TMI Tax Updates - e-Newsletter
December 2, 2020

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Securities / SEBI

Articles

1. The compliance of Dynamic Quick Response (QR) Code is relaxed till 31.03.2021 provided it is complied from 01.04.2021

   By: Ganeshan Kalyani

2. TO REMOVE EXCESSIVE TAX BURDEN ON SELF- EMPLOYED AND SALARIED PEOPLE -TAX RATE OF FIRMS AND MARGINAL TAX RATES FOR INDIVIDUALS AND HUF SHOULD ALSO BE REDUCED IN TUNE WITH LOWEST RATE FOR COMPANIES.

   By: DEVKUMAR KOTHARI

News

1. Update on auto-population of e-invoice details into GSTR-1

2. ₹ 1,04,963 crore of gross GST Revenue collected in the month of November 2020

3. CCI approves acquisition of Rivigo Services Private Limited (Rivigo) by Spring Canter Investment Ltd (SCIL) through subscription of compulsorily convertible preference shares

4. Finance Minister delivers keynote address at the inauguration of the Sri Lanka Economic Summit 2020

5. Indian growth story continues as is demonstrated by the trends in FPI, FDI and Corporate Bond Market flows

6. ADB, India sign $132.8 million loan to strengthen Meghalaya’s power distribution Sector

7. Board of Trade meeting to be held on 2nd December, 2020

Notifications

Companies Law

1. S.O. 4283 (E) - dated 27-11-2020 - Co. Law

Central Government designates Special Courts in the States of Maharashtra, West Bengal and Tamil Nadu

Customs

2. 42/2020 - dated 1-12-2020 - ADD

Seeks to amend notification No. 21/2016-Customs (ADD) dated 31st May, 2016 to extend the levy of Anti-Dumping duty on Methylene chloride originating in or exported from China PR, up to and inclusive of 31st Jan, 2021

GST - States

3. (43/2020)-FD 03 CSL 2020 - dated 19-11-2020 - Karnataka SGST

State Government appoints the 10th day of November, 2020, as the date on which the provisions of Section 7 of the Karnataka Goods and Services Tax (Amendment) Act, 2019 shall come into force.

4. 88/2020 - State Tax - dated 20-11-2020 - Maharashtra SGST

Seeks to implement e-invoicing for the taxpayers having aggregate turnover exceeding ₹ 100 Cr from 1st January 2021.

5. 85/2020-State Tax - dated 20-11-2020 - Maharashtra SGST

Seeks to notify special procedure for making payment of 35% as tax liability in first two month

6. 84/2020-State Tax - dated 20-11-2020 - Maharashtra SGST

Seeks to notify class of persons under proviso to section 39(1).

7. 81/2020-State Tax - dated 20-11-2020 - Maharashtra SGST

Seeks to notify amendment carried out in sub-section (1), (2) and (7) of section 39 vide Mah. Act No. XXXI of 2019

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/DOP/CIR/P/2020/235 - dated 1-12-2020

Relaxation in timelines for compliance with regulatory requirements

Highlights / Catch Notes

Income Tax

• Penalty Upheld u/s 271(1)(c) for Unsubstantiated Expenses and Discrepancies in Income Reporting vs. Form 26AS.

  Case-Laws - AT : Penalty u/s 271(1)(c) - excessive retainership expenses and not supported by the evidences and difference in the income as per TDS claimed in return of income and 26AS - Levy of penalty confirmed - AT
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• Assessing Officer Exceeded Authority by Evaluating MD's Remuneration in Limited Scrutiny Without Proper Approval.

  Case-Laws - AT : Remuneration paid to the Managing Director - Limited scrutiny assessment - AO did not make any discussion on the deductibility or otherwise of losses and examined the reasonableness of remuneration paid to the Managing Director which is beyond the jurisdiction of the AO as per the scrutiny guidelines. In case the AO intends to examine the issue, the AO ought to have converted the case into complete scrutiny, after obtaining the approval from the Pr.CIT or CCIT as applicable. - AT
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• CIT's revision u/s 263 challenged; AO's 30% tax rate on unexplained stock investments vs. CIT's 60% rate.

  Case-Laws - AT : Revision u/s 263 - As per CIT taxing the income @30% on the additional income representing the unexplained investment in stock required to be brought to tax u/s 115BBE and to be levied @60% instead of 30% - Once AO had taken a conscious decision and acted in accordance with law and made the assessment, the same could not be branded as erroneous by the Commissioner, simply because according to him, the Assessing Officer should have made further enquiries - AT
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• Assessing Officer Can't Base Additions Solely on Section 132(4) Statements; Only Profit from Unaccounted Cash is Taxable.

  Case-Laws - AT : Unaccounted cash receipts - on money for the additional work executed - All these facts and circumstances support that only profit required to be brought to tax but not the entire receipts. The assessee had admitted the income @ 30% on additional receipts which appears to be fair and reasonable.The AO cannot make addition solely on the basis of statement u/sec. 132(4) without considering the entire facts and the expenditure - AT
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• Bank Statements Not Books: Deposits Taxed u/s 69, Not Section 68, of Income Tax Act.

  Case-Laws - AT : Addition u/s 68 v/s 69 - bank statement or bank passbook cannot be considered to be the books of accounts maintained by the assessee. - As per section 68 of the Act, only the credits made in the books of accounts, that were not explained by the assessee required to be brought to tax. Since the deposits were made in the bank account, the same required to be taxed u/s 69, but not u/s 68 - AT
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• Unexplained Income from Forfeited Advance Not Taxable u/s 56(2)(ix), Covered by Section 51 for 2014-15.

  Case-Laws - AT : Addition of unexplained income - earnest/advance money under agreement to sell - The copy of the bank statements have been duly provided to the revenue authorities. The amount forfeited subsequently is not taxable under “income from other sources” u/s 56(2)(ix) in the assessment year 2014-15 but is a subject matter of provisions of Section 51 of the Act effective for the year under consideration. - AT
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Customs

• High Court Rules 14-Month Delay in COFEPOSA Detention Order Justified; No Impact on Legitimacy of Detention.

  Case-Laws - HC : Smuggling - detention of the petitioner - COFEPOSA Act - delay of 14 months in passing the detention order - the live link remains always active and the respondents have been able to satisfactorily explain that there was no inordinate delay in passing of the detention order which might have resulted in snapping the link between the illegal and detrimental activities of the detenue and the detention order - HC
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Corporate Law

• Diverse Expert Tribunals Essential for Timely Justice under Article 226; Independence and Competence Crucial to Reduce Caseloads.

  Case-Laws - SC : Tribunal - it is crucial that these tribunals are run by a robust mix of experts, i.e. those with experience in policy in the relevant field, and those with judicial or legal experience and competence in such fields. The functioning or non-functioning of any of these tribunals due to lack of competence or understanding has a direct adverse impact on those who expect effective and swift justice from them. The resultant fallout is invariably an increased docket load, especially by recourse to Article 226 of the Constitution of India. These aspects are highlighted once again to stress that these tribunals do not function in isolation, but are a part of the larger scheme of justice dispensation envisioned by the Constitution and have to function independently, and effectively, to live up to their mandate. - - SC
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SEBI

• SEBI Investigates Forward Trade Irregularities, Applies Piercing the Corporate Veil Doctrine in June 2011 Show Cause Notice.

