya Goods and Services Tax (Second Amendment) Rules, 2022.

2. ERTS(T) 65/2017/Pt. III/299 - dated 28-9-2022 - Meghalaya SGST

Seeks to rescind Notification No.ERTS (T) 79/2017/562, dated 28th March, 2018

3. ERTS(T) 65/2017/Pt. III/297 - dated 28-9-2022 - Meghalaya SGST

Seeks to provisions bring in force various sections of Meghalaya Goods and Services Tax (Amendment) Ordinance, 2022

4. LL(B).28/2017/Pt.I/1 - dated 30-8-2022 - Meghalaya SGST

Meghalaya Goods and Services Tax (Amendment) Ordinance, 2022

Circulars / Instructions / Orders

Income Tax

1. 23/2022 - dated 3-11-2022

Finance Act, 2022 - Explanatory Notes to the Provisions of the Finance Act, 2022

GST - States

2. 38/1/2017-Fin(R&C)(Film-2)/943 - dated 1-11-2022

Reimbursement of State GST collected on exhibition of cinematographic film titled “Take It Easy” in the State of Goa for 30 days from the date of release of the movie.

Highlights / Catch Notes

GST

• Margin Scheme Allows Input Tax Credit on Services and Expenses, Including Rent and Ads, u/r 32(5) CGST Rules.

  Case-Laws - AAR : Input Tax Credit - applicant is under Marginal Scheme - there is no bar on the registered tax payer to claim input tax credit on input services and corresponding expenses like Rent, Advertisement expenses, commission, Professional expenses, other like expenses and capital Goods while being under Margin Scheme (Rule 32(5) of CGST Rules) - AAR
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• Tree Cut Compensation Not Subject to GST; Land Compensation Reimbursement is Chargeable Due to Pure Agent Status.

  Case-Laws - AAR : Levy of GST - Pure services or not - Reimbursement of tree cut compensation amount paid to farmers and land owners during the course of execution of work is not chargeable to GST as the Applicant qualifies to be a Pure Agent and Reimbursement of land compensation amount paid to farmers and land owners during the course of execution of work is chargeable to GST as the Applicant does not qualifies to be a Pure Agent. - AAR
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• GST Reverse Charge: Exempt Goods Supplier Still Liable for GST on Certain Received Supplies Under RCM.

  Case-Laws - AAR : Levy of GST - Applicability of RCM - manufacturer and supplier of exempted goods - Levy of tax or otherwise on a particular supply does not have a bearing on the taxability of other supplies received or provided by a taxpayer. Thus the exemption provided to the outward supplies of the applicant does not have a bearing on the GST liabilities under reverse charge basis on the supplies received by the applicant. - AAR
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• E-commerce operator not liable for tax u/s 9(5) due to limited role in service supply. (5.

  Case-Laws - AAR : Classification of supply - nature of supply - e-commerce operator - The supply happens independent of the applicant and the applicant is involved only in the identification of the supplier of services and doesn't take responsibility for the operational and completion of the ride. Thus it is observed that supply of services are not through the electronic commerce operator, but are independent. Therefore, the applicant does not satisfy the conditions of Section 9(5) for the discharge of tax liability by electronic commerce operator. - AAR
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Income Tax

• Section 271AAA(3) exempts penalties u/s 271(1)(c) for assessment years 2008-2009 and 2009-2010.

  Case-Laws - AT : Penalty u/s.271(1)(c) or penalty u/s.271AAA - The provisions of Section 271AAA(3) of the Act specifically excludes the provisions of Section 271(1)(c) of the Act for the said two specified previous years. The search in assessee’s case having been conducted on 27.09.2008. Two specified previous years are AYs.2008-2009 & 2009- 2010. For these two assessment years, the penalty, if at all leviable, was u/s.271AAA of the Act and not u/s.271(1)(c) of the Act. - AT
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• Supreme Court Clarifies Section 11 Exemption: Applies Only to Specific Assessment Years in 2022 Case, Not Retrospective.

  Case-Laws - SC : Exemption u/s 11 - Clarification to the order [ 2022 (10) TMI 948 - SUPREME COURT] - Applicable retrospectively or not - The reference to application of the law declared by this court’s judgment, therefore, has to be understood in the context, which is that they apply for the assessment years in question, which were before this court and were decided; wherever the appeals were decided against the revenue, they are to be treated as final. - SC
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• CBDT Eases Rules: Non-Technical Offences u/s 279 Now Compoundable with Fee Payment.

  Case-Laws - HC : Compounding of offences u/s 279 - liberalisation of policy of the CBDT- applications for compounding of non-technical offences - imprisonment for less than 2 years was previously non-compoundable - direction issued to compound the offence on payment of suitable compounding fee - HC
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• Provision for Store Obsolescence Denied as Expenditure Due to Lack of Scientific Quantification Method.

  Case-Laws - AT : Loss on obsolescence of stores - the assessee has made a provision towards obsolescence of stores - in the preceding paragraphs, provision cannot be allowed as an expenditure especially when the assessee was unable to show us as to whether such provision was quantified in a scientific basis or not - AT
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• Court Rules Notional Interest on Deposit Not Taxable as Income; No Accrual or Receipt by Taxpayer Found.

  Case-Laws - AT : Accrual of income - Addition of notional interest @ 10 % on deposit made - interest having neither been accrued to the assessee (as per specific terms of the Agreement placed on record before us) and neither any interest having being received by the assessee, such interest cannot be subject to tax in the hands of the assessee on purely “notional basis” - AT
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• Revocable Trusts: Tax Settlements Disregarded; Income Taxed Directly to Contributors or Beneficiaries.

  Case-Laws - AT : Assessment of trust/AOP - revocable trust - where a contribution is made in a manner that the contributors are entitled to recover their contributions over a specified period, and are entitled to the income from their contributions, the settlement of the trust should be disregarded for the purpose of tax, and the income thereof taxed as through it had directly arisen to the contributors. In the case of a revocable trust, income shall be chargeable to tax only in the hands of beneficiaries/contributors. - AT
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• Court Rules No Additional Tax Liability Due to Explained Cash Deposits u/s 69A of Income Tax Act.

  Case-Laws - AT : Unexplained money u/s. 69A - As pleaded that the amount lying with the parents of smaller amounts has also been deposited in the bank account of the assessee. Even discarding this pleading, since the withdrawals and the amounts declared u/s.10(23)(c) in the returned income adequately proves the sources of cash deposits, no addition in this case is warranted - AT
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• Unexplained Cash Credits u/s 68: Assessee's Failure to Explain Source Leads to Income Tax Act Violation.

  Case-Laws - AT : Addition u/s 68 - unexplained cash credits of share capital and security premium - assessee has no plausible explanation to explain the source of alleged sum of share capital and security premium. - it can be safely concluded that the assessee had unaccounted income, which has been routed in the books through bogus/accommodation entry in the form of share capital and security premium - AT
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• Deduction u/s 80IA: Initial Allowance Cannot Be Revoked in Later Years Without Initial Disallowance.

  Case-Laws - AT : Deduction u/s. 80IA - the assets developed/created are not pertaining to the assessee - In the instant case before us, as there is no change in the facts and the applicable law, if the deduction has been allowed in the initial assessment years, the same cannot be withdrawn in the subsequent years without making disallowance in the initial assessment years. - AT
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• Amendment to Income Tax Act: Section 10A Clarifies Deductions at Gross Total Income Stage, Affecting Carried Forward Losses.

  Case-Laws - AT : Exemption u/s 10B - setting off of carried forward loss - Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI. - AT
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• Revenue Missteps: Burden Misplaced on Assessee for Foreign Shareholder Details in Section 68 Case.

  Case-Laws - AT : Addition u/s 68 - unexplained cash credit - Share premium received from foreign investor - Revenue ought not to have simply pushed the entire burden on to the assessee to provide the details and documents of foreign share holders, particularly when the CBDT empowered them to make independent enquiries from them. - AT
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• Tax Return Invalid if Filed Late u/s 153A; No Penalty u/s 271F for Timely Non-Filing.

  Case-Laws - AT : Penalty u/s. 271F - The filing of return beyond the due date is admittedly invalid return as there is no provision for filing the return belatedly once notice u/s.153A has been issued. This being so, we are of the view that the assessee had a valid ground for non-filing of return. - No penalty - AT
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Customs

• Court Orders Duty Drawback Claims Accepted Without Duty-Paid Documents for Domestic Tariff Area Supplies Under All Industry Rate.

  Case-Laws - HC : Refund of duty drawback on the customs component - All Industry Rate - the respondents are directed to accept and allow the claims of the petitioner, whereby duty drawback of the customs component on supplies made by the Domestic Tariff Area (DTA) unit to the petitioner in the category of ‘recipient of goods’ is made under Column ‘B’ of All Industry Rate, without insisting on actual duty-paid documents. - HC
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• DGFT Clarification Overrules Customs Allegations on DEPB Goods Classification; Adjudicating Authority Must Comply with DGFT's Decision.

  Case-Laws - AT : Benefit of DEPB - The clarification given by the DGFT will prevail over the allegation made by the Customs Department - In view of the change of circumstances by way of clarification issued by the DGFT and withdrawal of the show cause notice, there was no scope for adjudicating authority to deviate from the decision taken by the DGFT to classify the goods under DEPB Entry at Sr.No.2/66 therefore, the adjudicating authority has no authority to sit over the policy decision taken by the DGFT.- AT
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• Court Upholds COFEPOSA Detention Order Despite Delay in Decision; No Malice in Law Found.

  Case-Laws - HC : Validity of detention order - malice in law - COFEPOSA - Inordinate and unexplained delay in passing of the impugned detention order - the detention order cannot be quashed on the ground urged on behalf of the detenu that there was inordinate and unexplained delay on the part of the Central Government, i.e., respondent no. 3 in deciding the representation dated 10.03.2022. - HC
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• Detention order under COFEPOSA invalidated due to failure to provide legible documents, violating legal requirements, rules High Court.

  Case-Laws - HC : Validity of detention order - COFEPOSA - supply of illegible RUDs - the failure and non-supply of legible copies of all RUDs despite of a request and representation made by the detenu for the supply of the same, renders the order of detention illegal and bad in law; and vitiates the subjective satisfaction arrived at by the detaining authority. - HC
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• Call for Guidelines: Revenue Dept Needs Clarity on Handling Cases Amid Ongoing IBC Proceedings at NCLT/NCLAT.

  Case-Laws - AT : Recovery of demand - It is noted that IBC proceedings are being initiated against many companies who are either appellant or respondent in the appeals pending before this tribunal. The revenue-department has no proper guideline as to what stand is to be taken in a case where the IBC proceedings is in progress before NCLT/NCLAT or at higher forum - the Central Board of Indirect Taxes & Customs may consider issuing guideline/procedure for dealing with the case before this tribunal wherein, against the assesse’s company IBC proceeding has been initiated. - AT
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Indian Laws

• Independent Directors Not Liable for Cheque Dishonor Without Specific Allegations Detailing Their Role in Company Affairs.

  Case-Laws - HC : Dishonor of Cheque - vicarious liability of an independent director - In absence of any specific averments or allegations carving out a specific role attributable to petitioner in relation to conduct of business of accused company, merely making bald statements that all the accused persons/directors were incharge and responsible for the day to day affairs of the company, does not suffice to make the petitioner herein vicariously liable for dishonouring of the cheques not signed by her and there being material on record to show that she was an independent director in the company.- HC
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Case Laws:

• GST

• 2022 (11) TMI 278
  Cancellation of registration of petitioner - petitioner, wishing to rectify the error, had attempted to submit an application for amendment of the registration certificate - Accountant erroneously had selected cancellation from the drop down menu instead of modification - HELD THAT:- The only reason cited at paragraph 4 of the counter objecting to the prayer sought, is that the cancellation was effected only at the request of the petitioner. Hence it is for the petitioner to seek revocation of the same, in terms of the revisional remedies available. The counter does not dispute the explanation put forth by the petitioner or state that the error was not caused on account of an inadvertent mistake. The explanation tendered by the petitioner is accepted and it is held that the request for cancellation was only a simple and inadvertent error - the impugned order is set aside and the petitioner is permitted to make an application seeking restoration of registration, setting out the correct details of the principal and additional places of business. Petition allowed.

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• 2022 (11) TMI 277
  Cancellation of registration of petitioner - failure to furnish returns for a continuous period of six months - appeal preferred under Section 107 of the CGST Act - HELD THAT:- The issue raised in this writ petition is squarely covered by a recent decision of this Court in M/S. CHENNA KRISHNAMA CHARYULU KARAMPUDI VERSUS THE ADDITIONAL COMMISSIONER APPEALS1 AND ANOTHER [ 2022 (7) TMI 82 - TELANGANA HIGH COURT] where it was held that Though the lower appellate authority may be right in holding that while it may allow filing of an appeal beyond the limitation of three months for a further period of one month, therefore, by extension of limitation beyond the extended period of one month delay beyond the extended period of one month cannot be condoned, we are of the view that such a stand taken by respondent No.1 may adversely affect the petitioner. It is further found that the issue pertains to cancellation of GST registration of the petitioner. In the facts and circumstances of the case, it would be just and proper if the entire matter is remanded back to respondent No.2 to reconsider the case of the petitioner and thereafter to pass appropriate order in accordance with law. The matter remanded back to the file of respondent No.2 to consider the grievance expressed by the petitioner against cancellation of GST registration and thereafter pass an appropriate order in accordance with law - petition allowed by way of remand.

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• 2022 (11) TMI 260
  Input Tax Credit - applicant is under Marginal Scheme - credit on expenses like Rent, Advertisement expenses, commission, Professional expenses and other like expenses - credit on Capital Goods for the Applicant under Marginal Scheme - HELD THAT:- Rule 32(5) says that, a taxable supply provided by a person dealing in buying and selling of second hand goods i.e., used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price. If the value of such supply is negative, then it shall be ignored - rule 32(5) clearly bars availment of input tax credit on the purchase of those second hand goods which he is supplying, however there is no restriction on the availment of input tax credit in respect of input services or capital goods. After going through section 16 of CGST Act 2017 i.e Eligibility and conditions for taking input tax credit we can see that there is no bar on the registered tax payer to claim input tax credit on input services and corresponding expenses like Rent, Advertisement expenses, commission, Professional expenses, other like expenses and capital Goods while being under Margin Scheme (Rule 32(5) of CGST Rules) - the Applicant can claim input tax credit on the expenses in respect of input services and capital goods subjected to section 16 to 21 and rules 36-45 of CGST Act and Rules 2017.

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• 2022 (11) TMI 259
  Levy of GST - Pure services or not - reimbursement of tree cut compensation and land compensation amount paid to farmers and land owners during the course of execution of work - HELD THAT:- Since all the 4 conditions to be a pure agent are satisfied, the Applicant is acting as a pure agent only to the extent of reimbursement of tree cut compensation. But the Applicant is not acting as pure agent to the extent of reimbursement of land compensation as para 1.4 of Special conditions of contract does not mention land compensation i.e there is no contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of services to the extent of land compensation. However, in case if Special conditions of contract is not a part of the main agreement, then Advance Ruling issued in this case does not apply. Reimbursement of tree cut compensation amount paid to farmers and land owners during the course of execution of work is not chargeable to GST as the Applicant qualifies to be a Pure Agent and Reimbursement of land compensation amount paid to farmers and land owners during the course of execution of work is chargeable to GST as the Applicant does not qualifies to be a Pure Agent.

