Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 29, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seeking provisional release of seized goods - petitioner submitted that E-way bill can be applied for only after weighment at the weigh bridge - consignment was transported by truck from the Railway yard to a weigh bridge and the interception occurred during such transit - This writ Court refrains itself from expressing any opinion or view on the same. - HC
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Validity of Assessment order and Demand of GST - It was alleged that the petitioner was supplied nil rated or exempted supply, but he had not reversed the ITC related to the said exempt supply as per Section 17(2) - violation of principle of natural justice - his request for adjournment had been acceded to not for 30 days, but for 15 days. - the petitioner is desirous of going to the Appellate Authority for questioning and challenging the assessment which has been finalized and that being his right, if he has missed out on the limitation, condoning this period of limitation in the given circumstance, keeping the larger issue open, this petition is allowed. - HC
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Invalid E-way bill - E-way bill has been generated at 09.56pm at 03.12.2022 at Tiruvannamalai but movement of the vehicle was noticed on 03.12.2022 at 10:56pm at Thoppur Toll. - the question as to whether the vehicle could have crossed Thoppur Toll within one hour of declaration of e-way bill are all matters turning on facts. - This is not a fit case for interfering with the impugned notice. Let the petitioner respond to 04.12.2022 notice, let the respondent consider the same on its own merits and in accordance with law after affording an opportunity to the writ petitioner as per Section 129(3) of C-G &ST Act - HC
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Condonation of delay in filing appeal - three months prescribed period and one month condonable period - Hon'ble Supreme Court has made it clear that what was extended by order of Hon'ble Supreme Court qua Covid-19 period was only the period of limitation and not the period upto which the delay can be condoned in exercise of discretion conferred by the Statute. Therefore, this Court in the light of the authoritative pronouncement of Hon'ble Supreme Court, finds no grounds to interfere with the order of the first respondent. - HC
Income Tax
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Deduction u/s 40(b)(v) - deduction of the amount of remuneration paid to the partners - the appellant has to be authorized by the partnership deed and the same has to be in accordance with the terms of the partnership deed. Referring to the partnership deed constituting the appellant, Tribunal held that the partnership deed did not contain any terms for payment to the working partners. - Additions made by ITAT confirmed - HC
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Levy of penalty u/s. 271(1)(b) - Non compliance requirement in respect of special audit u/s. 142(2A) - relevant ledgers for all the years under consideration were impounded by the Ld. AO in the course of assessment itself which has prevented the assessee in making compliance to the requirements of the special auditors for getting the special audit u/s. 142A of the Act completed - No penalty - AT
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Assessment u/s. 144C(13) - time limit for completion of the assessment order u/s. 144C(13) - The relaxation under TOLA would not be applicable to the assessment orders passed in consequence to the DRP directions received by the Assessing Officer on 20.03.2021. The assessment order passed on 30.09.2021 was time barred. - AT
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Initiation of re-assessment proceedings - Reasons to believe - AO initiated re-assessment proceedings just to verify the deposits and withdrawals from the bank account of the assessee. There is no whisper in the reasons as to reason to doubt, much less the reason to believe, about the escapement of income. In view of the fact that the re-assessment has been initiated simply to verify the transactions in the assessee’s bank account, which does not fulfill the jurisdictional condition of belief about the escapement of any income - AT
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Disallowance of provision for slow moving obsolete stock - if the provision is accounted in accordance with the statutory requirements and the method of accounting has been consistently followed by the assessee over a period of time and accepted by the Department, the same should not be disturbed. - In the instant case no contrary material has been brought on record by the Department to show that the assessee was not consistently following accounting policy and provision for slow moving and obsolete inventory in preceding or succeeding assessment years - Additions deleted - AT
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Late fee charged u/s 234E - the appellant having deducted the tax has the obligation to file the quarterly TDS statements within the prescribed time limit which she failed to fulfill by filing the such statement with some delay as above. Therefore, CIT(A) was justified in confirming the finding of the CPC(TDS) in levying late fee u/s 234E as per law. - AT
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Reopening of assessment u/s 147 - The application of mind by the AO to the new and tangible material has to be discerned from the reasons recorded in each case and from the perusal of the reasons recorded for reopening the assessment in the present case, we are of the considered view that all the aforesaid conditions are fulfilled and the AO has rightly initiated the reassessment proceedings under section 147 - AT