  Case-Laws - SC : Forward trade in commodities - Trading Irregularities - Piercing of corporate veil - Issuing show cause notice to the second respondent and not to the first respondent - We are conscious of the fact that Respondent No.1 herein is a separate legal entity being a registered company, but the concept of piercing the veil is not unknown to law. By this process, the law either goes behind the corporate personality to the individual members or ignores the separate personality of the company. - No fresh show cause notice is required to be served on Respondent No.1 herein and the show cause notice dated 21.6.2011 would be treated as a show cause notice to both Respondent Nos.1 and 2 herein. - SC
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Case Laws:

• Income Tax

• 2020 (12) TMI 27
  Exemption u/s 11 and 10(23C)(iv) - income applied for charitable purposes exceeded 85% - AO held that the assessee is not eligible for exemption u/s 11 of the act on the reason that the assessee is engaged in commercial activities - HELD THAT:- Respectfully following the decisions of the Hon ble ITAT, Visakhapatnam in the assessee s own case for A.Ys.2010-11 to 2012-13 A.Ys 2013-14 to 2015-16 [ 2017 (11) TMI 673 - ITAT VISAKHAPATNAM] , [ 2019 (1) TMI 1066 - ITAT VISAKHAPATNAM] it is held that the activities of the assessee are not in the nature of trade, commerce or business or rendering of any service in relation to any trade, commerce or business and the proviso to sec.2(15), therefore has no application to the assessee s case. Consequently, it is held that the assessee is eligible for exemption u/s 11 as well as u/s 10(23C)(iv) of the Act. - Decided in favour of assessee. Difference in gross receipts declared by the assessee in Form 26AS - CIT(A) after examining the revised Form 26AS allowed the appeal of the assessee and deleted the addition - HELD THAT:- There was no difference in the receipts declared by the assessee and the receipts as per Form 26AS in respect of BCCI. The Ld.CIT(A) also given a finding that even infrastructure subsidy amounting to Rs. 5,16,67,017/- received from BCCI which was taken to balance sheet is treated as income of the assessee, the amount applied for charitable purposes is higher than the income of the assessee and allowable for exemption u/s 11 of the Act. Form 26AS is a statement which is also available to the AO. Further the assessee filed rectification petition before the AO during the pendency of the appeal proceedings. Instead of examining the correctness of 154 petition, it is seen that the AO rejected the petition on the plea of pendency of appeal before the CIT(A). When there is prima facie mistake, it is the obligation of the AO to rectify the mistake, even though the appeal is pending before the appellate authorities and submit the copy of rectification order for further action of Ld.CIT(A). Instead, the AO rejected the rectification petition, hence, AO should not have any grievance for further opportunity. Ld.CIT(A) is empowered to verify the corrections and decide the issue. Since the Ld.CIT(A) has examined the issue and found that there was no short admission of receipts, we find no reason to interfere with the order of the Ld.CIT(A) accordingly, ground No.(iii) of the revenue is dismissed. Contravention to Rule 46A of the IT Rules - HELD THAT:- With regard to reconciliation of gross receipts declared by the assessee and as per Form 26AS, we have already discussed in the earlier paragraphs that the assessee has filed 154 petition furnishing the complete details, which, the AO has rejected for the reason that the appeal was pending. Since the issue was already placed before the AO and the AO has rejected the assessee s petition for rectification we, find no infirmity in the order of the Ld.CIT(A) and accordingly ground No.(iv) is dismissed.

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• 2020 (12) TMI 26
  Exemption u/s 11 - tribunal directing CIT(E) to grant registration u/s 12-AA holding that class of beneficiaries are undoubtedly public or a wide section of public - assessee is having mixed objects, some of which are charitable and some of which are religious - Whether ingredients of section 12-AA were not satisfied in the case of the assessee - HELD THAT:- In RAMCHANDRA SHUKLA VS. SHRI MAHADEOJI , AIR [ 1969 (10) TMI 76 - SUPREME COURT ] has held that in Hindu system there is no line of demarcation between religion and charity is regarded as part of the religion. In CIT vs. Barkate [ 1993 (11) TMI 13 - GUJARAT HIGH COURT ] by placing reliance on aforesaid decisions of the Supreme Court held that the words trust for charitable purpose would include even trust for advancement of religion. It may be noted that if the object of the trust is partly religious and partly charitable, so long as no part of income or corpus is utilized for a purpose, which is not either charitable or religious, a trust is entitled to exemption under Section 11(1)(a) of the Act and such a trust is entitled for registration under Section 12AA of the Act. We are in agreement with the view taken by High Court of Gujarat. The decision relied upon by the revenue in case of SHERVANI CHARITABLE TRUST [ 2006 (8) TMI 631 - ALLAHABAD HIGH COURT ] has no application to the facts of the case as in the aforesaid case only 1/3rd of the income was to be spent on charitable objects and remaining income was to be spent on maintenance and support of members of the settlors family. Therefore, in the aforesaid case it was held that the assessee is not entitled to the benefit of exemption, which admittedly is not a case here. substantial questions of law framed by a bench of this court are answered against the revenue

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• 2020 (12) TMI 25
  Benefit of deduction u/s 10A - relief in respect of the recruitment fee was denied on the ground that such activity has no nexus with the activity of export of computer software - tribunal did not decide the grounds raised by the assessee and held that the same are academic - HELD THAT:- From perusal of the grounds raised by the assessee before the Tribunal as well as the order passed by the Tribunal, it is evident that the grounds raised by the assessee has not been adjudicated by the Tribunal and the Tribunal has held the same to be academic. Tribunal ought to have adjudicated the grounds raised by the assessee on merits instead of holding the grounds to be academic and not deciding the same. The order passed by the Tribunal is hereby quashed and the matter is remitted to the Tribunal to adjudicate ground No.16 afresh in accordance with law.

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• 2020 (12) TMI 24
  Revision u/s 263 - Deduction of rupees 1 crore u/s. 54EC denied - CIT directed the assessing officer to disallowed the deduction to the extent of rupees 50 lakhs holding that the phrase during any financial year means during any financial year after the first day of April 2007 and the intention of law was to identify any one of the financial years following 1.4.2007, and did not intend to include therein more than one financial year simultaneously? - HELD THAT:- Twin conditions are required to be satisfied for exercise of revisional jurisdiction under Section 263 of the Act. Firstly, the order of the Assessing Officer is erroneous and secondly, that it is prejudicial to the interest of the revenue on account of error in the order of assessment. The aforesaid provision was considered by the Supreme Court in MALABAR INDUSTRIAL COMPANY VS. CIT , [ 2000 (2) TMI 10 - SUPREME COURT ] and it was held that the phrase prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer and every loss of revenue as a consequence of the order of the Assessing Officer cannot be treated as prejudicial to the interest of revenue. It was further held that where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, the order passed by the Assessing Officer cannot be treated as erroneous order prejudicial to the interest of the revenue. If the facts of the case in hand are examined, it is axiomatic that the view taken by the Assessing Officer was one of the possible views. Therefore, the Commissioner of Income-Tax has not rightly invoked the powers under Section 263 of the Act.- Decided in favour of the assessee.

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• 2020 (12) TMI 23
  Short term capital computation - Disallowance of cost of acquisition - tribunal denying the capitalization of the interest on borrowed funds - purchase consideration and utilization of borrowed funds - HELD THAT:- Tribunal has agreed with the findings recorded by the Assessing Officer and has held that the Assessing Officer has rightly not granted the benefit of Rs. 50,00,000/- to the assessee towards cost of acquisition. It has further been held that there is no direct nexus between the loans advanced to the assessee by Dr.Manjunath and investment made by the assessee in the property in the same year and the money has been repaid to Dr.Y.S.Manjunath prior to sale of the property. The tribunal has therefore held that the amount of Rs. 7,00,000/- cannot be included in the cost of acquisition. The findings recorded by the tribunal are based on meticulous appreciation of evidence on record which by no stretch of imagination can be said to be perverse. Even otherwise, the matter stands concluded against the assessee by findings of fact, which are based on meticulous appreciation of evidence on record. The findings of fact do not suffer from any perversity warranting interference of this court in exercise of powers under Section 260A

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• 2020 (12) TMI 22
  Rectification u/s 254 - Deduction u/s 10A - income from human resource services - Whether tribunal was correct in recalling the order dated 25-05-2012 u/s 254(2) wherein it was held that income from manpower supply was income from other sources and therefore, does not qualify for deduction under Section 10A? - HELD THAT:- From perusal of the submissions recorded by the tribunal in the order dated 25.05.2012, it is evident that no such alternative submission as recorded in paragraph 29 was made by the assessee. However, the tribunal has not adjudicated the issues on merits and has recorded the alternative contention which was not taken by the assessee. Therefore, the tribunal has rightly invoked the powers under Section 254(2) of the Act as the order passed by the tribunal suffers from the mistake apparent on the face of the record. Substantial question of law framed in these appeals are answered against the revenue.