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• 2022 (11) TMI 258
  Maintainability of advance ruling application - application filed by the recipient of service - Classification of supply - build, design, operate and transfer bulk supply, distribution systems of the existing water supply systems in Belagavi City, Karnataka - reimbursement of manpower service provided as a part of Operation and Maintenance in relation to works contract service to build, design, operate and transfer bulk supply, distribution systems of the existing water supply systems in Belagavi City, Karnataka - pure services provided to KUIDFC in relation to works contract service to build, design, operate and transfer bulk supply, distribution systems of the existing water supply systems in Belagavi City, Karnataka - applicability of Sl.No.3 of Notification No.11/ 2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No.22/2021 dated 31.12.2021. Whether the applicant, is the proper person to file the instant application or not, being the recipient of the impugned services to which the questions are related? HELD THAT:- Section 95(a) of the CGST Act 2017, while defining the term advance ruling , stipulates that an applicant can seek advance ruling on the questions specified under Section 97(2) of the CGST Act 2017, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant - In the instant case the questions, on which the applicant seeks advance ruling, are not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant, but in relation to the service/s being received by them. Therefore the instant application is beyond the jurisdiction of this authority and hence is liable for rejection. The application filed by the Applicant for advance ruling is rejected, in terms of Section 98(2) of the CGST Act 2017.

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• 2022 (11) TMI 257
  Levy of GST - services procured from the respective service providers being the manufacturer and supplier of exempted goods falling under HSN 23099020 - Reverse Charge Mechanism - HELD THAT:- The applicant, admittedly is a registered person under GST Act and located in the taxable territory. They are the recipients of the services of the Goods Transport Agency and Security services, which are squarely covered under the category of supplies attracting GST liabilities on reverse charge basis, in terms of the Notification. Further Section 9(3) of the CGST Act 2017 stipulates that all the provisions of the CGST Act 2017 shall apply to the recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both, where the tax shall be paid on reverse charge basis by the recipient. Thus the recipient of service is liable to pay GST in respect of the services notified under Section 9(3) of the Act, ibid read with Notification 13/2017-Central Tax(Rate). It is pertinent to mention that GST is levied on the supply of service and liability is fastened independently for each of the supplies. Levy of tax or otherwise on a particular supply does not have a bearing on the taxability of other supplies received or provided by a taxpayer. Thus the exemption provided to the outward supplies of the applicant does not have a bearing on the GST liabilities under reverse charge basis on the supplies received by the applicant.

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• 2022 (11) TMI 256
  Classification of supply - nature of supply - e-commerce operator - Section 9(5) of CGST Act 2017 r/w notification No. 17/2017 dated 28.06.2017 - supply or not - supply by the service provider (person who has subscribed to Applicant s app) to his customers (who also have subscribed to Applicant s app) on the Applicant s computer application - supply of goods or services supplied by the service provider (person who has subscribed to Applicant s app) to his customers (who also have subscribed to Applicant s app) on the Applicant s computer application. Whether the applicant qualifies to be an e-commerce operator or not and whether they are liable to discharge tax liability in terms of Section 9(5) of the CGST Act 2017? HELD THAT:- Electronic Commerce Operator (ECO) means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce i.e. for the supply of goods or services or both, including digital products over digital or electronic network. In the instant case the applicant owns digital platform (APP MYn), for the supply of goods or services or both. Thus the applicant squarely fits into the definition and qualifies to be an Electronic Commerce Operator. The word through in the phrase services supplied through electronic commerce operator , in Section 9(5) ibid, gives the meaning that the services are to be supplied by means of / by the agency of / from beginning to the end / during entire period by e-commerce operator. In the instant case, it is observed that the applicant, because of their unique business model, merely connects the driver and passenger and their role ends on such connection; they do not collect the consideration; they have no control over actual provision of service by service provider; they do not have the details of the ride; they do not have control room/call centre etc. The supply happens independent of the applicant and the applicant is involved only in the identification of the supplier of services and doesn t take responsibility for the operational and completion of the ride. Thus it is observed that supply of services are not through the electronic commerce operator, but are independent. Therefore, the applicant does not satisfy the conditions of Section 9(5) for the discharge of tax liability by electronic commerce operator. Thus the applicant, though qualifies the definition of being an e-commerce operator, is not the person liable for discharge of tax liability under Section 9(5) of the CGST Act, 2017.

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• Income Tax

• 2022 (11) TMI 276
  Reopening of assessment u/s 147 - Estimation of income for bogus purchases - AO disallowed 12.5% of those purchases as embedded profit - HELD THAT:- The assessee is a partnership firm engaged in the business of trading of ferrous as well as nonferrous metals. Original return filed was not picked up for scrutiny. Subsequently when the information was received about assessee engaging in purchase from 14 parties who are listed as bogus parties, the case of the assessee was reopened. We find that there is a tangible material available with the assessing officer for reopening of the material and it is rightly upheld by the learned CIT A. He relied on the decision of the Honourable Bombay High Court in case of principal Commissioner of income tax versus Batliboi environmental engineering Ltd [ 2022 (6) TMI 903 - BOMBAY HIGH COURT ] wherein 12.5% of the bogus purchases were held to be reasonable. On the merits of the addition, we find that issue squarely covered by the decision of the Honourable Bombay High Court in Principal Commissioner of Income-tax V Batliboi Environmental Engineering Ltd [ 2022 (6) TMI 903 - BOMBAY HIGH COURT ] Wherein 12.5% of the amount of the bogus purchases were appellant is an addition in such cases - Appeal filed by the assessee is dismissed.

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• 2022 (11) TMI 275
  Penalty u/s.271(1)(c) or penalty u/s.271AAA - income of the assessee had been estimated by adopting the turnover of the assessee as recorded by the Principal because the assessee was doing raising of minerals ore as a contractor for Principal only - AO had treated 50% of the turnover in respect of the assessee and granted the assessee expenses of about 30% and had determined the net profit - HELD THAT:- Penalty as levied by the AO is 100% of the tax sought to be evaded. The penalty leviable u/s.271AAA of the Act is only 10% of the undisclosed income. Thus, clearly the intention of the AO was to levy penalty u/s.271(1)(c) of the Act and it cannot be considered as a mistake on the part of the AO. A perusal of the provisions of Section 271AAA of the Act shows that when a search has been conducted on or after 1st June, 2007 but before 1st day of July, 2012 then for the specified previous year being the previous year which has ended before the date of search but the date of filing of the return u/s.139(1) of the Act has not expired and the assessee has not filed his return as also the year in which the search was conducted are to be considered only u/s.271AAA of the Act. The provisions of Section 271AAA(3) of the Act specifically excludes the provisions of Section 271(1)(c) of the Act for the said two specified previous years. The search in assessee s case having been conducted on 27.09.2008. Two specified previous years are AYs.2008-2009 2009- 2010. For these two assessment years, the penalty, if at all leviable, was u/s.271AAA of the Act and not u/s.271(1)(c) of the Act. Consequently, on this ground, the penalty as levied by the AO and as confirmed by the CIT(A) for the said two assessment years, stands deleted. Penalty u/s 271(1)(c) - defective notice u/s 274 - HELD THAT:- The penalty admittedly is leviable on the facts of each case. A perusal of present case clearly shows that the estimation of income has been done by the assessee when it filed its return insofar as books are not available. Estimation has been done by the AO when making the assessment by following a particular method of estimation. This method of estimation by the AO has been disturbed by the ld. CIT(A) who has applied an alternative method of estimation of the assesee s income. The coordinate bench of the Tribunal went further to revise the estimation as done by the ld. CIT(A). A perusal of the assessment order clearly shows that the estimation as done by the AO in the assessment order is not on the basis of any seized documents but by interpretation and presumption drawn out of the various seized documents. Thus, at no stage, it can be said that there has been a contumacious conduct on the part of the assessee, which can lead to the conclusion of concealment of income. In the circumstances, as the income of the assessee has been estimated at all stages and there is no evidence of concealment of income at any of its stages, right from the filing of return to the appeal before the Tribunal, we are of the view that no penalty is leviable. It is further recognised that when there are catena of decision both in favour the assessee and against the assessee, the view in favour of the assessee is to be adopted as has been held by the Hon ble Supreme Court in the case of Vegetable Products[ 1973 (1) TMI 1 - SUPREME COURT] As no concealment has been proved in the case of the assessee, the penalty as levied by the AO and confirmed by the ld. CIT(A) stands deleted. Our decision to delete the penalty also gets support from the fact that the AO has not struck out inappropriate words in the paragraphs of notice issued u/s.274/271(1)(c) of the Act and on account of the fact that income of the assessee has been assessed only on estimation basis and no evidence of concealment of income has been found in the case of the assessee.

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• 2022 (11) TMI 274
  Estimation of income - percentage of the net profit as determined by the ld CIT(A) at 10% - HELD THAT:- A perusal of the order of the ld CIT(A) clearly shows that the highest percentage assessed by the AO is 6% for the assessment year 2004-05. For the assessment year 2006-07, AO has determined the income at 4.9% in the assessment u/s.143(3) of the Act. This being so, we are of the view that the interest of justice would be served if the estimation of the percentage of net profit is taken at 8% as against 10% directed by CIT(A) and we do so. The findings of CIT(A) in regard to adoption of estimation of income of the assessee stands upheld and the estimation of income by the CIT(A) at 10% stands reduced to 8%. Addition of the protective addition - We are of the view that no interference is called for insofar as the addition made in the hands of the assessee was only protective and same CIT(A) has held the addition to be substantive in the hands of M/s. Serajuddin Co. The addition, if at all, is on substantive basis in the hands of M/s. Serajuddin Co. same can be challenged in the case of M/s. Serajuddin Co. No other arguments in regard to legal ground which has been raised by the assessee, Ld AR submitted that he is not pressing the ground and has endorsed in the file to that effect. Consequently, the legal issue raised by the assessee stands rejected. Levy of penalty u/s 271F - HELD THAT:- As it is noticed that the facts in assessee s case are similar to the facts in the case of Gobardhan Matia [ 2022 (11) TMI 214 - ITAT CUTTACK ] in respect of levy of penalty under section 271F - Respectfully following the decision in the case of Gobardhan Matia [ 2022 (11) TMI 214 - ITAT CUTTACK ] the penalty as levied u/s.271F by the AO and confirmed by the ld CIT(A) stands deleted.

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• 2022 (11) TMI 273
  Validity of order passed by CIT-A - Whether CIT(A) had not given opportunity of hearing to the assessee , which was violation of principal of Natural Justice? - HELD THAT:- On perusal of the order of the Ld.CIT(A) it is observed that the assessee s submission has been reproduced by the Ld.CIT(A). The Ld.CIT(A) had considered the submission of the assessee before deciding the case. Assessee was granted opportunity by the Ld.CIT(A). Thus, there was no violation of natural justice. Hence, the ground number 1 of the assessee is dismissed. Addition u/s 14A r.w.r. 8D - .AR submitted that there was no exempt income earned by the assessee during the year hence there cannot be any disallowance u/s 14A - HELD THAT:- As relying on Kohinoor Project (P.) Ltd. [ 2020 (1) TMI 1161 - BOMBAY HIGH COURT] and Kumar Properties and Real Estate (P.) Ltd. [ 2021 (4) TMI 1163 - ITAT PUNE] it is held that since there was no exempt income earned during the year, no disallowance u/s 14A is called for. Accordingly Ground No.2 of the Assessee is allowed. Deemed dividend u/s 2(22)(e) - assessee has received Loan - AR submitted that the Assessee is not shareholder in Trenton Investment Company Pvt Ltd but Trenton Investment Company Pvt. Ltd is holding 99% share in the assessee company - HELD THAT:- In the case before us, the Trenton Investment Company Pvt. Ltd is 99% shareholder in the Assessee Company. The Trenton Investment Company Pvt. Ltd has given loan of Rs.1,00,00,000/- to the assessee company. Thus, the loan has been given by share holder. Therefore, provisions of Section 2(22)(e) will not be applicable to the impugned loan by Trenton Investment Company Pvt. ltd.- AO is directed to delete the said addition. Loan from Kimplas Piping System Ltd - The facts of the present case explains that Provisions of Section 2(22)(e) are attracted for the loan of Rs.Rs.11,12,387/- from Kimplas Piping System Ltd to the assessee. Therefore, respectfully following the ITAT Mumbai bench decision , we hold that the AO has rightly treated loan received from Kimplas Piping System Ltd as deemed dividend. Accordingly, impugned addition is upheld. Therefore, the Ground No.3 is partly allowed as discussed in earlier paras. Correct head of Income - Rental Income - Income from House Property or Income from other Sources - assessee had given the premises on rent along with furniture, fixtures, car parking - AO treated the said income as Income from other sources on the ground that the rent was not just for the premises but for furniture fixtures hence it was composite rent - HELD THAT:- In this case for earlier AY 2013-14 and AY 2014-15, the assessee had shown the rent as Income from House Property and department had accepted it in the order u/s 143(3). Thus, for the same premises, for earlier year department accepted it as Income from House Property. No valid reason given by the AO for changing the head of Income from Income from House Property to Income from other Sources. We are aware that the principle of Res Judicate does not apply to the income tax proceedings but principle of consistency needs to be followed when facts are same. Once Income tax department had accepted the income as Income from House property for two years, on the same facts for the same source of income, there is no reason to deviate from earlier stand. In these facts and circumstances of the case, we are of the opinion that the assessee has rightly offered the rent as Income from House property. Hence, the AO is directed to treat it as Income from house Property. As far as the difference in amount of rent offered for taxation and the amount of rent as per 26AS, the AO is directed to verify the documents and reconcile. Calculating Book Profit u/s.115JB - Addition of undisclosed rent - HELD THAT:- As relying on Forever Diamonds Pvt. Ltd [ 2015 (8) TMI 772 - BOMBAY HIGH COURT] it is held that the addition made by AO to Book Profit u/s.115JB is not maintainable. Hence, AO is directed to delete it. Thus, Ground No.5 of the assessee is allowed.

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• 2022 (11) TMI 272
  Exemption u/s 11(1)(d) - addition being specific donation received by the appellant trust as corpus donation as income of the assessee - whether contributions are Voluntary - Assessee was required to explain the nature of the corpus donations and to explain the source of such donation - HELD THAT:- As referring to Copy of Resolution passed by the assessee titled to discuss regarding donation received on per kg fat clearly show that the contributions are not Voluntary in nature. The assessee has suo moto passed a resolution to collect donation form the made by Milk Producers, which goes contrary to the assertion made by the assessee that contributions are Voluntary in its character. Apparently, the Milk producers do not any choice or say in the matter whatsoever. Merely producing a receipt which states that the amount has been paid towards the corpus fund of the appellant cannot lead us to accept that the contribution qualifies as a Corpus donation when notably these receipts do not even state the specific purpose that they are being given for. Moreover, as noted above, the donations are clearly not voluntary . The quantum of the cess, as well as the mode of computation thereof, has been decided by the Assessee and the Donor have no discretion or say in the matter. In Russel v. Vestry of St. Giles 3E B 416, Lord Campbell observed voluntary contributions here do not mean annual subscriptions paid for value received or expected to be received by the party paying, but means a gift made from disinterested motives for benefit of others. In Society of Writers v. I.R. 2 TC 257 the Court held that the entrance fees and subscriptions paid by entrants to a society or institution as a condition precedent to their membership and as the price of admission to the privileges and benefits of the society or institution are given under a contract and are not voluntary. The Delhi High Court in the case of Divine Light Mission [ 2004 (4) TMI 25 - DELHI HIGH COURT ] held that membership fee and subscription amounts received by trust/society from its members cannot be characterized as voluntary contribution within meaning of expression fund in Section 12. We find no infirmity in the order of Ld. Assessing Officer and Ld. CIT(A) and we are of the view that the assessee is not eligible for claim of deduction under Section 11(1)(d) of the Act. In the result, the appeal of the assessee is dismissed.