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Re-opening assessment u/s 147 by issuing notice u/s 148 - disallowance on account of bogus purchase - As observed earlier not only there existed new information with the AO from the credible sources, but also he had applied his mind and recorded the conclusion that the purchases claimed were non-genuine and therefore bogus, (clearly meaning that what was disclosed was false and untruthful). The requirements of section 147 r.w.s. 148 have clearly been met; and the reopening is held justified and legal. - AT
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TP Adjustment - unauthorized reference to TPO u/s 92CA(3) - It has been demonstrated in the instant case that the threshold monetary limit of Rs.5 crore was not available to the Assessing Officer to characterize the transactions with AE as SDT to enable him to make a reference to the TPO. The order of the TPO u/s 92CA(3) is thus a nonest and a nullity in the eyes of law. Consequently, the extension of time under erstwhile provisions of Section 153 for passing the assessment order based on such nonest order from TPO is not available to the AO in the instant case. - AT
FEMA
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This Court jurisdiction to entertain the execution petition of a foreign decree - Summary judgement - the setting aside of default judgment and passing of summary judgment by the same court at UK, is not recognized under the prescribed procedure of law in this country. Moreover, the disputes between the parties are triable issues and denial of leave to defend to the appellant/JD is against the interest of justice. - HC
Indian Laws
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Dishonor of Cheque - legally enforceable debt - cheque was given by the respondent to the revisionist for collateral security not as discharge to any of debt or other liability. Revisional Court after appreciating the material available on record rightly observed that the cheque was given as collateral security to the amount given by the revisionist to the respondents. There is no illegality in observation and conclusion drawn by the learned trial Court. - HC
IBC
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As per Section 238 of the IBC, 2016 is having override effect in any other law for the time being in force. In view of my prima facie findings that this Court cannot pass any interim order at this stage. This Court is of the view that the matter in issue in the suit can be more appropriately and effectively decided and adjudicated by the NCLT. In the present case, Section 430 of the Companies Act, 2013 itself provides an additional bar by stating that no injunction shall be granted by any civil court in respect of any action taken or to be taken in pursuance of any power conferred on the NCLT by the Companies Act, 2013. - HC
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CIRP - priority of distribution of assets in liquidation - liquidation proceedings - the financial debts owed to unsecured creditors have to be distributed by the liquidator as per the preference set out under Section 53(1) of Insolvency and Bankruptcy Code, 2016 i.e after distributing the workmen dues, wages and unpaid dues to the employees - HC
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Scope of the IBC - CIRP - Effect of moratorium - proceedings where both the parties may gain out of the agreement/contract. - Section 14 of the Code of 2016 is meant to refer those proceedings where even the corporate debtor would be a gainer, apart from third party, because third party would not fall under the definition of “creditor”. The bankruptcy proceedings remains generally to secure the institution by applying the measures given under the Code of 2016 and it is mainly in reference to the debt liability of the company and not to apply during the period of moratorium. It does not exclude application of other provisions to be given effect to and as the petitioner illustrated, in regard to the exclusion of the decree for specific performance where even a corporate debtor would be receiving the monies. - HC
Service Tax
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Refund claim - SEZ unit - requirement of approval from the committee of SEZ - due to non approval of input services refund cannot be rejected under Notification No. 15/2009 –ST dated 20.05.2009. Accordingly, the refund is not liable to be rejected on this ground. - AT
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Refund claim - rejection of claim on the ground of nondisclosure of availment of Cenvat Credit in ST-3 Returns - the mistake committed by the appellant is merely a procedural lapse which they tried to rectify immediately thereafter but were not permitted and substantial relief was denied to them, which is not permissible in law. Admittedly the ST-3 Returns manually filed by the Appellants were not verified as the same were not accepted by the authority below - the justice demands that the impugned order be set aside and the matter be remanded to the Original Authority for deciding the issued afresh after verification of ST-3 returns filed by the appellant manually. - AT
Central Excise
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Refund claim of the amount of pre- deposit - As per the cenvat credit rules, an assessee can take the cenvat credit of any duty paid on the inputs used in the manufacture of final product cleared on payment of duty - In the present case the amount of redemption fine is not eligible as cenvat credit as the same is not a duty which was paid on any input received by the appellant. The right course of action about refund of the amount of bank guarantee adjusted against the redemption fine is to file a formal refund claim. - AT
