Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 2, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI Short Notes
Articles
News
Notifications
Highlights / Catch Notes
GST
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Firm's GST registration cancelled due to non-filing; Missed appeal deadline despite no show-cause reply opportunity.
Case-Laws - HC : Cancellation of GST registration without providing opportunity to be heard violated principles of natural justice. Appeal filed by petitioner rejected due to expiry of limitation period u/s 107 of CGST Act, 2017. Show cause notice issued to petitioner for failure to furnish returns for six consecutive months. Petitioner claimed no reply filed within stipulated period, denying principles of natural justice. However, petitioner failed to furnish returns for six months and filed appeal after delay of one year and twenty days, beyond three-month limitation period u/s 107(1). Petitioner's lethargic approach in not filing returns and delayed appeal filing led to dismissal of writ petition, as no perversity found in cancellation order or appellate order beyond statutory limitation period.
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Error in GST return; rectification plea rejected without reasons.
Case-Laws - HC : Writ petition challenging order of assessment and DRC-07 notice issued without opportunity to petitioner, violating principles of natural justice. Held that no reasons assigned for rejecting rectification application u/s 161 of TNGST Act, except stating no satisfactory reasons attached. Petitioner pointed out error in return seeking revised assessment order. Impugned order rejecting rectification set aside, matter remitted to pass fresh order considering reasons, else give detailed reasons for rejection. Further DRC-07 proceedings kept in abeyance. Writ petition disposed of.
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Demo vehicles used by authorized dealers qualify for Input Tax Credit (ITC.
Case-Laws - HC : The summary focuses on the availability of Input Tax Credit (ITC) for demo vehicles used by authorized dealers. The Haryana Government issued a circular clarifying that ITC is available for demo vehicles, which are motor vehicles for passenger transportation with a seating capacity of up to 13 persons, as per Section 17(5) of the Haryana Goods and Services Tax Act, 2017. The circular addresses the availability of ITC for demo vehicles, even in cases where such vehicles are capitalized in the books of account by authorized dealers. The High Court set aside the earlier observation denying ITC for vehicles initially used as demo vehicles, entitling the petitioner to the benefit of ITC in light of the clarification provided by the circulars.
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Unreasoned tax order set aside, petitioner gets chance to submit documents.
Case-Laws - HC : The High Court found merit in the petitioner's submission that the impugned order rejecting the claim for Input Tax Credit did not consider the documents submitted, such as E-way bills, tax invoices, lorry receipts, and weighbridge slips. The court held that the order was passed without applying mind to the objections and evidence. Consequently, the impugned order was set aside, and the petitioner was granted an opportunity to submit objections and relevant documentary evidence within two weeks. Upon submission of the reply or documents, a fresh order would be passed after considering them and affording the petitioner a reasonable opportunity.
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High Court rejects repeated attachment orders beyond one year under GST law, upholding statutory interpretation.
Case-Laws - HC : The High Court's decision centers around the interpretation of Section 83 of the CGST/SGST Acts, which deals with provisional attachment orders. The key points are: Section 83(2) clearly states that a provisional attachment order will cease to have effect after one year from its issuance. Unlike the Income Tax Act, the GST Acts do not provide for extending this one-year period. The court held that accepting the Revenue's contention of issuing repeated attachment orders would violate the statute's language and legislative intent. The court relied on Supreme Court precedents like Radha Krishnan Industries and Vodafone International Holdings, which emphasize interpreting statutes based on their plain meaning and not supplying words or giving different meanings, even if it serves a larger public interest. Consequently, the court quashed the impugned attachment orders, declaring that Section 83 does not authorize fresh attachment orders after the one-year period specified in Section 83(2).
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Taxpayer wins case on violation of natural justice for non-service of show cause notices.
Case-Laws - HC : Principles of natural justice violated due to non-service of notices. Petitioner unaware of show cause notices issued through GST portal. Impugned order passed without affording opportunity of personal hearing, violating natural justice principles. Court set aside impugned orders and consequential provisional attachment order on condition of depositing 10% of disputed tax amount within four weeks. Petition allowed.
Income Tax
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safe harbour rules: Simplified Tax Rules for Diamond Mining Companies - 4% Income on Raw Diamond Sales.
Notifications : CBDT amends the Income-tax Rules, 1962 to introduce safe harbour rules for determining income referred to in clause (i) of sub-section (1) of section 9 of the Income-tax Act, 1961, chargeable to tax under the head "Profits and gains of business or profession". The key provisions are: For an eligible foreign company engaged in diamond mining business selling raw diamonds in a notified special zone, the income chargeable under this head shall be accepted as 4% or more of the gross receipts from such business, if the company exercises this safe harbour option. An "eligible assessee" has been defined as a foreign company engaged in diamond mining which opts for these safe harbour rules. "Raw diamonds" have been specifically defined. If the safe harbour option is exercised, no further deductions u/ss 30-38 shall be allowed, depreciation shall be deemed allowed, and no set-off of unabsorbed depreciation, carried forward losses or losses from other sources shall be permitted for this business income. The assessee must furnish Form 3CEFC to opt for safe harbour before filing the return. The Assessing Officer can invalidate the option if incorrect facts were furnished or facts were concealed. An assessee opting for safe harbour cannot invoke Mutual Agreement Procedure under tax treaties for avoidance of double taxation for this.
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Offshore investments rightly excluded from depreciation; Revenue's revisionary powers wrongly invoked.
Case-Laws - SC : Assessing Officer's exclusion of sum pertaining to investments outside India from depreciation on investment provision was upheld. High Court correctly held that Commissioner of Income Tax erred in invoking revisionary jurisdiction u/s 263 against Assessing Officer's order, as it was not prejudicial to revenue's interest. Supreme Court dismissed Special Leave Petition, upholding High Court's order setting aside Commissioner's revisionary order.
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Deduction on NPAs: Tax Laws vs. NHB Guidelines - Statutory Conditions Prevail over Prudential Norms.
Case-Laws - SC : Section 43D and Rule 6EB form a comprehensive code for deduction on account of non-performing assets (NPAs), distinct from NHB guidelines classifying NPAs. The court held that the tax provisions allow discretion to follow or not follow NHB guidelines when revised. The purpose of NPA classification by NHB differs from non-recognition of income under tax laws. The real income principle is inapplicable to Section 43D deductions, which must satisfy statutory conditions, separate from NHB's prudential norms. The Supreme Court upheld the High Court's decision, dismissing the petition and vacating interim relief granted earlier.
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Charity fund invested in joint ventures, risking tax exemption for that income. Courts upheld partial denial.
Case-Laws - HC : Charitable institution invested funds in shares of joint venture companies, violating Section 13(1)(d). Exemption u/s 11 denied for income from such investment. However, only income from violative investment liable to tax, not entire income. Legislature did not intend denial of Section 11 exemption for entire income. View supported by Bombay and Delhi High Court judgments. Investment by assessee in joint venture companies constituted investment in violation of Section 13(1)(d), disentitling exemption u/s 11 for income from such investment only.
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Tax dispute over interest expenditure disallowance for exempt income.
Case-Laws - HC : Disallowance u/s 14A is limited to Rs.2,77,80,538/- and cannot be treated as an enhancement of assessment. Neither assessee nor AO mentioned a specific figure linked to the allowance of interest paid. When the allowance of interest has not reached finality, the quantum of disallowance u/s 14A cannot be considered final. The first appellate authority omitted to consider the disallowable amount u/s 14A, which the Commissioner rectified u/s 154, permissibly. The Supreme Court judgments in South Indian Bank Limited and Maxopp Investment Ltd. clarified that Section 14A aims to prevent double benefit by disallowing expenditure related to exempt income. The Supreme Court in T.S.Balaram and MEPCO Industries Limited held that a mistake apparent on record must be obvious, not requiring a long-drawn reasoning process. The assessee's contention that Section 14A is inapplicable is untenable, as the assessee accepted the disallowance and provided calculations. The appellate authority followed due procedure, issued notice, considered objections, and rectified the error within the Act's purview. Substantial questions of law are answered against the assessee.
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Tribal member's income tax exemption claim: Seek structured legal remedy, avoid writ jurisdiction.
Case-Laws - HC : The High Court held that the petitioner, a Director in the Government of Meghalaya's Department of Soil, who claimed exemption from income tax u/s 10(26) as a member of a scheduled tribe, should avail the structured remedy provided by the Income Tax Act, 1961. The court found that as a writ court, it should not exercise jurisdiction to adjudicate upon highly disputed facts involving voluminous evidence. The petitioner had filed an application for revision u/s 264 for the assessment year 2014-15, which she allegedly withdrew on June 9, 2022. The court set aside the alleged withdrawal and directed the income tax authorities to treat the Section 264 application as pending, hear the petitioner, respondent No. 9, and other interested parties, and dispose of the application by a reasoned order within three months. The petitioner was given liberty to apply for interim orders pending the Section 264 proceedings.
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Property purchase from company treated as dividend? Tax dept overreach reversed by court.
Case-Laws - HC : The High Court examined the validity of reopening an assessment and invoking the extended period of limitation to add deemed dividend u/s 2(22)(e) of the Income Tax Act. The assessee had purchased a property, receiving the entire amount from a company where the assessee held 29% shares. The court held that the revenue authorities sought to add a sum as "deemed income" through the reassessment order, which was unsuccessfully challenged by the assessee. However, the Tribunal reversed the Commissioner's order affirming the reassessment. The court observed that the department's attempt was to merely include an additional amount over the sum subject to the earlier assessment order, which stood deleted. Considering the appeal's withdrawal, the issue was construed as answered against the revenue and in favor of the assessee, implying a lack of tangible material for reopening the assessment.
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Interest Deductions Upheld: Broken Period Interest on Securities and Expenses on Convertible Debentures Issue Allowed.
Case-Laws - HC : Deduction of broken period interest paid on securities and deduction of expenditure incurred on the issue of Fully Convertible Debentures (FCDs). Regarding broken period interest, the court affirmed the assessee's method of accounting, relying on previous decisions that allowed such deduction without resulting in revenue loss. On FCDs issue expenses, the court sided with the assessee, citing precedents that categorized such expenses as revenue expenditure eligible for deduction, rejecting the revenue department's contention that the intention was to increase capital. The court's decisions upheld the assessee's claims on both issues against the revenue authorities' objections.
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US firm's technical advisory services via call centers were not taxable in India as fees for included services under DTAA.
Case-Laws - HC : The Assessee did not deduct TDS u/s 195 on payments made to Ciena, US, resulting in disallowance u/s 40(a)(i). The addition was based on the assumption that the payments were chargeable as fees for technical services u/s 9(1)(vii). The ITAT deleted the addition, finding that Ciena's services did not involve making available technology. Ciena provided remote technical advisory support through call centers for equipment issues but defective equipment had to be shipped overseas for repairs. Ciena was the equipment manufacturer, and the agreement ensured support services in India. The Revenue contended Ciena provided knowledge, technology, and skills, constituting fees for included services under the DTAA's Article 12(4)(b), which was not supported by the agreement's plain language. The ITAT's findings on Ciena's service nature were factual, and the Revenue did not challenge their perversity. The High Court ruled in favor of the Assessee.
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Reassessment in income tax cases permissible only on specific grounds, not for unrelated additions.
Case-Laws - HC : Section 147 allows reopening of assessments in exceptional cases where the Assessing Officer has reason to believe income has escaped assessment. Concluded assessments should not be interfered with lightly. If the reopening ground cannot be sustained, there is little rationale for expanding reassessment proceedings. A strict interpretation of Section 147 is warranted given the nature of unsettling concluded assessments. Courts have held reassessment is confined to issues forming the reasons for reopening. Explanation 3 to Section 147 clarifies the AO can assess other issues noticed subsequently but does not override Section 147's plain language. The AO cannot assess other incomes where no addition is made on the reopening reasons. No substantial question of law arises.
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Realty firm's advance payment treated as genuine income despite documentation flaws.
Case-Laws - HC : The assessee failed to discharge its initial onus to prove creditworthiness and genuineness of the transaction reflecting a sum as outstanding in its final books of accounts. While the law permits taxing credited amounts u/s 68 if the Assessing Officer can reasonably infer that the transaction is not genuine based on evidence, the AO is not required to examine commercial expediency and must give wide latitude to contracting parties' discretion. There was no dispute regarding Unitech's creditworthiness or its payment of Rs. 67.5 crores to the assessee as an advance against property sale. Both parties claimed the transaction was genuine, and Unitech did not reflect it as an expense, making it tax-neutral. The AO found fault with documentation irregularities but flaws may not necessarily indicate subterfuge in absence of material suggesting the credited amount would otherwise be taxable income/undisclosed assets. As per Sumati Dayal, an apparent transaction can be rejected if reasonable grounds indicate it is not real, and the AO can draw inferences about the real transaction. However, since Unitech's creditworthiness was not in doubt, the questions framed by the Revenue were answered in favor of the assessee against the Revenue.
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Farm land turned into makeshift sheds: No "residential house" to claim tax deduction.
Case-Laws - HC : The High Court examined whether the assessee had constructed a residential house on agricultural land within the stipulated three-year period from the date of transfer of property to claim deduction u/s 54. The court held that the allowance is available if capital gains from the sale of a residential property are utilized for purchasing a residential property or constructing a residential house, implying raising a construction for inhabitation as a residential dwelling unit. The Inspector's report accepted by the ITAT revealed only makeshift guardrooms made of plywood sheets without electricity or water connection on the site. The court opined that putting together plywood sheets cannot be construed as constructing a residential house. The ITAT's findings were not perverse or manifestly erroneous, considering the description of the property. Therefore, no question of law arose for the court's consideration.
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Flawed Transfer Pricing Analysis: Inclusion of Incomparable Firm Despite Lack of Data Scrutiny.
Case-Laws - HC : Transfer pricing adjustment regarding inclusion of E4e Healthcare as a comparable company. Assessee objected due to unavailability of annual report. However, objections were not adjudicated as Transfer Pricing Officer determined arm's length price adjustment as nil for the relevant year. Assessee's contention that E4e Healthcare is functionally dissimilar and cannot be included as a comparable was not considered by any authority. Orders passed by authorities were based on incorrect assumptions.
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Property tax delay: Taxpayer not at fault, interest payable.
Case-Laws - HC : Impugned order setting aside claim for interest u/s 244A(2) was incorrect. Court held delay attributable to assessee must be excluded for computing interest period, but Department failed to exercise due diligence causing loss to assessee. No straight-jacket formula applies; each case warrants consideration based on facts. Order remanded to Department to reconsider interest claim from date of filing Revision Petition till payment date at 6% per annum after adjusting refund already granted.
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Real Estate Reassessment Debacle: Reopening assessment based on flawed guideline value for residential property instead of actual records invites judicial scrutiny.
Case-Laws - HC : Reopening of assessment based on purported guideline value of Rs. 16,000/- per sq. ft. for property was erroneous. Records showed guideline value was Rs. 12,000/- per sq. ft. for residential property, not commercial. u/s 47A of Indian Stamps Act, 1899, jurisdictional registering officer is competent authority to determine undervaluation for stamp duty purposes. Property registration at Rs. 12,000/- per sq. ft. indicates no undervaluation. Reopening inspired by mere change of opinion without new tangible material is impermissible as per Supreme Court's decision in Kelvinator of India Ltd. Sections 148 cannot be invoked for reviewing completed assessment based on change of opinion.
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Tax Dept. Failed to Cross-Examine Crucial Witness, Favoring Assessee's Claim of Agricultural Income.
Case-Laws - HC : The court held that the income tax department failed to properly investigate and cross-examine the crucial witness, Mr. Thangasamy, whose statement supported the assessee's claim of agricultural income from the sale of casuarina trees. The mere reliance on the village headman's statement was insufficient to discredit Mr. Thangasamy's statement produced by the assessee. The court emphasized that the department should have summoned and cross-examined Mr. Thangasamy to contradict his statement, as disbelieving or disregarding his statement without such cross-examination was incorrect. Consequently, the addition u/s 69A of the Income Tax Act as unexplained income was set aside, and the decision was rendered in favor of the assessee.
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Non-profit club's income exempt due to mutuality principle - surplus not for individual benefit.
Case-Laws - AT : The assessee club, established with a non-profit motive, is distinct from its members who lack rights over any surplus generated. The club's activities lack commerciality, and reserves are utilized solely for furthering club activities without benefiting individual members. Consequently, the principle of mutuality applies, rendering the club's income non-taxable. The department's appeal against this determination is dismissed by the Income Tax Appellate Tribunal.
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Partners' capital withdrawal after reorganization exempt from tax; routine records don't prove income suppression.
Case-Laws - AT : Incriminating documents seized during search were routine business records, not evidence of income suppression. Assessment u/s 153A invalid when regular assessment completed. Supreme Court's Abhisar Buildwell judgment relied upon. No violation of Section 47(xiii) provisos found - partners withdrew capital after reorganization, not as consideration for transfer. Madras High Court's CADD Centre judgment supported exemption u/s 47(xiii). Income Tax Appellate Tribunal set aside orders treating firm's assets/liabilities as taxable long-term capital gains u/s 45(4), allowing assessee's appeal.
Customs
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Revised tariff values for edible oils, brass scrap, gold, silver imports effective Nov 30.