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• 2022 (11) TMI 271
  Delayed employees as contribution to any PF or ESIC Fund - addition in respect of any Sum received from employees as contribution to any PF or ESIC Fund to the extent not credited to the employees account on or before the due date, including the extended date as mentioned in respective legislation) - Scope of amendment - HELD THAT:- On this issue jurisdictional ITAT and various coordinated benches held that the amendment made by the Finance Act 2021 to sec 36(1)(va) and section 43B are prospective in nature, effective from assessment year 2022-23. See M/S. VISHAL ENTERPRISES [ 2022 (2) TMI 1272 - ITAT BANGALORE] and PMGS INDIA PVT. LTD [ 2022 (6) TMI 1052 - ITAT MUMBAI] We are of the considered view that A.O. and first appellant authority are duty bound to follow the decisions of jurisdictional high Court otherwise it makes their decision unsustainable in so far as applicability of amendment by the finance act 2021, the same is effective from assessment year 2022-23 thus in the light of above, we hold that the C.P.C and Ld. CIT (A) has erred in applying amended provisions of sec 36(1)(va) r.w.s 43B to disallow assesses claim of deduction. Appeal filed by the assessee is allowed.

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• 2022 (11) TMI 270
  Addition u/s 68 - Share application money from M/s. Talent Infoways Ltd . - Non discharge of onus with regards to identity of the party, creditworthiness of the party and genuineness of the transaction - HELD THAT:- In the case of Shir Mukesh Choksi [ 2011 (2) TMI 1399 - ITAT MUMBAI ] and the companies run by him it has been established that they were engaged in providing accommodation entries to its beneficiaries, however, the statement recorded of Shri Mukesh Choksi, was not provided to the assessee despite various requests. It is the plea of the assessee that in absence of the aforesaid statement no cross examination could be done of Shri Mukesh Choksi. Since the additional evidence now filed before us was not examined by the AO and statement on the basis of which the reassessment proceedings were initiated was also not furnished to the assessee despite its requests, we deem it appropriate to remand this issue to the file of the AO for de novo adjudication. We direct the AO to provide the copy of statement of Shri Mukesh Choksi or any other person, which has been relied upon by the AO and also to examine the audited financials of M/s Talent Infoways Ltd. to determine the creditworthiness of the said entity. Since this issue is remanded for adjudication afresh, the assessee shall be at liberty to adduce any other evidence to support its case. AO shall also have the liberty to call for or examine any other documents/detail as may be necessary for complete adjudication of this issue. We order accordingly. As a result, ground No. 1 raised in assessee s appeal is allowed for statistical purpose. Addition towards interest on long-term loan with Shamrao Bank - HELD THAT:- As per the assessee, the amount towards interest on term loan with Shamrao Bank, which is pertaining to financial year 2003 04, was debited to its profit and loss account under the head prior period adjustments. Since, it forms of adjustments below the line of profit/loss before tax, therefore, the assessee has not claimed the said expenses while calculating the taxable income as the assessee has started the computation of business income/loss by considering profit/loss before tax and before the said prior period adjustment. In this regard, reference was made to the income tax return, computation of total income and profit and loss account of the assessee by the learned AR. After perusal of the aforesaid details, we agree with the submissions of the assessee and accordingly, direct the AO to delete the disallowance towards interest on long-term loan with Shamrao Bank. As a result, ground No. 2, raised in assessee s appeal is allowed.

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• 2022 (11) TMI 269
  Bogus LTCG - claim of exemption u/s. 10(38) of the Act in respect of long-term capital gains (LTCG) arising from sale of shares denied - HELD THAT:- As respectfully following the decision of this Tribunal dated 17.10.2022 [ 2022 (10) TMI 728 - ITAT KOLKATA ] as well as in the light of ratio laid down in the case of Swati Bajaj Others [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT ] find no infirmity in the orders of the ld. CIT(Appeals) holding the alleged LTCG for sale of equity shares as bogus and not eligible to exemptions under section 10(38) of the Act and also confirming the addition of commission expenditure incurred for arranging bogus LTCG and dismiss the appeals of the assesses.

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• 2022 (11) TMI 255
  Exemption u/s 11 - Clarification to the order [ 2022 (10) TMI 948 - SUPREME COURT ] - Applicable retrospectively or not - scope and amplitude of the definition charitable purpose - revenue seeks a clarification of the judgment delivered by this court [ 2022 (10) TMI 948 - SUPREME COURT] that para 254 of the judgment should be such as to enable the Revenue to redo the assessments in accordance with the above judgments for the past and examine the eligibility on a yearly basis for the future and thus render justice HELD THAT:- A plain reading of the conclusions recorded in Para 253 (A)(B)(C) (D) and (E) would disclose that this court consciously recorded its findings, with the intent of finally deciding the issues, for various organizations- in relation to the assessment years in question, - whereas in Para 253 (F), the court remitted the matter for examination and orders by the assessing officer. Similarly, the conclusion in Para 253 G, was conclusive with respect to the claim of private trusts; the appeals were dismissed. These conclusions are accurately reflected in the final, operative directions in Para 254. In Para 254 (i) to (iv), the conclusions recorded are against the revenue. In Para 254 (v), (vi), (vii) and (vii), the conclusions, are in favour of the revenue. The reference to application of the law declared by this court s judgment, therefore, has to be understood in the context, which is that they apply for the assessment years in question, which were before this court and were decided; wherever the appeals were decided against the revenue, they are to be treated as final. The reference to future application has to be understood in this context, which is that for the assessment years which this court was not called upon to decide, the concerned authorities will apply the law declared in the judgment, having regard to the facts of each such assessment year. In view of this discussion, no further clarification is necessary or called for.

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• 2022 (11) TMI 254
  Revision u/s 263 by CIT - whether the PCIT had passed a speaking order on the various queries raised and the reply submitted by the assessee? - HELD THAT:- When the PCIT has formal five queries and the assessee has submitted reply to those queries along with annexures it is expected that the authority should deal with the submission made by the assessee and passed a speaking order. However, the only reason which appears to have been well played in the mind of the PCIT the details were not furnished before assessing officer. Senior Advocate appearing for the appellant points out that such finding is factually incorrect and has drawn our attention to the letter of the assessee dated 20th December, 2016, from which we find not only the assessee has submitted on the merits of the matter but pointed out the legal position and the letter contains as many as seventeen annexures. Therefore, we can safely conclude that the order passed by the PCIT is a non speaking order. The assesee being aggrieved carried the matter up to the appeal before the Tribunal. On perusal of the order passed by the Tribunal we have no hesitation to hold that the order passed by the Tribunal is also a non speaking order of course the learned Tribunal could not be faulty because it was testing the correctness of the order which was without reasons. This conclusion would be sufficient for us to interfere with the order passed by the Tribunal. After the order was passed by the PCIT it giving effect to an order passed by the assessing officer dated 28th November, 2019 in which the assessing officer has accepted the stand taken by the assessee except for queries (A) and (E). So far as queries, (B), (C) (D) the assessing officer has accepted the stand taken by the assessee. Therefore, in our considered view the matter has to be remanded back to the PCIT for a fresh consideration and to pass a speaking order only with regard to queries (A) and (E). For the above reasons the appeal is allowed. The order passed by the Tribunal is set aside and the order passed by the PCIT dated 7 th February, 2019 is also set aside and the matter stands remanded to the PCIT for fresh consideration of queries (A) and (E) alone. The appellant assessee is permitted to file additional submissions before the PCIT after considering the same and affording the personal hearing to the assessee. Fresh order be passed on merits and in accordance with law assigning reasons.

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• 2022 (11) TMI 253
  Reopening of assessment u/s 147 - notice is challenged is that it has been initiated after the expiry of four years from the end of the relevant AY on a mere change of opinion without any tangible new material - vehicle expenses and hire charges without deducting TDS on the hiring charges paid to the service provider - contention of the Assessee that the matter regarding non-deduction of TDS while paying to the service provider was already the subject matter of the original assessment proceedings before the AO during the scrutiny assessment - HELD THAT:- As the original assessment was on the basis of a complete and careful examination of the books of accounts produced by the Assessee. There was application of mind by the ITO to the materials produced by the Assessee. As regards the reasons for reopening the assessment, it is stated to be based simply on information available on record. There is no indication that there was any failure by the Assessee to make a full and true disclosure of all the material particulars. The notice records mechanically that the ITO had reasons to believe that income chargeable to tax has escaped assessment. In other words, there is no reference to any new and tangible material forming the basis for the above belief about escapement of income from tax. In short, the same material already available on record was re-examined by the ITO to come to the conclusion that there was an escapement of income. Notwithstanding the explanation to Section 147 of the Act that production of books of accounts by itself will not amount to a full disclosure, the reasons communicated should still have to indicate that there was a failure to make a full disclosure although the accounts were produced before the AO. In the instant case, there is no such statement anywhere on the record, which could have formed the basis for the belief of the ITO that income had escaped assessment. In the present case, it appears that the reopening of the assessment was based on the same material already available before the AO and without any noting, at the time of reopening of the assessment that there was a failure on the part of the assessee to make a full and true disclosure of all material particulars. On the same material already available, the ITO formed reason to believe that income had escaped assessment. This appears to be a textbook example of a reopening of assessment based on a mere change of opinion. - Decided in favour of assessee.

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• 2022 (11) TMI 252
  Reopening of assessment u/s 147 - Time Limit for notice - HELD THAT:- As regards the first notice dated 31st March, 2021, it is seen from the text of the notice itself that it has been issued more than six years after the closure of the relevant AY on 1st April, 2020 and therefore exceeds the time limits set u/s 149 of the Act. That period has not got extended by the 2020 Act. This was explained by the Supreme Court of India while interpreting the amended provisions in Union of India v. Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] The Supreme Court made a distinction between notices issued on or after 1st April, 2021 and those issued prior thereto. It permitted the proceedings pursuant to notices issued on or after 1st April, 2021 to continue in terms of the amended provisions even while clarifying that the notices issued prior thereto, would have to abide by the provisions as they exist prior to the amendment. This Court in M/s. Ambika Iron and Steel Pvt. Ltd. case [ 2022 (1) TMI 1291 - ORISSA HIGH COURT] quashed notices issued prior to 1st April, 2021 which was beyond the period of six years after the expiry of the AY in question. Thereafter, in an order in Nutan Bhusan Jena [ 2022 (5) TMI 1467 - ORISSA HIGH COURT] this Court relied on the Supreme Court judgment in Union of India v. Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] and quashed notices u/s 148 of the Act which were issued prior to 1st April, 2021 but beyond the period of six years after the expiry of the relevant AY. Following the above orders, as far as the present case is concerned, inasmuch as the impugned notice dated 31st March, 2021 seeking to reopen the assessment for the AY 2013-14 was issued more than six years after the end of the relevant AY, it is hereby quashed.

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• 2022 (11) TMI 251
  Maintainability of appeal against ITAT order - low tax effect - addition of bogus LTCG - penny stocK purchases - Tribunal had dismissed the appeal filed by the revenue by noting the fact that the appeal is less than the monetary limit of Rs.50 lakhs fixed by the CBDT - HELD THAT:- It is not disputed before us that the issue involved in this appeal was decided by this Court in an earlier matter in the case of Principal Commissioner of Income Tax (1) Kolkata Vs. Rakesh Kumar Khemuka [ 2022 (7) TMI 1336 - CALCUTTA HIGH COURT] and the appeal filed by the revenue was dismissed and held the exception to penny stock cases from the stipulation of monetary limit would be indeed operable from 16.09.2019 that is only in the cases where appeal was filed on or after 16.09.2019 - the department having taken a decision and a circular having been issued on 6.9.2019 followed by official memorandum of 16.9.2019 taking a decision that the stipulation of monetary limit would be operable from 16.9.2019, it is of no significance as to whether the appeal was pending on the said date and whether the tribunal was hearing the matter. This is so because the cut off date fixed under the circular is that it will apply to cases where appeals are filed on or before 16.9.2019. In the instant case, admittedly, the appeal has been filed much prior to the said date. For the above reason, we find that the order passed by the learned tribunal dismissing the appeal does not call for any interference. Accordingly, the appeal filed by the revenue stands dismissed.

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• 2022 (11) TMI 250
  Nature of expenses - expenses on advertisement, business promotion, brokerage and commission and software development charges - Revenue or capital expenditure - classification of the expenses being a revenue neutral exercise - ITAT referred to the Guidance Note provided by the ICAI for accounting in the case of real estate projects and concluded that the expenses under the four (4) heads disallowed by the AO are covered by paragraph no. 2.4 of the Guidance Note and are therefore, administrative expenditure and thus, these expenses cannot be carried forward and should be expensed and classification of the said expenditure as revenue expenditure would not place the Revenue at any disadvantageous position whereas it may put the Assessee to some disadvantage - HELD THAT:- The contention of the Revenue that the disallowed expenses are of an enduring nature and should therefore be capitalized to the cost of the project is not based on any legal principle. The Revenue does not dispute that these expenses are not a direct cost of the specific project but are indirect costs incurred by the Assessee for development of its real estate business. Revenue does not dispute that these expenses are admittedly not incurred as cost towards completion of the on-going real estate project and therefore in our considered view these expenses cannot be added toward the cost of valuation of the specific asset. The expenses such as advertising expenses, business promotion and brokerage and commission have been incurred by the Assessee towards building its reputation and network in the real estate market and so also the software development charges are incurred towards administrative expenses. No error in the findings of the ITAT, which holds that the said expenses incurred by the Assessee are in the nature of general administration cost and selling cost as classified by the Guidance Note issued by ICAI. The said expenses had been incurred by the Assessee for its business and therefore, it qualifies for deduction as revenue expenditure, as per the decision of this court in Gopal Dass [ 2019 (3) TMI 1272 - DELHI HIGH COURT] The admissibility of the deduction is therefore not denied by Revenue but it is only the year of deduction which is sought to be postponed. It is in these facts the ITAT has held the classification of the expense is revenue neutral. It would be pertinent to note the decision of the Supreme Court on the issue of revenue neutrality wherein the Apex Court in the decision of Excel Industries Ltd. [ 2013 (10) TMI 324 - SUPREME COURT] held in the subsequent accounting year, the assessee did derive benefits under the advance license and the duty entitlement pass book and paid tax thereon. Therefore, it is not as if the Revenue has been deprived of any tax. We are told that the rate of tax remained the same in the present assessment year as well as in the subsequent assessment year. Therefore, the dispute raised by the Revenue is entirely academic. No infirmity in the order of the ITAT and that any substantial question of law arises for consideration in the present appeal. Accordingly, the same is dismissed.