VAT
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Assessment of tax - calculation and clubbing of turnover of two units - sister concern or independent entities - The act of the petitioner herein is an attempt to swindle exchequer's money by evading payment of tax and if the contention of the petitioner that Tirupur Sree Annapoorna Hotel and Sree Annapoorna Sweets are independent entities is accepted, then the term "sister concern" will become diluted and all the firms will adopt the same tactics of creation of one or more sister concerns under one umbrella with different names and claim the benefit of tax. In that event, it will defeat the real intention of the legislature. - HC
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Refund of Excess ITR certified by the Auditor - Input Tax Rebate (ITR) - u/s 15, the burden of proving that any sale or purchase effected by a dealer is not liable to tax under Section 9 or Section 10 as the case may be, or that he is eligible for an input tax rebate under Section 14 shall be on the dealer, therefore, the burden was on the appellant to satisfy that the Input Tax Rebate for which he claimed the rebate was duly paid by the selling dealer before the sale of the goods. The authorities have recorded the satisfaction that those selling dealers did not show these sales to the appellant in their VAT Tax Return. - HC
Case Laws:
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GST
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2022 (12) TMI 1236
Seeking provisional release of seized goods - detention of goods on the ground that E-way bill was not generated for movement of the consignment - HELD THAT:- This Court would now set aside the impugned order. This means that the matter reverts to the detention/seizure order under Section 129(1) of TN-G ST Act. This Court would also now be directing the respondent to redo Section 129(3) legal drill after affording a fresh opportunity to the writ petitioner. In this view of the matter, as Section 129(1) scenario gets revived, learned counsel for writ petitioner on instructions submits that the writ petitioner is ready to furnish Bank Guarantee for the entire amount payable qua Section 129(1)(a) i.e., penalty of 200% of the tax payable. This submission is recorded. Impugned order under Section 129(3) is set aside - the writ petitioner shall furnish Bank Guarantee as per 129(1)(c) read with Section 129(1)(a) i.e., (penalty equivalent to 200% of the tax payable) latest by Monday i.e., by 26.12.2022 - application disposed off.
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2022 (12) TMI 1235
Maintainability of petition - availability of alternative remedy - fair opportunity of hearing - ex-parte order - violation of principles of natural justice - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This we say so, for two reasons - (a) violation of principles of natural justice, i.e. fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case and (b) order passed ex parte in nature, does not assign any reasons sufficient even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences, (c) We also find the authorities not to have adjudicated the matter on the attending facts and circumstances. All issues of fact and law ought to have been dealt with, even if the proceedings were ex parte in nature. As such, on this short ground alone, we dispose of the present writ petition. The instant petition sands disposed of.
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2022 (12) TMI 1234
Freezing of Bank Accounts of petitioner - petitioner claims that it was denied access to its bank account on 05.11.2021 without being informed of any reason for the same, since then the petitioner is unable to operate the bank account - HELD THAT:- Section 83 of the CGST Act empowers the concerned authority to provisionally attach assets, in cases where the proceedings have been initiated under Chapter XII, XIV or XV of the CGST Act and the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary to issue provisional attachment. In the present case, it is contended on behalf of the respondent that information had been received from another Commissionerate (DGGI, Ghaziabad) that certain entities have colluded to fraudulently avail GST. Apparently, the petitioner was named as one of the suspicious entities - In so far as the reasons for freezing the bank account is concerned, the petitioner is at liberty to approach the ICICI Bank for seeking the reasons for freezing the bank account. The bank is directed to provide the petitioner the reasons for the same. Petition is disposed off.
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2022 (12) TMI 1233
Maintainability of the writ petition - Availability of efficacious remedy of appeal - dispute pertains to questions of fact - seeking direction upon the respondents to show cause as to how an Officer of the State Taxes could carry out the proceedings under Section 129 of CGST Act - HELD THAT:- Taking into consideration that an efficacious alternative remedy by way of appeal is available to the petitioner under Section 107 of JGST Act, we therefore, grant liberty to the petitioner to approach the appellate authority against the impugned order passed under Form GST MOV 09. On his approaching, the State Taxes Officer, Intelligence Bureau, Dhanbad Division, Dhanbad shall provide the GSTIN number so that the petitioner can prefer an appeal online. In case the appeal is not accepted online for any technical reasons, he would be at liberty to prefer an appeal manually before the appellate authority. Writ petition is disposed off.