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• 2020 (12) TMI 21
  Addition u/s 68 v/s 69 - deposits made by the assessee in the bank account in the form of cash in Andhra Bank - HELD THAT:- AO is not permitted to make addition u/s 68 in respect of deposits made in the bank accounts. As per section 68 of the Act, only the credits made in the books of accounts, that were not explained by the assessee required to be brought to tax. Since the deposits were made in the bank account, the same required to be taxed u/s 69, but not u/s 68 of the Act. This Tribunal in the case of Asha Sanghavi [ 2019 (11) TMI 868 - ITAT VISAKHAP ATNAM] held that the addition made in respect of bank deposits u/s 68 cannot be sustained and the bank statement or bank passbook cannot be considered to be the books of accounts maintained by the assessee. Accordingly deleted the addition. - Decided in favour of assessee.

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• 2020 (12) TMI 20
  Validity of assessment order - statutory notice u/s 143(2) was not served on the assessee - HELD THAT:- We fail to understand that when assessee in the return of income for the impugned assessment year has mentioned the office address, then what prompted the Department to issue notice under section 143(2)/143(1) of the Act for the impugned assessment year on an address different from the officie address of the assessee. AR has made a statement at the Bar that the assessee at no point of time has intimated the address to the Department on which the statutory notice under section 143(2) was sent and there has been no change in the office address of the assessee. Departmental Representative stated that the Department is under major restructuring drive and further due to COVID-19 pandemic it would be difficult to retrieve the records at an early date. Taking into consideration entirety of facts, we deem it proper not to decide ground No.1 at this stage. The issue is left open to be adjudicated at a later point of time, if need arises. Exemption u/s 11 denied - activities carried by the assessee fall within the realm of object of general public utility , hence, proviso to section 2(15) gets attracted - HELD THAT:- As decided in own case after considering various judicial pronoucements and different facets of the arguments raised by rival sides, the Tribunal concluded that the activities carried out by the assessee fall within the ambit of charitable purpose under section 2(15) of the Act and the proviso to said section does not get attracted.The Tribunal while deciding the issue of assessee s eligibility to claim benefit of section 11 and 13 of the Act was alive to the fact that assessee is a creation of statute and is an extended arm of State Government.

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• 2020 (12) TMI 19
  Unaccounted cash receipts - on money for the additional work executed - statement recorded u/sec. 132(4) relied upon for making the addition - whether the entire additional receipt constitute income or not when unaccounted expenditure is also involved? - CIT(A) deleted the addition holding that the assessee has received the on money for the additional work executed by them and the entire receipts cannot be treated as income - HELD THAT:- AO made the addition solely on the basis of statement recorded u/sec. 132(4) without considering the other issues and facts involved in construction with regard to the additional expenditure related to construction of flats. No other evidence was brought on record by the AO to controvert the statement regarding receipt of additional receipts for additional work carried out by the assessee. This fact was supported by the information found from the table of the Accountant indicating the additional receipt as well as expenditure. The assessee has explained during the course of assessment proceedings that the additional income of Rs. 750/- per sq.ft. was accepted without taking into consideration of the land owners share. The assessee from the beginning explained that the additional receipts were received for earning the additional work. All these facts and circumstances support that only profit required to be brought to tax but not the entire receipts. The assessee had admitted the income @ 30% on additional receipts which appears to be fair and reasonable.The AO cannot make addition solely on the basis of statement u/sec. 132(4) without considering the entire facts and the expenditure, therefore we do not find any reason to interfere with the order of the ld.CIT(A) and the same is upheld and the appeal of the Revenue is dismissed for both the assessment years. Addition u/s 147 - As argued that the assessment made u/sec. 143(3) r.w.s. 147 is bad in law - HELD THAT:- . During appeal hearing, ld.DR did not place the reasons recorded by the AO for reopening the assessment before us. However, as seen from the assessment order the assessee has accepted the additional income u/sec. 132(4) on the basis of information collected by the AO during the search proceedings thus there was escapement of income and hence, we hold that reopening of assessment by issue of notice u/sec. 148 is valid.

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• 2020 (12) TMI 18
  Unaccounted receipts as income - Survey u/s 133A - loose sheets were found disclosing the unaccounted receipts which were received in cash as well as cheque - assessee had admitted the entire undisclosed receipts as income for various assessment years, however, offered only 30% of the undisclosed receipts as income in the return filed in response to notice issued under section 148 - HELD THAT:- From the finding of the CIT(A) as well as the submissions made by the assessee before the AO and during the course of assessment proceedings, it is observed that the unaccounted cash expenditure was not considered while admitting the additional income. The assessee admitted the entire cash receipts as additional income and the department has accepted the same without going into further details of unaccounted expenditure. AO also did not work out the cost of construction of additional works for the flat and arrived at the profit. In normal practice, the AO should consider the expenditure for construction of the flats including cash expenditure and arrive at the cost of construction. From the total sale proceeds i.e. cash receipts as well as bank receipts, cost of construction required to be reduced and net profit required to be brought to tax. AO may also go into the details of unaccounted expenditure and make addition invoking the relevant provisions of the Act. AO has not done such exercise in this case. AO also did not consider the unaccounted expenditure incurred though the evidences are available in the impounded material. AO also did not refer the cost of construction to the departmental valuation and simply estimated the unaccounted receipts @1000/- per sq.ft in respect of residential area and Rs. 1500/- per sq.ft in respect of commercial area without arriving at the actual cost of construction with accounted expenditure and the unaccounted expenditure which is baseless. Also incumbent upon the AO to arrive at the accounted receipts and unaccounted receipts and the actual expenditure incurred. No such exercise was done by the AO and simply taxed the entire unaccounted receipts which were offered by the assessee at the time of survey. When there is evidence available with regard to unaccounted expenditure and receipts, taxing the entire unaccounted receipts as income is unjustified. Hence, estimation of income made by the assessee which was accepted by the Ld.CIT(A) appears to be reasonable, hence, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue.