Notifications : This notification Issued by CBIC amends the tariff values for certain imported goods effective November 30, 2024, u/s 14(2) of the Customs Act, 1962. The key amendments are: 1) Revised tariff values for import of various edible oils like crude palm oil ($1119/MT), RBD palm oil ($1127/MT), crude palmolein ($1129/MT), RBD palmolein ($1132/MT), and crude soyabean oil ($1117/MT). 2) Tariff value for brass scrap (all grades) has been fixed at $5220 per metric ton. 3) For gold, two tariff value slabs: - $850 per 10 grams for forms availing exemption under Notification 50/2017 - $850 per 10 grams for gold bars (excluding tola bars), coins over 99.5% purity, and gold findings 4) For silver, three value slabs: - $978/kg for forms availing exemption under Notification 50/2017 - $978/kg for silver excluding coins/medallions over 99.9% purity and semi-manufactured forms.
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Imported goods like brake pads wrongly classified, importer's claim rejected by authorities.
Case-Laws - SC : Classification dispute regarding imported goods such as brake pads, mold tools, etc. Tribunal upheld classification under CTH 6813 8900, rejecting importer's claim for CTH 3824 9090/3824 7900. Importer ineligible for exemption notifications. Demand for normal period upheld, extended period demand set aside. Supreme Court concurred with Tribunal's findings, dismissing Revenue's appeal.
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Importers can challenge reassessment of declared values despite requesting expedited clearance.
Case-Laws - HC : Appellants' right to challenge the enhancement of declared values for imported goods, even after initially requesting expedited clearance. The key points are: Section 17 of the Customs Act mandates a speaking order for reassessment at variance with self-assessment. Mere requests for expedited clearance cannot be construed as abandonment of the right to appeal reassessment. The proper officer must provide reasons for rejecting declared values before reassessment. Enhancing values solely based on NIDB data without corroborative evidence is unwarranted. Reassessment must comply with rules, be reasoned, and based on tangible justifiable material. The High Court allowed the appeals, setting aside CESTAT orders and restoring the Commissioner (Appeals) order.
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Court quashes export scheme benefit denial over description mismatch, cites defective decision-making process.
Case-Laws - HC : The High Court quashed the decision of the Policy Relaxation Committee (PRC) rejecting partial benefit under the Merchandise Exports from India Scheme (MEIS) due to a mismatch between the goods description in shipping bills and ITC (HS) 87085000. The court found the decision-making process grossly defective, lacking application of mind and breach of natural justice principles. The PRC failed to indicate reasons for accepting the respondent's case or rejecting the petitioner's case, without discussing the Risk Assessment (RA) report or comments from PC-3 Divisions. The court directed the PRC to reconsider the petitioner's claim within two months, furnishing the RA report and PC-3 comments to the petitioner within 15 days. If additional material is considered, copies must be provided to the petitioner for response. The PRC must hear the petitioner and pass a reasoned order.
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Duty liability row over imported diagnostic reagents - Customs re-assessment overruled.
Case-Laws - AT : The case pertains to the classification and duty liability assessment of imported 'diagnostic reagents' u/s 17 of the Customs Act, 1962. The denial of benefit under Notification No. 50/2017-Cus and application of Serial No. 453 of Schedule III of IGST Notification No. 01/2017 for integrated tax discharge u/s 3(7) of the Customs Tariff Act were affirmed. The appellant's claim for assessment under Tariff Item 3822 0090 was denied, and the lack of a 'speaking order' as per Section 17(5) of the Customs Act was not considered. The appellant acquiesced to the higher duty burden due to the 'proper officer's' absolute power. The misdirection of 'self-assessment' and affirmation of re-assessment without material evidence invalidated it ab initio. The Appellate Tribunal set aside the impugned order, restored the bills of entry before the original authority for disposal u/s 17 of the Customs Act, and allowed the appeals by way of remand.
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Customs duty evasion case: Cross-examination denied for DRI officers and co-noticee.
Case-Laws - AT : The summary focuses on the rejection of cross-examination of DRI officers and a co-noticee by the competent authority. The main objective of cross-examination is to challenge the accuracy, credibility, and reliability of testimony provided by witnesses. However, in this case, the DRI officers have no personal interest, and their statements were not relied upon by the revenue in the show cause notice. The appellant cannot direct the manner of investigation by an investigative agency, and any concerns regarding the investigation's efficacy and integrity can be brought out in the reply to the show cause notice. Section 24 of the Act clarifies that mere retraction of a statement does not invalidate its evidentiary value unless certain conditions are met. The Adjudicating Authority's decision to deny cross-examination cannot be faulted when no incriminating statement was recorded from the officers, and the appellant himself made a valid confessional statement. Section 122A of the Customs Act does not mandate cross-examination, and its grant is subject to the Adjudicating Authority's discretion based on principles of natural justice. The impugned decision denying cross-examination was taken judiciously and cannot be substituted merely because another view is possible.
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Importer's appeal against Clean Energy Cess on metallurgical coke rejected due to delayed challenge and non-requirement of reassessment order.
Case-Laws - AT : The appellant's appeal against the rejection of chargeability of Clean Energy Cess on imported metallurgical coke was dismissed. The Bills of Entry were filed in January and February 2015, but the appellant raised the issue of non-issuance of an order u/s 17(5) of the Customs Act, 1962, after more than a year from the clearance of goods. The Bills of Entry were finally assessed without re-assessment, rendering the appellant's claim of re-assessment and the requirement for an order u/s 17(5) meritless. The Commissioner's reply to the appellant's grievance letter clarified the factual position and the non-requirement of an order u/s 17(5). The Commissioner (Appeals) rightly rejected the appeal on grounds of time bar and maintainability. The impugned order passed by the Commissioner (Appeals) was upheld, and the appellant's appeal was rejected.
DGFT
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India Relaxes CHIMS Registration Rules for Integrated Circuits and Parts Imports.
Notifications : This notification amends the import policy conditions for certain electronic integrated circuits and related parts under Chapter 85 of the Indian Trade Clarification (Harmonized System) 2022 Schedule. Specifically, it discontinues the requirement of compulsory registration under the Chip Imports Monitoring System (CHIMS) for the following ITC HS codes: 85423100 - Processors, controllers, etc. 85423200 - Memories 85423300 - Amplifiers 85423900 - Other electronic integrated circuits 85429000 - Parts Previously, these products were subject to Policy Condition 8 of Chapter 85, which mandated CHIMS registration for import. With this notification, that condition has been removed, allowing free import of these items without the CHIMS requirement, with immediate effect. The changes are issued under the authority of the Foreign Trade (Development & Regulation) Act 1992 and Foreign Trade Policy 2023, with approval from the Minister of Commerce and Industry.
IBC
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Collusive CIRP initiation by related parties disguised as financial debt.
Case-Laws - AT : The NCLAT set aside the CIRP initiated by Respondent No. 2 against Respondent No. 1, holding it to be collusive and for purposes other than insolvency resolution. Respondent No. 3 was a director and shareholder in all three companies, controlling over 20% voting shares, thereby qualifying as a related party u/s 5(24)(m)(i) and (iii) of the IBC. The amount disbursed by Respondent No. 2 to Respondent No. 1, being related parties, does not qualify as financial debt per the Supreme Court's ruling in Phoenix ARC case. The NCLAT relied on Hytone Merchants case, which allowed setting aside CIRP if collusion is proved despite fulfilling Section 7 requirements. Respondent No. 3's presence across companies and lack of denial regarding allegations indicated collusion between Respondents No. 1 and 2.
Indian Laws
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Delay, laches principles scrutinized in administrative appeals before tribunals & High Court's judicial review scope.
Case-Laws - HC : The summary focuses on the applicability of the principles of delay, laches, and limitation in proceedings before the Central Administrative Tribunal and the scope of judicial review by the High Court under Article 226 of the Constitution. The key points are: The principle of delay and laches applies to writ petitions under Article 226, but the period of limitation does not. The Administrative Tribunal Act, 1985 allows the Tribunal to condone delays based on sufficient cause, akin to Section 5 of the Limitation Act, 1963. The Tribunal erred in applying the principles of delay, laches, and limitation without examining the relevant dates and facts. The High Court set aside the Tribunal's order and remitted the matter for fresh adjudication after affording an opportunity of hearing to the parties.
PMLA
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Money laundering case cognizance valid despite ongoing probe. Retrospective PMLA amendment upheld. No violation of natural justice.
Case-Laws - HC : Cognizance of money laundering offense by Trial Court valid despite ongoing investigation. Retrospective applicability of Explanation-II to Section 44(1)(b) PMLA upheld. Impugned order valid, no violation of natural justice principles. Special Court can take cognizance based on ED's complaint u/s 3 PMLA. CrPC provisions on investigation, bail, preliminary procedures applicable to PMLA cases unless stated otherwise. ED can file supplementary complaint for additional evidence against accused. Initial PMLA complaint permissible even during ongoing investigation due to Explanation-II introduced in 2019 allowing supplementary complaints. No illegality in Trial Court order, petition dismissed.
SEBI
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SEBI tightens merchant banker norms - streamlines qualifications, grievance redressal, market-making & disclosure duties.
Notifications : Amendments to SEBI (Merchant Bankers) Regulations: 1. Removing the requirement of minimum two years of experience for employees of merchant bankers. Instead, requiring at least two employees professionally qualified in finance, law, accountancy or business management. 2. Merchant bankers to take all necessary steps for grievance redressal instead of just "adequate" steps. Removing the requirement to inform SEBI about complaints received. 3. Merchant bankers granted registration must ensure market making as per SEBI regulations. 4. Clearly defining responsibilities of lead managers, especially regarding disclosures, allotment and refunds in offer documents. 5. Restricting merchant bankers from lead managing issues if they are promoters/associates of the issuer/offeror, unless certain exemptions apply. 6. Merchant bankers underwriting an issue must subscribe before finalization of basis of allotment. 7. Requiring disclosure of transactions by merchant bankers for acquiring securities of bodies corporate whose issues they manage, with some exemptions. 8. Substituting gender-specific pronouns with gender-neutral terms. 9. Updating references to the Companies Act, 2013 from the older 1956 Act. 10. Redefining the term "auditor" as per the 2013.
Service Tax
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Taxpayer's VCES declaration for service tax dues valid despite audit report & show cause notice.
Case-Laws - HC : This case deals with the validity of a declaration under the Voluntary Compliance Encouragement Scheme (VCES) for service tax dues. The taxpayer was issued a show cause notice (SCN) alleging wrongful availing of CENVAT credit on service tax paid for medical insurance services provided to employees. The key issues are whether the taxpayer was ineligible to file a VCES declaration due to an audit report and the SCN, and whether the SCN covered the dues declared under VCES. The court held that an audit report is not an order of determination under relevant sections of the Finance Act, 1994, as required for ineligibility under VCES. The SCN was limited to specific dues not covered by the taxpayer's VCES declaration. Since the SCN did not cover the declared dues, the taxpayer cannot be deprived of VCES benefit. The court found no infirmity in allowing the taxpayer's appeal.
Case Laws:
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GST
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2024 (11) TMI 1406
Cancellation of the GST registration without providing opportunity to be heard - violation of principles of natural justice - appeal preferred by the petitioner has been rejected on the ground of being filed after expiry of Limitation period as envisaged under Section 107 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- It appears that a show cause notice was issued to the petitioner (Annexure-2) which indicates that the reason for issuing show cause notice is that the petitioner failed to furnish the return for a continuous period of six months which is mandatory as per the CGST Act - The petitioner during course of argument had submitted that in the order of cancellation, it has been mentioned that the undersigned has examined the reply but fact remains that no reply was filed by the petitioner within the stipulated period and as such principles of natural justice has been denied to him. It is true that no reply of the petitioner was on record as informed by the CGST counsel; however, the fact remains that the petitioner failed to furnish return for a continuous period of six months. It further transpires that the appeal of the petitioner was also rejected on the ground of limitation as the same was filed after a lapse of more than 1 year and 20 days; whereas the normal period for filing appeal is three months as prescribed under section 107 (1) of CGST Act 2017. There are no hesitation in holding that the petitioner firm is not entitled for any relief on the ground of being lethargic in approach, inasmuch as, on the one hand, the petitioner did not file return for a continuous period of six months and on the other hand the petitioner filed appeal before the appellate forum after a delay of 1 year and 20 days which is admittedly beyond the period of three months for filing appeal as prescribed under the Act. Thus, neither there is any perversity in the order of cancellation of GST registration; nor is there any necessity for interference with the appellate order, inasmuch as, the same is filed beyond the statutory period of limitation - Accordingly, the instant writ application stands dismissed.
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2024 (11) TMI 1405
Constitutionality of Section 16 (2) (c) of CGST/SGST Acts - violation of Articles 14 and 19 (1) (g) of the Constitution of India - non-application of mind - violation of principles of natural justice - HELD THAT:- From a bare perusal of the order dated 08.12.2023 it is clear that the 1st respondent has not applied its mind and the said order has been passed in a mechanical manner. Order bearing No. CTO/LGSTO-510/2023- 24/8814 dated 08.12.2023 by the 1st respondent (Annexure-D) is quashed - writ petition is allowed in part.
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2024 (11) TMI 1404
Challenge to order of assessment and the DRC-07 notice and the order passed in the rectification application - order of assessment made without giving opportunity to the petitioner based upon which the notice of DRC-07 was issued - violation of principles of natural justice - HELD THAT:- Considering the fact that no reasons whatsoever have been assigned except to make the statement that no satisfactorily reasons attached to the annexure had been made out, the first respondent had not given any reasons. Section 161 of the TNGST Act indicates that when such an application is made and if no error on the face of record had been made out to the applications for rejection are to be rejected. In the present case, the petitioner has pointed out an error in his return, which he seeks to rectify for passing the revised order of assessment. The said reasons had not been considered by the first respondent and therefore, the impugned order dated 04.06.2024 rejecting the application of the writ petitioner for rectification alone is hereby set aside and remitted back to the first respondent for passing a fresh order after considering the reasons and pass appropriate orders. If the authorities decide not to entertain the said request, he shall give detailed reasons as to why the said order is being made. Further proceedings, pursuant to DRC- O7 notice dated 02.01.2024 shall be kept in abeyance. This writ petition stands disposed of.
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2024 (11) TMI 1403
Availability of Input Tax Credit in respect of demo vehicles - issuance of Circular No. 231/25/2024-GST (F.NO.CBIC-20001/6/2024-GST], dated 10.09.2024 - HELD THAT:- The clarification has been also taken note of by the Haryana Government, and they have issued similar clarification vide Circular No. 231/25-HGST/2024/GST-II (CBIC Circular No.231/25/2024- GST, dated 11.09.2024), dated 13th September 2024 - Said circular discussed the availability of Input Tax Credit on demo vehicles, which are motor vehicles for transportation of passengers having approved seating capacity of not more than 13 persons in terms of clause(a) of section 17(5) of Haryana Goods Services Tax Act, 2017. Further, it deals with the availability of the Input Tax Credit on demo vehicles in cases where such vehicles are capitalized in the books of account by the authorized dealers. The observations of not giving benefit of Input Tax Credit to vehicles, which have been initially used as demo vehicles, is accordingly, set-aside in view of the extension of grant of availability of Input Tax Credit with respect to the demo vehicles, as clarified by the aforesaid circulars. The petitioner is entitled to the benefit of ITC.
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2024 (11) TMI 1402
Challenge to order passed by the respondent on the premise that the same was made in violation of principles of natural justice - HELD THAT:- The impugned order dated 10.04.2024 is set aside and the petitioner shall deposit 10% of the disputed tax within a period of four weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four weeks from the date of receipt of a copy of this order along with supporting documents/material. If any such objections are filed, the same shall be considered by the respondent and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner. The Writ Petition stands disposed of.
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2024 (11) TMI 1401
Violation of principles of natural justice - impugned order has been made on a gross non-application of mind to the objections filed by the petitioner - rejection of petitioner's claim for ITC - HELD THAT:- This Court finds that there is some merits in the submission of the petitioner inasmuch as the impugned order does not even make a reference to the documents that have been filed in the form of E-way bill, Tax invoices, etc., while rejecting the petitioner's claim of entitlement to Input Tax Credit. Further more, in this matter the petitioner is also in possession of lorry receipts, weighbridges, etc. In the circumstances, this Court is of the view that the petitioner may be granted one final opportunity to produce all the related documents. The impugned order is thus set aside and the petitioner is granted liberty to submit objections, if any along with the relevant documentary evidence within a period of two weeks from the date of receipt of copy of this order. If such reply or documents are produced within the stipulated period i.e., two weeks from the date of receipt of copy of this order, order would be passed afresh, after considering the reply or document and after affording the petitioner a reasonable opportunity therein. This writ petition is disposed of.
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2024 (11) TMI 1400
Challenge to final order framed under Section 73 (9) of the Central Goods and Services Tax Act, 2017 - personal hearing on the scheduled date not availed - principles of natural justice - HELD THAT:- All that the competent authority has chosen to observe is that the reply has not been found to be satisfactory. Since the order impugned is bereft of any reasoning, it is rendered unsustainable. The impugned order dated 20 August 2024 is quashed - petition allowed.
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2024 (11) TMI 1399
Violation of principles of natural justice - impugned order came to be passed, without affording an opportunity of personal hearing to the petitioner - HELD THAT:- In the present case, the only issue raised by the petitioner is that before issuing the impugned order, no opportunity of personal hearing was provided to the petitioner, but the first respondent passed the impugned order after affording an opportunity of personal hearing to the petitioner. However, considering the submission made by the learned counsel for the petitioner that, the petitioner is willing to deposit 10% of the disputed tax amount, this Court is inclined to set aside the impugned order dated 31.05.2024. The impugned order dated 31.05.2024 is set aside and the matter remanded back to the respondents on condition that the petitioner shall deposit 10% of the disputed tax demand of the impugned assessment year, within a period of four (4) weeks from the date of receipt of a copy of this order and thereafter, the petitioner is directed to file a reply within a period of two (2) weeks. Petition disposed off by way of remand.