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• 2022 (11) TMI 249
  Compounding of offences u/s 279 - liberalisation of policy of the CBDT- applications for compounding of non-technical offences - imprisonment for less than 2 years was previously non-compoundable - case of the Appellant that the order passed by the Respondent is contrary to the guide lines issued by the Central Board of Direct Taxes - It is contended that, impugned order has been passed by the said authority without constituting a proper quorum to adjudicate compounding application and as per the above guidelines of the CBDT stated above, all the applications for compounding of non-technical offences[which includes 276C(1) should be decided by the Committee consisting of (i) CCIT (CCA), (ii) DGIT (Inv.) and CCIT/DGIT having jurisdiction over the case. HELD THAT:- There is a liberalisation over a period of time. Infact, as per the latest press release dated 17.09.2022, the scope of eligibility for compounding of cases has been relaxed whereby case of an applicant who has been convicted with imprisonment for less than 2 years being previously non-compoundable, has now been made compoundable and discretion has been vested with the competent authority to compound offence. The Appellant is now aged about 76 years. Though the Appellant has shown complicity in evading tax and also been subjected to penalty, no useful purpose would be served by prosecuting the Appellant at this distant of time because she took advantage of the legal remedy available under law. See case of K.M.Mammen Vs. Principal Commissioner of Income Tax [ 2019 (9) TMI 59 - MADRAS HIGH COURT]. The press release dated 17.09.2022 of the Government and the revised guide lines for compounding of offence dated 16.09.2022 allows scope for compounding of offences. There is liberalisation. We are therefore inclined to interfere by setting aside the Impugned Order of the learned Single Judge in W.P.No.906 of 2018 dated 24.01.2020 and allow the case of the Appellant for compounding of the offences. Accordingly, this Writ Appeal is allowed by setting aside the order of the learned Single Judge and the matter is remanded back to the Respondents to suitably demand the compounding fee payable by the Appellant in terms of revised guidelines for compounding of offence dated 16.09.2022 read with press release dated 17.09.2022. The above exercise shall be carried out within a period of six weeks from the date of receipt of a copy of this order and on such demand being made, the Appellant shall pay the amount to the Revenue

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• 2022 (11) TMI 248
  Reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT:- We are of the view that present is not a fit case to interdict the proceedings at the very threshold. Reasons have been assigned by the assessing officer as to why the explanation given by the petitioner could not be accepted. Certainly, such reasons given have a nexus with the formation of the belief that income chargeable to tax has escaped assessment. It is equally trite that sufficiency or adequacy of reasons cannot be gone into in a proceeding under Article 226 of the Constitution of India. That apart, we are at a stage prior to issuance of notice under Section 148 of the Act. A detailed analysis is neither warranted nor justified. As rightly pointed out in Anshul Jain Vs. Principal Commissioner of Income Tax [ 2022 (10) TMI 3 - SC ORDER] petitioner would have ample opportunities to agitate his contentions during the reassessment proceedings. We see no ground to entertain the writ petition.

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• 2022 (11) TMI 247
  Deduction u/s 80G - reason for rejecting the application of the Respondent is that the Respondent was collecting capitation fees for allotment of medical seat etc., and was not properly accounting it and that later after a search proceedings was conducted, offered to pay tax - HELD THAT:- Though the present Appeal was admitted to answer the aforesaid substantial questions of law, we are of the view that the fundamental issue which goes to the root of the issue as to whether the Respondent was eligible for deduction u/s 80G will depend on the continuance of registration granted to the respondent Assessee u/s 12(A) (a) which is now subject matter of a show cause proceeding and is pending before the Appellant herein in terms of order [ 2019 (7) TMI 1958 - MADRAS HIGH COURT] We are therefore inclined to dispose of this Appeal without answering the aforesaid substantial questions of law raised as a decision has to be taken on facts and law and by the Appellant whether the respondent assessee is entitled to regularisation under Section 12(A) (a) - We are therefore inclined to quash the impugned order passed by the Tribunal and remit the case to the Appellant for passing a fresh order on the application filed by the Respondent u/s 80 G after further order is passed in the show cause notice dated 21.07.2008 seeking to cancel registration granted to the petitioner under Section 12(A) (a). The order passed by the Tribunal dated 12.12.2008 is set aside and the case is remitted back to the Appellant to pass a fresh orders on the application filed by the Respondent assessee dated 11.03.2008, after affording an opportunity of hearing to the Respondent assessee preferably, within a period of three months from the date of receipt of a copy of this order or under Section 12(A) (a) which ever is later.

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• 2022 (11) TMI 246
  Addition u/s 68 - unexplained cash credit - assessee has received money under the head share capital as well as share premium - CIT(A) partly allowed the appeal of the assessee on this issue by directing the AO to delete the addition in respect of investors from whom the money was received by cheques by giving detailed findings that the assessee has proved the identity, creditworthiness of the investors and also the genuineness of the transactions while confirming the addition where the money was made in cash from 128 investors on the ground that the said transactions were not genuine as they were made in cash - HELD THAT:- AO has harped on the sole basis of investments being in cash which cannot be a sole ground for making the additions particularly when the investors appeared personally before the AO in response to summons issued u/s 131 and admitted and confirmed the investments in the shares of the assessee company. As perused the said remand report dated 14.10.2019 and find that nowhere in the remand report any adverse inference was drawn the AO of any kind whatsoever. AO even stated in the remand report that investors were either engaged in small scale proprietory business of trading in paddy or were engaged in agricultural operations. AO also noted that the cash deposited into the bank accounts was out of was out of normal business operation and all have filed their ITRs , balance Sheets, personal P L A/Cs and bank statements who invested in the assesse company by cheques. As regards those investors who invested in the assessee s shares in cash in small amounts have filed their voter I.D cards , balance sheets and confirmed the transactions by personally appearing before the AO in response to summons issued u/s131 of the Act. As also stated by the AO that there is no bar on buying shares in cash and any person can invest this much amount. Under these facts and circumstances, we are not in concurrence with the conclusion of the Ld. CIT(A) that the assessee has failed to discharge the onus of proving the creditworthiness of all the creditors and genuineness of the transactions. Accordingly we set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition - Accordingly ground raised by the assessee are allowed. Addition in respect of disclosure made in the survey operation in respect of excess stocks found - HELD THAT:- We have examined the records of stocks as placed before us and find that the stocks disclosed during survey of Rs. 50 lacs were duly incorporated in the books of accounts of the assessee as is apparent from paper book. Even AO has accepted the fact that assessee has shown the stocks of Rs. 50 lacs in the books of accounts and allowed the credit thereof. Considering these facts , we set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition of Rs. 50 lacs. Accordingly ground no. 4 is allowed. TDS u/s 194C - Addition u/s 40a(ia) - assessee has paid documentation charges consisting of freight and transportation charges on which tax was not deducted at source as required - HELD THAT:- The crux of the ratio laid down in the said decision is that where the assessee has made any payment and the payee has duly disclosed the said receipt in M/S. HINDUSTAN COCA COLA BEVERAGE PVT. LTD [ 2007 (8) TMI 12 - SUPREME COURT] has paid taxes thereon, no disallowance u/s 40a(ia) of the Act to be made. therefore the Ld. CIT(A) has not interpreted the decision correctly. Since the payment made by the assessee to Satyam Services has duly been shown in the return of income of the said recipient and due tax was also paid which is not in dispute at all. Therefore respectfully following the ratio as laid down in the Apex Court decision as referred to above , we are inclined to set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition. Appeal of the assessee is allowed.

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• 2022 (11) TMI 245
  Foreign exchange fluctuation gain - Treatment to Forex gain/loss arising from business transaction - non-operating in nature OR operating revenue/cost - HELD THAT:- Tribunal has held in assessee s own case order dated 25-02-2021 [ 2021 (2) TMI 1146 - ITAT PUNE ] that foreign exchange gain is a part of operating revenue. The ld. CIT DR could not place on record documents/evidences to suggest any deviation of facts. In view thereof, following the same parity of reasoning in assessee s own case in earlier years, the grounds on forex gain issue are allowed. Insurance claim receipt in respect of export assignment damage claim - HELD THAT:- As observed by the Tribunal that if any item at the time of creation/payment if it is taken as part of operating cost in the year under consideration, then, it would be operating in nature and would constitute operating income. We notice that at page 5 of the D.R.P s order there is a table given in which it is stated that insurance claim receipt in respect of export assignment damage claim , which therefore, signifies it as operating cost. Once it is operating cost then in the year under consideration it would also draw the same colour viz. it would be operating in nature and would constitute operating income. This ground of the assessee is therefore, allowed. Payment of intra group services - HELD THAT:- Tribunal for A.Y. 2013-14 [ 2021 (2) TMI 1146 - ITAT PUNE ] has observed that since T.P.O determined NIL ALP on the preliminary premises that there was no evidence of receipt of services and that the Tribunal has noticed the fact of receipt of services, therefore, this issue was set aside and the matter was remanded back to the file of the A.O./TPO for determining the ALP of the international transaction of intra group services as per law after allowing reasonable opportunity of hearing to the assessee. Therefore, following the same parity of reasoning for this year also and on the same premises that on one hand the revenue states that no evidence was furnished regarding receipt of intra group services and on the other hand the Tribunal has noticed the fact of receipt of services, as per the aforestated order in assessee s own case (supra) and also considering the submissions of the ld. D.R on this issue, therefore, for detailed factual verification this issue is remanded back to the file of the A.O/T.P.O to re-adjudicate as per law complying with the principles of natural justice. This ground of appeal is allowed for statistical purposes. T.P adjustment to be restricted only to value of international transactions in the manufacturing segment under TNMM on the basis of principle of proportionality - HELD THAT:- Similar issue has been dealt with by co-ordinate Bench of Pune Tribunal in the case of DCIT Cir. 1(1) Pune Vs. Franke Faber India Pvt. Ltd [ 2022 (8) TMI 198 - ITAT PUNE ] - We set aside the findings of the ld. D.R.P on this issue and direct that the transfer pricing adjustment should be restricted only to the extent of the international transactions. Accordingly, Ground No. 6 stands allowed. Contribution made to gratuity fund and superannuation fund under the provisions of sec. 40A(7) - HELD THAT:- Issue decided in favour of assesee in assessee s own case for A.Y. 2013-14 [ 2021 (2) TMI 1146 - ITAT PUNE ] - Considering the provisions of section 40A(7) of the Act it is apparent that the deduction can be allowed only if the gratuity and superannuation funds are duly approved by the ld. C.I.T. In the present case before us, the ld. A.R for the assessee submitted that the issue is still pending approval from the ld. C.I.T. It is expected that the ld. C.I.T. will shortly pass orders with regard to assessee s application. Following the same parity of reasons for this year also as in the preceding year, the matter is sent back to the file of the ld. A.O. who will decide the matter in conformity with such order of the ld. C.I.T. Ground No. 7 is allowed for statistical purposes. Addition of interest amount to the income of the assessee corresponding to the tax deducted treating it as not being recorded in the books of accounts of the assessee even though the same were netted off and reduced from the power expenses incurred in the year under consideration - HELD THAT:- This issue is remitted back to the file of the A.O for re-adjudication after considering the detailed evidences as filed by the assessee. Ground No. 8 is allowed for statistical purposes.

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• 2022 (11) TMI 244
  Revision u/s 263 - provision for bad and doubtful debts as debited to the P L accounts due to non-receipts of amounts Water charges receivable from Kothagudem Municipality since 1999, Amount receivable toward reimbursement of salaries of the staff counted against the Government posts from the Government for the period from 01.02.1999 to 31.03.2004, Bill of cost for an amount from various companies to the end of 31.03.2010. HELD THAT:- It is an admitted fact that the assessee has debited an amount in the P L A/c towards miscellaneous losses and provisions written off which include provisions for bad and doubtful debts. Although the assessee has given the details of miscellaneous losses and provisions written ofhowever, the AO failed to consider the provisions for bad and doubtful debts since any provision for bad and doubtful debts cannot be allowed as an expenditure. Similarly, in the computation of income statement u/s 115JB, the assessee has taken the book profit at Rs.28866.02 lakhs and arrived at the income of Rs.484,74,65,032/- u/s 115JB as against Rs. 51008.45 lakhs. Despite the figures available on record, the Assessing Officer failed to examine the short computation of income u/s 115JB of the Act. Similarly, the Miscellaneous losses and provisions for bad and doubtful debt of Rs.24.55 crores includes Rs.15,03,01,740/- towards obsolete stores etc., and Rs.3434340 towards loss on sale of scarp. However, the Assessing Officer failed to examine the issue properly since the assessee is having scarp a/c separately and therefore, the obsolescence of store a/c should have been transferred to the scarp a/c and scarp receipts thereof, if any, should have been offered to tax. Since the Assessing Officer in the instant case has not examined the vital issues properly, therefore, the order passed by the Assessing Officer, in our opinion, has become erroneous as well as prejudicial to the interest of the revenue. Therefore, CIT, in our opinion, has rightly invoked the jurisdiction u/s 263 of the I.T. Act. The various decisions relied upon by the learned Counsel for the assessee, in the instant case, are distinguishable and not applicable to the facts of the present case since the Assessing Officer in the instant case has not at all examined the issue for which he has raised the queries. Accordingly, the order passed by the learned CIT is upheld and the grounds raised by the assessee are dismissed. Addition of disallowance towards provision for bad and doubtful debts - AO made the addition on the ground that the provision for bad and doubtful debt is not an allowable expenditure - HELD THAT:- A perusal of the order passed by the learned CIT (A) for the A.Y 2011-12 shows that similar addition made by the Assessing Officer was sustained by hi towards provision for bad and doubtful debts and the learned Counsel for the assessee admitted that the assessee has accepted the same and has not filed any appeal. Further, any provision for bad and doubtful debt debited to P L A/c is not an allowable expenditure. In this view of the matter, we do not find any infirmity in the order of the learned CIT (A) on this issue. Accordingly, the same is upheld and the ground raised by the assessee is dismissed. Addition on account of loss on sale of scrap - HELD THAT:- Since the scrap is valued at saleable value, there cannot be any loss on account of sale of scrap. Further, the sale of scrap is not the basic business of the assessee. In this view of the matter and in view of the detailed reasoning given by the learned CIT (A), we do not find any infirmity in the order of the learned CIT (A) on this issue. So far as the argument of the learned Counsel for the assessee that in subsequent years, the learned CIT (A) has allowed such type of claim by deleting the addition made by the Assessing Officer on this issue and the Revenue has not filed any appeal against the relief granted by the learned CIT (A) is concerned, we do not find any merit in the same argument. Merely, because some wrong has been followed, the same cannot be perpetuated. Further, it is the settled proposition of law that the principle of res judicata does not apply to Income Tax Proceedings and every A.Y is separate and distinct. In this view of the matter, the order of the learned CIT (A) is upheld and the ground raised by the assessee is dismissed. Loss on obsolescence of stores - AO made addition being amount debited towards obsolescence of stores etc., under the head Misc. Losses and Provisions on the ground that the assessee is having scrap a/c separately and therefore, the same is not an allowable expenditure - HELD THAT:- CIT (A) sustained the addition. We do not find any infirmity in the order of the learned CIT (A) on this issue. As mentioned earlier, the assessee has made a provision towards obsolescence of stores and as mentioned by us in the preceding paragraphs, provision cannot be allowed as an expenditure especially when the assessee was unable to show us as to whether such provision was quantified in a scientific basis or not - whether there is any reversal of entry on account of increase or decrease in the provision in the subsequent years was also not shown by the assessee. Under these circumstances, we do not find any infirmity in the order of the CIT (A) on this issue and the ground raised by the assessee is dismissed.