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• 2020 (12) TMI 17
  Exemption u/s 11 - Addition towards surplus income - HELD THAT:- Assessee furnished the details and the CIT(A) called for the remand report. During the remand proceedings, the assessee furnished complete details, i.e.ledger accounts and expenses which were examined by the AO and discussed by the Ld.CIT(A) head-wise in his appeal order. The AO at no point of time, made any adverse comments with regard to the exemption claimed by the assessee. CIT(A) granted exemption u/s 11 on the basis of the remand report submitted by the AO. The Ld.CIT(A) directed the AO to grant exemption u/s 11 and observed that the AO did not make any adverse observation against Manager of the Trustee or Society in the remand report with regard to misappropriation of the funds of the Society. Further, we find from the order of the Ld.CIT(A) that no violation u/s 13(1)(c) was brought on record by the AO in the remand report. Therefore, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. Ground of the department is dismissed. Disallowance to 50% of the expenditure incurred on boarding and lodging expenses - HELD THAT:- As stated that the assessee could not furnish some of the details, such as names of persons, their identity and purpose of visit etc., which created suspicion to hold that the expenditure was not completely verifiable. Since the assesse has furnished the information merely because of the failure of the assessee to furnish some of the details such as names of persons, purpose of visit etc., disallowance of the entire expenditure unjustified. The assessee is engaged in running the educational institutions and it is needless to say that it has to engage the faculty from outside for which the expenditure required to be incurred. AO did not doubt the genuineness of expenditure. Therefore, we hold that restricting the expenditure to the extent of 50% is reasonable and no interference is called for in the order of the Ld.CIT(A). Therefore, appeal of the revenue on this ground is dismissed. Interest payment to interested persons @18% - AO disallowed the entire interest because of non response from the assesse to the notices issued - HELD THAT:- The assessee has paid the interest @18% to the interested persons and explained that interest payment was on par with the market rate and there was no pressure from the lenders for immediate payment of the principle. CIT(A) viewed that there is no bar on payment of interest @18% and the same is on par with the market rate. The department did not bring any material to show that the funds are available in the market for interest lesser than 18%. Since the CIT(A) has given a finding that the interest payment @18%, is on par with the market rate and the department failed to bring any material to controvert the finding given by the Ld.CIT(A) we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the Revenue on this ground is dismissed. Addition on building rent - CIT-A deleted addition - HELD THAT:- AO did not dispute the genuineness of rent payments as observed from the remand report as well as the order of the Ld.CIT(A) in the earlier years as per the said agreement. AO also did not suspect the genuineness of the rent payment to Smt.M.Sucharitha in the impugned assessment year. Before the Ld.CIT(A), the assessee furnished the rent agreement which was verified by the Ld.CIT(A) and allowed the expenditure. The assessee filed paper book wherein the assessee has furnished the copies of rental agreement, wherein, the property was let out to the assessee for a monthly rent of Rs. 1,00,000/- per month and the same was used for hostel building by the society. Therefore, we do not see any reason to interfere with the order of the Ld.CIT(A). Addition for vehicle rents - CIT(A) deleted the addition towards the car rent and confirmed the addition towards tractor - HELD THAT:-.CIT(A) found that the AO did not make proper enquiry to enable the assessee to produce the details and accordingly confirmed the addition of Rs. 3,60,000/- towards tractor rent and deleted the balance. From the order of the lower authorities, we observe that the department did not make out case that the expenditure was not incurred by the assessee. We also observe from the paper book page No.20 to 23 that there was written agreement dated 10.04.2009 from M.Sucharitha for letting out the cars to the assessee. Since the assessee has produced ledger accounts and rental agreements in respect of cars and no material was brought on record by the AO to controvert the finding of the Ld.CIT(A) with regard to non utilisation of cars by the Trust, we are unable to disagree with the Ld.CIT(A), accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue.

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• 2020 (12) TMI 16
  Revision u/s 263 - As per CIT taxing the income @30% on the additional income representing the unexplained investment in stock required to be brought to tax u/s 115BBE and to be levied @60% instead of 30% - search u/s 132 was conducted and excess stock was found which was admitted by the assessee as additional income - Pr.CIT viewed that the assessment order passed by the AO, taxing the income @30% instead of 60% is erroneous and prejudicial to the interest of the revenue - HELD THAT:- AO caused necessary enquiries after satisfying himself that the income representing the excess stock required to be brought to tax as business income, but not u/s 69 completed the assessment proceedings. The Ld.Pr.CIT taken a different view and held that the excess stock required to be brought to tax u/s 69 thus, on the same issue, on which the AO located the excess stock represents business income, the Ld.Pr.CIT has taken a different view and made revision u/s 263 of the Act. It is settled issue that on difference of opinion, the CIT is not permitted to make revision u/s 263. This view is supported by the decision of Hon ble jurisdictional High Court in the case of Spectra Shares and Scrips (P) Limited [ 2013 (6) TMI 173 - ANDHRA PRADESH HIGH COURT] held that merely because of difference of opinion, Pr.CIT cannot invoke his powers u/s 263 . As decided in G.V.R. ASSOCIATES VERSUS INCOME-TAX OFFICER [ 2017 (4) TMI 393 - ITAT VISAKHAPATNAM] estimation of the net profit is one of the permissible methods of assessment of income from business. AO had taken a conscious decision of estimating the net profit from business after considering the nature and complexity of the books of account maintained by the assessee. Once AO had taken a conscious decision and acted in accordance with law and made the assessment, the same could not be branded as erroneous by the Commissioner, simply because according to him, the Assessing Officer should have made further enquiries. - Decided in favour of assessee.

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• 2020 (12) TMI 15
  Revision u/s 263 - addition as excess stock declared during the course of search - AO did not make any addition or did not bring any income or part of income u/s 69 - Estimation of income - NP determination - AO estimated the income @2.15% on total turnover - HELD THAT:- Two views are possible with regard to excess stock found during the course of search in the premises of the assessee. According to the decisions relied upon by the assessee, the same forms part of business income and the same cannot be assessed u/s 69 or 69A - Since two views are possible on assessment of excess stock as business income as well as unexplained investment as per the views of Ld.Pr.CIT and the assessee, the AO after examining the explanation taken a view that the excess stock required to be assessed as business income, accordingly completed the assessment. Therefore, when two views are possible on the same issue and the AO has taken one of such views, the Pr.CIT is not permitted to substitute his view to tax the assessee at higher rate by applying the provisions of section 115BBE of the Act in the proceedings u/s 263. This view is supported by the decision of Hon ble jurisdictional High Court in the case of Spectra Shares and Scrips (P) Limited [ 2013 (6) TMI 173 - ANDHRA PRADESH HIGH COURT] held that merely because of difference of opinion, Pr.CIT cannot invoke his powers u/s 263. Also in G.V.R. ASSOCIATES [ 2017 (4) TMI 393 - ITAT VISAKHAPATNAM] held that the estimation of the net profit is one of the permissible methods of assessment of income from business. The Assessing Officer had taken a conscious decision of estimating the net profit from business after considering the nature and complexity of the books of account maintained by the assessee. Once the Assessing Officer had taken a conscious decision and acted in accordance with law and made the assessment, the same could not be branded as erroneous by the Commissioner, simply because according to him, the Assessing Officer should have made further enquiries. - Decided in favour of assessee.

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• 2020 (12) TMI 14
  Remuneration paid to the Managing Director - Limited scrutiny assessment - disallowance made as expenditure not wholly and exclusively laid out for the purpose of business - AO viewed that the payment as remuneration to the Managing Director is excessive but not due to the business expediency - HELD THAT:- Managing Director has offered the income in his hands and paid the taxes thereon. Merely because losses were set off against the income, it cannot be concluded that the payment of remuneration is a colorable device. Incorrect allowance of loss also is having potential tax effect, thus the reducing the loss is permitted as per law and the same cannot be equated with colourable device. Since the company felt that remuneration paid to the Managing Director was reasonable, burden shifts on the revenue to make out a case of fair value of remuneration with reference to identical facts and comparable cases apropos to the services rendered by the Managing Director. No such exercise was made by the AO. Therefore, we hold that the Ld. CIT(A) erred in upholding the decision of the AO in confirming the addition, hence, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. As observed from the order of the AO, the case was selected for scrutiny for limited purpose of verifying whether the deduction claimed on account of business loss is admissible or not. AO did not make any discussion on the deductibility or otherwise of losses and examined the reasonableness of remuneration paid to the Managing Director which is beyond the jurisdiction of the AO as per the scrutiny guidelines. In case the AO intends to examine the issue, the AO ought to have converted the case into complete scrutiny, after obtaining the approval from the Pr.CIT or CCIT as applicable. No such approval was obtained by the AO before going into the details of reasonableness of remuneration paid to the Managing Director. - Decided in favour of assessee.