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2024 (11) TMI 1398
Provisional attachment orders issued under Section 83 of the CGST/SGST Acts after the expiry of the prescribed period - detention of petiitoner on the allegation of fraudulent transactions, leading to the evasion of GST on a massive scale - HELD THAT:- It is clear from the law laid down in Radha Krishnan Industries [ 2021 (4) TMI 837 - SUPREME COURT ] that while interpreting a taxing statute, the provisions must be construed on its plain terms and the Court must have regard to the purpose underlying the provision and an interpretation which effectuates the purpose must be preferred particularly when it is supported by the plain meaning of the words used - As can be seen from the provision of Section 83 (2) of the CGST/SGST Acts, an order of provisional attachment under Sub-section (1) of Section 83 will cease to have effect after the expiry of the period of one year from the date of the order made under Sub-section (1). As distinct from the provisions of Section 281B of the Income Tax Act, 1961, the provisions of Section 83 (2) of the CGST/SGST Acts do not even provide for the extension of the period of provisional attachment. Therefore, it must be held that on the plain meaning of the words used in Sub-section (2) of Section 83 of the CGST/SGST Acts, an attachment cannot extend beyond the period specified in Sub-section (2) of Section 83. It is clear that the provisions of Section 83 (2) read with the provisions of Rule 159 of the CGST Rules, 2017 indicate beyond doubt that a provisional attachment under sub-section (2) of Section 83 cannot extend beyond a period of one year from the date on which it was first made. To accept the contention of the Revenue in this case would be to do violence to the language of the statute and permit the Revenue to keep on issuing repeated orders of provisional attachment which would mean that the provisional attachment can continue for as long as the Revenue decides that it must continue. This, obviously, was not the intention of the legislature, for had the intention been different, the provisions of Sub-section (2) of Section 83 would have been worded differently. In Vodafone International Holdings BV v. Union of India [ 2012 (1) TMI 52 - SUPREME COURT ], the Supreme Court considered whether the sale of certain shares by HTIL to Vodafone would amount to a transfer of a capital asset within the meaning of Section 2 (14) of the Income Tax Act. In interpreting the expression source of income in India used in Section 9 (1) (i), the Court approved the above observations in Ransom. These decisions are clear authority for the proposition that the Courts will not step in and supply words or give the provisions of a statute a different meaning even if they feel that such interpretation may be necessary in the larger public interest. It is not necessary to consider the contention that Ext. P6 series of orders also suffers from the vice of non-application of mind and is a verbatim reproduction of Ext. P2 series of orders. Ext. P6 series of orders will stand quashed. It is declared that the provisions of Section 83 of the CGST/SGST Acts do not contemplate or authorise the issuance of a fresh order of attachment after the period specified in Section 83 (2) of the CGST/SGST Acts - Petition allowed.
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2024 (11) TMI 1397
Violation of principles of natural justice - non-service of notices - petitioner came to know about the impugned order from the third respondent/Bank on account of the recovery proceedings inititated against the petitioner for non-filing of GST returns - HELD THAT:- It is evident that the impugned show cause notices were uploaded on the GST Portal Tab. According to the petitioner, the petitioner was not aware of the issuance of the show cause notices issued through the GST Portal and the original of the said show cause notices were not furnished to them. In such circumstances, this Court is of the view that the impugned order came to be passed without affording any opportunity of personal hearing to the petitioner to establish its case, thereby violating the principles of natural justice and that it is just and necessary to provide an opportunity to the petitioner to establish their case on merits and in accordance with law. This Court is inclined to set aside the impugned orders dated 13.12.2023 passed by the second respondent and the consequential Provisional Attachment order dated 05.06.2024 passed by the first respondent - The orders impugned herein are set aside on condition that the petitioner deposits 10% of the disputed tax amount in respect of the assessment year in question within a period of four weeks from the date of receipt of a copy of this order. Petition allowed.
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2024 (11) TMI 1396
Seeking rectification of a ruling order - Section 102 read with Section 97 of Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017 - HELD THAT:- The contention of the applicant has been examined in the light of the original order and noticed that there are some additional equipments which are required to be made available on a ship as additional safety measure in compliance with certain statutory provisions. Though these are also to be compulsorily made available on a vessel and ship but cannot be taken to be parts of a ship as per general understanding but are rather additional equipments on a ship. Hence the request of the applicant for deletion of the term Lifeboat in Para no. 2 of Page number 19 is not considered. The original order is amended in para no: 2 of page no: 21 and serial numbers 81 and 89 are included and these are to be considered not as essential part of a warship/submarine but additional equipment s. The application is hereby disposed off .
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Income Tax
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2024 (11) TMI 1395
Validity of Revision u/s 263 - out of provision made for depreciation on investment by the assessee, the Assessing Officer has added only investments in India and excluded a sum pertaining to investments outside India - as decided by HC CIT committed an error in holding that the order passed by the AO was erroneous and prejudicial to the interest of the revenue. Accordingly, the order passed by the Commissioner of Income Tax was set aside. HELD THAT:- Having heard learned counsel for the parties and having gone through the materials on record, we see no reason to interfere with the impugned order passed by the High Court. Special Leave Petition is, accordingly, dismissed.
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2024 (11) TMI 1394
Claim for deduction on account of the method for determining an NPA - entitlement to deduction on account of de-recognition of interest accruing upon NPAs applying Rule 6EB of the Income Tax Rules, 1962 - directions issued by the National Housing Bank under Section 30A read with 36 of the National Housing Bank Act, 1987 - As decided by HC [ 2017 (7) TMI 144 - DELHI HIGH COURT] Section 43D of the Act read with Rule 6EB is a complete Code in itself. There is an element of discretion for the rule making authority to follow or not to follow the NHB guidelines as and when they are revised. The purpose of classification of debts as NPA by the NHB and the purpose for non-recognition of income for the purposes of the Act are different. Given the wording of the relevant provisions of the Act and the NHB Act, it is not possible to agree to HUDCO's proposition that with every change in the NHB guidelines there would be a corresponding automatic change in Rule 6EB. Even otherwise, as pointed out by the ITAT, the real income principle would have no application as far as Section 43D of the Act. A distinction is required to be drawn between the concept of 'deductions' claimed under the Act which has to satisfy the conditions laid down therein to qualify as such and the prudential norms that the NHB Act may lay down for determining an NPA. HELD THAT:- Having heard the learned counsel appearing for the petitioner and having gone through the materials on record, we see no reason to interfere with the impugned orders passed by the High Court. The Special Leave Petitions are, accordingly, dismissed. Interim relief earlier granted by this Court vide Order dated 6-8-2018 stands vacated forthwith.
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2024 (11) TMI 1393
Denial of exemption granted u/s 11 - income from investment which is made in violation of Section 13(1)(d) - HELD THAT:- In the instant case, the assessee is a charitable institution and invested the funds in the shares of the joint venture companies - The said joint venture companies are neither the Government Companies nor the Corporations established under Central or Provincial Acts. The investment was made by the assessee as a promoter in the joint venture companies. The essential nature of the investment made by the assessee was an investment in the shares of the joint venture companies. Assessee continues to hold share even beyond the cut-off date i.e., 30.11.1983. The funds invested from the assessee corporation was from the profit of previous year relevant to the assessment year 1984-85. Therefore, the assessee had violated the provisions of Section 13 (1) (d) - assessee is, therefore, not entitled for exemption u/s 11 of the Act. From perusal of Sections 11 and 13 of the Act, it is evident that the Legislature did not contemplate the benefit of denial of Section 11 of the Act, to the entire income and only the income from an investment made in violation of Section 13 (1) (d) of the Act is liable to tax. The aforesaid view has been taken in DIT (Exemption) v. Sheth Mafatlal Gagalbahai Foundation Trust [ 2000 (10) TMI 26 - BOMBAY HIGH COURT] and in IT (Exemption) v. Agrim Charan Foundation [ 2001 (8) TMI 78 - DELHI HIGH COURT] respectively We may examine whether the entire income from such an investment made in violation of Section 13 (1) (d) of the Act, which has accrued to the assessee has to be taxed. From perusal of Sections 11 and 13 of the Act, it is evident that the Legislature did not contemplate the benefit of denial of Section 11 of the Act, to the entire income and only the income from an investment made in violation of Section 13 (1) (d) of the Act is liable to tax. The substantial question of law framed in these Appeals is answered by stating that the investment made by the assessee in its joint venture companies is an investment made in violation of Section 11 (5) read with Section 13 (1) (d) of the Act and, therefore, the assessee is not entitled to claim the benefit of exemption under Section 11 of the Act. However, only the income from such an investment made in violation of Section 13 (1) (d) of the Act is liable to tax.
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2024 (11) TMI 1392
Disallowance u/s.14A - rectification u/s 154 - HELD THAT:- Disallowance u/s 14A of the Act is limited to Rs.2,77,80,538/- and the same cannot be treated as an enhancement of assessment and further held that neither assessee nor AO have mentioned particular figure without linking the same to the allowance of the interest paid and when the allowances of interest has not reached finality, it cannot be said that quantum of disallowance u/s 14A has finally be arrived at and also held that the first appellate authority has omitted to consider the aspect of amount disallowable u/s 14A of the Act and the said mistake was rectified by the Commissioner in the appeal while exercising the power conferred u/s 154 and the same is permissible. In South Indian Bank Limited [ 2021 (9) TMI 566 - SUPREME COURT] by relying the judgment of Maxopp Investment Ltd [ 2018 (3) TMI 805 - SUPREME COURT] held that the purpose behind Section 14A by not permitting deduction of the expenditure incurred in relation to income, which does not form part of total income, is to ensure that the assessee does not get double benefit. Once a particular income itself is not to be included in the total income and is exempted from tax, there is no reasonable basis for giving benefit of deduction of the expenditure incurred in earning such as income. In T.S.Balaram [ 1971 (8) TMI 3 - SUPREME COURT] and MEPCO Industries Limited [ 2009 (11) TMI 24 - SUPREME COURT] the Hon ble Supreme Court held that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not mistake apparent from the record . The above said judgments are not applicable to the facts and circumstances of the case on the ground that the assessee had filed three calculations of the interest to be allowed u/s 14A of the Act before the AO to determine the total income and allowance of interest paid to the M/s.Tamil Nadu Newsprint and Papers Limited. Hence, the contention of the learned counsel for the appellant that the provisions of Section 14A of the Act is not applicable to the assessee is not tenable under law, especially the appellate authority passed order dated 29.12.2003 rectifying the disallowance amount u/s 14A basing upon the calculations made by the assessee and the same cannot be treated as enhancement of assessment. It is pertinent to mention here that the assessee itself had accepted the disallowance under Section 14A of the Act and therefore it was not debatable issue. The appellate authority after following the due procedure as contemplated under the law including the issuance of notice and after considering the objections of the parties rectified the error and made disallowance and the same is within the purview of the provisions of the Act. Hence, substantial questions of law are answered against the assessee.
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2024 (11) TMI 1391
Exemption from income tax u/s 10(26) - Petitioner is working as Director in the department of Soil, Government of Meghalaya. She is a resident of Khasi Hills. She claims to be a member of the scheduled tribe as defined under Article 366(25) of the Constitution of India - Petitioner's withdrawal of application for revision under Section 264 - HELD THAT:- First of all, the Income Tax Act, 1961 provides very detailed machinery for investigation and determination of income and its assessment to tax. It also provides a structured system for assessment, preferment of appeal from such assessment, revision and so on. Writ petitioner has to avail of that remedy which in our opinion is efficacious. Secondly, as a writ court we should not exercise jurisdiction to adjudicate upon highly disputed facts by evaluating very voluminous evidence, which is involved here. We find from the records petitioner assessee filed an application for revision u/s 264 of the said Act for the assessment year 2014-15. On 9th June, 2022, she withdrew it. Now, petitioner submits that her client had no hand in the withdrawal of that application and that it was the handy work of the respondent No.9. We are not going into the correctness of the allegations made against the respondent No.9, narrated hereinabove. We are of the view that considering the gravity of the dispute, this application for revision under Section 264 of the said Act be treated as pending. We set aside the alleged withdrawal of the Section 264 application purported to have been made by the letter dated 9th June, 2022. We direct the income tax authorities to hear the petitioner, the respondent No.9 and other interested parties, if any and dispose of the Section 264 application by a reasoned order within three months of communication of this order. The petitioner is given liberty to make an application before the income tax authorities for any interim order pending this proceeding under Section 264 of the said Act. All points are kept open before the income tax authorities.
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2024 (11) TMI 1390
Disallowance u/s 43B - non-payment of liabilities such as VAT, Entry Tax, CST before the prescribed date of filing the return of income u/s 139 (1) - HELD THAT:- It is admitted position on record that the appellant / assessee did not claim the amount in his profit and loss account as an expenditure / deduction, nor the appellant claim deduction in respect of that account u/s 43B. In that view of the matter, the AO, CIT(A) and the ITAT, all three authorities have concurrently erred in holding that the appellant has claimed deduction / expenditure u/s 43B of the IT Act adding to its taxable income. Accordingly, the impugned order passed by the ITAT holding that the appellant is liable to pay tax is liable to be and is hereby set aside. The substantial question of law is answered in favour of the assessee and against the Revenue.
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2024 (11) TMI 1389
Reopening of assessment u/s 147 - cash deposits were made in the bank account of the petitioner - HELD THAT:- The total value of the transactions, which were suggestive of petitioner s income escaping assessment was quantified. The petitioner had responded to the impugned notice raising several issues. However, we do not find that the said response contains any information either as to the quantum of cash deposited during the previous year relevant to the AY 2017-18. There was also no explanation as to why large amounts were received in cash. AO had passed the impugned order holding that the petitioner s response was found to be unsatisfactory. The entire purpose of issuing a notice u/s 148A (b) of the Act is to enable the Assessee to respond to the information available with the AO, which may be suggestive of the Assessee s income escaping assessment. In the instant case, where the allegation is that a large cash deposits were made in the bank account of the petitioner, the least that was required for the petitioner was to inform the AO as to the correct quantum of the cash deposits in his bank account and his explanation for the same. This crucial information is not available in the petitioner s response to the impugned notice. It is relevant to note that at the threshold stage of issuing a notice under Section 148 of the Act, the AO is not required to finally conclude whether any income has escaped assessment. The notice merely initiates the reassessment proceedings. Thus, all rights and contentions of the petitioner to contest the quantum as well as the taxability of the amounts as reflected in the impugned notice and the impugned order are reserved. We are unable to accept that any interference by this court is warranted in proceedings under Article 226 of the Constitution of India.
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2024 (11) TMI 1388
Reopening of assessment u/s 147 - Reason to believe - income from Long Terms Capital Gain ('LTCG ) and this entitles the petitioner to claim deduction u/s 54-B - HELD THAT:- From the perusal of the reply filed during assessment proceedings and the assessment order, it is evident that there was no specific question raised with regard to deduction claimed u/s 54B. The case would have been on different pedestal if the AO during the assessment proceedings had raised query with regard to deduction u/s 54B. In that case the reply and material filed by the petitioner relating to the deduction would have either been accepted or rejected or further probe ordered. There is no quarrel with the proposition of law that the reassessment proceedings cannot be initiated merely on change of opinion. The reasons for reopening clearly indicates that the AO had reason to believe that income had escaped assessment. We at this stage are not at all suggesting that the inference drawn is correct. What is required at this stage is that the AO has reason to believe that there was an escaped assessment. There is no bar that u/s 147 of the Act that the reasons to believe cannot be based upon the material already available on record. It is not a case of change of opinion, the petition is dismissed.
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2024 (11) TMI 1387
Validity of reopening of assessment - invoking the extended period of limitation - Addition of deemed dividend u/s 2(22)(e) as assessee had purchased a property and for acquiring the property assessee received entire amount from the company in which assessee holds 29% of shares - whether there was any tangible material that was available for reopening the assessment? HELD THAT:- The fact that emerges from the discussion above, it is clear that a sum was sought to be added to the income of the petitioner as deemed income vide Assessment order dated 29.12.2017. The petitioner unsuccessfully challenged the same before the CIT (Appeals) who by an order dated 08.09.2022 had rejected the petitioner's Appeal. The Tribunal has now reversed the decision of the Commissioner's Appeal dated 08.09.2022 affirming the Assessment order dated 29.12.2017. The attempt of the Department is to merely includes an additional amount over and above a sum which was the subject matter of the earlier Assessment order which stands deleted. In the light of the above development and in the light of the fact that the Appeal itself has been withdrawn it has to be construed that the issue stands answered against the Revenue and in favour of the Petitioner.
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2024 (11) TMI 1386
Deduction in respect of the broken period interest paid - method of accounting followed by the appellant in respect of broken period interest - Tribunal in rejecting the assessee s contention was of the view that when the securities are purchased by the appellant along with interest thereon, the price paid becomes the cost of the asset which is to be debited to Profit Loss Account - HELD THAT:- As in American Express International Banking Corporation [ 2002 (9) TMI 96 - BOMBAY HIGH COURT] question was answered in favour of the assessee wherein as find that the assessee's method of accounting does not result in loss of tax/revenue for the Department. That, there was no need to interfere with the method of accounting adopted by the assessee-bank. Our attention is also drawn to a recent decision of the Supreme Court in Bank of Rajasthan Ltd. [ 2024 (10) TMI 875 - SUPREME COURT] wherein the Supreme Court affirmed the view taken by this Court in CitiBank NA [ 2008 (8) TMI 766 - SUPREME COURT] , American Express International Banking Corporation [ 2002 (9) TMI 96 - BOMBAY HIGH COURT] as also in HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] question answered in affirmative in favour of the assessee and against the Revenue. Deduction in respect of the expenditure incurred by the assessee on the issue of Fully Convertible Debentures - assessee had made a rights issue of Fully Convertible Debentures (FCDs) and in such connection, had incurred expenditure on account of printing expenses, advertisement, professional fees, stamp duty and filing fees, bank charges, packages, etc. - deduction was rejected by AO on the ground that the real intention of the assessee was to increase its capital and not to raise borrowed capital - HELD THAT:- In answering such issue in favour of the assessee and against the Revenue, observed that the said question would stand covered by the decision of Havells India Ltd. [ 2012 (5) TMI 449 - DELHI HIGH COURT] which followed the decision of the Supreme Court in India Cements Ltd. [ 1965 (12) TMI 22 - SUPREME COURT] and the decision in Commissioner of Income Tax vs. Secure Meters Ltd. [ 2008 (11) TMI 66 - RAJASTHAN HIGH COURT] held that the expenditure incurred thereon was revenue in nature. Decided in favour of the assessee and against the revenue.