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2022 (12) TMI 1232
Refund of additional tax liability incurred by the petitioner in the light of GST law introduced w.e.f. 1.7.2017 onwards - HELD THAT:- Reliance placed upon the order of this Court in M/S D.A. ENTERPRISES THROUGH ITS PROPRIETOR DINESH KUMAR MISHRA VERSUS STATE OF CHHATTISGARH THROUGH THE SECRETARY; CHIEF ENGINEER HASDEO BASIN; SUPERINTENDING ENGINEER; EXECUTIVE ENGINEER MANIYARI [ 2022 (12) TMI 1136 - CHHATTISGARH HIGH COURT] , wherein under identical set of facts, this Court has allowed the said writ petition. Considering the submissions of learned counsel for the parties and also taking into consideration the judgment of this Court in the case of M/s D.A. Enterprises, the writ petition as of now stands disposed of permitting the petitioner to approach respondents No.2 to 5 in terms of the order of the State Government dated 10.10.2018 (Annexure P-2). The petitioner is also required to produce before the authority concern necessary proof of the additional tax liability incurred on account of the introduction of the GST law within a period of one week - petition disposed off.
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2022 (12) TMI 1231
Release of seized perishable goods - conclusion of adjudication proceedings expeditiously - seeking cross examination of the Panch witnesses, other witnesses whose statements are relied upon in the Show Cause Notice and the officers of the DGGI - allegations made against the petitioners is that they had fraudulently availed input tax credit - HELD THAT:- The learned counsel for the petitioners states that although the replies to the Show Cause Notice (SCN No. 8/2021) were termed as interim replies, the same may be considered as final and the adjudicating authority may proceed on the said basis. Insofar as the petitioner s request for permission to cross-examine certain witnesses and officers is concerned, this Court does not consider it apposite to decide the same in these proceedings - The adjudicating authority is requested to complete the proceedings pursuant to the show cause notice as expeditiously as possible and in any event within a period of four months from today. The adjudicating authority shall consider and dispose of the petition s application for cross examination of witnesses/officers in accordance with law. The petition is disposed of.
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2022 (12) TMI 1230
Seeking provisional release of seized goods - petitioner submitted that E-way bill can be applied for only after weighment at the weigh bridge - consignment was transported by truck from the Railway yard to a weigh bridge and the interception occurred during such transit - HELD THAT:- This writ Court refrains itself from expressing any opinion or view on the same. There is another reason as to why this writ Court refrains itself from expressing any opinion and proceeds to dispose of the writ petition. That other reason is, learned Revenue counsel, on instructions, submits that pursuant to interception on 06.12.2022, a show-cause notice as statutorily required under Section 129(3) of C-G ST Act has been issued to the writ petitioner on 07.12.2022, the writ petitioner has sent a reply on the same day, the third respondent has considered the same and has made an order dated 09.12.2022, which has been placed before this Court. To be noted, copy of the 09.12.2022 proceedings has been handed over by the learned Revenue counsel to the learned counsel for writ petitioner today. If the writ petitioner chooses to do the same in accordance with law, the Authority / forum / Court would consider the same on its own merits and in accordance with law untrammelled by any observation in this order which has been made for the limited purpose of disposal of captioned writ petition. The writ petition fails and the same is dismissed.
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2022 (12) TMI 1229
Validity of Assessment order and Demand of GST - It was alleged that the petitioner was supplied nil rated or exempted supply, but he had not reversed the ITC related to the said exempt supply as per Section 17(2) - violation of principle of natural justice - HELD THAT:- This Court notices that this is not the case where the Court would like to employ the ratio laid down in case of Graziano Transmission India Private Limited vs. State of Gujarat [ 2022 (7) TMI 752 - GUJARAT HIGH COURT] . As the facts were completely different and here as can be noticed, his request for adjournment had been acceded to not for 30 days, but for 15 days. The online portal also is indicative of the fact that it was for both adjournment and the personal hearing, however, on 11.02.2022 admittedly, neither the response was given in writing nor had the petitioner appeared in person. He also never bothered thereafter to know as to what had happened on 11.02.2022. It is also a matter of record that search was conducted at the official premise on 17.02.2022 and consequent upon the said search not only the petitioner, but some other employees were also called by the officer concerned for recording the statement and eventually on 21.02.2022, the order came to be passed which is impugned. He has reversed credit as has been detailed in the petition and that according to him was the reason for him to believe that everything was over till he received the communication from the Bank on 21.06.2022 where electronically the demand had been raised and the Bank was asked to adjust his demand - Be that as it may, for present, the petitioner is desirous of going to the Appellate Authority for questioning and challenging the assessment which has been finalized and that being his right, if he has missed out on the limitation, condoning this period of limitation in the given circumstance, keeping the larger issue open, this petition is allowed.