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• 2020 (12) TMI 13
  Addition u/s 68 v/s 69 - deposits made in the bank account - AR argued that the addition made u/s 68 is unsustainable, since, the deposits were made in the bank accounts but not in the books of accounts - HELD THAT:- AO found that the deposits were made in Savings Bank account with Andhra Bank and the same was not taken in to account in books of accounts, thus, it is clear that the deposits made in the bank account were not entered in the books of accounts. Therefore, the AO ought to have considered the addition u/s 69 instead of 68. As discussed earlier, the deposits made in the bank account are not to be taxed u/s 68 of the Act and the correct course of action is to tax the same is u/s 69 of the Act. On similar facts, this Tribunal in the case of Smt.Asha Sanghavi [ 2019 (11) TMI 868 - ITAT VISAKHAPATNAM] held that the cash deposits required to be brought to tax u/s 69, but not u/s 68 of the Act. - Decided in favour of assessee.

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• 2020 (12) TMI 12
  Eligibility for exemption u/sec. 11 - Denial of exemption as activities of the local authorities as commercial in nature because the assessee is engaged in the activities of sale of plots, constructed houses, collection of various fees etc. - as per revenue assessee is carrying out sale of sites and houses and earning profits on such real estate activities - HELD THAT:- On appeal this tribunal has considered the above issues in detail in its order dated 20/03/2020 and held that the assessee is carrying on the activities in accordance with the objects and purpose for which it was established and there is no commercial activities. Accordingly, restored the registration and directed the AO to grant exemption u/sec. 11 to the assessee. Orders passed for the A.Ys. 2005-06 to 2007-08 2010-11 are covered by the order of this tribuna [ 2020 (3) TMI 1018 - ITAT VISAKHAPATNAM] hence, we set aside the orders of the lower authorities and direct the AO to allow the exemption u/sec. 11 and compute the income as per secs. 11 to 13 of the Act. Accordingly, appeals of the assessee are allowed.

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• 2020 (12) TMI 11
  Deemed dividend u/s 2(22)(e) - outstanding as on 31.03.2014 was a loan and the assessee got direct benefit from the company, hence taxed the same as deemed dividend - CIT(A) deleted the addition - HELD THAT:- CIT(A) correctly deleted the addition following the order of this Tribunal in the assessee s own case for the earlier assessment year 2014-15 [ 2018 (8) TMI 2004 - ITAT VISAKHAPATNAM] on identical facts wherein held the transactions between them are business transactions as brought out by the Assessing Officer at para 7.3 of the order. The non-business transactions are few and mostly are through journal entries and not receipts/payments. As facts being the same, respectfully following the order of CIT(A) for A.Y.2014- 15 and that of ITAT for A.Y2014-15, it is held that no direct or indirect benefit is derived by the appellant warranting addition u/s 2(22)(e). - Decided in favour of assessee.

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• 2020 (12) TMI 10
  Disallowance of payment made to third parties - assessee could not produce any evidences regarding payments made to third parties on the instruction given by the sub-contractors of the assessee - HELD THAT:- On perusal of the materials produced before us it seems that the subcontractors instructed the assessee to make payments to third parties on behalf of the sub-contractors and accordingly, the assessee issued account payee cheque in the name of such third parties. As observed by both Authorities below that the assessee failed to produce any supporting evidences in tune with the contentions made before both the Authorities below and now before this Tribunal, the Ld. AR fairly conceded that the assessee is ready to produce all the necessary evidences in support of his contentions. AR prayed to remand the issue to the file of Assessing Officer for fresh examination. DR reported no objection in remanding the issue to the file of the Assessing Officer for fresh verification. - Decided in favour of assessee for statistical purposes. Disallowance made u/s. 40A(3) - HELD THAT:- AR submitted that out of Rs. 3,75,000/-, the assessee made payment through account payee cheques for an amount of Rs. 80,000/- which is in accordance with provisions of Section 40A(3) we find no evidence in support of which filed even before us. But however, the Ld. AR prayed to remand this issue to the file of Assessing Officer for his limited verification and examination whether the amount of Rs. 80,000/- was paid in accordance with Section 40A(3) - we confirm the disallowance made in contravention of Section 40A(3) of the Act to the extent of Rs. 2,95,000/- (Rs. 3,75,000/- - Rs. 80,000/-). Therefore, we direct the Assessing Officer to examine the issue to an extent of Rs. 80,000/- involved in ground - Decided partly in favour of assessee.

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• 2020 (12) TMI 9
  Addition through a non speaking order - assessment U/s. 144 - Sale of Arricultural land - AO assessed income after allowing credit being sale consideration of said land as per the sale deed out of total bank deposits - CIT(A) during the appellate proceedings had admitted additional evidence filed by the assessee through an application under Rule 46A - HELD THAT:- Registered sale deed dated 05/05/2010 was executed by the assessee in favour of one Prithivi Singh S/o. Jaipal for the sale consideration of Rs. 6,95,000/- and this sale deed do not contain the details of execution of alleged agreement to sell dated 04/03/2010. As gone through the copy of agreement dated 04/03/2010 which was executed between the assessee and one Jaipal. On careful analyzing the said agreement dated 04/03/2010, we noticed that this agreement was not executed between the assessee and the said purchaser of land i.e. Prithivi Singh rather the said agreement has been executed between the assessee and one Jaipal S/o- Shri Banshi Ram who according to assessee, father of the purchaser Shri Prithivi Singh. Even otherwise, the said agreement dated 04/03/2010 do not contain signature of Jaipal on the said agreement which goes to prove that Jaipal was never signatory or party to the said agreement. Therefore, this document dated 04/03/2010 carries no evidentiary value. When a registered document has been placed on record Presumption is to be drawn that registered document in the shape of registered sale deed dated 05/05/2010 carried evidentiary value which shows that the consideration paid to the assessee for the sale of the land in question was only at Rs. 6,95,600/- and the A.O. had rightly completed the assessment at Rs. 13,79,400/- after allowing credit of Rs. 6,95,600/- being sale consideration of the said land as per sale deed out of the total bank deposits of Rs. 20.75 lacs. The decision of the Coordinate Bench of this Tribunal in the case of Shri Pappu Ram Saran [ 2020 (9) TMI 228 - ITAT JAIPUR] is of no help to the assessee as the facts contained in that case is altogether different from the facts of the present case- No new facts or circumstances have been brought before us in order to controvert or rebut the findings so recorded by the ld. CIT(A), therefore, we uphold the order of the ld. CIT(A) qua this issue. Appeal of the assessee is dismissed.