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2024 (11) TMI 1385
TDS u/s 195 - Assessee had not deducted tax at source on the payments made to Ciena, US - disallowance u/s 40(a)(i) - addition was premised on the assumption that the payments made to Ciena, US were chargeable to tax, under Section 9 (vii) of the Act, being fees for technical services - ITAT deleted addition on finding that the services rendered by the Ciena, US did not contain an element of make available of the technology - HELD THAT:- ITAT had noted that Ciena, US provides technical on-call advisory services. Ciena, US remotely provides support services through call centres, to the customers of the Assessee, in case of problems of outage, or where emergency technical support is required in cases where a system is compromised. However, in cases where the equipment develops any defect and requires repair, the same has to be shipped overseas to Ciena, US for the repairs. It is also relevant to note that Ciena, US is the manufacturer of the equipment supplied to customers in India, and the agreement between the Assessee and Ciena, US, is essential to ensure that the support services are provided to the customers in India. Revenue s contention that Ciena, US directly provides knowledge, technology, skill and experience to the Assessee for it to render services is not supported by the plain language of the Agreement dated 01.04.2010. Thus, the contention that consideration paid by the Assessee was fees for included services as defined under paragraph 4(b) of Article 12 of the DTAA, is not merited. As noted-above, the findings of the learned ITAT regarding the nature of services rendered by Ciena, US are the findings of the fact. It is also important to note that no question regarding whether the said findings are perverse has been projected by the Revenue in this case. Decided against revenue.
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2024 (11) TMI 1384
Validity of Reopening of assessment u/s 147 - Addition on the ground other than assessment was reopened - Assessee contention that since no addition had been made on account of the reasons on the basis of which the reopening of the assessment was sustained no other addition was permissible accepted by ITAT - HELD THAT:- Section 147 of the Act enables the reopening of concluded assessments only in exceptional cases, where there the AO has reason to believe that Assessee s income for the relevant period has escaped assessment. It is trite law that concluded assessment should not be lightly interfered with. If the ground on which the concluded assessment is sought to be re-opened, cannot be sustained, there would be little rationale for expanding the reassessment proceedings. In our view, it would not be apposite to accept an expansive interpretation to the provision of Section 147 of the Act. Given that the nature of the proceedings is to unsettle concluded assessment, a strict interpretation of the plain language of Section 147 of the Act, is warranted. We respectfully concur the view of this court as articulated in Ranbaxy Laboratories Limited [ 2011 (6) TMI 4 - DELHI HIGH COURT] and ATS Infrastructure Ltd.[ 2024 (7) TMI 1441 - DELHI HIGH COURT] and Jaguar Buildcon Pvt. Limited. [ 2024 (8) TMI 517 - DELHI HIGH COURT] It is also relevant to note that various courts had taken a view that the reassessment proceedings were confined under Section 147 of the Act only to the issues (reasons to believe) on the basis of which the assessments were reopened. Thus, there was no scope for making any addition other than those which were circumscribed by the reasons to believe as recorded by the AO prior to the issuing a notice under Section 148 of the Act. However, this controversy was set at rest by introduction of Explanation 3 by virtue of the Finance Act, 2009 with retrospective effect from 01.04.1989. Explanation 3 to Section 147 merely clarified that the AO would assess or reassess the income in respect of the issue which had escaped assessment and such other issue, which came to the notice subsequently. However, the said explanation does not control the import of the plain language of Section 147 of the Act. Explanation 3 to Section 147 of the Act, merely clarifies that the jurisdiction of the AO was not confined to assessing or reassessing of the income of an Assessee only in respect of the issue, which formed a part of the reasons recorded for reopening the assessment. The said explanation cannot be interpreted to mean that the AO could assess other incomes of the Assessee even in cases where no addition is made on account of the reasons for which reassessment was initiated. No substantial question of law arises in the present appeal.
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2024 (11) TMI 1383
Unexplained credit u/s 68 - assessee has failed to discharge its initial onus to prove creditworthiness and genuineness of transaction - sum reflected as outstanding in the final books of accounts of the Assessee - HELD THAT:- It is settled law that the credit in the books of accounts may be taxed u/s 68 if the AO on the basis of evidence and material on record can reasonably infer that the assessee s explanation regarding the transaction reflected as credit in his books, is a subterfuge and the transaction as disclosed, is not genuine. It is also necessary to observe that the AO is not required to examine the commercial expediency of the transaction and supplant its view in place of the transacting parties. AO is required to give a wide latitude to the commercial discretion of the contracting parties to enter into a transaction. And, unless the AO finds, on the basis of cogent material, that the transaction is a subterfuge and is not genuine, the AO must accept the same. There is no dispute as to the creditworthiness of Unitech and that it had paid the amount of Rs. 67.5 crores to the Assessee. There are no attendant circumstances, which would suggest that the Assessee had camouflaged its taxable income as an advance against the sale of property. It is material to note that Unitech has also not reflected the payment as an expense and has derived no tax advantage by making a payment of Rs. 67.5 crores to the Assessee. The transaction is, thus, tax neutral. Both the parties (Unitech as well as the Assessee) have claimed that the said amount was paid and received as an advance for purchase of the subject property. The AO has found fault with the documentation as the stamp paper had been issued prior to the date of the Agreement as typed on the non-judicial stamp paper. Whilst in some cases the finding to the said effect may be of significant relevance in determining the genuineness of the transaction, but may not be dispositive in other cases. Whether a flaw in documentation is indicative of a subterfuge must necessarily be determined bearing in mind other attendant facts of the case. In a case where the attendant facts and material indicates that the assessee has taxable income/ undisclosed assets, which would have been brought to tax but for being disguised as another transaction, any irregularity or flaw in the documentation may be of significance. In absence of any material indicating that the credit reflected in the books, but for being so reflected, may be chargeable to tax, it would not be reasonable for the AO to reject the Assessee s explanation on account of any irregularity or flaw in the documentation of the transaction. As explained in Sumati Dayal [ 1995 (3) TMI 3 - SUPREME COURT] the apparent transaction may be rejected if there are reasonable grounds to indicate that the same is not real. Thus, it may also be apposite for the AO to draw an inference as to what is the real, while considering rejection of what is apparent. It is material to note that the questions of law as projected by the Revenue and as noted at the outset are premised on the assumption that the creditworthiness of Unitech was in doubt. But as noted before there is no cavil that Unitech had sufficient funds to make the payment that it had. The questions as framed are answered in favour of the Assessee and against the Revenue.
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2024 (11) TMI 1382
LTCG - Disallowance of deduction u/s 54 - whether the Assessee had constructed a residential house on the agricultural land within the stipulated period of three years from the date of transfer of the aforesaid property in question, that is, on or before 25.09.2017? - HELD THAT:- A plain reading of Section 54 of the Act that the allowance is available if the capital gains arising from a sale of residential property is utilised by the Assessee for purchasing a residential property or constructing a residential house. It is obvious that the construction of a residential house would entail raising a construction for inhabitation as a residential dwelling unit. The Inspector s report, which the learned ITAT had accepted is a makeshift guardroom made of plywood of 7 feet x 6 feet was found on the site and a similar room of plywood of 16 feet x 12 feet with a toilet attached was found at the said site. Putting together a structure of plywood sheets cannot be construed as constructing a residential house. The Inspector had also reported that there was no electricity or water connection on the land and electricity was used by genset. The first inspection report indicated that the exact location itself of the land was difficult to find as the area was vast and inhabited and comprised of hilly terrain. It is material to note that the structures made of plywood sheets were found to exist on the subject property during the second visit of the Inspector conducted on 7.12.2017. In our view, no question of law arises for consideration of this court given the description of the subject property in question, as noted by the learned ITAT in its order. The findings of the learned ITAT cannot be assailed as perverse or manifestly erroneous.
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2024 (11) TMI 1381
TP Adjustment - inclusion of E4e Healthcare as a comparable - Assessee had objected to the use of the said entity as a comparable on the ground that its annual report was not available in the public domain - HELD THAT:- None of the objections of the Assessee with regard to the inclusion of E4e Healthcare were adjudicated. However, the assessee did not agitate the matter further, because the learned TPO had determined the ALP adjustment for the AY 2012-13 as NIL. It is thus, clear that the Assessee s contention that E4e Healthcare is functionally dissimilar to the assessee and therefore, could not be included as a comparable, has not been considered by any authority. As noted above, the orders passed by the learned DRP, the learned TPO and the learned ITAT proceeded on an assumption which are ex-facie incorrect.
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2024 (11) TMI 1380
Interest towards refund negatived in the Rectification Petition - HELD THAT:- As in the present case, it is seen that the impugned order came to be passed negativing the petitioner's claim for interest by stating that in terms of Section 244 A (2) of the Act, if the proceedings resulting in the refund are delayed for the reasons attributable to the assessee (petitioner in this case), the delay so attributable to him shall be excluded from the period, for which, the interest is payable, but the respondent failed to take into considering that only due to the faults committed on their side, (i.e. Department) in having failed to deal with the petitioner's case with abundant caution, the petitioner is now facing loss. Further, this Court is of the view that there cannot be a straight jacket formula in all such cases, where, the assessees are claiming for refund/interest. The impugned order is set aside. The matter is remanded to the respondent for re-consideration, in which case, respondent is directed to consider the petitioner's claim for interest and pass orders towards release of the interest amount from the date of filing of the Revision Petition i.e. 31.03.2014 till the date of payment i.e. On 31.10.2024, with interest at the rate of 6% p.a. after deducting a sum as already been refunded to the petitioner.
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2024 (11) TMI 1379
Validity of reopening of assessment - Ropening as based on the purported guideline value of the property at Rs. 16,000/- Per. Sq. Ft. - difference between the value adopted for the computation of the stamp duty and the guideline value is to be taxed - HELD THAT:- The Court is of the view that the impugned order in over-ruling the objection of the petitioner, on the ground of difference, between the purported guideline value of the property at Rs. 16,000/- Per. Sq. Ft. is not available as it is inspired due to change of opinion. That apart, the records that have been filed before this Court is Rs. 16,000/- Per. Sq. Ft. is for the commercial property and not for residential property. The SRO s letter dated 04.10.2022 confirms that value that was adopted only Rs. 12,000/- Per. Sq. Ft. That apart Section 47 A of the Indian Stamps Act, 1899, it is the Jurisdictional Registering Officer, who is the competent authority under the Indian Stamps Act, 1899 to come to a conclusion, whether there was any under valuation or not. If there is under valuation, the property would not have been registered at Rs. 12,000/- Per. Sq. Ft. Prima-facie , it is clear that the reopening of the assessment is only inspired from change of opinion, as all the materials available for completing the assessment. Impugned order is liable to be set aside in the light of the decision of Kelvinator of India Ltd., [ 2010 (1) TMI 11 - SUPREME COURT] Hon ble Supreme Court has made it clear that the power that is to be exercised under Sections 148 cannot be used for change of opinion as there is no power to review completed assessment.
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2024 (11) TMI 1378
Addition representing agricultural income - material evidence filed for the sale of the casuarina trees - ITAT sustaining the entire amount of agricultural income as unexplained income - addition based on the sworn statement - HELD THAT:-. The facts of the case of the appellant in this Appeal being almost identical to the facts of the case the appellant's husband [ 2024 (9) TMI 1455 - MADRAS HIGH COURT ] evidence which department has gathered is long after the felling of trees and sale by the appellant by placing reliance on the statement of the Village Headman. The statement of the Village Headman can at best only corroborate the stand which department based on evidence, if there were other compelling evidence. It was incumbent on the part of the Income Tax Department to have summoned the said Mr.Thangasamy of Alangudi Taluk, Pudukottai District and verified and confirmed whether the said person had indeed given the statement which was produced by the Appellant and if so whether the statement given by the said person was true or not. Although the department is governed by preponderance of probability and not by strict rules of evidence, yet it was incumbent to have secured the presence of the said person. They should have cross examined him before disbelieving the statement. Therefore, an issuance of summon to Mr.Thangasamy who had given statement by the Income Tax department is not sufficient. Income Tax department should have secured the presence of Mr.Thangasamy to answer to the summons and should have confronted him and contradicted the content of the statement of Mr.Thangasamy produced by the appellant by way of cross examination. Therefore, without cross examination, the statement of Mr.Thangasamy can neither be disbelieved nor disregarded. The statement of Mr.Thangasamy cannot be therefore discredited. If Mr.Thangasamy had refused to co-operate, the Income Tax Department was not without remedy under the provisions of the Income Tax Act, 1961 to secure his presence. Since this exercise was not done, the demand confirmed u/s 144(A) are liable to be interfered as unsustainable. Addition u/s 69A of the Income Tax Act, 1961 as unexplained credit/unexplained money of the appellant are incorrect and are liable to the set aside. Decided in favour of assessee.
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2024 (11) TMI 1377
Credit of TDS - no credit of the TDS had been given in the order u/s 154 r.w.s. 143(1) - HELD THAT:- In the instant case, the assessee has declared capital gain in FY.2017-18 (AY.2018-19). Though the payments were received in three years, but credit for the TDS u/s 194IA deducted by the purchaser, M/s Happy Home Infra Tech, can be allowed only in AY.2018-19. Therefore, claim to allow credit of TDS of Rs. 4,50,000/- in AY.2016-17 is not in accordance with the clear provisions of the Act. CIT(A) has rightly rejected the ground of the assessee for AY.2016-17. However, he has directed AO to allow credit of such TDS amount in AY.2018-19, which is correct. We direct the AO to withdraw credit of TDS from AY.2016-17, if the same has been allowed, after due verification by AO. AO is further directed to allow credit of TDS in AY.2018-19. This ground is allowed for statistical purpose.
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2024 (11) TMI 1376
Addition u/s 153A - whether no incriminating document/material found during the course of search? - addition u/s 56(2)(viii)(c) - HELD THAT:- We find that the factual matrix of the instant case shows that the only seized document referred to in the assessment order by the AO at Para 3 of the assessment order is the list of shareholders of M/s Confident Distributors Pvt. Ltd, which included the assessee. CIT(A) correctly held that the document is available in public domain and hence cannot be categorized as incriminating document. Addition is made u/s 56(2)(viii)(c) on account of difference in the face value of fresh issue of shares by the company and book value of shares. We find that there is no whisper, in the assessment order, of any incriminating documents/records or any other evidence found or seized during the course of search proceedings which prompted such addition made in the case of the assessee. Section 56(2)(viii) of the Act is a deeming provision and the issue in this case under consideration is the pricing of the shares without any reference to any incriminating material found during the search. Further, the existence, identity and genuineness of the transaction has not been doubted by the AO. We also note that the assessee had filed return of income originally u/s 139 of the Act on 29.09.2012 which was processed u/s 143(1) of the Act. At the time of search action on 29.12.2015, no assessment/reassessment proceedings were pending in the case of assessee. The impugned AY is thus an unabated assessment AY and, therefore, the ratio laid down in the case of Abhisar Buildwell [ 2023 (4) TMI 1056 - SUPREME COURT ] squarely apply wherein it has been held that assessment u/s 153A of the Act can be framed only on the basis of incriminating material found at the time of search. The issue of addition in an unabated assessment year and the role of incriminating material has been finally settled by the decision of case of Abhisar Buildwell [supra] wherein held once during search undisclosed income is found on unearthing the incriminating material during the search, the AO would assume jurisdiction to assess or reassess the total income even in case of completed/unabated assessments. As the addition made in the case of the assessee in the instant year is devoid of any incriminating materials, we direct the AO to delete the impugned addition. Decided in favour of assessee.
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2024 (11) TMI 1375
Maintainability of Appeals on lifting of the moratorium period ordered by the Hon ble Supreme Court - HELD THAT:- Hon ble Supreme Court ordered for moratorium period on the Assessees companies, thus consequent to the said Judgment of the Hon ble Supreme Court the present appeals filed by the Assessees are not maintainable and liable to be dismissed. Accordingly, we dismiss the appeals filed by the Assessees with the liberty to Assessees/department to seek for restoration of the above Appeals on lifting of the moratorium period ordered by the Hon ble Supreme Court or any other change of circumstances.