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2022 (12) TMI 1228
Seeking direction to the respondent to release the vehicle and consignment - invalid E-way bill - E-way bill has been generated at 09.56pm at 03.12.2022 at Tiruvannamalai but movement of the vehicle was noticed on 03.12.2022 at 10:56pm at Thoppur Toll. - Section 129(3) of The Central Goods and Services Tax Act, 2017, Tamil Nadu Goods and Services Act, 2017 and Integrated Goods and Services Tax Act, 2017 - HELD THAT:- In any event, on a demurrer even if it is construed as 10.56p.m, the question as to whether the vehicle could have crossed Thoppur Toll within one hour of declaration of e-way bill are all matters turning on facts. Section 129 provides for issue of notice / hearing before order is made. This Court is informed that notice has been issued on 04.12.2022. The order has to be made within 7 days but owing to the captioned writ petition being filed on 09.12.2022, making of the order has been put on hold is learned Revenue counsel's say. This is not a fit case for interfering with the impugned notice. Let the petitioner respond to 04.12.2022 notice, let the respondent consider the same on its own merits and in accordance with law after affording an opportunity to the writ petitioner as per Section 129(3) of C-G ST Act. Though obvious, it is made clear that if the order is adverse to the writ petitioner, it is open to the writ petitioner to assail the same in a manner known to law - Petition dismissed.
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2022 (12) TMI 1227
Condonation of delay in filing appeal - three months prescribed period and one month condonable period vide Section 107 of the Central Goods and Services Tax Act, 2017 elapsed within Covid-19 period - HELD THAT:- In identical circumstances, this Court had penned a judgment in THE GENERAL MANAGER SOUTHERN RAILWAY HEAD QUARTERS OFFICE PARK TOWN CHENNAI AND THE CHIEF ENGINEER/CENTRAL (CONSTRUCTION) N SOUTHERN RAILWAY PERIYAR E.V.R. HIGH ROAD EGMORE CHENNAI VERSUS EAGLE-OMEGA AND KR AND CO. (JV) REPRESENTED BY ITS LEAD PARTNER MR. C. KARNAN [ 2020 (10) TMI 1348 - MADRAS HIGH COURT] wherein delay in filing an application under Section 34 of The Arbitration and Conciliation Act, 1996 left the protagonist of a Section 34 high and dry. Hon'ble Supreme Court has made it clear that what was extended by order of Hon'ble Supreme Court qua Covid-19 period was only the period of limitation and not the period upto which the delay can be condoned in exercise of discretion conferred by the Statute. Therefore, this Court in the light of the authoritative pronouncement of Hon'ble Supreme Court, finds no grounds to interfere with the order of the first respondent. The argument that impugned order returns a finding in favour of writ petitioner but does not grant relief owing to limitation bar is no argument as law is well settled that when limitation elapses right is not extinguished but remedy is barred. Petition dismissed.
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2022 (12) TMI 1226
Maintainability of petition - availability of alternative remedy - fair opportunity of hearing - ex-parte order - violation of principles of natural justice - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This we say so, for two reasons - (a) violation of principles of natural justice, i.e. fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case and (b) order passed ex parte in nature, does not assign any reasons sufficient even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. The instant petition sands disposed of.
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Income Tax
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2022 (12) TMI 1225
Deduction u/s 40(b)(v) - deduction of the amount of remuneration paid to the partners - Payment of remuneration to partners not authorized by the Partnership Deed - HELD THAT:- According to the Tribunal, the appellant has to be authorized by the partnership deed and the same has to be in accordance with the terms of the partnership deed. Referring to the partnership deed constituting the appellant, Tribunal held that the partnership deed did not contain any terms for payment to the working partners. In that view of the matter, Tribunal while confirming the order of the assessing officer held that payment made to the partners amounting to Rs.1,08,000.00 is not an allowable deduction as per Section 40(b)(v) of the Act. On due consideration, we do not find any error or infirmity in the view taken by the Tribunal. No question of law, not to speak of any substantial question of law, arises from the said order of the Tribunal.Appeal is devoid of any merit and the same is accordingly dismissed.