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• 2020 (12) TMI 8
  Assessment u/s 153A - JCIT has not applied his mind properly before giving approval - limitation as prescribed u/s. 153D - assessee submitted that the AO sent the draft assessment order before the JCIT for taking approval u/s. 153D of the Act of near about 75 cases on 29th December, 2017 and the ld. JCIT approved the draft assessment order on the same date - HELD THAT:- The provision of Section 153D of the Act states regarding making of the order within the stipulated period. Further from the reading of the provisions of Section 153D it is clear that there is no mention about the service of the order, however, it is only mentioned that the order shall be made . With regard to service it has clearly been defined in the section 143(2) of the Income Tax Act but in section 153D nowhere about service of order has been mentioned. The case laws relied on by the ld. AR of the assessee in the case of Dilip Constructions Pvt. Ltd.[ 2019 (12) TMI 311 - ITAT CUTTACK] is not applicable in the present facts of the case. Accordingly, we dismiss the legal grounds taken by the assessee. Addition on the documents found in the premises of Jami Siva Sai during the course of search proceedings - HELD THAT:- We are of the view that the AO is not justified in making the addition in the hands of the assessee of Rs. 75 lakhs. The AO did not follow the prescribed procedures, which ought to have been followed in cased of documents which was found in the case of other persons as prescribed u/s. 153C of the Act. Therefore, the entire addition made by the AO along with the interest made thereon is not correct. Accordingly, we delete the addition and interest charged. With regard to ground No. 4: since we have deleted the entire addition made by the AO and decided the appeal of the assessee on merits of the case, therefore, this ground is consequential in nature. Thus, the ground taken by the assessee on merits is allowed. Unexplained money u/s. 69 - HELD THAT:- Merely found the documents and if there is no transaction it cannot be said that the assessee has done the transactions outside his books of accounts or merely found the documents in the name of anybody cannot be said that the transactions have been occurred unless and until it is not established by confirmation from both the parties. Therefore, this addition made by the AO is deleted and this ground of appeal of the assessee is allowed. Addition u/s. 69 as unexplained money - agricultural income - HELD THAT:- Assessee not filed any supporting documents for agricultural income so that the agricultural income can be justified. We also observed that the figures of agricultural income is very zig-zag. Therefore, as per our considered opinion, this issue should go back to the file of AO for verification of accumulation of cash as stated above and the assessee is directed to prove the source of income shown as above. The assessee will also cooperate with the AO for above purpose without seeking any unnecessary adjournments. Needless to say, the assessee shall be provided reasonable opportunity of being heard to substantiate his claims. Thus, this ground of the assessee is allowed for statistical purposes. Unexplained investment in gold ornaments - HELD THAT:- CIT(A) has allowed 350 grams of gold ornaments. During the course of search proceedings, total gold were found at 4489.980 grams out of which the authorities below have allowed 2400 grams and remaining gold 1473.580+616.400 = 2089.980 were disallowed. After going through the records of the authorities below, we noted from the para 9 of the assessment order, that the assessee had filed confirmation letter of the persons whose name as stated above but these confirmations have not been disregarded by the AO as well as it has not been considered by the CIT(A).only 1003.80 grams belongs to the assessee and rest jewellery belongs to the respective names as mentioned above. This fact has not been controverted by any of the authorities below. Therefore, the remaining jewellery should be taxed in the hands of the respective names/owners. The assessee is required to explain only 1003.580 grams. Since the assessee is a male person so he is entitled for as per CBDT Instruction No. 1916 of 1994 and he is entitled for 100 grams of jewellery. Further, considering the status of the assessee, being a senior citizen of 73 years old, who belongs to well-established family and looking to the religious functions and marriage ceremonies in the family of the assessee, we deem it proper to allow 200 grams gold out of 903.580 (1003.580-100) grams. Now, gold remained to be explained by the assessee of 703.580 grams, out of which 616.400 grams gold were purchased from the HUF s fund as claimed by the assessee. Thus, if the assessee would be able to justify the cash availability in the hands of the HUF before the AO and it would be able to nullify the observation of the CIT(A) i.e. production of purchase bill, then the assessee will get relief of 616.400 grams or to the extent possible and the rest quantity is hereby disallowed. Accordingly, we restore this issue to the file of AO to consider the claim of the assessee as per our above observations. This ground of appeal of the assessee is partly allowed for statistical purposes.

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• 2020 (12) TMI 7
  Reopening of assessment u/s 147 - addition u/s 40A(3) - HELD THAT:- In the case of Godrej InduStries Limited Vs. B.S. Singh, DCIT Ors. [ 2015 (8) TMI 668 - BOMBAY HIGH COURT] has held that the validity of reopening notice shall be determined with reference to reasons which are recorded in support thereof and nothing else - in the absence of reason to believe that income chargeable had escaped assessment, re-assessment notice shall not be sustainable. We are confronted with a case in which the AO initiated re-assessment proceedings on the premise that the assessee had recorded bogus purchases to the tune of Rs. 8,33,600. Addition was finally made u/s 40A(3) of the Act by impliedly accepting the genuineness of the transactions. That being the position, we are of the considered opinion that the reassessment cannot be held to have been validly initiated. Hon ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] has held that the AO cannot proceed with re-assessment if the grounds mentioned in re-assessment are non- existent i.e., if no addition is made on that score. When we examine the factual scenario obtaining in the instant case on the touchstone the inescapable conclusion which can be drawn is that the only addition made in the re-assessment on a ground different from the one for which notice u/s 148 of the Act was issued, lacks legality. The same is, therefore, deleted - Decided in favour of assessee.

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• 2020 (12) TMI 6
  Disallowance u/s. 43B(f) - HELD THAT:- DR did not object to the suggestion of remanding the issue back to AO for deciding the matter as per the decision of the Hon ble Supreme Court in the case Exide Industries[ 2020 (4) TMI 792 - SUPREME COURT] - In the light of the aforesaid submissions, we set aside the impugned order of the Ld. CIT(A) and direct the AO to decide the impugned issue of leave encashment claim of Rs. 5,17,130/- in the light of the said decision of the Hon ble Supreme Court in the Exide case (supra). Needless to say that assessee should be given proper opportunity of hearing before the AO passes the order as per law. These grounds of assessee s appeal are allowed for statistical purpose. Deduction of donation u/s. 80G - Disallowance of exemption as the assessee did not produce any supporting documents - HELD THAT:- Since the assessee could not bring any material to show that the said cheque was encashed, the Ld. CIT(A) did not accept the claim of assessee. According to the Ld. AR, if an opportunity is given to assessee, it is ready to bring evidence on record to show that the assessee, in fact, had given cheque and the payments were in fact, credited in the accounts of said charitable trust. We set aside the impugned order of the Ld. CIT(A) and remand this issue also back to the file of the AO for fresh consideration/adjudication of the issue. If the AO after verification finds that the payments were credited/encashed by the donee-trust which, who enjoys the 80G approval, benefit/claim of deduction, may be allowed in accordance to law. This ground of assessee s appeal is allowed for statistical purpose.

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• 2020 (12) TMI 5
  Penalty u/s 271(1)(c) - excessive retainership expenses and not supported by the evidences and difference in the income as per TDS claimed in return of income and 26AS - HELD THAT:- Keeping in view the conduct and nature of the assessee that he has filed the appeal, but failed to appear before us on the aforementioned dates nor submitted any documents in support of his appeal nor appointed any authorized representative to appear on his behalf. There are no reasons for us to interfere into or deviate from the findings so recorded by CIT(A). Hence, we are of the considered view that the findings so recorded by the CIT (A) are judicious and are well reasoned. Resultantly, the grounds raised by the assessee stands dismissed.

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• 2020 (12) TMI 1
  Addition of unexplained income - earnest/advance money under agreement to sell - credit entries received by assessee from M/s True Value Contractors P. Ltd . - income from other sources - HELD THAT:- Assessee received an amount on account of sale of property and received money from one entity namely True Value Contractors Pvt. Ltd. whose name has been changed to Jaffna Contractors . The amount has been duly reflected in the bank account of the assessee and a certificate from the State Bank of India that the payments have been received from Axis Bank into the account of the assessee. The copy of the bank statements have been duly provided to the revenue authorities. The amount forfeited subsequently of Rs. 1,80,00,000/- is not taxable under income from other sources u/s 56(2)(ix) in the assessment year 2014-15 but is a subject matter of provisions of Section 51 of the Act effective for the year under consideration. Hence, we decline to interfere with the order of the ld. CIT (A) on this issue. The appeal of the revenue is dismissed.