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2024 (11) TMI 1374
Disallowance u/s 36(1)(iii) - interest free advance by assessee - assessee has paid interest on various parties and has not charged any interest on the money landed by assessee - HELD THAT:- Neither the assessee has paid interest on short borrowings nor charged any interest on the advances given for short periods. Rather the assessee was having running account with both the parties, therefore, there was no justification for making disallowance of interest expenses. In the result, first part of ground No. 1 of appeal is allowed. Addition on account of low household expenses - AO made addition by taking view that total household expenses withdrawal or assessee and his family which is not sufficient for four members in the family in Y category of city - assessee vehemently argued that the assessee has shown sufficient withdrawals for his household expenses, the assessee has withdrawn Rs. 78,400/-. The wife of assessee has also shown withdrawal of Rs. 60,000/-. The family of assessee consists himself, his wife, two minor children one children is school going and assessee resides in the house owned by his father. Assessee s withdrawal shown by assessee are sufficient to meet day-to-day expenses - HELD THAT:- As no benefit of withdrawal of Rs. 78,400/- is allowed by Assessing Officer. The assessee is living in the house owned by his father. Thus, considering the overall facts and circumstances of the case, in my view, the total household expenses of four members of a family is not less than Rs. 30,000/- per month in City Light, Surat. Thus, the assessee is allowed benefit of Rs. 1.20 lacs plus (+) his own withdrawal of Rs. 78,400/- and rest of the addition to the extent of Rs. 2,81,600/- is sustained. In the result, second part of ground No. 1 is partly allowed.
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2024 (11) TMI 1373
Non grant of full TDS credit claimed in the return of income - CPC granted credit for TDS in proportion to the capital gain income declared by the assessee and disallowed the claim for the balance TDS. HELD THAT:- Undisputedly, the entire TDS on the sale consideration was remitted to the Government account in the name of the assessee. This fact is clearly evident from Form No. 26AS and the corresponding TDS certificate. Accordingly, the assessee claimed credit of entire TDS. Whereas, in the return of income of assessee s wife, no TDS was claimed. The aforesaid factual position remains uncontroverted before us. Merely because the property was jointly owned by the assessee and his wife and the capital gain arising on sale of property was equally shared by the joint owners, that cannot be the sole reason for disallowing assessee s claim in respect of TDS credit. More so, when it is the assertion of the assessee that his wife has not claimed credit for TDS. We direct the AO to factually verify, whether assessee s wife has claimed any part of the TDS and in case, assessee s claim that his wife has not claimed any part of the TDS is found to be correct, entire TDS credit should be allowed to the assessee.
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2024 (11) TMI 1372
Rejection of applications u/s 12AB and 80G(5) - objects are charitable in nature and restricted to the members of the Trust and not for the benefit of public at large and as such does not fall under the category of charitable object as per the provision of section 2(15) - HELD THAT:- We find that Hon ble Jurisdictional High Court in CIT Vs. Jamiatul Banaat Tankaria [ 2024 (10) TMI 712 - GUJARAT HIGH COURT] held that where CIT(E) rejected assessee s trust application for registration under Section 12A on the ground that its objects were for benefit of a particular religious community or caste and accordingly assessee was not entitled for exemption in terms of Section 13(1)(b), since Section 13(1)(b) was not relevant at the stage of registration under Section 12A but rather comes into play at the time of assessment when determining exemption u/s 11, impugned rejection of application was unjustified. CIT(E) has not examined the objects and activities of the assessee trust which are the twin conditions for granting registration u/s 12A/12AB. We also find merit in the submission of assessee that the ld. CIT(E) while rejecting the application of assessee has referred Clause- H to O only and has not considered the other clauses. Entire memorandum of association has to be considered and not by selecting a particular clause of the memorandum of association. Considering the fact that the ld. CIT(E) has not given his finding on the objects and activities of the assessee, therefore, we deem it appropriate to restore the issue back to the file of ld. CIT(E) reconsider the registration of assessee u/s 12AB of the Act afresh Appeal of assessee is allowed for statistical purposes.
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2024 (11) TMI 1371
Determination of quantum of peak credits appearing in books of accounts/bank accounts of various assessees - HELD THAT:- As exclusively for restricting the addition u/s 68 to only the peak unexplained credit after elimination of circular transaction(s), if any, within the Group concerns. The one and only one inference that emerged from the Tribunal order [ 2013 (10) TMI 1522 - ITAT DELHI ] is that the entire credits appearing in the books of account/bank account(s) for providing accommodation entries to beneficiaries have to be assessed in the hands of the appellants/assessees if the same was not taxed elsewhere in the hands of other business concerns of this Group involved in providing accommodation entries to beneficiaries. We find merit in the arguments of the CIT-DR. We are of the considered view that the Ld. Counsel s argument that the peak of the bank credits has to be assesseed as per the direction of the Tribunal order dated 18.10.2013 is devoid of any merit on the simple reasoning that the bank credits are not assessable as unexplained credits u/s 68 of the Act and each accommodation entry is independent and separate transaction. Tribunal as directed the appellant/assessee to produce the evidence and demonstrate the chain of transactions before the AO during the course of remitted proceedings. Tribunal has clarified that the burden of proof to produce the evidence and demonstrate the chain of transactions, layering indulged by him in the calculation of peak credits and to prove each credit in the books of each assessee is on the appellants/assessees. However, we have noticed that the appellants/assessees, during the second round of assessment proceedings, failed to follow the directions of the Tribunal vide order dated 18.10.2013. Therefore, the AO was constraint to assess the entire credits u/s 68. Without offering any comment on merit of the case, we deem it fit to set aside the impugned orders and remit the matter back to the file of the AO for deciding the issue of peak credit in light of the above observations/ discussions/findings. In view of the decision and Tribunal order in the cases of Ordinary Financial Services Pvt. Ltd. we direct the AO to work out the commission income @ 0.50% of accommodation entries provided by the concerned assessees and to allow the consequential relief. We have taken note of the fact that the investment documents were seized from the possession of the appellant/assessee and it has to be explained by the appellant/assessee. The appellant/assessee failed to bring any material on the record to contradict the finding of the lower authorities. We therefore, do not find any fault in the finding of the Ld. CIT(A) on this score.
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2024 (11) TMI 1370
Assessment u/s 56(2)(X) - stamp duty value of the property was much higher - purchase of immovable property by the appellant in the previous year relevant to the assessment year 2017- 18 and not in the previous year relevant to assessment year 2018-19 - HELD THAT:- Sale consideration was settled on the date of the agreement i.e. 30th December, 2016 and that all the amount was paid on the said date. He therefore, has contended that the collector rate/ circle rate as on the date of execution of the agreement should be taken for the purpose of making any addition u/s 56(vi)(2). Though, this ground has been taken by assessee as an additional ground, however, we find force in the same in view of the provisions of Section 56(2)(X) read with First proviso and Second proviso. As per first and second Proviso to Section 56(2)(X) of the Act, where, the date of agreement, fixing the amount of consideration, is prior to the date of the registration deed and the amount of consideration or part thereto as per the said agreement has been paid by the purchaser though banking channel, then the stamp duty value/ circle date as mentioned on the date of agreement is to be taken for the purpose of Section 56(2)(x). Since, in this case the entire payment of ₹86 lacs was transferred by the assessee through banking channel on 30th December, 2016, therefore, AO is directed to calculate the amount as per the circle rate as applicable on 30th December, 2016. AO shall call upon for information in this regard from the circle officer/ collector and thereafter, apply the said rates for the purpose of computing the income of the assessee while invoking the provisions of Section 56(2)(x).
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2024 (11) TMI 1369
Principle of Mutuality - Assessment of Club - whether case of the assessee is covered by the principle of mutuality ? - HELD THAT:- As assessee club was established for non-profit motive and the club and its members were distinct/ distinguishable and they do not have right in any surplus, if generated by the assessee club and none of the activities of the club could be tainted with commerciality. Any reserve held by the club are also used for the purpose of furtherance of the activities of the club and cannot be used by any member for its own benefit. It is clear that activities of the Assessee are covered by principle of mutuality. Accordingly, the appeal of the department is hereby dismissed.
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2024 (11) TMI 1368
Validity of order in the name of non-existent person - CIT(A) has passed ex parte order - HELD THAT:- We quash the assessment order since the AO issued notice u/s. 143(2) and passed order u/s 144 in the name of deceased and non-existent assessee whereas the AO had information about the death of the assessee before passing order u/s 144 of the Act. Accordingly the assessment order passed in the name of deceased and non-existent assessee is not a valid order passed in the eyes of law. Accordingly we quash the assessment order. Appeal by the assessee is allowed.
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2024 (11) TMI 1367
Assessment u/s 153A - Addition of long-term capital gains - transfer of capital asset owned by the firm during the previous year while converting the partnership firm into a company - HELD THAT:- As alleged incriminating documents seized at the time of search and we found that at no stretch of imagination, the above said documents could be treated as incriminating records because they are only the documents maintained by the assessee during the normal course of business like Board Resolution, note prepared by the Advocate and the valuation report prepared by the advocate and the indenture of retirement-cum-release of partnership firm dated 06.07.2015 and financial statements for the assessment year 2015-16. From the above said documents we are not able to find any incriminating evidence for the suppression of income. We therefore, does not accept the reasoning of the AO that these are all incriminating records recovered at the time of search from the assessee. Further, there is no suppression or escaped income made out by the AO, based on the seizure of the above said incriminating documents and therefore we are of the view that no assessment proceedings could be initiated u/s 153A of the Act when the assessment was completed. To arrive such a conclusion we relied on the judgement of the Hon ble Supreme Court in the case of Abhisar Buildwell P Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] Whether the assessee had committed any violation of the provisos to Section 47 (xiii) of the Act as alleged by the AO? - There is no evidence available with the AO to show that the partners had received consideration at the time of succession and the AO also not brought out any specific instances of receiving any consideration at the time of effecting the succession. As seen from the various records, and the balance sheet, it is clear that before the transfer of the firm into a company, the partners have withdrawn their surplus share capitals and therefore, there is no evidence or any materials available with the AO to show that the partners have received consideration for the purpose of transferring the assets and liabilities of the firm to the assessee company. The partners have withdrawn their surplus capital amount after the reorganization of the firm and not immediately before the succession and therefore, it cannot be treated as consideration received for the transfer of the assets and liabilities of the firm to the company. Therefore, we are not agreeing with the reasons adduced by the AO in order to attract proviso (c) to section 47(xiii) of the Act. In the present case, there are no violation of the conditions laid down in section 47(xiii) proviso (a) or (c) of the Act and therefore, the order of the AO treating the value of the assets and liabilities of the firm, as capital gain obtained by way of transfer of capital asset liable to be taxed under the head long term capital gains u/s 45(4) of the Act is not sustainable. In coming to the above conclusion, we derive assistance from the judgement of M/S CADD Centre [ 2016 (5) TMI 422 - MADRAS HIGH COURT] . CIT(A) also in his order simply extracted the findings of the AO and confirmed the order passed by the AO and therefore we are setting aside both the orders of the CIT(A) and the AO and held that the addition made under the head long term capital gains is not sustainable and hence the assessee is entitled for exemption u/s 47 (xiii) of the Act. Assessee appeal allowed.
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2024 (11) TMI 1366
Unexplained deposits in bank a/c - HELD THAT:- On perusal of bank statement, we find that the assessee has made frequent deposits in bank a/c and it is not a case of one time sudden deposit. Further, the assessee has also made frequent cash withdrawals from the very same bank a/c. Therefore, looking at the pattern of deposits and withdrawals, the assessee should not be denied the benefit of peak credit. That means, only peak-shortage can be considered as unexplained income. This is in consonance with the view taken by various judicial forums. We find that there is a peak shortage of Rs. 1,05,000/- on 01.06.2010 which can only be treated as unexplained. Consequently, the addition made by AO is restricted to the extent of Rs. 1,05,000/- and the rest of the addition is deleted. The assessee gets relief accordingly.
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2024 (11) TMI 1365
Denial of exemption claimed u/s 11(2) - Assessee had failed to file Form 10 electronically before the due date of filing of return of income as mandated by Rule 17 of the Income Tax Rules 1962 but filled in physically - HELD THAT:- It is not the case of the Revenue that there was difference between Form 10 filed by the Appellant physically and electronically. Revenue has placed nothing on record to controvert the finding returned by the CIT(A) that the funds were not accumulated casually by the Assessee and were utilize for the purpose of the Assessee Trust. We note that Assessment Year 2016-2017 was also the first year of applicability of amended Rule 17 of IT Rules requiring electronic filing of Form 10 since the said Rule came into effect from 01/04/2016 relevant to the Assessment Year 2016-17. The Assessee has also placed on record Form 10B for the Assessment Year 2016-17 filed electronically on 21/09/2016 wherein it has been clearly stated that INR 7.34 Crores has been accumulated in terms of Section 11(2). Thus, we hold that the benefit of exemption claimed by the Appellant under Section 11(2) cannot be denied to the Appellant. As decided in Parle Hindu Devalaya Mandal [ 2020 (3) TMI 1353 - ITAT MUMBAI] and Navodaya Education Trust [ 2021 (7) TMI 769 - ITAT BANGALORE] Tribunal has taken a view that in case where the Form 10 has been filed physically before the due date the benefit of Section 11(2) of the Act cannot be denied merely for non-filing of Form 10 electronically. Decided against revenue.
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2024 (11) TMI 1364
Ex-parte order of the CIT(Appeals) - CIT(Appeals) had disposed off the appeal for non-prosecutio n - HELD THAT:- Assessee despite having been afforded six opportunities had except for seeking adjournments on three occasions had failed to participate in the proceedings before the CIT(Appeals), therefore, the latter holding a firm conviction that the assessee was not interested in prosecuting the matter, disposed of the appeal vide an ex-parte order. On a careful perusal of the order of the CIT(Appeals), we find that he had summarily referred to the observation of the A.O and approved the same without deliberating upon the specific issues, based on which, the additions/disallowances were assailed by the assessee before him. As observed by us hereinabove, the CIT(Appeals) had disposed off the appeal for non-prosecution and had failed to apply his mind to the issues which did arise from the impugned order and was assailed by the assessee before him. We are unable to persuade ourselves to accept the manner in which the appeal of the assessee had been disposed off by the CIT(Appeals). Once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. In fact, a perusal of Sec.251(1)(a) and (b), as well as the Explanation to Sec.251(2) of the Act reveals that the CIT(A) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per mandate of law the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non-prosecution. We, thus, not being able to persuade ourselves to subscribe to the dismissal of the appeal by the CIT(Appeals) for non-prosecution, therefore, set-aside his order with a direction to re-adjudicate the same afresh. Needless to say, the CIT(Appeals) in the course of the set-aside proceedings shall afford a reasonable opportunity of being heard to the assessee, and shall adjudicate the grounds of appeal/additional grounds of appeal as have been raised by the assessee before us. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (11) TMI 1363
Disallowance of costs and expenses related to the Kaledonia project while computing the loss incurred by it upon sale of units - HELD THAT:- As the observations of the Assessing Officer that the assessee has not filed any details to substantiate its cost of construction is not acceptable, since the AO himself has assessed the Work-in-Progress as mentioned hereinabove. Since the business activities in Kaledonia Project is common from A.Y. 2008-09, therefore, it becomes imperative to determine the cost of construction shown by the assessee in its books of accounts. Therefore, in the interest of justice, we deem it fit to send the matter back to the file of the AO. Since there is no dispute that the assessee is engaged in the business, therefore, the Assessing Officer is directed to decide the impugned quarrel afresh in the light of the fact that the assessee is engaged in business activities. The assessee is directed to justify its claim of cost of construction / Work-in-Progress by submitting necessary documentary evidences and the Assessing Officer is directed to examine / verify the same and decide the issue afresh after affording reasonable and adequate opportunity of being heard to the assessee. The contention that some of the sales are illegal and since no sale consideration has been received the same should be excluded from the business receipts of the assessee need to be verified in the light of the decision of this Tribunal in the case of M/s. Sagar Developer [ 2014 (8) TMI 1253 - ITAT MUMBAI] .The assessee has filed copies of FIR filed with Enforcement Department, CBI etc., as additional evidences, which are admitted and the Assessing Officer is expected to consider the same while deciding the issue afresh. Disallowance of business loss - this essentially comprises of certain expenses debited to the profit and loss account and the major expenses was on account of building maintenance charges - HELD THAT:- CIT(A) has erred in as much as it relied upon the provisions brought into statute by Finance Act, 2017 and we are in A.Y.2012-13 and section 23(5) has not been held to have a retrospective effect. Assessing Officer has erred in drawing the support from the decision of the Hon ble Delhi High Court (supra) in as much as the decision of the Hon ble Delhi High Court is for the provisions prior to the year 2001 and after introduction of section 23(1)(c) of the Act the assessee is eligible for vacancy allowance. Therefore, if the rental income has been taxed then the assessee is equally eligible for the vacancy allowance as per section 23(1)(c) of the Act for the vacant commercial units in Kaledonia Project. Considering the facts in the light of the relevant provisions of Act, we direct the Assessing Officer to delete the addition. Addition based upon mismatch of Form 26AS - As we find that the bone of contention is the income inclusive of service tax and the income shown in the TDS Form 26AS is exclusive of service tax. Assessee is directed to file a reconciliation statement and the Assessing Officer is directed to examine and verify the same and give credit to taxes paid as per the provisions of the law. Disallowance of interest under section 36(1)(iii) - The undisputed fact is that the sister concern M/s. Sapphire Land Development Pvt Ltd., is also engaged in the business of real-estate development and has utilized this amount towards development of the real estate business. Therefore, it cannot be said that the assessee has failed to justify the business necessity of these advances. Considering the fact that the assessee has suo-moto disallowed the interest we are of the opinion that this should suffice any necessity for the disallowance. Therefore, the Assessing Officer is directed to delete the addition of the balance amount. This ground is allowed. Disallowance of prior period expenses - It is true that these expenses pertain to period prior to the year under consideration. But it is equally true that these expenses were capitalised in value of capital Work-in-Progress of Kaledonia Project and were never debited to the profit and loss account of earlier assessment years. It appears that the Assessing Officer has never called any documentary evidences to corroborate this claim. Therefore, in the interest of justice and fair play, we set-aside this issue to the file of the Assessing Officer.