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• 2022 (11) TMI 243
  Accrual of income - Addition of notional interest @ 10 % on deposit made - AO computed notional interest at the rate of 10% on deposits held by the assessee with M/s Sanman Holdings Private Limited on the ground that the same was not offered to tax all the assessee is following accrual system of accounting and added the same to the assessee s total income - HELD THAT:- The assessee has placed on record before us copy of letter by M/s Sanman Holdings Private Limited to the assessee intimating its inability to pay interest due to financial crisis. The assessee has also placed on record copy of letter dated 30-09- 2011 of M/s Tanti Holdings Private Limited in which it stated that the company M/s Sanman Holdings Private Limited amalgamated into it with effect from 01-04-2010 and also acknowledging the liability to pay unsecured loan of Rs. 350 crores taken by M/s Sanman Holdings Private Limited to the assessee. CIT(Appeals) also observed that the assessee did not utilise any interest-bearing loans to advance the sum of Rs. 350 crores to M/s Sanman Holdings Private Limited. Therefore, the Department has not brought on anything on record to demonstrate that the interest income sought to taxed had accrued to the assessee nor has the Revenue brought anything on record that any interest income was in fact received by the assessee. It is a well-settled principle of law that income cannot be taxed in the hands of the assessee, on purely notional basis. Either the income should accrue to the assessee, as per terms of agreement or otherwise, or else the same should have been received by the assessee. In the instant facts, as per terms of Agreement, on amalgamation of M/s Sanman Holdings Private Limited into M/s Tanti Holdings Private Limited by way of Orders of High Court of Mumbai and Gujarat, there is no obligation for M/s Sanman Holdings Private Limited to pay any interest to the assessee. In the case of Asian Hotels [ 2007 (12) TMI 274 - DELHI HIGH COURT] considered the issue of notional income from interest free loans received by the petitioner in respect of shops given on rent. AO computed tax of 18 percent per annum on the notional interest on the basis that they resulted in benefit to the petitioner. Rejecting this contention, the Court held that the notional income from the interest free loans is not taxable in the absence of a specific provision in the Income Tax Act - interest having neither been accrued to the assessee (as per specific terms of the Agreement placed on record before us) and neither any interest having being received by the assessee, such interest cannot be subject to tax in the hands of the assessee on purely notional basis . Accordingly, we find no infirmity in the order of Ld. CIT(Appeals), who in the instant set of facts, deleted the interest sought to be taxed in the hands of the assessee on notional basis. Appeal of the Department is dismissed.

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• 2022 (11) TMI 242
  TP Adjustment - international transaction of payment of Group fees having two constituents, viz.,under the Service Agreement with Faurecia, France; and under Cost Sharing Agreement with Faurecia, France - HELD THAT:- The assessee aggregated the overall transaction with other international transactions, which the TPO did not approve. The first question is whether the TPO was justified in segregating the international transaction of payment of Group fees from others. It is seen that similar stand was taken by the assessee as well as the TPO on this issue in earlier years. Tribunal, vide its order [ 2022 (5) TMI 1468 - ITAT PUNE] has countenanced the action of the authorities below on this score for the A.Y. 2011-12. Similar view has been followed by the Tribunal for the next year as well, that is, A.Y. 2012-13 holding that such a transaction needs to be separately benchmarked. The facts and circumstances for the year under consideration are admittedly similar. Following the view taken by the Tribunal for the immediately preceding two years, we uphold the segregation of the international transaction of payment of Group fees from the other international transactions. Services received by the assessee against which the payment in question was made - HELD THAT:- An owner of an asset cannot be called upon to pay for its use. The ld. AR did not have any idea about the outcome of the huge R D costs shared by the assessee over the period. There can be another possibility that R D cost sharing is for a subject different from the use of Technology and Know-how against which the assessee paid Royalty. If both the payments are for two different air-tight things, without any overlapping, then there can be no embargo on allowing the deduction for both, after the ALP determination of the R D Cost sharing. However, the ld. AR did not have any record to show the nature of benefit received for payment of royalty and R D cost sharing. While evaluating the consideration for the R D Cost sharing payment, the AO will look into the above discussed factors also. Having discussed about the examination of the availment of actual services by the assessee, the next step is to determine the ALP of the international transaction of payment of Group fees - TPO invoked the CUP method and determined Nil ALP on the ground that no evidence of receipt of services was provided. Once, on a fresh examination of the evidence to be filed by the assessee, if the TPO comes to the conclusion that the services were actually availed, then he will proceed to determine the ALP of the international transaction afresh. It is made clear that all the methods for determination of the ALP are open before the TPO, who, depending upon the facts and circumstances, would be competent to adopt any one of them as the most appropriate method. In the ultimate analysis, we set-aside the impugned order and remit the matter of transfer pricing addition of Rs.10.34 core to the AO/TPO for a fresh determination in the hue of discussion made above. Needless to say, the assessee will be allowed reasonable opportunity of hearing.

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• 2022 (11) TMI 241
  Assessment of trust/AOP - Liability of representative assessee - income arising to any person by virtue of revocable transfer of assets - income as charitable to tax in the hands of the assessee or charitable to tax in the hands of the beneficiaries - Whether the assessee trust is revocable trust the assessee holding this amount for the benefit of the contributors and beneficiaries only? - contribution relation to a revocable transfer - CIT(A) justification in treating the assessee as Representative assessee while it should be treated as AOP, because it has derived income which is other than the income derived from investments as specified in section 10(23FB) of the Act - HELD THAT:- In the present case, we can deduce from the documents filed that each contributor to the Fund has made a contribution on the condition that the initial contribution along with any income or gains arising on the investments made from his contribution would be returned to the contributor upon the sale of the investments. In such a scenario, the contribution is nothing but a revocable transfer as defined in section 63 of the Income Tax Act The entire assets will be distributed to the contributors on dissolution of the assessee trust after the expiry of pre-determined period. As per section 63 of the Income tax Act, a transfer shall be deemed to be revocable if it contains any provision for the re-transfer directly or indirectly of the whole or any part of the income or assets to the transferor, or it in any way gives the transferor a right to re-assume power directly or indirectly over the whole or any part of the income or assets. Thus, where a contribution is made in a manner that the contributors are entitled to recover their contributions over a specified period, and are entitled to the income from their contributions, the settlement of the trust should be disregarded for the purpose of tax, and the income thereof taxed as through it had directly arisen to the contributors. In the case of a revocable trust, income shall be chargeable to tax only in the hands of beneficiaries/contributors. Trust was not created for limited time where the trustee is revocable and the funds were to be return back on the termination of the beneficiary. Assessee further produced a few documents which show that the amount has been return to the assessee and where the trust is revocable the agreement. Going through the term of fund investment period and commitment period it is very clear that funds were to be returned back on the termination of the contribution and the trust was not created for certain time so the trust is a revocable trust. AR further produced the few example whether the amount was received by the corporation is income from SME tech fund-RVCF-II where the owner are national bank CIT(A) has rightly taken view that the assessee trust is received some amounts under revocable transfer of asset where the AO failed to note that no income is charitable to tax in the hands of the assessee but it is charitable to tax in the hands of the beneficiaries and any income arising to any other in such revocable transfer of AOP which charitable to income tax as the income of the transferor and not in the income transferee where the income received by the assessee trust was charitable to tax in the hands of contributors/beneficiaries and not in the hands of the assessee. AO contentions that the investment was available for free use by the assessee is not correct. Assessee pointed that the interest of the other beneficiary is the evident of default clause where the circular is to be considered. In support, reliance was placed in the following decision in the case of CIT vs. SAE Head Office Monthly Paid Employees Welfare Trust [ 2004 (9) TMI 92 - DELHI HIGH COURT] ] - It is a clear definition that the income arising to any person by virtue of revocable transfer of assets shall be chargeable to tax as income of the transferor will apply to the facts and circumstances of the present case and therefore, the assessment in the hands of the transferee/ representative assessee was not justified. Taking into consideration of orders of lower authorities documentary evidence assessee trust is revocable trust. Hence, ground of the Revenue appeal is dismissed and uphold the order of the ld. CIT(A) that the RVCF Trust is revocable trust. Going through the number of documentary evidence produced before us it can thus been noted that the beneficiaries each from money to the assessee and his agreement were entered into between the assessee and each beneficiaries there is not enter see arrangement between one contributor/ beneficiaries and the other contributors/beneficiaries as each of them entered into separate contribution arrangement with the assessee. The AO s findings are baseless and unjustified that the investment was available for free use by the assessee is not correct and the AO s action in the impugned assessment order for the year cannot be sustained in this regard and we uphold the order passed by the ld. CIT(A) where the assessee trust is revocable trust the assessee holding this amount for the benefit of the contributors and beneficiaries only the each distribution to the fund has made the contribution on the condition that the initial contribution along with any income or gain arising on the investment made from his contribution would be return to the contributor upon the sale of investment and the contribution is nothing to a revocable transfer has defined in section 63 of the Act and in the entire asset will be contributed to the contributors and dissolution of the assessee trust after expiry. Appeal of the Revenue is dismissed.

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• 2022 (11) TMI 240
  Revision u/s 263 - AO passed the reassessment order u/s 147/143(3) - Capital gain computation - error in computation of cost of acquisition - AO Replaced the full sale consideration with deemed sale consideration contemplated u/s 50C of the Act i.e., the amount equivalent to the sum for which stamp duty was paid - HELD THAT:- It is pertinent to observe that the deemed sale consideration u/s 50C of the Act is not an absolute figure. It has to be further verified u/s 50C sub-Clause (2) for determining the market rate all these aspects are to be examined. It is also pertinent to observe that the cost of acquisition was on 22/11/2004. The indexation with appreciation of cost of acquisition is calculated for taking a final figure for the purpose of reducing it from full sale consideration assumed u/s 50C of the Act. From the finding of AO it is to be seen that all these consideration must have gone by. It is not a mathematical formula. He has taken a particular cost of acquisition on the basis of valuer s report and thereafter calculated the capital gain. This calculation may have been not matched with the understanding of the ld. Commissioner but this cannot be a reason to set aside the assessment for framing the same de-novo. Therefore, on this point, we are of the view that the impugned order passed by the ld. Commissioner is not sustainable. It is to be further notice that the ld. CIT himself failed to conduct any enquiry in the finding extracted supra pointing out as to why the valuer s report considered by the Assessing Officer for taking cost of acquisition is erroneous. For taking action u/s 263 of the Act, twin conditions should be fulfilled i.e., the order should be erroneous inasmuch as it causes prejudice to the revenue. From the finding of the ld. CIT, it appears that the ld. CIT has erred in construing the position of law. As in the case of DG Housing Projects Ltd. [ 2012 (3) TMI 227 - DELHI HIGH COURT] has held that the ld. Commissioner should not simply relegate the point that the assessment order is erroneous to the AO. Commissioner, after analyzing the record, ought to have recorded a categorical finding and provided valid reasons as to how the assessment order is erroneous. In other words, the ld. Commissioner should have recorded a finding about the error that had crept in which required action u/s 263 - Therefore, in the absence of this finding, we are of the view that the impugned order is not sustainable and hence the same is quashed. Appeal of the assessee is allowed.

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• 2022 (11) TMI 239
  Addition of on-money on sale of land - addition for undisclosed income for on-money - HELD THAT:- In the seized documents also reference of payment for purchase of the lands. Thus, in the light of statements of the brokers and seized documents, it cannot be denied that on-money was paid while purchase of land by the assessee. We find that identical issue of addition of on-money in assessments under section 153A for search period i.e AY 2007-08 onward has been restored back to the file of the AO by the Tribunal wide order [ 2022 (7) TMI 1335 - ITAT MUMBAI] therefore, in the Facts and circumstances of the case, we feel it appropriate to restore the issue in dispute involving grounds raised by the assessee to the file of the Learned Assessing Officer for considering the claim of the assessee for making addition for undisclosed income for on-money at the rate of the 10% of the sales after giving set off of the expenses of on-money incurred for purchase of the land. The grounds of the appeal of the assessee accordingly allowed for statistical purposes. Penalty levied under section 271(1)(c) - HELD THAT:- Since we have already restored the addition in dispute made in assessment proceedings above to the file of the Learned Assessing Officer, therefore, the penalty levied in respect of the addition cannot survive; accordingly same is also restored to the file of AO for deciding afresh after adjudicating on the issue of addition in quantum proceedings. The grounds of the appeal of the assessee accordingly allowed for statistical purposes.

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• 2022 (11) TMI 238
  Addition on account of explained cash credits u/s.68 - accepting a gift from a relative - Whether relationship as explained u/s. 56(2)(v) of the Act fits into the facts of the case? - A.O. held that the assessee failed to provide source of investment into shares by his NRI brother, which eventually the assessee is getting in the form of gift - onus is not established and assessee s gift to the nieces has no logic - HELD THAT:- Assessee received the gift from his own brother who is a Non-Resident from the year 1966. The allotment of shares were made under NRI quota to the assessee s brother in USA. Thus the source and genuineness is being proved beyond doubt, the assessee having received the above gifts from his brother, who is as per the Explanation 2 to Section 56(2)(v) of the Act, there need not be any occasion for receipt of gift by the assessee. In our considered opinion, the whole approach of the A.O. is wholly perverse which cannot be sustained in law and therefore the deletion by the Ld. CIT(A) does not require any interference. Thus the Grounds raised by the Revenue are without merits and the same are liable to be rejected.

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• 2022 (11) TMI 237
  Revision u/s 263 - admitting total income under the heads income from house property and income from business - CIT-A directing the AO to recompute the income without giving any opportunity of being heard to the assessee to explain that the AO has already initiated enquiries in respect of purchase of the property and passed assessment order u/s 143(3) - HELD THAT:- It is an admitted fact that the CIT has not given sufficient opportunities to the assessee to explain and substantiate the case of the assessee. Therefore, we are of the firm view that the assessee should be given an opportunity to explain his case, in order to meet the principles of natural justice. We therefore, remit the matter back to the file of the Ld.Pr.CIT to give one more opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purpose.

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• 2022 (11) TMI 236
  Exemption u/s 11 - whether assessee is eligible for exemption u/s 11 and not hit by the amended provisions of Sec.2(15) under the object of General Public Utility ? - DR has submitted that the assessee was running kalyana mandapams and women s hostel, letting out building for commercial purposes and submitted that no charitable activity has been carried out by the assessee and not entitled for claiming exemption under section 11 - HELD THAT:- The assessee has not carried out any charitable activities. Therefore, AO denied the claim of exemption u/s 11 to the assessee. No doubt, the assessee was having 12AA registration, we find that having 12A registration was not automatic to claim the benefit under section 11 of the Act. The assessee has to prove before the AO that the assessee was carried charitable activities and it can claim exemption under section 11 of the Act. In the present case, the assessee has not above to prove that it has carried charitable activities and the business activities was incidental to the charitable activity. The order passed by the CIT(A) that the assessee has carried charitable activity is without any basis and any evidence. Thus, we reverse the order passed by the ld. CIT(A). Accordingly, we restore the assessment order passed by the AO and allow the grounds raised by the Revenue.

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• 2022 (11) TMI 235
  Unexplained money u/s. 69A - amount deposited in bank account of the assessee during the demonetization period - HELD THAT:- As amount has been deposited before 8th November, 2016 and an amount has been deposited during the demonetization period. We have examined the cash withdrawal which are to the tune - The assessee has shown in his return of income an amount of Rs. 3,00,000/- as gifts from friends and relatives u/s.10(23)(c) as shown in column B-15 in ITR-V which has been duly accepted by the revenue authorities. Further the assessee has relied on the CBDT Instruction No. 3/2017 dated 21.02.2007 wherein it was instructed that no further verification for the cash deposit up to Rs. 2,50,000/- is required to be made. Assessee has also filed bank statements of the father, mother and wife wherein absolutely no cash deposits have been made. As pleaded that the amount lying with the parents of smaller amounts has also been deposited in the bank account of the assessee. Even discarding this pleading, since the withdrawals and the amounts declared u/s.10(23)(c) in the returned income adequately proves the sources of cash deposits, no addition in this case is warranted - Appeal of the assessee is allowed.