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• Customs

• 2020 (12) TMI 4
  Smuggling - detention of the petitioner - COFEPOSA Act - delay of 14 months in passing the detention order - stand of the respondents is that the Deputy Commissioner of Police, Rohini, Delhi informed the respondents vide his letter dated 3rdMarch, 2016 that several visits were made at the address of the petitioner in Rohini to execute the detention order but no one could be found - HELD THAT:- The material placed before the Detaining Authority should be sufficient and the Detaining Authority ought to have scrutinized the same to reach a reasonable conclusion by due application of mind, so as to find grounds for issuing the preventive detention order stands satisfied in the present case and we do not find any blatant malice in issuance of the subject detention order dated 30th December, 2015. The next ground to challenge the impugned detention order is that there has been a long delay of 14 months in passing the detention order - HELD THAT:- It is pertinent to mention here that the link between the illegal and detrimental activities of the detenue and the detention order did not break at that stage as he never deterred from indulging in the said activities even after passing of the said detention order and in being full knowledge of the same. Hence, the live link remains always active and the respondents have been able to satisfactorily explain that there was no inordinate delay in passing of the detention order which might have resulted in snapping the link between the illegal and detrimental activities of the detenue and the detention order. The next ground agitated on behalf of the petitioner is that there is variance in the subjective satisfaction of the Detaining Authority - HELD THAT:- As per the respondents, there is no variance so as to confuse the detenue. All the grounds which lead to issuance of impugned detention order have been specifically laid down in the grounds of detention served upon the petitioner - In view of this and the details given in the grounds of detention, there cannot be any confusion in the mind of the petitioner/detenue, which might have deprived him of his legal right to submit his detailed representation. The next ground raised on behalf of the petitioner/detenue is that vital documents were not placed before the Detaining Authority - HELD THAT:- The relevant documents which were required for subjective satisfaction of the Detaining Authority wereduly placed before the Detaining Authority for consideration and on the basis of those documents, the Detaining Authority came to a conclusion that the detention order is necessary to be issued for preventive detention of the petitioner, so as to ensure that he does not indulge in illegal and detrimental activities and copies of the said documents have been supplied to the petitioner running into more than 600 pages as stated by the learned counsel for the respondent. However, each and every document referred to but not relied upon by the Detaining Authority to reach to its subjective satisfaction is not required to be supplied to the petitioner/detenue. Learned counsel for the petitioner has also argued that there was mechanical rejection of his representation dated 20th February, 2020 whereas the contention of the learned counsel for the respondent is that the said representation made to Detaining Authority was duly considered and rejected as the said documents were neither relied upon nor there was a basis of the subjective satisfaction of the Detaining Authority - HELD THAT:- When the documents asked for by the petitioner/detenue were not relied upon or are not the basis of the subjective satisfaction of the Detaining Authority, the detention order cannot be quashed on the ground that the said documents were not supplied and the representation for the supply of the said documents was rejected. Learned counsel for the petitioner has also argued that till date no prosecution has been launched in the case in hand, so his detention is vitiated - HELD THAT:- Where the petitioner/detenue himself has absconded for a considerable number of years and his son, who is a co-accused, is not traceable even on date, mere fact that the hearings in the case has not started, cannot be a ground for quashing of the preventive detention order which has got no direct connection with the proceedings to be launched by DRI before Court. Ground of oral undertaking by DRI of not taking any coercive action under Customs Act, 1962 - HELD THAT:- We do not agree with the learned counsel for the petitioner as mere moving an application for recall of the warrant cannot be a substitute of his personal presence before the Court on the basis of the bond executed by him before the Jail Superintendent at Vishakhapatnam. It is reiterated that the detenue has not surrendered before a Court in Delhi, where he was declared as a proclaimed offender and he failed to appear despite his undertaking, so these judgments are of no help to his cause. One last ground taken is that due to the pandemic and deteriorating medical condition of the detenue, he being a senior citizen and patient of diabetes and hypertension, he may be ordered to be released by this Court. In this regard, it is to be noted that although, the petitioner had made a representation before the High-Power Committee appointed by the High Court of Delhi for his release and has taken other steps before the Authorities, but it was not found to be a fit case for his interim release. Similar is our considered view. This Court arrives at a considered conclusion that the preventive detention order passed by the Joint Secretary, COFEPOSA under Section 3 (1) of COFEPOSA does not suffer from any illegality and is not liable to be quashed - Petition dismissed.