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Customs
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2024 (11) TMI 1362
Classification of imported goods - Binding Material, Parts for Brake, disc brake pads, tool for mould, etc . - to be classified under CTH 38249090 / 38247900 or CTH 68138900? - benefit of N/N. 152/2009-Cus. dated 31.12.2009 and also N/N. 50/2017-Cus. dated 30.06.2017 - invocation of Extended Period of limitation. As decided by CESTAT [ 2024 (10) TMI 17 - CESTAT CHENNAI] Respondent s classification of the impugned goods under Chapter Heading 3824 9090/3824 7900 is rejected and the department s classification under CTH 6813 8900 is upheld. Consequently, the appellant is not eligible for the benefit of the Notification No. 50/2017-Cus. dated 30.06.2017 and Notification no.152/2009-Cus dated 31.12.2009. However, the demand for the normal period along with interest is only upheld and the demand for the extended period is decided in favour of the Respondent importer - Appeal of Revenue is partly allowed. HELD THAT:- After having perused the impugned judgment of the Customs, Excise and Service Tax Appellate Tribunal, we concur with the findings recorded by the Tribunal. The Appeal is, accordingly, dismissed.
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2024 (11) TMI 1361
Challenge to the decision rendered by CESTAT - appellants right to question the enhancement made concerning the valuation of the imported goods, once the appellants had given up their right to seek issuance of a show cause notice and/or speaking order under Section 17 of the Customs Act, 1962 - Decision to enhance the declared values relied exclusively on data from the NIDB - Declared values and the power of reappraisal - HELD THAT:- Section 17 (5) then proceeds further and constitutes the next fundamental step which the statute constructs in respect of reassessment. Shorn of unnecessary details, it prescribes that where the reassessment done under Section 17 (4) is at variance with the self-assessment of the importer, the proper officer would proceed to pass a speaking order in support of such reassessment. A combined reading of sub-sections (4) and (5) of Section 17 thus leads one to the irresistible conclusion that a reassessment, provisional or preliminary, would already exist and would have been formulated prior to sub-section (5) getting triggered. It is also important to bear in mind that Rule 12 (2) is essentially concerned with the first limb of the reassessment exercise and is connected with Section 17 (4). This would clearly appeal to reason since the information or documentation that may be elicited from the importer would have to be concerned with the reasonable doubt which the proper officer harbours and thus obliged to communicate to the importer upon request the grounds on the basis of which it doubts the truthfulness or accuracy of the value declared. It is also pertinent to note that sub-section (4) of Section 17 is prefaced by the use of the expression Where it is found on verification, examination or testing . It is this verification exercise which would necessarily entail the importer being provided a reasonable opportunity to be heard before a final decision is taken. It is perhaps in the aforesaid light that Century Metal Recycling observed that neither the opportunity of questioning an opinion with respect to reassessment as formed nor an opportunity of hearing can be waived. In fact, it held that the aforesaid procedure would clearly be mandatory. Exploring the concepts of abandonment and waiver - Whether that right itself can be said to have been abandoned ? - As it becomes more than apparent that the assertion of abandonment and waiver of a right is clearly misconceived. The tone and tenor of the communications which were addressed by the appellants cannot possibly be interpreted or construed as amounting to a conscious waiver of a right to question the reassessment further. Not only do those documents appear to be the submission of a without prejudice request tendered in order to facilitate expeditious clearance of goods, the same cannot possibly be viewed or interpreted as amounting to an abandonment of the right to institute an appeal itself. When we revert to the view expressed by the CESTAT in CUSAA 126/2022, we find that there is a clear absence of consideration of the various communications which had been addressed by the appellant to the customs authorities and which had preceded the finalization of re-evaluation of declared value. The CESTAT thus appears to have proceeded on the premise that the importer had all along agreed to the enhancement of the declared value and raised no protest. The CESTAT thus appears to have incorrectly proceeded on the basis that the communications addressed itself implied that the importers had willingly accepted the value as suggested by the customs authorities and consequently, the respondents being relieved of undertaking any adjudication as contemplated under Section 17 of the Act in light of the abandonment and waiver of the appellant s right to challenge the reassessment. The appellants had registered their protest on more than one occasion and had also sought expeditious clearance of goods subject to an exercise of provisional reassessment being undertaken. These facts and circumstances clearly detract from the argument of a conscious abandonment of the right to question the reassessment or to accept the re-evaluation exercise undertaken without reservation of a right to challenge. Rejection of declared values: Assessing its validity - The proper officer could not be said to have been relieved of its obligation to pass a speaking order in terms of Section 17 (5). The process of rejecting the declared value and reassessing the transaction value is statutorily required to be preceded by the proper officer having drawn an opinion of why the declared value was not liable to be accepted before consequently proceeding to reassess the value. While the said reassessment may not be framed in elaborate terms, it would necessarily have to be reflective of the reasons which weighed upon the respondent to form the opinion that the declared value was not liable to be accepted. Value enhancement on the basis of NIDB data - whether the enhancement or re-evaluation of the 'declared value' can be based solely on the data available in the NIDB, in Agarwal Foundries, the Hyderabad Bench of the CESTAT had held that the customs authorities would be unjustified in enhancing the declared import values solely on the basis of NIDB data? - Rule 10A of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 [1988 Rules], as analysed by the CESTAT in this decision, was similar to Rule 12 of the 2007 Rules. The CESTAT ruled in favour of the appellant, holding that NIDB data alone would be insufficient for value reassessment without corroborative evidence or contemporaneous import comparisons. This decision underscored the importance of comprehensive evidence and procedural compliance in customs disputes, cautioning against arbitrary reliance on NIDB data Tribunal has consistently found that a valuation addition based solely on NIDB data would wholly unwarranted and that any such reassessment would have to be shored by independent and cogent evidence. The legal position so articulated would ensure fairness and transparency in the determination of import values. The body of precedent noticed above have in unison held that mere reliance on external data without corroborative evidence or clear justification would fail to meet the tests and principles underlying the provisions enshrined in the 1988 Rules and 2007 Rules. They correctly lay emphasis on the imperatives of a reasoned approach to customs valuation and a deviation from declared values being founded on tangible and justiciable material. A reassessment or rejection of declared value would thus have to necessarily be established as being compliant with the aforenoted requirements of pre-eminence. Relieving the respondents of this obligation would clearly lead to pernicious consequences. We would answer the question framed in the affirmative and in favour of the importers. The appeals are consequently allowed and the impugned orders of the CESTAT set aside. The order of the Commissioner (Appeals) shall in consequence stand restored.
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2024 (11) TMI 1360
Partial rejection of benefit under Merchandise Exports from India Scheme (MEIS) - mismatch between the description of the goods in the shipping bills and the description in ITC (HS) 87085000 - HELD THAT:- No reasons are indicated why the Respondent s case was accepted or why the Petitioner s case was rejected. There is no discussion on the RA report or comments from PC-3 Divisions. On perusing the minutes, it is impossible to understand whether there was any application of mind. This is an additional reason to interfere with the impugned decision. In the reply filed on behalf of the Respondents, significantly, neither is the copy of the RA s report, nor the copies of the comments received from PC-3 Divisions annexed. Based of the affidavit or, for that matter, other averments in the affidavit, we cannot uphold the impugned decision considering the serious defects in the decision-making process. Therefore, we clarify that we are not addressing the merits of the decision but propose to interfere with it because the decision-making process was grossly defective. In this case, the principles of natural justice have been breached, and a case is made to set aside the impugned decision. Accordingly, we quash and set aside the PRCs impugned decision in Meeting No. 22/AM22 held on 22.03.2022 and 29.03.2022. We direct the PRC to reconsider the Petitioner s claim for benefits under MEIS as expeditiously as possible and in any event within two months from today. Before such a decision is taken, a copy of RA s report and comments received from PC-3 Divisions must be furnished to the Petitioner. This may be done within 15 days from today. If the PRC wishes to consider any other material, then copies of such material must be furnished to the Petitioner within two weeks from today. If the Petitioner wishes to file any response to this material, the Petitioner should file such response within a week of receipt of this material. The PRC must hear the Petitioner or its representative and pass a reasoned order.
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2024 (11) TMI 1359
Appeal filed against order of Commissioner (Appeals) remanding the matter to the original adjudicating authority - Sole ground mentioned in the impugned order for rejection of the request made by the appellant is delay of more than three months from the date of let export order - HELD THAT:- We find that the impugned order though signed by Deputy Commissioner (Exports), Customs House, Mundra has been rejected by the competent authority. In the instant case the competent authority was the Principal Commissioner of Customs, consequently the appeal has been filed before the Tribunal. The said limitation of three months was introduced by the Circular 36/2010 dated 23.09.2010. The Hon ble High Court of Gujarat in the case of Messrs Mahalaxmi Rub Tech Limited [ 2021 (3) TMI 240 - GUJARAT HIGH COURT] has set aside the said requirement of filing the application for conversion within a period of three months as ultravirus, Article 14 and 19(1)(g) of Constitution of India as well as ultravirus section 149 of the Customs Act, 1962. The special leave petition filed by the Revenue against the said order before Hon ble Apex Court has been rejected as reported under [ 2023 (4) TMI 1272 - SC ORDER] . In the impugned order, the sole ground for rejection is the delay of more than three months in filing the application in terms of Circular No. 36/2010-Cus dated 23.09.2010. Since the said Circular itself has been set aside by Hon ble High Court of Gujarat, reliance on the said Circular cannot be sustained. The impugned order, is therefore, set aside and appeal allowed.
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2024 (11) TMI 1358
Rejection of Refund claim of 4% SAD levied under sec. 3(5) of the Customs Tariff Act, 1975 for import of adapter plate, power and control cables and APC receiver - mandatory endorsement as required under Notification No. 102/2007-Cus dated 14.9.2007 has not been made - HELD THAT:- The issue is no longer res integra in the light of the Larger Bench decision in Chowgule Company [ 2014 (8) TMI 214 - CESTAT MUMBAI (LB)] Tribunal examined a reference of a related matter as to whether to avail the benefit of Notification No. 102/2007, the condition 2(b) of the Notification is mandatory for compliance being a trader who cleared the goods on the strength of commercial invoices. The judgment went on to examine the genesis and object of the levy and the role of the exemption notification, which is very useful in understanding the issue. CA s Certificate along with the reconciliation statement has been provided supports the appellants prayer for sanction of refund. The CA s certificate and Reconciliation Statement prescribed in Boards Circular is to provide a ledger/ document-based scrutiny of the claim and should ordinarily be relied upon to sanction the claim. If a serious evasion of duty was suspected physical inquiry could have been conducted by revenue with the buyers or in any other manner and the CA s Certificate along with reconciliation statement discredited, while taking action to deny the claims. There would then be proper ground to reject the claim and take any other action deemed necessary. Regular cash inflows are the lifeline of a business and blocking legitimate claims on half-baked reasons, without examining the developments in law, does a great dis-service to business and the trade and should be avoided.
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2024 (11) TMI 1357
Refund application filed beyond the time limit specified u/s 11B - refund claim was filed which is beyond six months from the date of payment of duty and rejected the claim as being time-barred as well as holding that the assessment order was not challenged in a manner known to law - HELD THAT:- Amounts claimed were part of the export duty only and until final assessments are done, the excess duty paid cannot be quantified. This being so he should have remanded the matter back to the file of the Lower Authority to examine the claim after finalization of the assessment apart from the fact that the Original Authority had decided the matter ex-parte after a long delay thus violating the principles of natural justice. His action of rejecting the appeal was hence not in order. The judgments cited by revenue are not relevant to the facts of the case and are distinguished. We find that this is a refund claim pertaining to Shipping Bill dated 06/08/2008. The claim was rejected by the said Lower Authority, after six years, without affording the appellant any hearing vide order dated 24/12/2014, on the ground that the appellant had not challenged the order of assessment. Such an action was not legal and proper when the assessment was provisional and the order was also passed violating the principles of natural justice. As held by Constitutional Courts, whenever an order is struck down as invalid being violation of principles of natural justice, there is no final decision of the case and, therefore, proceedings are left open. All that is done is that the order assailed by virtue of its inherent defect is vacated but the proceedings are not terminated. [See Guduthur Bros. Vs Income Tax Officer, Special Circle, Bangalore [ 1960 (7) TMI 5 - SUPREME COURT] and Superintendent (Tech. I) Central Excise, I.D.D. Jabalpur and Ors. Vs Pratap Rai[ 1978 (4) TMI 97 - SUPREME COURT] ]. The impugned order has also been found defective as stated above. This being so the appeal succeeds. However, the fact of final assessment of the SB is not available and hence the matter needs to be remanded back to the file of the Original Authority to examine the matter on the basis of the finally assessed SB on merits. Considering the considerable delay involved and the improper application of law and procedure in the matter, it is desirable that the matter be monitored by the jurisdictional JC / ADC of Customs, Custom House, Chennai, to ensure that there is no further delay in the matter by the Original Authority and that the issue is finalised within 90 days of receipt of this order.
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2024 (11) TMI 1356
Refund claim - rejection of refund claim for non-fulfillment of conditions 2(e)(iii) since the date of sales invoice being prior to out-of-charge and he also rejected the claim for non-fulfilment of condition 2(c) of Notification No. 102/2007 dated 14.9.207, since the refund claim pertained to Kolkata Port. Whether the degree of negligence is so high that a substantive matter of refund is to be denied due to a procedural lacuna? - HELD THAT:- As since the refund was filed on time albeit in the wrong jurisdiction the claim could not have been rejected on the ground of time bar but should have been transferred to the Competent Authority. That being the case, the claim has to be examined and decided by the proper officer having jurisdiction over the matter, since any order passed without jurisdiction would be void ab initio, as such a defect cannot be correct even by consent of parties (See Kiran Singh Ors. Vs. Chaman Paswan Ors.[ 1954 (4) TMI 48 - SUPREME COURT] . In the circumstances the appeal is allowed by way of remand with a direction that the preferred claims may be placed before the jurisdictional authority by the respondent within 30 days of receipt of this order, who shall then examine and finalize the matter within 60 days of receipt of the claim paper from the respondent. The appellant shall also cooperate in ensuring the same.
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2024 (11) TMI 1355
Classification and duty liability - Import of diagnostic reagents on which liability to duties of customs was determined, under section 17 of Customs Act, 1962 - denial of benefit of notification no. 50/2017-Cus dated 30th June 2017, as also recourse to serial no. 453 of Schedule III of IGST notification no. 01/2017 (Integrated Tax Rate) dated 28th June 2017 for discharge of integrated tax for the purpose of section 3(7) of the Customs Tariff Act affirmed the detriments to them - claim for assessment at rate of duty corresponding to tariff item 3822 0090 of First Schedule to the Customs Tariff Act has been wrongly denied and that observance of the essence of assessment, in accordance with section 17(5) of the Customs Act for disputed classification to warrant issue of speaking order in its breach was not considered at all. HELD THAT:- Claim of the appellant herein for classification, with lower duty liability in consequence, had been preferred in the bill of entry is not in dispute; such are entered in the check list which, upon discharge of duty liability, is transformed as assessed bill of entry for clearance from customs control under section 47 of the Customs Act. The revision occurred between filing of bill of entry and the conclusion of mandate under section 17 of the Customs Act and, all this while, except by foregoing release of goods, albeit temporarily, the importer is under the absolute power of proper officer which appears to have caused them to acquiesce in the determination of higher duty burden. Such misdirection of self-assessment is inappropriate exercise of statutory authority and it is but proper for superior authorities to set right such travesty of law. A copy of this order may, therefore, be placed before Chairman, Central Board of Indirect Taxes Customs (CBIC) for his attention. Affirmation of re-assessment without any material to go by invalidates it ab initio. The lack thereof should have prompted the first appellate authority to enforce compliance with consequence of revision. Not having done so invalidates the impugned order. Accordingly, we set aside the impugned order and restore the bills of entry before the original authority for disposal in the manner set out in section 17 of the Customs Act. These appeals are allowed by way of remand.
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2024 (11) TMI 1354
Rejection of cross-examination of six DRI officers and one co-noticee by the competent authority - HELD THAT:- Main objective of cross-examination is to challenge the accuracy, credibility, and reliability of the testimony provided by any witness in a proceedings before the Original Authority. Cross-examination of a witness can be requested when his statement is used against the appellant in adjudication proceedings which is not the situation in this case. This is a case where cross examination is sought mainly of DRI officials who have recorded statements of individuals. The officers have no personal interest in the matter. It is not the case of the appellant that any statement relied upon by the revenue in the SCN, has been made / taken from the said officers / persons and hence an opportunity of cross-examining the maker of the statement should be given. The reason given for the request to cross examine the said officials is to ascertain facts relating to the alleged absconding of the said Sheikh and Jamal and as they have doubts regarding the efficacy and integrity of the investigation conducted. It is also not shown that the said persons are the officers investigating the where abouts of the said Shri Sheikh and Jamal or have merely recorded the statements of the individuals. In any case the officers are not a material witness in the lis. Further the appellant cannot direct the manner in which the investigation should be conducted by an investigative agency as it would tantamount to interference with the functioning of the agency. Any facts noticed regarding the efficacy and integrity of the investigation conducted can be brought out in their reply to the SCN, so as to seek a favorable order. Section 24 of the said Act, which deals with matter relating to criminal proceedings and has more stringent safeguards, makes it clear that mere retraction of a statement is of no avail, unless the conditions stated therein are demonstrated, otherwise the confession does not loose its evidentiary value. Hence the decision of the Ld. Adjudicating Authority cannot be faulted for not permitting the cross examination of the impugned persons, when no statement has been recorded from the officers incriminating the appellant and the appellant had himself made a confessional statement that is valid evidence. It cannot be held that the decision was unreasonably or capriciously or vague etc. In fact admission is the best piece of substantive evidence that can be relied upon. [See United India Insurance Co. Ltd. and Anr. Vs Samir Chandra Chaudhary [ 2005 (7) TMI 701 - SUPREME COURT] ]. Though not conclusive, it is decisive of the matter, unless shown to be obtained by inducement, threat, or promise or is proved erroneous. Section 122A of the Customs Act which deals with Adjudication Procedure does not mention that an opportunity of cross-examination should be given, let alone that a reply to the Show-Cause Notice should be given after cross-examination if any. The permission for cross-examination has evolved as a part of the principles of natural justice. But it is not a straight jacket formula, and grant of cross examination is dependent on the discretion of the Adjudicating Authority to be exercised in a judicious way. The appellant is free to make his written submissions to the SCN both prior and post the cross-examination or further, during the personal hearing. So the lack of an opportunity of cross examination should not incapacitate the appellant from submitting his reply to the issues raised in the notice. When the impugned decision denying cross-examination was taken by the officer acting within the scope of his powers. It has been taken judiciously and can t be said to be arbitrary, vague or fanciful. It cannot hence be substituted just because the appellant feels that another view may be possible.