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• 2022 (11) TMI 234
  Reopening of assessment u/s 147 - assumption of jurisdiction under section 147 read with section 148 - HELD THAT:- The validity of assumption of jurisdiction by the AO under section 147 read with Section 148 of the I.T. Act, 1961 is to be examined on the basis of the reasons recorded by the AO for coming to the belief that income had escaped assessment. Such reasons have to be recorded before assumption of Jurisdiction u/s 147 ( i.e. before issue of notice u/s 148 ). Any developments which take place after assumption of jurisdiction under section 147 of I.T. Act (i.e. 148 of I.T. Act) has no relevance for deciding whether the AO had reason to believe, before assumption of jurisdiction under section 147 of I.T. Act ( i.e. before issue of notice u/s 148 of I.T. Act) that income had escaped assessment. When such reasons are not made available by Revenue either to the assessee or to the appellate authorities [Ld. CIT(A) as well as ITAT]; we have to conclude that the onus has not been discharged by Revenue to justify assumption of jurisdiction under section 147 of I.T. Act through issue of notice under section 148 of Income Tax Act. When the assumption of jurisdiction under section 147 read with section 148 of I.T. Act lacks validity, the resultant assessment order lacks legitimacy. Assessing Officer has conducted inquiries without authority of law before issue of notice under section 148 - Thus, the assumption of jurisdiction by the A.O. u/s147 of I.T. Act read with section 148 is based on inquiries conducted without the authority of law. It is of the firm view that assumption of jurisdiction under section 147 r.w.s. 148 on the basis of inquiries conducted without the authority of law lacks legitimacy. Assumption of jurisdiction must be held to be unauthorized, when the inquiries made for assuming the jurisdiction were unauthorized in law and the assessment order passed in pursuance of unauthorized assumption of jurisdiction under section 147 r.w.s. 148 of I.T. Act, also lacks legitimacy. Assumption of jurisdiction must be held to be unauthorized, when the inquiries made for assuming the jurisdiction were unauthorized in law and the assessment order passed in pursuance of unauthorized assumption of jurisdiction under section 147 r.w.s. 148 of I.T. Act, also lacks legitimacy. - Decided in favour of assessee.

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• 2022 (11) TMI 233
  Disallowance u/s 40(a)(ia) - Addition on account of reimbursement of expenses to AE as per order of TPO - CIT upholding order of Transfer Pricing Officer (TPO)/AO making adjustment to income on account of reimbursement of expenses to AE by determining ALP at Rs. Nil - HELD THAT:- Since, in the present case, it is an accepted fact that no TDS has been deducted in respect of payment therefore, the same is disallowable under section 40(a)(ia) of the Act. Further, in respect of balance payment nothing has been brought on record to show that tax was deducted at source. Accordingly, the balance payment is also disallowable under section 40(a)(ia) of the Act. We find that the TPO has also made adjustment in absence of proof of rendition and benefit of the services to the assessee. In view of the above submission, we deem it appropriate to direct the AO to disallow the expenditure in this year by invoking the provisions of section 40(a)(ia) - AO is further directed to examine the claim of the assessee for deduction in subsequent year as per law. In view of the aforesaid, the adjudication of transfer pricing adjustment on account of reimbursement of expenses to AE becomes academic in nature in the year under consideration, since, the same would make no difference to the assessed income of the assessee, as the said expenditure has already been held to the disallowable under section 40(a)(ia) even in view of the submissions of the assessee. The issue of transfer pricing adjustment can be examined in the assessment year in which this expenditure is claimed by the assessee. Ground no. 1 raised in assessee s appeal is allowed for statistical purpose. Ddisallowance of Mark to Market loss - AR submitted that loss arising from forex transaction recorded on Mark to Market basis is an allowable expenditure and the same is not speculative in nature - Revenue has disallowed the loss arising on account of foreign exchange forward contract as a notional loss - HELD THAT:- As is evident from the record, in the present case, the Revenue has disallowed the foreign exchange loss on the basis that the same is notional in nature. It is also not been denied that these contracts are entered into by the assessee in the course of its business of travel agent and tour operator. Therefore, respectfully following the aforesaid decision of D. Chetan Company [ 2016 (10) TMI 629 - BOMBAY HIGH COURT] we direct the AO to delete the addition made on account of disallowance of Mark to Market loss. As a result, ground no. 2 raised in assessee s appeal is allowed. Disallowance u/s 14A - HELD THAT:- We find that the claim of the assessee is supported by the decision of Vireet Investment (P) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] wherein it was held that only those investments are to be considered for computing average value of investments, which yield exempt income during the year. Accordingly, we direct the AO to only considered those investments for the purpose of computation of disallowance u/s 14A read with Rule 8D of the Rules, which yield exempt income during the year. As a result, ground No. 3 raised in assessee s appeal is allowed for statistical purpose.

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• 2022 (11) TMI 232
  Addition u/s. 68 - unexplained cash credits of share capital and security premium received during the year - HELD THAT:- The assessee company has been able to procure share capital/share premium Statutory notice u/s. 131 duly served upon the alleged directors but none complied. Assessee failed to produce the alleged shareholders before the ld.AO for identity, creditworthiness and genuineness of the transaction. Even after providing sufficient opportunity no submission was made either before the AO and CIT(A) nor before us. Assessee was asked to explain the cash credits received by it during the year. The assessee failed to file necessary details to explain the source of alleged cash credit and also unable to prove identity, creditworthiness of the cash creditors as well as genuineness of the transaction as per section 68 - assessee company has miserably failed to explain the source of alleged cash credit. If the assessee had sufficient details to explain the alleged sum, it could have certainly filed those details. Consistently escaping from appearing before the AO and the appellate authority(CIT A) indicates that the assessee has no plausible explanation to explain the source of alleged sum of share capital and security premium. If the assessee is unable to explain the alleged cash credit and consistent escaped, the provisions of section 68 are attracted. Thus, it is held that the assessee has routed its unaccounted income in the books of account in the form of share capital and security premium by arranging bogus share capital and share premium through accommodation entry provider. Under these facts and circumstances, we find no infirmity in the finding of the CIT(A) confirming the addition made u/s. 68 of the Act and the same is confirmed. Thus, grounds of appeal raised by the assessee are dismissed.

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• 2022 (11) TMI 231
  Addition u/s 68 - unexplained cash credits of share capital and security premium received during the year - HELD THAT:- Statutory notice u/s. 143(2) of the Act duly served upon the assessee and when the case of the assessee was selected for scrutiny the assessee company having such huge Capital and Security Premium Reserve failed to make any representation before the ld.AO. Even after providing sufficient opportunity by ld.AO no submission was made either before the ld.AO nor before ld. CIT(A) and nor before us. The assessee was asked to explain the cash credits received by it during the year. The assessee failed to file necessary details to explain the source of alleged cash credit and also unable to prove identity, creditworthiness of the shareholders as well as genuineness of the transaction. The assessee company has miserably failed to explain the source of alleged cash credit. If the assessee had sufficient details to explain the alleged sum, it could have certainly filed those details. Consistently escaping from appearing before the ld. AO and the appellate authority (ld.CIT-A) indicates that the assessee has no plausible explanation to explain the source of alleged sum of share capital and security premium. Therefore, the provisions of section 68 of the Act are squarely applicable on the alleged transaction and it can be safely concluded that the assessee had unaccounted income, which has been routed in the books through bogus/accommodation entry in the form of share capital and security premium - Decided against assessee.

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• 2022 (11) TMI 230
  Deduction u/s 54F - AO had denied the exemption on the ground that the same was not claimed in the return of income - CIT(A) held that the claim for exemption u/s 54 can be entertained at the stage of appeal - appellant had purchased two flats in Pune by two separate purchase deeds - HELD THAT:- It is an admitted fact that the appellant had not offered any capital gains on the sale of flat at Mumbai. During the course of assessment proceedings, the assessee had furnished the details of working of capital gains arising on sale of flat at Mumbai and claimed exemption u/s 54. CIT(A) had entertained the additional claim u/s 54 placing reliance on the decision of CIT v. Prithvi Brokers Shareholders (P.) Ltd [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] and proceeded to examine the claim on merits. CIT(A) had extracted the details of investments made in the new two flats and held that two flats cannot be treated as one flat in view of the fact that they cannot be combined into single unit as they are located in different floors placing reliance on case of CIT vs. Devdas Naik[ 2014 (7) TMI 173 - BOMBAY HIGH COURT] CIT(A) placing reliance on the decision of K.C. Kaushik [ 1990 (4) TMI 38 - BOMBAY HIGH COURT] held that the assessee is entitled for exemption u/s 54 only in respect of one flat and directed the Assessing Officer to exempt the cost of investment in one flat made before due date of filing the return of income - The contention of the ld. AR that the appellant is entitled to the exemption u/s 54 in respect of investment made into two flats cannot be accepted in view of the decision of K.C. Kaushik - Hence, the order of the ld. CIT(A) is based on the decision of the Hon ble Jurisdictional High Court referred above supra, does not call for any interference. Accordingly, the grounds of appeal filed by the assessee stand dismissed.

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• 2022 (11) TMI 229
  Disallowance u/s 14A r.w.r. 8D - During the course of assessment, the AO was of the view that the income received by the assessee from investments made in AOP is exempted and consequently he applied the Section 14A r.w.rule 8D made disallowance - HELD THAT:- As noted from the record that the assessee was having total interest funds to the tune of Rs.15.13 crores whereas total loan given to subsidiaries were to the tune of Rs.12.92 crores (PB 41) only and if the amount of interest charged is further reduced from this amount then it comes to Rs.6.35 Crores (Rs.12.92 Cr. Minus Rs.6.57 Cr.) which is more than the disallowance confirmed by the ld. CIT(A) amounting to Rs.1,74,18,626/-. The decisions relied upon by the ld. AR of the assessee finds favour in this case. Since, the assessee has not challenged the finding of the ld. AO. The addition made by the ld. AO is confirmed and that of the ld. CIT(A) is reversed. In this view of the matter, we feel that the ld. CIT(A) has exceeded his jurisdiction and the enhancement made by the ld. CIT(A) deserves to be deleted . Thus Ground No. 1 of the assessee is allowed. Interest on income tax refund - HELD THAT:- AO noted that the assessee had received income tax refund amounting to Rs.4,29,218/- but the assessee in the income tax return had shown interest amount of Rs.1,17,100/- only. During the course of assessment proceedings, the assessee could not dispel the doubt raised by AO about the interest amount of Rs.1,17,100/- . Hence, the AO made of Rs.3,12,118/- to the total income of the assessee. In first appeal, the ld. CIT(A) confirmed the action of the AO. During the course of hearing, the ld. AR of the assessee has not advanced any submissions or arguments controverting the findings of the ld. CIT(A) as to the addition sustained by the ld. CIT(A) amounting to Rs.3,12,118/-. In this view of the matter, the ground No. 2 of the assessee is dismissed.

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• 2022 (11) TMI 228
  Revision u/s 263 by CIT - Disallowance of liquidated damages - disallowance was upheld on the basis that the liability would arise only on actual supply and therefore the provision made for the year under consideration is an unascertained liability. - HELD THAT:- The provision is made up to the last date of the financial year, i.e. 31.03.2012. The assessee has considered the delivery date as per the purchase order/clause in the contract and calculated the delay up to 31.03.2012. It is also noticed that the amount of liquidated damages is calculated as a percentage of the basic value of the purchase order/contract. This would mean that the provision for liquidated damages is created for the period relevant to the year under consideration. Though the actual damages would be paid only on delivery of lubrication systems or products, the liability, in our view, has to be provided for under the mercantile system of accounting. We see no merit in the contention that the provision made is an unascertained liability on the basis that the liability to pay would arise on a future date.. The CIT(A) relied on the decision of FFE Minerals [ 2018 (9) TMI 357 - MADRAS HIGH COURT] while upholding the disallowance. In our view this case is distinguishable from assessee s case since the fact of the said case is different to the extent that only negotiations and discussion took place and the final amount of liquidated damages was computed much later. In assessee s case, however, the provision is made based on the terms agreed with the customer and it relates to the period relevant for the year under consideration. In view of the above discussion we hold that the provision made for liquidated damages is an ascertained liability and should be allowed as a deduction. The disallowance made by the AO in this regard is deleted. Appeal filed by the assessee is allowed.

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• 2022 (11) TMI 227
  Assessment u/s 153A - Addition being additional cash consideration for acquiring shares of KMPL and GBPL - HELD THAT:- Conclusive observation of the AO itself shows that the entire edifice of making assessment is nothing but assumptions, surmises and conjectures. The Bench asked a very simple question to the ld. DR that in whose hands substantive addition has been made and in whose hands protective addition has been made. DR could not answer to this simple question and we do not understand from the perusal of the record of the assessee and considering the assessment in the case of Peakwood Realty Pvt Ltd, though one thing is certain that same addition in respect of similar transaction has been made in the hands of the two assessees. A perusal of the assessment order in the case of Peakwood Realty Pvt Ltd shows that there is a reference of some document found which is internal page 10 of the assessment order in the case of Peakwood Realty Pvt Ltd. This document shows that some additional consideration has been paid - This document was found from the laptop of one Smt. Bina Shah. This document was neither found from the premises of the assessee nor from the possession of the assessee and is sole basis of making entire payment. Since this incriminating material was neither found from the premises of the assessee nor connected with the assessee in any manner, therefore, the ratio laid down in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] squarely apply. There is no adverse inference drawn in respect of sellers of shares i.e. KMPL and GBPL though the impugned addition has been made on the basis of pure surmises and conjectures nothing has been done in the hands of the sellers of the shares. As mentioned elsewhere, shareholders of GBPL and KMPL are NRI and, therefore, Peakwood Realty Pvt Ltd had to take No Objection Certificate for transfer of shares from RBI which was duly obtained by it. AO has proceeded with a preconceived mind without realizing that the documents which he is referring to is for making addition neither has names of the sellers of the shares nor name of the assessee. Therefore, following the ratio laiddown by the Hon ble Delhi High Court [supra], this addition deserves to be deleted. Even on merits of the case, the addition cannot be sustained as the Assessing Officer has made the addition u/s 69 of the Act which has been modified by the ld. CIT(A) and sustained the addition u/s 69 - A revisit to the facts of the case would clear the quarrel. Addition made by the Assessing Officer u/s 69 is purely on assumption and without any basis. Presuming that the assessee has paid cash for the purchase of shares as these sellers of shares were holding 430 acres of prime land in Village Mangar, Faridabad Gurgaon border. Addition though modified by CIT(A) u/s 69B but has been confirmed on the presumption, surmises and conjectures - Firstly, investment was made by Peakwood Realty Pvt Ltd and not by the assessee and secondly, the AO has made addition in the hands Peakwood Realty Pvt Ltd, then there should not be any reason for making same addition in the hands of the assessee when the assessee is not party to the transaction. Considering the entire factual matrix from all possible angles, addition made in the hands of the assessee on all counts deserves to be deleted. - Decided in favour of assessee.