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• Corporate Laws

• 2020 (12) TMI 3
  Tribunals - Member of the Tribunal or Appellate Tribunal or other authorities - Constitutionality of various provisions concerning the selection, appointment, tenure, conditions of service, and ancillary matters relating to various tribunals - constitutional validity of the Tribunal, Appellate Tribunal and other Authorities [Qualification, Experience and Other Conditions of Service of Members] Rules, 2020 - Allegation that the Search-cum-Selection Committees provided for in the 2020 Rules did not conform to the principles of judicial dominance - Appointment of persons without judicial experience to the posts of Judicial Members/ Presiding Officer/ Chairpersons - terms of office - Advocates, eligible for appointment or not - Administrative control of the executive in matters relating to appointments and conditions of service - principles of separation of powers and independence of judiciary. National Tribunals Commission - HELD THAT:- The Union of India directed to set up a National Tribunals Commission as suggested by this Court by its order dated 07.05.2018 at the earliest. Setting up of such Commission would enhance the image of the Tribunals and instill confidence in the minds of the litigants. Dependence of the Tribunals for all their requirements on the parent Department will not extricate them from the control of the executive. Judicial independence of the Tribunals can be achieved only when the Tribunals are provided the necessary infrastructure and other facilities without having to lean on the shoulders of the executive. This can be achieved by establishment of an independent National Tribunals Commission - there should be a separate tribunals wing established in the Ministry of Finance, Government of India to take up, deal with and finalize requirements of all the Tribunals till the National Tribunals Commission is established. Search-cum-selection Committee - HELD THAT:- Rule 4 (2) of the Rules postulates that a panel of two or three persons shall be recommended by the Search-cum-Selection Committee from which the appointments to the posts of Chairperson or members of the Tribunal shall be made by the Central Government. The learned Amicus Curiae voiced serious objections to Rule 4(2) on the ground that it would be compromising judicial independence - The recommendations for appointments by the Search-cum-Selection Committee should be final and the executive should not be permitted to exercise their discretion in the matter of appointments to the Tribunals. Accordingly, we direct that Rule 4(2) of the 2020 Rules shall be amended and till so amended, that it be read as empowering the Search-cum-Selection Committee to recommend the name of only one person for each post. However, taking note of the submissions made by the learned Attorney General regarding the requirement of the reports of the selected candidates from the Intelligence Bureau, another suitable person can be selected by the Search-cum-Selection Committee and placed in the waiting list. In case, the report of the Intelligence Bureau regarding the selected candidate is not satisfactory, then the candidate in the waiting list can be appointed. Terms of Office - HELD THAT:- Section 184 of the Finance Act, 2017 provides for reappointment of Chairpersons, Vice-Chairpersons and members of the Tribunals on completion of their tenure. There is no mention of reappointment in the 2020 Rules. However, the learned Attorney General submitted that the members shall be entitled to seek reappointment. Reappointment for at least one term shall be provided to the persons who are appointed to the Tribunals at a young age by giving preference to the service rendered by them. House Rent Allowance - HELD THAT:- Experience has shown that lack of housing in Delhi has been one of the reasons for retired Judges of the High Courts and the Supreme Court to not accept appointments to Tribunals. At the same time, scarcity of housing is also a factor which needs to be kept in mind. The only way to find a solution to this problem is to direct the Government of India to make serious efforts to provide suitable housing to the Chairperson and the members of the Tribunals and in case providing housing is not possible, to enhance the house rent allowance to Rs. 1,25,000/- for members of Tribunals and Rs. 1,50,000/- for the Chairman or Chairperson or President and Vice Chairman or Vice Chairperson or Vice President of Tribunals. In other words, an option should be given to the Chairperson and the members of the Tribunals to either apply for housing accommodation to be provided by the Government of India as per the existing rules or to accept the enhanced house rent allowance. This direction shall be effective from 01.01.2021. Advocates as Judicial Members - HELD THAT:- While the Attorney General suggested that an advocate who has 25 years of experience should be considered for appointment as a Judicial member, the learned Amicus Curiae suggested that it should be 15 years. An Advocate of a High Court with experience of ten years is qualified for appointment as a Judge of the High Court as per Article 217 (2) of the Constitution of India. As the qualification for an advocate of a High Court for appointment as a Judge of a High Court is only 10 years, we are of the opinion that the experience at the bar should be on the same lines for being considered for appointment as a judicial member of a Tribunal. Exclusion of Advocates in 10 out of 19 tribunals, for consideration as judicial members, is therefore, contrary to MADRAS BAR ASSOCIATION VERSUS UNION OF INDIA [ 2015 (5) TMI 501 - SUPREME COURT] . However, it is left open to the Search-cum-Selection Committee to take into account in the experience of the Advocates at the bar and the specialization of the Advocates in the relevant branch of law while considering them for appointment as judicial members. Eligibility of Members of Indian Legal service - HELD THAT:- Wherever legal expertise in the particular domain is implicated, it would be natural that advocates with experience in the same, or ancillary field would provide the catchment for consideration for membership. This is also the case with selection of technical members, who would have expertise in the scientific or technical, or wherever required, policy background. These tribunals are expected to be independent, vibrant and efficient in their functioning. Appointment of competent lawyers and technical members is in furtherance of judicial independence. Younger advocates who are around 45 years old bring in fresh perspectives. Many states induct lawyers just after 7 years of practice directly as District Judges. If the justice delivery system by tribunals is to be independent and vibrant, absorbing technological changes and rapid advances, it is essential that those practitioners with a certain vitality, energy and enthusiasm are inducted. 25 years of practice even with a five-year degree holder, would mean that the minimum age of induction would be 48 years: it may be more, given the time taken to process recommendations. Therefore, a tenure without assured re-engagements would not be feasible. A younger lawyer, who may not be suitable to continue after one tenure (or is reluctant to continue), can still return, to the bar, than an older one, who may not be able to piece her life together again. Removal of Members - HELD THAT:- The learned Attorney General submitted that the preliminary scrutiny done by the Central Government, according to Rule 8 (1) is only for the purpose of weeding out frivolous complaints. The learned Attorney General has also fairly submitted that the recommendations made by the Search-cum-Selection Committee shall be implemented by the Central Government. We are in agreement with the submissions of the learned Attorney General. Time Limit for appointment - HELD THAT:- The pendency of cases in the Tribunals is increasing mainly due to the lack of personnel in the Tribunals which is due to the delay in filling up the vacancies as and when they arise due to the retirement of the members. There is imminent need for expediting the process of selections and appointments to ensure speedy justice. We, therefore, direct that the Government of India shall make the appointments to the Tribunals within three months after the Search-cum-Selection Committee completes the selection and makes its recommendations. Retrospectivity of 2020 Rules - HELD THAT:- ll appointments made prior to the 2020 Rules which came into force on 12.02.2020 shall be governed by the parent Acts and Rules. Any appointment made after the 2020 Rules have come into force shall be in accordance with the 2020 Rules subject to the modifications directed. Petition disposed off.

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• Securities / SEBI

• 2020 (12) TMI 2
  Forward trade in commodities - Trading Irregularities - Piercing of corporate veil - abuse of position by the MD / Chairman of the Commodity Exchange - Plea of lack of adequate opportunity - principles of natural justice - Issuing show cause notice to the second respondent and not to the first respondent - multiple proceedings have been initiated but have resulted in no culmination over a period just short of a decade. HELD THAT:- We do feel that there was an endeavour to some extent by Respondent No.2 herein to prolong the proceedings but then looking into the enormity of the contents of the show cause notice running into 150 pages with documents spanning 4,000 pages supporting it, a reasonable time had to be given to respond to the same. We may note that the whole enquiry was at the behest of independent enterprising journalist. The manner in which the proceedings were sought to be closed raises serious doubts in our mind that a fair process and opportunity has been extended to Respondent No.2 herein. Piercing of corporate veil - Insofar as Respondent No.1 herein is concerned, not even a formal show cause notice has been issued. However, the fact remains that the communications addressed by Respondent Nos.1 and 2 herein do give rise to a clear and unequivocal view that it was understood as a notice both to Respondent Nos.1 and 2 herein. - to some extent truth in what has been alleged by the appellants before us, i.e., that Respondent Nos.1 and 2 herein are conveniently playing this game of coming up separately even though they are joined in all purposes. We are conscious of the fact that Respondent No.1 herein is a separate legal entity being a registered company, but the concept of piercing the veil is not unknown to law. By this process, the law either goes behind the corporate personality to the individual members or ignores the separate personality of the company. - We are, thus, not able to hold that there was a failure to serve show cause notice to Respondent No.1 herein merely because no such notice was specifically addressed to it. The directions passed by the SAT for the case to begin with the service of fresh show cause notices would not be an appropriate direction. In the conspectus of the factual position from the proceedings which have taken place and the legal principles discussed, we are of the view that the following directions would subserve the interest of justice and perfect the rights of the parties: i. No fresh show cause notice is required to be served on Respondent No.1 herein and the show cause notice dated 21.6.2011 would be treated as a show cause notice to both Respondent Nos.1 and 2 herein. ii. The documents already asked for by Respondent No.1 and 2 herein and not supplied should be supplied. In order to obtain clarity on this issue, we direct that a list of documents sought for by either respondents be supplied to the SEBI within two weeks from the date of this order and those documents are to be supplied by SEBI within two weeks thereafter. iii. Respondent Nos.1 and 2 herein are granted opportunity to file their reply to the show cause notice without any further delay within a period of four weeks after receiving aforementioned documents. iv. The SEBI would thereafter proceed to give an opportunity for personal hearing both to Respondent Nos.1 and 2 herein and these proceedings are to go on, on a day-to-day basis and no request for adjournment will be entertained in this behalf from either respondents.. v. The SEBI would take a final view on the subject matter thereafter. vi. Needless to say, if Respondent Nos.1 and 2 herein are aggrieved by the same, the remedy against the same lies before the SAT. vii. We make it clear that all pleas as raised by Respondent Nos.1 and 2 herein would be considered by the SEBI, legal or factual including but not confined to aspects of jurisdiction. In fact, this is the very purpose of relegating the proceedings before the SEBI and not to SAT as the right of appeal is a valuable right to be exercised after adequate opportunity at the first adjudication stage level. The order of the FMC dated 23.7.2011 has been set aside and a fresh order has to be passed. The different proceedings initiated, still pending almost at a nascent stage, are in pursuance of that order. The natural consequence, thus, would be that those proceedings would have to be kept in abeyance for the time being, till a view is taken by SEBI in pursuance of the directions passed by this order and would have to abide by the decision taken by the SEBI or in appeal arising therefrom. We clarify that were Respondent Nos.1 and 2 herein to fail in their endeavours, it will not mean that those other proceedings have to start de novo and can continue from the stage where they are, subject, of course, to the nature of directions passed afresh by SEBI. Appeals disposed off.

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