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2024 (11) TMI 1353
Chargeability of Clean Energy Cess on Metallurgical Coke imported - Rejection of appeal filed by the appellant on the ground of time bar and maintainability - HELD THAT:- We observe that the Bills of Entry were filed in the months of January and February 2015. The appellant has not raised the issue for more than a year. The appellant raised the issue of non issue of order u/s 17(5) of the Customs Act, 1962, after more than one year from the date of clearance of the goods. A perusal of the Bills of Entry shows that the Bills of entry were finally assessed and there was no re-assessment. Thus, we do not find any merit in the claim of the appellant that there was re-assessment of the Bills of Entry done by the assessing officers and they are required to issue order under section 17(5) of the customs Act, 1962. The appellant filed a grievance letter in the CPGRAMS portal, for which a reply dated 12.09.2018 was given indicating the factual position and why no order was required to be issued under Section 17(5) of the Customs act, in this case. Thus, we observe that the Ld. Commissioner (Appeals) has rightly rejected the appeal filed by the appellant on the ground of time bar and maintainability. As the letter dated 18.09.2018, is not an order issued under Customs Act, 1962, we do not find any infirmity in the impugned order issued by the Ld. Commissioner (Appeals), rejecting their appeal. Uphold the impugned order passed by the Commissioner (Appeals) and reject the appeal filed by the appellant.
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Insolvency & Bankruptcy
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2024 (11) TMI 1352
Admissibility of petition - initiation of CIRP - Validity of demand for interest and repayment of principal amount by the Financial Creditor - Existence of debt and default or not - Time limitation - HELD THAT:- As per provisions of Section 5(8) of IBC, 2016, financial debt means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money. In the present case money has been disbursed to the Corporate Debtor towards time value of money and interest is shown as due in the ledger accounts of the Corporate Debtor. The total interest due is more than Rs. 1 crore and was demanded by the Financial Creditor through letter dated 22.01.2019 which was not paid by the Corporate Debtor. Thus, the debt of above Rs. 1 crore was due, was demanded and was payable which was not paid by the Corporate Debtor. The ingredients of petition under Section 7 of the IBC, 2016, mainly existence of debt, and default are established in this case, and the Corporate Debtor was eligible to be admitted in CIRP on application under Section 7 of IBC, 2016. Time limitation - HELD THAT:- The application under Section 7 of the IBC, 2016 was filed on 30.05.2022. The Appellant itself as Director of the Corporate Debtor had acknowledged the debt in the ledger accounts of Financial Year 2016-17, 2017- 18 and 2018-19 through confirmation of accounts including the last dated 01.04.2019 appearing at page 104 of the Appeal Paper Book. The three year period, since the acknowledgement, expired on 31.03.2022. However, as per the direction of the Hon'ble Supreme Court in Suo Moto Writ Petition No. 3 of 2020 decided on 10.01.2022 [ 2022 (1) TMI 385 - SC ORDER] , the period from 15.03.2020 till 28.02.2022 is to be excluded for counting of limitation under any law. Excluding the said period, the present petition under Section 7 was filed within the limitation period by the Financial Creditor. The Ld. NCLT has rightly admitted the Corporate Debtor in CIRP on an application under Section 7 of IBC, 2016 filed by the Financial Creditor. We do not find any reason to interfere in the impugned order of Ld. NCLT - The appeal, devoid of merit, is dismissed.
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2024 (11) TMI 1351
Admission of section 7 application - Respondent No. 1 and Respondent No. 2 are related parties, who in collusion and connivance with the ex- management/promotor/director/shareholder of Respondent No. 1 i.e. Respondent No. 3 to 5 initiated the CIRP - HELD THAT:- The Respondent No. 3 who happened to be a director and shareholder in all three companies, namely, Navayuga, Respondent No. 1 and Respondent No. 2. In Navyuga he is director and 21.77% shareholder, in Respondent No. 1 he was a Promotor and director till 2015 and 33.34 % shareholder and in Respondent No. 2 he is a director 66.66% shareholder which shows that this case shall come within Section 5(24)(m)(i) and (iii) of the Code as Respondent No. 3 is controlling more than 20% of the voting share of these companies and also the assignor. It has been held by the Hon ble Supreme Court in the case of Phoenix ARC (P) Ltd. [ 2021 (2) TMI 91 - SUPREME COURT] that amount disbursed to third party that too by the related party will not qualify as a financial debt under the Code. It has also been held in the case of Hytone Merchants Pvt. Ltd. [ 2021 (7) TMI 60 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] that even if Section 7 of the Code ingredients are fulfilled then also if collusion is proved CIRP can be set aside. The Appellant has specifically averred in para 33 of the appeal paper book about the presence of Respondent No. 3 in all three companies as shareholder and director which has not been denied by Respondent No. 2 and 3 in their reply, firstly, there is no parawise reply filed and secondly in the reply the emphasis is more on the issue as to how the provision of Section 5(24) is attracted about which an inference can be drawn that the allegation of the Appellant about Respondent No. 3 is correct and once he was the director/promotor 33.34% shareholder in Respondent No. 1 and Director in both Navayuga and Respondent No. 2 with 21.77% and 66.66% shareholder, it cannot be said that he was not a related party especially when it is incorporated in the financial statement of the CD much less Note 3 of the audit report that long term borrowings the amount in question, is taken from the related parties. The collusion between Respondent No. 1 and Respondent No. 2 can be ascertained from such circumstances. There are no doubt that the petition filed by Respondent No. 2 against Respondent No. 1 was collusive and for a purpose other than for the resolution of insolvency and hence the impugned order by which Respondent No. 2 has pushed Respondent No. 1 into CIRP is hereby set aside. Appeal allowed.
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PMLA
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2024 (11) TMI 1350
Money Laundering - cognizance of the offence by Trial Court - whether such cognizance was valid given the ongoing investigation? - retrospective applicability of Explanation-II to Section 44(1)(b) of the PMLA - impugned order passed without taking into consideration the entirety of the matter - violation of principles of natural justice - HELD THAT:- In Devarapally Lakshminarayana Reddy v. V. Narayana Reddy, [ 1976 (5) TMI 101 - SUPREME COURT] , the Hon ble Supreme Court elucidated the scope and purview of the term taking of cognizance and gave a detailed explanation thereof. It was observed that the stage, at which cognizance of an offence is taken, depends upon the facts and circumstance of the particular case - It was held that taking cognizance of an offence is subjective to each case and mere issuance of a search warrant or a warrant of arrest does not, by itself, mean that cognizance of the offence has been taken rather cognizance of the offence is said to be taken only when the Court applies his mind to proceed further under Section 200 (now Section 223 of the BNSS) or under Section 204 of Chapter XVII of the CrPC. Under the PMLA, a Special Court can only take cognizance of an offence under Section 3 of the PMLA, punishable under Section 4 of the PMLA, based on a complaint filed by the ED. It was held that while Section 46 of the PMLA stipulates that the provisions of the CrPC apply to proceedings before the Special Court as well since it functions like a Sessions Court as the phrase save as otherwise provided in PMLA allows exceptions - in the absence of any overriding provision in the PMLA, Sections 200 to 204 of the CrPC (now Section 223 to 227 of the BNSS) duly applies to complaints filed under the PMLA. This means that the Special Court must assess if a prima facie case exists for an offence under Section 3 of the PMLA. If no such case is found, the Court can dismiss the complaint under Section 203 of the CrPC, however, if a prima facie case is established, the Court may proceed under Section 204 of the CrPC. As per the settled position of law, cognizance under Section 44 (1) (b) of the PMLA is based on the prosecution complaint filed by the ED pursuant to an investigation and the said complaint duly incorporates the gist of the offences and the manner in which the offences were committed by the accused persons, accompanied with the evidence collected during the statement along with the statement of witnesses and accused. The CrPC provisions related to investigation are applicable to investigations under the PMLA. Furthermore, Section 46 of the PMLA states that the provision of the CrPC applies to proceedings in Special Courts under the PMLA, making the Special Court equivalent to a Court of Sessions. Unless stated otherwise in the PMLA, CrPC provisions, including those on bail and preliminary procedures (Sections 200 to 204 of the CrPC), apply to PMLA cases - there is no doubt that a supplementary complaint can certainly be filed by the respondent ED against an accused, who is already facing prosecution for offence under Section 3 of the PMLA before the Special Judge. It is evident that when an investigating agency is authorized to conduct the investigation and carries out additional investigation to collect further evidence, the concerned agency has the right to submit a supplementary complaint to present the newly collected material on record - Upon the perusal of Explanation-II to Section 44 (1) (b) of the PMLA, it is revealed that it has been explicitly stated that the ED has the right to include any subsequent complaint in order to conduct further investigation into an alleged offence against the accused persons. This is to bring forth additional evidence, oral or documentary against any accused person for which a complaint has been already filed, whether named in the original complaint or not. This Court is of the view that an initial complaint can be filed under Section 44 of the PMLA, even if the investigation is not fully completed, especially in light of the Explanation-II, introduced in the year 2019, which permits the filing of a supplementary complaint - this Court does not find any force in the arguments of the petitioner that the cognizance has been taken illegally as the complaint was filed pending investigation due to filing of subsequent complaints. There is no illegality in the order passed by the learned ASJ-03, North West District, Rohini Courts, Delhi, in Ct. Case No. 515651/2016 and the same is, hereby, upheld - Petition dismissed.
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Service Tax
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2024 (11) TMI 1349
Validity under the Voluntary Compliance Encouragement Scheme (hereafter VCES) - SCN Issued to the taxpayer alleging wrongful availing of cenvat credit in regard to the service tax paid on medical insurance services provided to the taxpayer s employees during the period from 2007-08 to 2011-12 - whether the taxpayer was ineligible to furnish a declaration under VCES in terms of Section 106 (1) of the 2013 Act on account of the audit report dated 22.09.2010 and the SCN? HELD THAT:- The question is not whether any exercise for determining the service tax dues had been conducted or whether an ascertainable quantum of outstanding service tax had been reported. The opening sentence of Section 106 of the 2013 Act is unambiguous, and expressly provides that any person may make a declaration with respect to the dues in respect of which no notice or an order of determination under Section 72 or Section 73 or Section 73A of the Chapter had been issued or made before the 1st day of March, 2013 . Thus, for the said exception to apply, it would be necessary that an order of determination under Section 72, Section 73 or Section 73A of the 1994 Act had been issued. Clearly, an audit report is not an order of determination under either of the aforesaid sections, as mentioned in the opening sentence of Section 106 (1) of the 2013 Act. Issuance of the SCN - There is no cavil that SCN was a limited notice in respect of service tax dues relating to the medical insurance services provided to the taxpayer s employees. The taxpayer s declaration under Section 107 of the 2013 Act was not in respect of the said dues. The order-in-original dated 24.05.2016 also indicates that the taxpayer was entitled to file a declaration in respect of the dues that were not covered by an earlier demand cum show cause notice. On that basis, the taxpayer s declaration was partly allowed. Thus, since the SCN did not cover any of the dues in respect of which a declaration was filed, the taxpayer cannot be deprived of the benefit of VCES. We find no infirmity with the decision of the learned CESTAT in allowing the taxpayer s appeal.
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2024 (11) TMI 1348
Receipts pertain to export of services or not? - Demand by deviating the basis issue as to whether the receipts pertain to export of services or not - HELD THAT:- Original Authority accepted the activity undertaken by the appellant as export of service and dropped the proceedings by considering all the evidences on record. As find that on appeal filed by the Revenue, Commissioner (Appeals) without considering the reasons on the basis of which the Original Authority has dropped the proceedings, proceeded to confirm the demand on the basis of irrelevant discrepancies which was not the issue for determination especially when the Original Authority has accepted the receipts to be export proceeds on the basis of FIRC which is a legal document for acceptance of proof of export of service. The entire proceedings against the appellant were initiated on the basis of gross receipts as shown in the Income Tax Returns and Form 26-AS for the year 2014-15. The entire demand in the present case is barred by limitation because the Show Cause Notice was issued on 29.09.2020 but the same was served on 18.02.2022 whereas the period of demand is October 2014 to March 2015; and Commissioner (Appeals) has not given any finding on the limitation. The extended period of limitation can only be invoked when the department establishes by cogent evidence that there is a suppression of material facts at the appellant s end with intent to evade payment of duty, whereas in the present case there is no suppression because the Show Cause Notice is based upon the documents including bank account and Income Tax Returns.
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2024 (11) TMI 1347
Demand of service tax under the head of Mandap Keeper Services - invoking extended period of limitation - HELD THAT:- As the appellant is a statutory body and no individual would gain from avoiding or evading tax. In these circumstances, we concur with the aforesaid decision to hold that there cannot be any intention to evade payment of duty and therefore, invocation of extended period of limitation cannot be sustained. The appellants can only be liable for the period within the period of limitation. Liability of tax for the period post 01.07.2012 - Taxability of services provided by a government authority under the negative list post 01.07.2012 - Revenue has sought to classify the service in the nature of Mandap Keeper Service under the category of support service - No merit in the argument of Revenue that the service in the nature of Mandap Keeper can be classified under the category of support services . From the definition of support services , it is clear that only the services which are in the nature of outsourced services i.e. the functions that entities carry out in ordinary course of operations themselves but may obtain as service by the outsourcing from others for any reason whatsoever. The services in the instant case do not qualify as support services and therefore, the services provided by the appellant are covered under the negative list. In these circumstances we find that after 01.07.2012 the services provided by the appellant are covered by the negative list.
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2024 (11) TMI 1346
Demand of Service Tax and imposition of penalties - appellant conducts Cricket Matches in International Level, National Level and State Level at different places in Vadodara region - service provider/service receiver relationship between the appellant and BCCI for the purpose of levying service tax appellant was receiving subsidies/assistance from BCCI from time to time. The appellant had also received certain capital equipment from BCCI. Under the mistaken belief that the capital equipment is additional subsidy/assistance from BCCI, the appellant paid service tax thereon. Later on, the BCCI informed that them the said capital received is part of the total subsidies/assistance from BCCI and not in addition to it. The appellant had also paid the service tax on total subsidy . Later on BCCI raised debit note on the appellant. In respect of the value of the goods supplied as capital equipment. Consequently, the appellant took suo moto re-credit of the service tax paid on the capital equipment HELD THAT:- The appellant had received certain equipment from BCCI and under the impression that the said equipment is in addition to the grant given by the BCCI, the appellant discharged service tax thereon. Later on, when debit note was raised by the BCCI, the appellant released that the equipment received was part of the grant and not in addition to it and consequentially corrected the situation by taking re-credit of the service tax paid on capital equipment. Similar facts are mentioned in the statement of the Head of Account of BCCI. In the said statement against question No. 8, 9 and 10, Shri Vidyadhar Laxman Sahasrabudhe has observed that BCCI has debited an amount of Rs. 4.14 Crore from the account of BCA maintained by them by way of issuing debit note dated 31.03.2014. Shri Vidyadhar Laxman Sahasrabudhe also submitted the relevant ledgers for 2013-14. In similar circumstances in the case of Saurashtra Cricket Association [ 2022 (11) TMI 152 - CESTAT AHMEDABAD] the tribunal had relied on the observations made by Tribunal in the case of Vidarbha Cricket Associate [ 2014 (1) TMI 204 - CESTAT MUMBAI (LB)] to allow the benefit. The decision of Tribunal in the case of Saurashtra Cricket Association [ 2022 (11) TMI 152 - CESTAT AHMEDABAD] has been upheld by the Hon ble Apex Court as reported [ 2023 (5) TMI 814 - SC ORDER] . Appeal allowed.