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2022 (12) TMI 1224
Reopening of assessment u/s 147 - reason to believe - HELD THAT:- AO bears no nexus with the material available on record and is merely based on suspicion, does not find favor with me. As per the settled position of law, the A.O for taking recourse to proceedings u/s 147 is required to arrive at a bonafide belief on the basis of material available on record that the income of the assessee chargeable to tax had escaped assessment. No obligation is cast upon the A.O at the stage of taking recourse to proceedings u/s 147 to conclusively prove that the income of the assessee chargeable to tax had escaped assessment. As is discernible from the aforesaid reasons to believe , A.O had clearly arrived at a bonafide belief on the basis of the material available with him that the income of the assessee chargeable to tax had escaped assessment. Accordingly, finding no substance in the claim of the ld. A.R that the belief of the AO that the income of the assessee chargeable to tax had escaped assessment has no nexus with the material available on record, and is merely based on a pretence, does not find favor with me, as there was sufficient material available with the A.O for taking recourse to proceedings u/s.147 - Thus, the additional ground of appeal No.1 raised by the assessee is dismissed in terms of the aforesaid observations. Claim of the Ld. AR that there is no independent application of mind by the A.O, and the proceedings u/s.147 of the Act have been initiated by him on the basis of a borrowed satisfaction - We are unable to subscribe to the same. On a careful perusal of the reasons to believe , find that the A.O after referring to the material as was available before him had clearly applied his mind, and had on the basis of a bonafide belief so arrived at by him taken recourse to proceedings u/s.147 of the Act. Quality of the reasons to believe , as per the settled position of law, cannot be allowed as a basis for the assessee to assail the validity of jurisdiction assumed by the A.O u/s.147 of the Act. Thus, the additional ground of appeal No.2 raised by the assessee is dismissed in terms of the aforesaid observations. Claim of the assessee that as the reasons to believe was followed by issuance of notice u/s.148 of the Act on the same date, i.e., on 31.03.2017 after obtaining approval of the appropriate authority u/s.151 - On a perusal of the sanction granted by the appropriate authority u/s.151 of the Act, I find that the latter had approved the reasons to believe recorded by the A.O with an observation that the case was fit for reopening, and thus, had granted sanction for issuing notice u/s.148 of the Act. I, thus, not finding any merit in the aforesaid claim of the ld. A.R reject the same. Thus, the additional ground of appeal No.3 raised by the assessee is dismissed in terms of the aforesaid observations.
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2022 (12) TMI 1223
Levy of penalty u/s. 271(1)(b) - Non compliance requirement in respect of special audit u/s. 142(2A) - HELD THAT:- relevant ledgers for all the years under consideration were impounded by the Ld. AO in the course of assessment itself which has prevented the assessee in making compliance to the requirements of the special auditors for getting the special audit u/s. 142A of the Act completed. Reference is also made to the legal maxim impotentia excusat legam and lex non cogit ad impossibilia in this respect. When there is an invincible disability to perform mandatory part of the law that impotentia excuses. Law does not compel one to do that which one cannot possibly perform. Where the law creates a duty or charge and the party is disabled to perform it, without any default in him and has no remedy over it, there the law will, in general, excuse him. Therefore, when it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the person interested had no control, the circumstances will be taken as a valid excuse. Assessment proceedings furnished by the Ld. Counsel, it is evidently demonstrated that there exists a reasonable cause within the meaning of section 273B of the Act which prevented the assessee in meeting the compliance requirement in respect of special audit u/s. 142(2A) of the Act. - Levy of penalty directed to be deleted.
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2022 (12) TMI 1222
Assessment u/s. 144C(13) - time limit for completion of the assessment order u/s. 144C(13) - DR submitted that the assessment order has been passed by the AO within the period of limitation as extended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) - since the entire proceedings before the DRP and thereafter were carried out during Covid-19 pandemic the relaxation allowed by the Special Act TOLA would apply to the assessment order passed in pursuant to the directions of the DRP? - HELD THAT:- As decided in the case of Shell India Markets (P.) Ltd. [ 2022 (2) TMI 1149 - BOMBAY HIGH COURT] concluded that the time limit for completion of the assessment order u/s. 144C(13) of the Act was upto 30.04.2021. The relaxation under TOLA would not be applicable to the assessment orders passed in consequence to the DRP directions received by the Assessing Officer on 20.03.2021. The assessment order passed on 30.09.2021 was time barred. Similar are the facts in the present case. Therefore, we have no hesitation in holding that the assessment order dated 30.09.2021 in the present case is barred by limitation and is without jurisdiction. The assessee succeeds on ground of the appeal.