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• 2022 (11) TMI 226
  Deduction u/s. 80IA - AO referred to the provisions of Explanation to section 80IA(13) of the Act with retrospective effect from 01.04.2000 and held that the assets developed/created are not pertaining to the assessee and the assessee is entitled only to a fixed remuneration for its professional services and, therefore, disentitling it from deduction u/s. 80IA - According to the assessee, it has been set up by the Government of Goa as a SPV to develop infrastructure facilities which are developed by the assessee by appointing various contractors - CIT-A confirmed part addition - HELD THAT:- From the perusal of meritorious and factual findings given by the Ld. CIT(A) for granting relief to the assessee by allowing the deduction u/s. 80IA(4) of the Act for an amount partly since no contrary material, both on fact or law has been brought on record, we find no reason to interfere with the said findings given by the CIT(A) as discussed and reproduced above. We also note the fact that the claim of deduction u/s. 80IA(4) of the Act by the assessee is for the eighth consecutive year and for the past seven preceding years, the claim of the assessee has been consistently allowed. From the tabulation given, we note that in the present case, deduction has been allowed for all the earlier assessment years and the Ld. AO has now sought to disallow the deduction for the eighth year which otherwise is allowable for consecutive period of ten assessment years. In the instant case before us, as there is no change in the facts and the applicable law, if the deduction has been allowed in the initial assessment years, the same cannot be withdrawn in the subsequent years without making disallowance in the initial assessment years. While confirming the allowance of deduction granted by the Ld. CIT(A), we also place reliance on the decision of the Hon ble jurisdictional High Court of Bombay in the case of ABG Heavy Industries Ltd.[ 2010 (2) TMI 108 - BOMBAY HIGH COURT] In respect of the addition confirmed by the Ld. CIT(A) and agitated by the assessee before us, we do not find any merit in the claim made by the assessee for allowing these items of other income in eligible for deduction u/s. 80IA of the Act. We do find no reason to interfere with the fact based findings given by the Ld. CIT(A) on this issue as discussed and reproduced above. Both the appeal of assessee and the revenue are dismissed.

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• 2022 (11) TMI 225
  Exemption u/s 10B - setting off of carried forward loss against the income of the units eligible for exemption u/s. 10B - HELD THAT:- As decided in the case of Hindusthan Unilever Ltd [ 2010 (4) TMI 206 - BOMBAY HIGH COURT] and BLACK VEATCH CONSULTING PVT. LTD. [ 2012 (4) TMI 450 - BOMBAY HIGH COURT] allowed the appeal of the assessee by directing the AO to allow as exempt u/s. 10B to the assessee and further, to allow the carry forward of unabsorbed depreciation of Rs.2,00,58,145/- as claimed by the assessee in its return. Hon ble Supreme Court in the case of CIT Vs. Yokogawa India Ltd. [ 2016 (12) TMI 881 - SUPREME COURT] wherein the issue has been dealt with by the Hon ble Supreme Court in respect of section 10A which according to the Ld. Counsel is equally applicable to cases governed by the provisions of section 10B in view of the said later provision being pari materia with section 10A of the Act though governing a different situation. We answer the appeals and the questions arising therein, as formulated at the outset of this order, by holding that though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI. All the appeals shall stand disposed of accordingly. Appeal of revenue is dismissed.

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• 2022 (11) TMI 224
  Penalty u/s 271(1)(c) - furnishing inaccurate particulars of income and concealing the particulars of income - HELD THAT:- CIT(A) has objectively dealt with the contentions of the assessee in respect of issue of complexity of accounts raised by the assessee to substantiate his claim that mistakes were committed by him in maintaining correct accounts. On this aspect, the ld. CIT(A) has noted that assessee was assisted by statutory auditor, authorized representative and accountants and thus he had all the resources available to explain his case and comply with the requirements of the law. CIT-A noted that ld. AO has levied penalties on the final amounts only which remained as confirmed/sustained in the hands of the assessee and not on the initial additions which were made in the assessment. Accordingly, the penalty so imposed is on all those amounts for which either the Co-ordinate Bench of ITAT in the assessment has confirmed the additions or the assessee himself has not preferred any appeal against the order of ld. CIT(A) in respect of the additions. Fact based findings given by the ld. CIT(A) after analyzing the submission filed by the assessee, more particularly where the assessee himself has not preferred any appeal against the order of ld. CIT(A) on certain additions which were confirmed at the First Appellate Stage, we do not find any reason for the interference in the findings so given by the ld. CIT(A) in confirming the penalty levied by the ld. AO u/s. 271(1)(c) - Accordingly, the ground of appeal by the assessee is dismissed.

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• 2022 (11) TMI 223
  Addition u/s 68 - unexplained cash credit - Share premium received from foreign investor - HELD THAT:- The share capital premium to the extent of Rs.63,32,28,987/- pertained to earlier years; and the nature source of the same had already been examined and verified in the income tax assessments for the earlier years, and therefore the same is directed to be deleted, since no addition u/s 68 of the Act was legally permissible in the relevant AY 2018-19. Share premium received from the founder promoter, Mr. Anuj Rakyan it is noted that the assessee has discharged its burden of proving his identity, genuineness and creditworthiness, and both the lower authorities could not find any defects or fault therein and therefore the aforesaid addition is also directed to be deleted. Share premium received from three (3) foreign investor, we once again deprecate the inaction and non-application of mind to the facts of the case by the lower authorities, particularly when the revenue has accepted the identity and genuineness of these investors in the past years. Having held so, we also cannot lose sight of the fact that the assessee by their own admission was unable to provide all the primary evidences Viz, income tax returns, bank statement, etc of the foreign investors concerning the relevant year for verification. Understandably, these foreign investors are of repute and given the fact that the assessee was only as start-up, it may not be in a position to obtain from them all relevant documents, as desired by the AO/NFAC. However, this cannot absolve the foreign investors from verification of their creditworthiness by the income tax authorities. In our humble opinion, the right course of action for the revenue was to make independent enquiries from these investors through appropriate channel such as FT TR etc, particularly when such manner and line of enquiry had already been laid down by the CBDT in their SOP dated 19.11.2020 or from the AO s of the respective foreign investors. I Revenue ought not to have simply pushed the entire burden on to the assessee to provide the details and documents of foreign share holders, particularly when the CBDT empowered them to make independent enquiries from them. With these observations, we set aside the addition to the extent being the share premium received from foreign investors back to the file of the AO/NFAC for de-novo assessment in respect of the credit in assessee s book, in a fair and reasonable manner and in accordance to law. Needless to say, the assessee shall be provided with reasonable opportunity of being heard. As the share premium relating to Ms. Jaqualine Fernandez is concerned, in the light of the facts discussed (supra) in respect of Ms. Jaqualine Fernandez, AO/NFAC is directed to confine their inquiries only to the genuineness of the arrangement by enquiring as to whether the agreed consideration had indeed been subjected to Goods Service Tax [GST] and TDS, as claimed by the assessee; and also the manner in which the consideration has been accounted by the assessee and the share-holder in their respective books. If the arrangement is found to be in accordance to law, then no addition shall be made on this count. The AO/NFAC may make enquiries directly from the share-holder as well, but at the same time, AO/NFAC shall allow sufficient opportunity of being heard to the assessee. Appeal of the assessee is partly allowed for statistical purposes

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• 2022 (11) TMI 215
  Determination of income of the assessee - Estimation of income - AO completed the assessment by adopting the turnover of the assessee as adopted on M/s. Serajuddin Co., and granting the assessee a reduction of 30% towards expenses - HELD THAT:- Details in the diary only show the details for 4 months. It is also an admitted fact that no books of accounts and vouchers have been maintained by the assessee, which is evident from the fact that the search did not bring out any books of account. However, in the assessment order, the AO refers to profit and loss account in his order. How this profit and loss account has been prepared is not ascertainable. AO had no details with him except the turnover of the assessee, which has also been extracted from the books of account of M/s. Serajuddin Co. This being so, a perusal of the order of the ld CIT(A) clearly shows that he has taken into consideration all the issues to come to the conclusion in paras 5.1 5.2 of his order that the estimation of income of the assessee is the best method to determine the income of the assessee. We find no reason to interfere with these findings of the ld CIT(A) in respect of estimation of income insofar as neither the assessee nor the revenue has been able to dislodge the findings of the ld CIT(A). Percentage of the net profit as determined by the CIT(A) at 10% - A perusal of the order of the ld CIT(A) clearly shows that the highest percentage disclosed by the assessee is 6%. This being so, we are of the view that the interest of justice would be served if the estimation of the percentage of net profit is taken at 8% as against 10% directed by the ld CIT(A) and we do so. The findings of CIT(A) in regard that he is not pressing the legal grounds taken in Ground Nos.1 to 5 of cross objections. Consequently, Ground Nos.1 to 5 of cross objections stand dismissed as not pressed. Ld AR submitted that Ground Nos.6 to 8 are against the estimation as done by the ld CIT(A) at 10%. As we have reduced the estimation of the net profit of the assessee from 10% to 8%, Ground Nos.6 to 8 on merits stands partly allowed.

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• 2022 (11) TMI 214
  Penalty u/s. 271F - deficiency in service of notices and the AO has proper jurisdiction for issue of notice u/s.153A - HELD THAT:- The levy/confirmation of penalty is based on the facts of each case. There is no presumption that the assessee is willfully violating the law. It is an admitted fact that notice u/s.153A has been served on the assessee and the assessee is required to file the return within 30 days. It is also an admitted fact that for obtaining of the Xerox copies of the seized document, it took more than 2-3 months. Just by obtaining of xerox copies of seized documents, the return cannot be filed. It has to be co-related, verified, examined and reconciled before the return is filed. The filing of return beyond the due date is admittedly invalid return as there is no provision for filing the return belatedly once notice u/s.153A has been issued. This being so, we are of the view that the assessee had a valid ground for non-filing of return. Accordingly, penalty levied by the AO and confirmed by the CIT(A) is deleted. Appeals of the assessee are allowed.

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• Customs

• 2022 (11) TMI 268
  Refund of duty drawback on the customs component - All Industry Rate - Case of petitioner is that this position only stood clarified with the amendment issued via notification dated 31.10.2019 - HELD THAT:- Noticeably, the amendment was brought to the notice of the Court, by the petitioner, via its rejoinder. No sur-rejoinder has been filed by the respondents - Concededly, the other aspects of the matter remain the same. The petitioner would not be required to have a brand rate of duty drawback fixed, based on actual duty-paid documents for the return of basic customs duty. To that extent, paragraph no. 7.06(b) of the FTP 2015-2020, prior to the amendment, is read down. Consequentially, paragraph no. 7.06(b) of the HBP 2015-2020, prior to the amendment, is also read down - the respondents are directed to accept and allow the claims of the petitioner, whereby duty drawback of the customs component on supplies made by the Domestic Tariff Area (DTA) unit to the petitioner in the category of recipient of goods is made under Column B of All Industry Rate, without insisting on actual duty-paid documents. The writ petition is disposed off.

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• 2022 (11) TMI 267
  Wrongful availment of benefit of DEPB - product manufactured and exported by the appellant falls under Sr.No.1 of group code no.66 under the description of Fish Fish Products including frozen meat or not - recovery under proviso to section 28(1) of the Customs Act, 1962 along with interest and penalty - HELD THAT:- Earlier this matter was remanded by this tribunal to pass a denovo order after consideration of DGFT s clarification vide letter dated 09.01.2009. The adjudicating authority though considered the said letter dated 09.01.2009 but the same was discarded on the ground that the decision by the DEPB Committee earlier will prevail. In view of the change of circumstances by way of clarification issued by the DGFT and withdrawal of the show cause notice, there was no scope for adjudicating authority to deviate from the decision taken by the DGFT to classify the goods under DEPB Entry at Sr.No.2/66 therefore, the adjudicating authority has no authority to sit over the policy decision taken by the DGFT. The clarification given by the DGFT will prevail over the allegation made by the Customs Department - the entire adjudication order passed discarding the decision taken by the DGFT cannot be sustained. Appeal allowed.

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• 2022 (11) TMI 222
  Validity of detention order - malice in law - COFEPOSA - Inordinate and unexplained delay in passing of the impugned detention order - absence of subjective satisfaction and non-placement of vital documents by the sponsoring authority and/or non-consideration thereof by the detaining authority and non-supply thereof to detenu - detention vitiated in view of the violation of settled mandate of law and procedure - Non-application of mind by detaining authority while passing the detention order - Inchoate and incomplete investigation - Non-compliance of procedural safeguards/requirements - HELD THAT:- The Hon ble Supreme Court in Ankit Ashok Jalan [ 2020 (3) TMI 248 - SUPREME COURT ], has, in no uncertain terms carved out a distinction with respect to the determination of a representation, received after reference to the Advisory Board, sent to the detaining authority and to the appropriate government. It was observed that since the judgment in K.M.Abdulla Kunhi [ 1991 (1) TMI 244 - SUPREME COURT ] had dealt with a situation where the detaining authority was the appropriate Government itself, the principle laid down there would not be applicable in a case where the detaining authority and the appropriate Government are distinct - It was therefore held in Ankit Ashok Jalan that if the law is now settled that a representation can be made to the specially empowered officer who had passed the order of detention in accordance with the power vested in him and the representation has to be independently considered by such detaining authority, the principles concerned adverted to in para 16 of the decision in K.M. Abdulla Kunhi would not be the governing principles for such specially empowered officer. In the present case, the representation made to the detaining authority, i.e., respondent no. 2 on 02.03.2022, who was specially empowered officer passing the order of detention, was decided on 15.03.2022, without waiting for the opinion of the Advisory Board or confirmation of the detention order by the Central Government. The second representation dated 10.03.2022 made by the detenu to the Central Government, i.e, respondent no. 3 was received by the latter after the reference being made to the Central Advisory Board and decided on 09.05.2022, i.e., after receipt of the said opinion and confirmation of the detention order by the Central Government - the detention order cannot be quashed on the ground urged on behalf of the detenu that there was inordinate and unexplained delay on the part of the Central Government, i.e., respondent no. 3 in deciding the representation dated 10.03.2022. The present writ petition is dismissed and disposed of accordingly.

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• 2022 (11) TMI 221
  Validity of detention order - supply of illegible RUDs - subjective satisfaction of the detaining authority is vitiated or not - whether the present detenu is similarly placed as the detenus in the Zakir [ 2022 (5) TMI 89 - DELHI HIGH COURT] case so as to attract the ground of parity? - HELD THAT:- In view of the admitted position by the official respondents and the above extracted decision of this court, the RUDs supplied to the detenu, as well as, relied upon by the Detaining Authority in arriving at its subjective satisfaction were admittedly illegible, therefore, grossly violating the constitutional right of making an effective representation, guaranteed to the detenu under Articles 14,21 and 22(5) of the Constitution of India. It is trite to say that when a person is detained in pursuance to an order of preventive detention, the statutory authorities are constitutionally charged with the responsibility of ensuring that the grounds of detention, including legible copies of all RUDs and other relevant documents that are considered whilst forming the subjective satisfaction, are provided to the detenu by the detaining authority; so as to enable the detenu to make an effective representation to the advisory board, as well as to the detaining authority. Therefore, the failure and non-supply of legible copies of all RUDs despite of a request and representation made by the detenu for the supply of the same, renders the order of detention illegal and bad in law; and vitiates the subjective satisfaction arrived at by the detaining authority. It is well settled and not in dispute that under the provisions of Section 3 of COFEPOSA, it is only the detaining authority, which can ultimately decide to pass or not, a detention order against any person, and that too, after perusing each and every document and material placed before it. It is also not in dispute that the subjective satisfaction of the detaining authority itself is to be arrived at after perusing all the relevant documents and material produced - It is also an admitted position that many of the RUDs placed before the detaining authority were illegible/dim/blank pages. There are considerable force in the contention that had the detaining authority itself perused the RUDs for arriving at its subjective satisfaction and formulation of grounds, it would have been alive to the fact that many of the RUDs placed before it were wholly illegible. Whether the detenu in the present case is similarly placed with the detenu in the case of Zakir [ 2022 (5) TMI 89 - DELHI HIGH COURT] ? - HELD THAT:- In view of the admitted position by the sponsoring authority, as well as, the detaining authority, we find force in the argument that the present detenu is similarly placed as the detenus in the case of Zakir and would consequently, attract the ground of parity. Petition allowed.