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2024 (11) TMI 1345
Delay passing adjudication order - Short payment of the differential service tax - discharging service tax liability on construction services after taking 67% abatement in terms of Notification No. 01/2006-ST dated 01.03.2006 - HELD THAT:- The period of dispute 2008-09 to 2010-11 and show cause notice was issued on 16.10.2014 whereas the Order-in-Original was passed on 22.03.2021 approximately after the expiry of seven years and there has been no correspondence from the department at all for a period of seven years; the department has not been able to give any cogent reason for such a delay in adjudication; the delay in adjudication has resulted in lapsing of other benefits of the appellant and has increased unnecessary interest liability on the appellant; therefore, the impugned order in first instance is violative of the principle of natural justice and is liable to be set aside as held in the cases of Unnayak Prop [ 2009 (7) TMI 947 - CESTAT, KOLKATA] and Shirish Harshvadan Shah[ 2010 (1) TMI 508 - BOMBAY HIGH COURT] Appellant has opted for the abatement scheme provided in Notification No. 01/2006-ST dated 01.03.2006 and has fulfilled all the conditions specified in the said notification and there is no dispute in this regard. Once the appellant has opted for the benefit of that notification and admittedly the said notification has not been withdrawn even after framing the composition scheme under the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. Further, under the composition scheme, the appellant was required to give option for the same in terms of Rule 3 of the said Rules, whereas, in the present case, the appellant has not opted for the said scheme and continued to avail the benefit under Notification No. 01/2006 after fulfilling all the conditions prescribed therein. Decision of the Tribunal in the case of Bharat Heavy Electricals Ltd [ 2012 (4) TMI 197 - CESTAT, MUMBAI] is applicable in the present case and benefit of the Notification No. 01/2006 cannot be denied to the appellant once they fulfilled the conditions of the same. Denial of benefit of Notification No. 01/2006-ST dated 01.03.2006 is bad in law therefore set aside the impugned order and allow the appeal of the appellant with consequential relief, if any, as per law.
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2024 (11) TMI 1344
Classification of services - whether the works undertaken by the appellant are original works or completion and finishing services ? Claim of abatement as per the Notification No.11/2014-S.T., dated 11-7-2014 during the relevant period - HELD THAT:- To invoke the proviso to Section 73 of the Finance Act, 1994, one of the ingredients such as fraud, collusion, wilful misstatement, suppression of facts or contravention of any of the provisions of this Chapter or the rules made thereunder with intent to evade payment of service tax, has to be established. In the instant case, there is nothing on record to establish that the appellant had suppressed any of the facts or there was any intention to evade payment of duty. In the case of Uniworth Textiles Ltd. [ 2013 (1) TMI 616 - SUPREME COURT] observed that unless there is positive evidence to prove that the appellant had suppressed the facts or contravened the provisions of the act, the extended provisions of limitation cannot be extended. Since, in the instant case, nothing is on record to prove the same, we are not inclined to confirm the demand beyond the normal period. Services rendered to the SEZ unit - the only objection taken by the Revenue is the Form A-2 which includes the specified services duly authorized is mentioned as works contract services but the specified services to be received by the SEZ unit are Architect Services - HELD THAT:- In the instant case, admittedly, the services were rendered to the SEZ unit by the appellant, the only objection raised was that the services rendered was Works Contract Services while it is mentioned in the form as Architect services . The fact that services were rendered to the SEZ unit is not disputed and both the services are eligible for the benefit of exemption as per the letter dated 02.01.2018 issued by the Department of Commerce (SEZ Section), therefore, we do not find any reason to deny the exemption. Hence, the impugned order to this extent is set aside. The demand of Service Tax is confirmed for the normal period along with interest with regard to the works contract services undertaken by the appellant in terms of Rule 2A(ii)(B)(ii) of Service Tax (Determination of Value) Rules, 2006. The demand is set aside for the services provided to the SEZ unit. Penalty under Section 78 of the Finance Act, 1994 is also set aside. The appeal is allowed by way of remand for redetermination of duty only for the normal period relating to Works Contract Service rendered and for services meant for other than SEZ units.
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2024 (11) TMI 1343
Demand of service tax on the price at which the appellant had sold the coal rejects - HELD THAT:- Demand is not sustainable because service tax is not a tax on the sale of goods. If the appellant had received some coal rejects, for instance, and an amount of Rs. 100 is deducted from the service charges by the client towards these coal rejects, service tax has to be paid without this deduction of Rs. 100/- from service charges. The appellant did so. Now, if the appellant subsequently sells this coal rejects either as such or after mixing it with some other coal and sells them for Rs. 150, this amount is the value of coal the rejects sold by the appellant on which the appellant may be required to pay VAT/ sales tax. According to the appellant it had paid appropriate VAT to the State Government. The demand of service tax on the sale price of rejects is beyond the scope of the Finance Act, 1994 because service tax can be levied only on the consideration received for the services and not on a goods sold by the appellant. Service Tax has already been discharged on the entire value of consideration this as is evident from the invoices. In this case, the appellant already paid service tax on the entire amount of beneficiation charges without deducting the value of the coal rejects. Therefore, the entire amount of service tax having been paid, the demand of service tax again on the value of coal rejects sold by the appellant in the four show cause notices confirmed in the two impugned orders is totally misconceived. No service tax can be levied on the sale of goods as proposed in the show cause notice on them as service charges for coal beneficiation. Appeal allowed.
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Central Excise
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2024 (11) TMI 1342
Levy of penalties - wrong availment of CENVAT credit based on fraudulent invoices without receiving goods by the assessee - HELD THAT:- Evidently, Rule 26(2) of the Central Excise Rules provides for imposing penalty on any person who either issues an excise duty invoice without delivery of goods specified therein or abets in making any such an invoice or any other document or abets in making any such document on the basis of which a user of the invoice or the document is likely to take or has taken ineligible benefit under the Act or Rules. In this case, the allegation in the SCN as well as affirmation in the impugned order is that the assessee had taken CENVAT credit on the strength of fraudulent invoices issued by M/s Ridhi Sidhi without supplying of the goods - The role of Shri Prem Jain is as the Director of the assessee and the role of Shri Gyan Jain is as the General Manager of the assessee. Neither the assessee nor Shri Prem Jain nor Shri Gryan Jain have either issued invoices or abetted issuing of the invoices according to the show cause notice or the impugned order. Therefore, Shri Prem Jain and Shri Gyan Jain are not covered by Rule 26 (2). Rule 15A of CCR, provides for penalty for violations of CCR not elsewhere specified. The CCR provide for availment of CENVAT credit by an assessee subject to some conditions and after following certain procedures. If there are violations of CCR, they can be violations by the assessee - There is also no provision for imposing penalty upon the Director or the General Manager or other functionary of assessee under the CCR. Rule 15A of CCR, therefore, also does not apply to the Director or General Manager of the assessee. Thus, neither Rule 26 (2) of Central Excise Rules, 2002 nor Rule 15A of CCR under which the penalty was imposed on Shri Prem Jain and Shri Gyan Jain apply to the facts of this case. The penalty imposed on them cannot be sustained as it is imposed without any authority of law - It also needs to be pointed out that while penalties were imposed under two different Rules [Rule 26(2) of the Central Excise Rules and Rule 15A of CCR ] the quantum of penalty imposed under each of them has also not been indicated in the order of the Additional Commissioner which was upheld by the impugned order by the Commissioner (Appeals). The impugned order is set aside insofar as it relates to the penalties imposed on Shri Prem Jain and Shri Gyan Jain - Appeal allowed.
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2024 (11) TMI 1341
Liability of Appellant to pay Central Excise duty on pre-budgeted stock of branded garments lying in its godown after it has been made taxable by N/N. 12/2011 dated 01.03.2011 - HELD THAT:- The brand names were put by the job-workers and not by the Appellant on the garments manufactured and cleared at the job workers end. For excise taxable events it is manufacturing itself that would determine the taxability but duty can be levied and collected at a later stage for convenience of administration and removal can be made taxable event in terms of Rule -9A of Central Excise Rules, 1944. It would be worthwhile to mention that Rule 9-A that was meant for determination of the date of duty and tariff valuation has been deleted from the statute book since 2001 with introduction of New Central Excise Rules in place of old Rules of 1944 and therefore, by invoking the same, duty liability cannot be fastened on the Appellant on the basis of removal of goods from godown when these were already cleared upon payment of NIL rate of duty prevailing then. The impugned order is set aside - appeal allowed.
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2024 (11) TMI 1340
Benefit of N/N. 33/2022-CE dated 09.07.2012 - liability to pay Education Cess and Secondary Higher Education Cess - recovery alongwith interest and penalty - HELD THAT:- The issue of liability to pay Education Cess as well as Secondary Higher Education Cess in the facts of the present case involves interpretation of statute which issue is sub-judice, before the Hon ble Apex Court. When such is the case, no mens rea could be attributed to the Taxpayer, especially since the appellant is claimed to have remitted the disputed cess of Rs.88,494/- along with applicable interest thereon vide Challan No. 21 dated 27.10.2014 and hence, there is no scope to burden the appellant with penalty under Section 25 ibid. The impugned order is set aside - matter remanded back to the Original Authority who shall wait for the verdict of the Hon ble Apex Court in the case of SRD Nutrients Pvt. Ltd. [ 2022 (1) TMI 615 - SUPREME COURT] - appeal disposed off by way of remand.
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2024 (11) TMI 1339
Default in payment of duty beyond 30 days from the due dates - bar to utilize the Cenvat Credit - violation of Rule 8(3A) of CCR - Extended period of limitation - penalty - period from January 2011 to March 2014 - HELD THAT:- The issue as to whether the Assessee can utilise the CENVAT credit toward payment of duty when in default is no more res integra and many judicial authorities have held that the provision of Rule 8(3A) of Central Excise Rules, 2002 as ultra vires to the Main Act. The Hon ble Gujarat High Court in the case of M/s. Indsur Global Ltd. Vs. UOI [ 2014 (12) TMI 585 - GUJARAT HIGH COURT ] struck down the condition in Rule 8(3A) for payment of duty without utilizing the CENVAT credit as unconstitutional and invalid. It is found that the Department had preferred an appeal against the decision passed in Indsur Global Ltd. before the Hon ble Supreme Court. The Ld. Counsel for the appellant has submitted before us that the appeal filed by the Department in Indsur Global Ltd. has been disposed by the Hon ble Apex Court [ 2024 (7) TMI 1559 - SC ORDER (LB) ]. The appeal was referred to the Lok Adalat proceedings before the Hon ble Supreme Court and settlement has been arrived at. The effect is that the stay order having merged with the order of settlement, stands vacated. The decision rendered by the Hon ble High Courts of Gujarat and Madras in the above cases would revive and be in force as a precedent. Under such circumstances, the judgements referred by the Ld. AR does not support the cause of revenue. The demand raised alleging violation of Rule 8(3A) cannot sustain and requires to be set aside. Ordered accordingly. Since the demand itself does not sustain, the invocation of extended period and imposition of penalties does not arise - the impugned order is set aside - appeal allowed.
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2024 (11) TMI 1338
Levy of central excise duty - debonding of a 100% EOU unit to DTA, on finished and semi-finished goods, which are either exported on bond or cleared in domestic market on payment of excise duty, during 18.12.2012 (cutoff date) to 15.02.2013 (final exit order) - HELD THAT:- The issue of non-payment of central excise duty on final goods on debonding is settled in favour of appellant. Also, prima facie, the other issue that no duty is payable on semi-finished goods is settled in favour of appellant in terms of decisions relied upon in paragraph 2 above. However, it is seen that although the Learned Commissioner took verification report dated 20.01.2017 from jurisdictional office, the same was not furnished to the appellant. The Hon ble Supreme Court in KOTHARI FILAMENTS ANR. VERSUS COMMISSIONER OF CUSTOMS (PORT) KOLKATA ORS. [ 2008 (12) TMI 28 - SUPREME COURT] has held that documents relied upon in the adjudication order are required to be supplied to the appellant in terms of principles of natural justice. There are considerable force in appellant s submission that question of demand of excise duty does not arise if goods are exported which fact can be verified from the CA certificate dated 15.11.2016 which was submitted before the Learned Commissioner, however, the same was not considered. The same needs to be considered. The matter needs to be reconsidered by the Learned Commissioner/ adjudicating authority by (i) providing the letter dated 20.01.2017 issued by the jurisdictional Assistant Commissioner to the appellant; and (ii) considering the CA certificate dated 15.11.2016 to ascertain claim of export of goods, along with other evidence which may be put on record by the appellant. The impugned order is set aside and the appeal allowed by way of remand to the adjudicating authority for passing a fresh order.
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CST, VAT & Sales Tax
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2024 (11) TMI 1337
Challenge to action of the respondents in freezing his saving bank accounts with the purpose to recover the VAT dues of M/s East Bourne World Cuisine Private Limited, where the petitioner was a former director - HELD THAT:- The company has itself filed an appeal before the appellate authority, which is still pending. It is also noticed that the company is functional and the petitioner is no more a director of the said company. In the circumstances, there was no occasion for the respondent to attach the bank accounts of the petitioner for recovery of its dues as against the concerned company. A perusal of Section 83 (3) of Companies Act also reflect that the recovery from the director of a company can only be made when such a company has been wound up. Even under the Companies Act, 1956, the provision for recovery from the director is not available at the stage prior to winding up of the company - There is also no case of allegation of mismanagement of the company and in such circumstances also, the order would have to be obtained from the concerned NCLT. The order of attachment of the saving accounts of the petitioner and the notice dated 12.02.2021 are quashed and set aside. The petitioner is held to be entitled to receive a sum of Rs. 1 lac as penal cost for wrongful attachment of his bank accounts putting him in unnecessary financial distress. The amount of Rs. 1 lac shall be paid by the respondent authorities and deposited in his bank account within two months, failing which interest @ 18% shall also be paid, which may be recovered from the concerned delinquent officer, who has arbitrarily issued attachment order without authority. The writ petition is allowed.
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2024 (11) TMI 1336
Rectification application to recall earlier order - error apparent in the original order or not - HELD THAT:- Mistake of law is an interpretation of law which a particular Court may hold. However, merely because a different interpretation can be taken of the provisions of law, rectification application cannot be allowed to be entertained. There has been a gross abuse of the process of the Court in passing the order dated 24.12.2007, and the same therefore, cannot be allowed to be sustained. The same is accordingly set aside. The VAT appeal is allowed.
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Indian Laws
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2024 (11) TMI 1335
Rejection of Original Application on the ground of delay and laches - applicability of time limitation - issuance of the provisional gradation list - scope of judicial review - HELD THAT:- The principle of delay and laches is to be applicable in a case where the principle of limitation is made out. The same is strictly applicable in a proceeding under Article 226 of the Constitution of India or any other litigation where the principle of limitation is not applicable. If the principle of limitation is applicable then, the case is to be considered on the basis of applicability of principle of limitation by giving go-bye to the principle of delay and laches. The position of law is very settled that under Article 226 of the Constitution of India the principle of delay and laches is held to be applicable, however, the period of limitation is not applicable. In STATE OF MP VERSUS NANDLAL JAISWAL [ 1986 (10) TMI 321 - SUPREME COURT ], the Hon'ble Apex Court has observed that the power of the High Court to issue an appropriate writ under Article 226 of the Constitution is discretionary and if there is inordinate delay on the part of the petitioner in filing the writ petitioner and such delay is not satisfactorily explained, the High Court may decline to interfere and grant relief in exercise of its writ jurisdiction. Emphasis was laid down on the principle of delay and laches stating that the High Court does not ordinarily permit a belated resort to the extraordinary remedy under the writ jurisdiction because it is likely to cause confusion and inconvenience in bringing the justice. The Central Administrative Tribunal has been given the Constitutional status and in order to carry out the judicial proceeding a statute has been formulated known as the Administrative Tribunal Act, 1985. The Tribunal has been conferred with a power under section 14 of the Administrative Tribunal Act, 1985 - Further, the Tribunal has been conferred with the power to condone the delay as per the provision made under sub-section (3) of Section 21 of the Act, 1985 whereby and whereunder, it has been laid down in view of the principle as contained under Section 5 of the Limitation Act, 1963 to condone the delay if the sufficient cause will be shown. It is evident that the Administrative Tribunal Act, 1985 wherein the Tribunal is to apply the principle of limitation for the purpose of acceptance of the original application subject to the power to condone the delay, meaning thereby, the whatever power has been conferred to the High Court under Article 226 of the Constitution of India, the same is little bit different, even though the Tribunal is having the Constitutional status to the effect that under Article 226 of the Constitution of India, there is non- applicability of principle of limitation and, as such, by virtue of the judicial pronouncement the principle of delay and laches has been held to be applicable on the principle that inordinate delay cannot be allowed to approach the Court of equity after lapse of a reasonable delay, subject to sufficient cause. Thus, it is evident that the sufficient cause means that the party should not have acted in a negligent manner or there was a want of bona fide on its part in view of the facts and circumstances of a case or it cannot be alleged that the party has not acted deliberately or remained inactive . However, the facts and circumstances of each case must afford sufficient ground to enable the Court concerned to exercise discretion for the reason that whenever the Court exercises discretion, it has to be exercised judiciously. This Court is of the view that the objection has been dealt with by the authority on 13.01.2020 and immediately within a period of one year the Tribunal has been approached by the petitioner and, as such, it is not even a case to satisfy the learned Tribunal for the purpose of condoning the delay, since, the Tribunal has been approached within a period of one year from the date when the objection of the writ petitioner has been rejected , i.e., on 13.01.2020. The error apparent on the face of the order means that if the order appears on its face having with error, then only the power of judicial review is to be exercised. The scope of judicial review conferred to the High Court under Article 226 of the Constitution of India in sowing interference with the award passed by the adjudicator/Tribunal - This Court in the premise of the power conferred to exercise the power of judicial review is now proceeding to examine the propriety of the impugned order wherefrom it is evident that the Original Application of the writ petitioner has been rejected on the ground of applicability of principle of delay and laches and limitation. It is evident that while dealing with the issue of limitation, the learned Tribunal has not dealt with that as to from which date either the limitation will count or from which date the principle of delay and laches would be applicable - this Court is of the view that the learned Tribunal has not appreciated the factual aspect before coming to the conclusion about the applicability either of the principle of delay and laches or the principle of limitation. The impugned order dated 24.08.2022 passed in Original Application by the learned Tribunal is hereby set aside - the matter is remitted to the learned Tribunal to pass order afresh after affording opportunity of hearing to the parties concerned in accordance with law - Petition disposed off.
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