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2022 (12) TMI 1221
Addition on substantive basis treating the same as unaccounted income of the appellant - Whether any corroborative seized material found? - rejected the claim of the assessee that he has acted as Middleman only - HELD THAT:- It is pertinent to note that the affidavit filed by the Manager of the assessee though was rejected has been taken into account by the CIT(A) in consonance that the excel sheet found and seized from the office premises of the assessee and thus the data shown in the said computer belongs to the assessee. Assessee at no point of time has proved that the excel sheet was not of assessee s and the staff is also not aware of the said excel sheet. The theory of assessee that he is a middleman acting in real estate in certain transactions and earns brokerage also is not been established by the assessee through any documents. It is only oral submissions of the assessee before the CIT(A). CIT(A) has categorically mentioned that only real income has to be taxed and not the gross income of the assessee and, therefore, addition to the extent of Rs.74,50,000/- was taken into consideration on the basis of promissory note. CIT(A) further observed that all the payments as per the promissory notes are made after the date of receipts as reflected in P3 tab, therefore, accepted the assessee s contention. CIT(A) has given a table calculating the cash to the extent of Rs.2,05,50,000/- which was received in cash. Thus, the addition made by the CIT(A) is justifiable. There is no need to interfere with the same. Unaccounted expenses against unaccounted income declared under PMGKY 2016 - HELD THAT:- CIT(A) has taken cognisance of Circular No.43 of 2016 dated 27.12.2016, the same declaration of set off was already filed and taxes were paid. The Assessing Officer cannot tax the same amount by invoking provisions of Section 69A of the Act. Thus, the CIT(A) was correct in deleting the said addition. Ground no.3 of Revenue s appeal is dismissed. Undisclosed income - DR submitted that the CIT(A) erred in admitting additional evidences during appellate proceedings and never called for remand report which is violation of Rule 46A of the Income Tax Rules - HELD THAT:- It is pertinent to note that from the perusal of the Assessment Order, it can be seen that the said Banakat deed and relevant documents were before the Assessing Officer during the assessment proceedings. CIT(A) has rightly taken cognisance of these documents and the same cannot be treated as additional evidences on merit. CIT(A) has categorically mentioned that the assessee sold certain lands and the sum of Rs.1 crore was already given to the assessee and the balance was to be given as per the schedule in Banakat/agreement. Thus, the transaction was declared as genuine transaction by the CIT(A). There is no need to interfere with the same and hence ground of Revenue s appeal is dismissed.
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2022 (12) TMI 1220
Maintainability of appeal by the revenue on low tax effect - Monetary limit for filing the appeal of the revenue before the Tribunal - AO made an addition on account of Long Term Capital Gain arising on receipt of compensation for acquisition of agricultural land of the assessee - HELD THAT:- Monetary limit prescribed for filing of appeal by the department have been revised by CBDT vide its Circular No. 3 of 2018 dated 11.07.2018 and para no. 10 of the said circular has carved certain exception on the issues which should be contested on merits notwithstanding that the tax effect entailed is less than the specified monetary or where there is no tax effect. AO had made an enquiry from the land acquisition officer who had settled the relevant information based on which a view was taken by the ld. AO to complete the assessment. It is not a case where the land acquisition officer was conducting any investigation or enquiry as law enforcement agency within the meaning of exception noted in para 10e of the CBDT s Circular (supra). Also it is a case where information was sought from land acquisition officer by ld. AO to supply the information which was used for purpose of making the assessment in question. In fact the grounds taken by the revenue is not in conformity with the stated exceptions in CBDT Circular. Therefore, in our considered view the present appeal filed by the revenue does not fall in the exception noted in para 10e in the said circular. Accordingly, the appeal filed by the revenue is dismissed on the threshold in terms of CBDT s Circular since the tax is below the monetary limit of Rs. 50 lakhs as prescribed in the said circular. Appeal filed by the revenue is dismissed.
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2022 (12) TMI 1219
Initiation of re-assessment proceedings - Reasons to believe - cash deposits unexplained in the bank and also withdrawals made therefrom - HELD THAT:- AO initiated re-assessment proceedings just to verify the transactions of deposits and withdrawals in/from the bank account. Section 147 of the Act, dealing with the reassessment, opens with the words If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income . It is ostensible that the action u/s 147 can be taken when the AO has formed reasons to believe that some income chargeable to tax has escaped assessment. Ex consequenti, belief of the AO about any income escaping assessment is sine qua non for initiating re-assessment. No jurisdiction can be assumed for framing assessment u/s 147 of the Act absent such reasons to believe about the escapement of income. On going through the reasons, as reproduced above, it is palpable that the AO initiated re-assessment proceedings just to verify the deposits and withdrawals from the bank account of the assessee. There is no whisper in the reasons as to reason to doubt, much less the reason to believe, about the escapement of income. In view of the fact that the re-assessment has been initiated simply to verify the transactions in the assessee s bank account, which does not fulfill the jurisdictional condition of belief about the escapement of any income, we are satisfied that action of the AO lacks validity. We, therefore, set aside the initiation of reassessment and the consequential order passed u/s 147. Assessee appeal is allowed.