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• 2022 (11) TMI 220
  Recovery of demand - applicant submits that as per the resolution plan approved by NCLT, no dues exists against the applicant - HELD THAT:- The NCLT has passed an order by approving resolution plan of the company M/s. Ruchi Soya Industries Ltd in favor of Patanjali Ayurved Limited, Divya Yog Mandir Trust, Patanjali Parivahan Pvt. Ltd. and Patanjali Gramudhyog Nyas, who are the resolution applicant - from the terms of the resolution plan approved by the NCLT, it prima facie appears that the appellant is not liable to pay any dues. However, this tribunal is not competent to decide regarding the recovery of any dues. It is the department who has to decide whether any dues is recoverable or otherwise, in the light of the resolution plan approved by the NCLT. As per the resolution plan approved by the NCLT and in the light of Hon ble Supreme Court judgment in the case of Ghanashyam Mishra Sons Pvt. Ltd. [ 2021 (4) TMI 613 - SUPREME COURT ], it prima facie appears that the adjudged dues cannot be recovered by the department however, this issue has to be decided by the department and not by this tribunal. For this reason, that firstly, there is no provision made in the Customs and Central Excise Act to give effect of NCLT proceedings. This tribunal being creature under the Customs Act, even though the Insolvency and Bankruptcy Code have over riding effect over all the other acts, in absence of any explicit provision under the Customs/Central Excise Act, this tribunal cannot decide finally whether the adjudged amount can be recovered by the department or otherwise. This issue has to be resolved by the respondent with the appellant/resolution applicant/NCLT/Resolution professional. It is noted that IBC proceedings are being initiated against many companies who are either appellant or respondent in the appeals pending before this tribunal. The revenue-department has no proper guideline as to what stand is to be taken in a case where the IBC proceedings is in progress before NCLT/NCLAT or at higher forum - the Central Board of Indirect Taxes Customs may consider issuing guideline/procedure for dealing with the case before this tribunal wherein, against the assesse s company IBC proceeding has been initiated. Application disposed off.

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• Insolvency & Bankruptcy

• 2022 (11) TMI 219
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Corporate Debtor is a Financial Service Provider - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is pertinent to note that the Corporate Debtor is a Financial Service Provider Annexure A at Page 5 of the Affidavit in reply as is evident from the Registration Certificate that has been filed. The Hon ble NCLAT has reiterated time and again and had taken the same stand which is reflected in Saumil A Bhavnagri v. Nimit Builders Private Limited and Ors., [ 2020 (3) TMI 158 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] that the definition of Corporate Person in Section 3(7) of IBC specifically provides that it shall not include any financial service provider. The Corporate Debtor is a Financial Service Provider and hence the petition is rejected.

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• 2022 (11) TMI 218
  Leave to either impound itself the transfer deeds and collect the appropriate stamp duty alongwith the penalty, if any, or otherwise may refer the instruments Transfer Deed (Form 7B) - collection of the deficit stamp duty and penalty by impounding the same - transfer deeds properly stamped or not - HELD THAT:- A duty is cast upon the judge irrespective of the fact whether any objection, it s marking is raised or not to examine whether the instrument is stamped properly or not. The court should not depend on the objections on the other counsel before considering whether the document is admissible in evidence or not. While holding that the objections, if any, from either side as regards to admissibility of Exhibit R-3, (but not its proof) cannot be gone into as Exhibit-R3 has been marked without any objection, the power under Section 33 of the Indian Stamp Act is invoked - application dismissed.

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• Service Tax

• 2022 (11) TMI 266
  Classification of services - contract with Gujarat State Electricity Corporation for the work of timely payment of railway freight and to undertake all such steps to ensure that freight pre-paid coal wagons reach the GSECL plant site and in return they were receiving commission - whether the services provided by the appellants were classifiable under the category of Clearing Forwarding Agent Service or under Business Auxiliary Service? - demand alongwith penalty u/s 78 - HELD THAT:- The present case involved mix question of law and facts. The learned Commissioner (Appeals) decided the matter relying on the Tribunal s decision in the case of COAL HANDLERS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-I [ 2004 (5) TMI 5 - CESTAT, KOLKATA] wherein it was held that the identical services are classifiable under clearing and forwarding agent service. Since this very judgement which is sole basis of the Commissioner (Appeals) order which has been set aside and party s appeal was allowed by the Hon ble Supreme Court, it is opined that since the identical facts and law point is involved, the learned Commissioner (Appeals) has to reconsider the matter in the light of the change of legal position between the Tribunal s decision in Coal Handlers and the Apex Court decision in M/S. COAL HANDLERS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, RANGE KOLKATA I [ 2015 (5) TMI 249 - SUPREME COURT] . Since the facts are also need to be compared and verified between this case and the case of Coal Handlers, the matter should be remanded back to the Commissioner (Appeals) to decide afresh in the light of Hon ble Supreme Court judgement in the case of Coal Handlers - appeal allowed by way of remand.

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• 2022 (11) TMI 265
  Valuation of services - reimbursement of electricity expenses - inclusion of facility sharing charges in the assessable value - taxability of the service charges under the head Business Support Service received from Webdunia - mutuality of services - suppression of facts - penalty under Section 77 and 78 of FA - extended period of limitation - HELD THAT:- The appellant is not liable to service tax on the amount received as facility charges amounting to Rs.1,73,50,000/- as the same is wholly attributable to electricity expenses, which has been shared proportionately by the appellant and its sister concerns. Taxability of the service charges under the head Business Support Service received from Webdunia - HELD THAT:- Both Webdunia, PPPL and Naidunia (appellant) are under the same management. Thus, there is element of mutuality in sharing of facility and the available news library. Accordingly, the said receipt is not chargeable to tax (of Rs.30,000/- p.m.) under the head Business Support Service . Extended period of limitation - penalties - HELD THAT:- The appellant have maintained proper records of their transactions and receipts. Thus, the issue and demand in dispute is wholly interpretational in nature or by way of change of opinion. Admittedly, the appellant is registered with the Department and have regularly filed the returns and deposited the admitted tax. Accordingly, the show cause notice is bad for invoking the extended period of limitation - All penalties imposed are set aside. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2022 (11) TMI 264
  CENVAT Credit - inputs - goods namely steel plates, HR plates, HR coils, MS Bar, MS Beam, MS Joists, GC Sheets, etc - period from March, 1995 to September, 2003 - HELD THAT:- The appeal pertains to the period March, 1995 to September, 2003, the adjudicating authority decided the matter solely on the basis of Larger Bench decision in the case of VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] wherein, it was held that the amendment of Notification No. 16/2009-CE (NT) dated 07.07.2009 has a retrospective effect and accordingly, even for the period prior to such amendment the credit is not admissible. This decision was reversed by the Hon ble Chhattisgarh High Court in M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [ 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] . The adjudicating authority needs to give a fresh look in the entire case in the light of the various judgements given subsequent to the reversal of larger bench decision in the case of VANDANA GLOBAL by the Hon ble High Court of Chhattisgarh - the appeals are allowed by way of remand to the adjudicating authority for passing a fresh order.

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• 2022 (11) TMI 263
  Quantum of interest, calculated correctly or not - relevant date for calculation of interest - whether the appellant have been granted correct amount of interest for the correct period on the deposit made during the investigation, pursuant to being successful in appeal? - HELD THAT:- Under similar circumstances, where the amount was deposited during investigation/audit, this Tribunal has allowed the interest from the date of deposit till the date of refund @12% P.A. The appellant is entitled to interest from the date of deposit till the date of refund @ 12% P.A. Adjudicating Authority is directed to grant the balance interest within a period of 30 days from the date of receipt of this order - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2022 (11) TMI 262
  Principles of natural justice - validity of assessment order - impugned order observations and allegations about fake invoices and fake forms have been made against petitioner but show cause notice issued was without any of these allegations and without any details - opportunity not provided to petitioner to effectively deal with the allegations - HELD THAT:- It is difficult to understand why Respondent No.3 could not have provided all the details alongwith the show cause notice. This is a serious lapse and we find in many matters the concerned officers do not provide all the details. Perhaps, they do not have proper training on adjudication matters or they are not even aware about the legal provisions or need to follow principles of natural justice. The impugned order alongwith show cause notice is hereby quashed and set aside. Respondent No.3 may issue a fresh show cause notice to petitioner containing every detail by which Respondent No.3 feels tax is sought to be evaded by not recording or recording in an incorrect manner or petitioner has claimed or deducted incorrectly. Petitioner shall file detailed reply within two weeks of receiving the show cause notice - Respondent No.3 may then pass final assessment order within eight weeks of receiving reply after giving personal hearing to petitioner, notice whereof shall be communicated atleast seven working days in advance. The assessment order shall contain all reasons for arriving at the findings there in and if the Assessing Officer does not agree with petitioner s contentions, detailed reasons as to why he disagrees shall also be given in the Assessment Order. Petition disposed off.

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• 2022 (11) TMI 261
  Violation of principles of natural justice - Legality and validity of the revisional order - challenge on the ground that the revisional authority had granted seven days time to the petitioner to file objection to the notice proposing revision but without exhaustion of the aforesaid period, the revisional order has been passed - HELD THAT:- When the 1st respondent had granted seven days time to the petitioner to submit written objection on the proposed revision of assessment, he ought to have waited till expiry of the aforesaid period. Without the aforesaid period being completed, 1st respondent hastily passed the order dated 16.07.2022 thereby pre-empting the petitioner from filing written objection. When the show cause notice itself clearly says that petitioner should file written statement within seven days of receipt of the notice, we fail to understand as to how 1 st respondent could have arrived at such a conclusion - We are not satisfied with such an explanation. However, in the present proceeding we are not inclined to delve into this aspect of the matter but in an appropriate case we may consider awarding exemplary costs if we are of the view that such mistakes are not bona fide. The revisional order dated 16.07.2022 is set aside - matter remanded back to the 1st respondent. Petitioner shall submit written objection to the show cause notice dated 08.07.2022 within seven days from the date of receipt of a copy of this order whereafter 1st respondent shall pass fresh order in accordance with law after giving due opportunity of hearing to the petitioner - petition allowed by way of remand.

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• 2022 (11) TMI 217
  Maintainability of petition - availability of efficacious alternative statutory remedy of filing of appeal - inter-state purchase of HSD at concessional tax rates against C-Forms - deletion of entry in registration certificate - Section 49 (4) of Chhattisgarh Value Added Tax, 2005 - whether proper notice was issued to petitioners for Sales Tax (Central) or not? - HELD THAT:- Normally writ petitions filed by-passing alternate statutory remedy available under the law are not to be entertained, but there is no absolute bar. The bar created by Courts is self-restrained. Recently, in case of Assistant Commissioner of Sales Tax others vs. Commercial Steel Limited [ 2021 (9) TMI 480 - SUPREME COURT ], Hon ble Supreme Court while dealing with question of maintainability of writ petition has held that the High Court having regard to the facts of the case, can exercise discretion to entertain or not to entertain writ petition. An alternative remedy is not an absolute bar for invoking writ jurisdiction of the High Court under Article 226 of the Constitution of India and in cases where the authority against whom writ is filed is shown to have had no jurisdiction or had usurped jurisdiction without any legal foundation, writ petition can be entertained. In the case at hand, petitioners, who are registered dealers under the Act of 2005 as also the Act of 1956, have been awarded contract by South Eastern Coalfields Ltd. for execution of work of excavating overburden (all kinds of strata/ overburden in situ), loading into tippers, transportation and unloading of excavated materials; sprinkling spreading of material at the site shown and other related works, awarded to them by South Eastern Coalfields Ltd. under contract. After award of contract, petitioners submitted application seeking inclusion of high-speed diesel (HSD) and mining in their registration certificates under the Act of 2005 and in certificate under the Act of 1956. Accordingly, their registration certificates were amended - The petitioners have raised the ground that respondent Department had not issued proper notice under Section 49 (3) of the Act of 2005 for deleting entries mining and high-speed diesel (HSD) from their registration certificates and deleted entries mining and high-speed diesel (HSD) from the registration certificates of petitioners issued under the Act of 1956. In some case, after deletion of entries from registration certificate, consequential order of recovery of tax with penalty has been passed against petitioners concerned. It is apparent that respondent Department had suo motu decided revision No.146 K.C. - 1/20 (Central) without issuing notice and without giving opportunity of being heard to registered dealer i.e. petitioner herien, which is mandatory under the provisions of Section 49 (3) the Act of 2005 and Rule 9 of the Rules of 1957. This Court is of the view that the order impugned with respect to suo motu revision No.146 K.C.-1/20 (Central) is passed in violation of provisions of the Act of 2005 as also the Rules of 1957 as no notice under Section 49 (3) of the Act of 2005 was issued giving opportunity of hearing to registered dealer before amending registration certificate issued in Form-B under Rule 5 of the Rules of 1957 by deleting entries made thereunder. Hence, in the opinion of this Court there was violation of principles of natural justice. This being the position, the impugned order is liable to be and is hereby quashed - petition allowed.

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• Indian Laws

• 2022 (11) TMI 216
  Dishonor of Cheque - vicarious liability of an independent director - active role played in the transactions or business of the company or in any day to day affairs of the company - specific allegations against the petitioner to show as to how the petitioner had knowledge or was involved in the transaction alleged in the complaint, present or not - HELD THAT:- Coming to the facts of the present case, a perusal of Form No. DIR-12, dated 16.01.2017, of the accused company K.S. Oils Limited shows that the petitioner was an independent director at the time of commission of the offence. In view of Section 141 of Negotiable Instruments Act, 1881 and Section 149 of Companies Act, 2013 petitioner could have been held vicariously liable only if it was shown that she was incharge of and was responsible for the conduct of the business of the company at the time of commission of offence, and not otherwise. The general allegations have been made against all the directors of the accused company. Such mere allegation or bald assertion may be sufficient to implicate the Managing directors as well as those who are signatories to cheque, but not the other directors or persons, especially independent or non-executive directors, as held in catena of judgments. In fact, it has come to the knowledge of this Court that in reference to the same complaint case and summoning order, two other directors of the accused company namely Sanjay Aggarwal, arrayed as accused no. 5 in complaint, and Sourabh Garg, arrayed as accused no. 6 and 11 in complaint, had also filed petitions i.e., Crl. M.C. 5852/2019 and Crl. M.C. 5799/2019 before this Court seeking quashing of summoning order qua them. In these petitions, a Coordinate bench of this Court vide order dated 16.08.2022 has quashed the summoning order with regard to the petitioners therein, on the ground that they were not even the directors in the accused company at the relevant point of time and had resigned even before the agreements were entered into between the accused company and complainant - In absence of any specific averments or allegations carving out a specific role attributable to petitioner in relation to conduct of business of accused company, merely making bald statements that all the accused persons/directors were incharge and responsible for the day to day affairs of the company, does not suffice to make the petitioner herein vicariously liable for dishonouring of the cheques not signed by her and there being material on record to show that she was an independent director in the company. In S.M.S. Pharmaceuticals Ltd. [ 2005 (9) TMI 304 - SUPREME COURT ], and affirmed recently in Sunita Palita [ 2022 (8) TMI 55 - SUPREME COURT ] by the Apex Court, liability depends on the role one plays in the affairs of a company and not on designation or status alone. As also held by the Apex Court inM/S. PEPSI FOODS LTD. ANR VERSUS SPECIAL JUDICIAL MAGISTRATE ORS [ 1997 (11) TMI 518 - SUPREME COURT] , summoning an accused person cannot be resorted to as a matter of course and the order must show application of mind. The impugned order is quashed to the extent of issuing of summons to the present petitioner for alleged commission of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - petition allowed.

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