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2022 (12) TMI 1218
Reopening of assessment u/s 147 - notice to be issued by the non-jurisdictional ITO - transfer of case from ITO to the other - HELD THAT:- The concerned jurisdictional ITO, before framing the assessment did not issue notice u/s 148 which was sine qua non to assume jurisdiction to proceed with the assessment proceedings. thus case has not been transferred with the sanction of the Competent Authority as provided u/s 127 of the Act . Concerned ITO, Ward-4(5) without getting sanction from the competent authority himself transferred it to ITO Ward-3(5) and since the ITO, Ward-3(5) neither recorded reasons to believe that the income of the assessee has escaped assessment nor he issued notice u/s 148 therefore, the assessment framed by him was bad in law. Reliance in this respect can be placed on the decision in the case of Pankajbhai Jay Sukh Lal Shah [ 2019 (6) TMI 799 - GUJARAT HIGH COURT] . In view of this, the assessment order framed by the ITO, Ward-4(5) being bad in law is hereby quashed. Appeal of the assessee stands allowed.
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2022 (12) TMI 1217
Levy of penalty u/s 271(1)(c) - None appeared on behalf of the assessee, even in the previous hearings none appeared in spite of service of notice to the assessee - HELD THAT:- We have given our thoughtful consideration and perused the materials available on record. As it is seen from the quantum appeal order [ 2017 (11) TMI 2014 - ITAT AHMEDABAD] in assessee's own case for the very same Assessment Year 2010-11, the appeal was dismissed for non-prosecution. In spite of as many as 22 opportunities given to the assessee by this Tribunal, the assessee has not come forward to conduct the appeal. There is no other material placed before us, the Grounds of Appeal raised by the assessee are also general in nature. In the absence of any material, we have no hesitation in confirming the concurrent findings of the Lower Authorities and thereby confirming the levy of penalty under section 271(1)(c) of the Act. Appeal filed by the Assessee is dismissed.
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2022 (12) TMI 1216
Disallowance of provision for slow moving obsolete stock - assessee is making provision in respect of unsold stock of cassettes and compact disc s in accordance with AS-2 - principle of resjudicata - As submitted assessee is consistently following the same method of accounting since its inception and the same has been accepted by the Department for the last two decades - HELD THAT:- The assessment year under appeal is the only assessment year when disallowance has been made in respect of provision for slow moving and obsolete inventories. It is true that the principle of resjudicata does not apply in Income Tax proceedings, but at the same time rule of consistency cannot be ignored especially when the accounting method followed by assessee is in accordance with approved Accounting Standards. Revenue has not brought on record any material to show the reasons for deviation in not accepting provision for slow moving and obsolete inventories in the impugned assessment year. In the case of CIT vs. Santram Mangatram [ 2005 (1) TMI 57 - PUNJAB AND HARYANA HIGH COURT] has held that where from the inception of its business, the assessee had continuously adopted the same method of valuation of closing stock and no objection was raised by the Department in any of the previous years, there was no valid ground to hold that method adopted by the assessee for valuation of stock was legally impermissible. In the case of United Commercial Bank [ 1999 (9) TMI 4 - SUPREME COURT] has held that where the assessee bank was valuing stock-in-trade at cost for the purpose of statutory balance sheet and for the Income Tax purpose valuation was at cost or market value, whichever is lower and that was accepted by the Department in the preceding assessment years, there is no justifiable reason for the Revenue for not accepting same in the impugned assessment year. Thus held if the provision is accounted in accordance with the statutory requirements and the method of accounting has been consistently followed by the assessee over a period of time and accepted by the Department, the same should not be disturbed. In the instant case no contrary material has been brought on record by the Department to show that the assessee was not consistently following accounting policy and provision for slow moving and obsolete inventory in preceding or succeeding assessment years. We find no valid reason to uphold the findings of the CIT(A) confirming the addition. Consequently, findings of CIT(A) are reversed and ground No.3 of appeal is allowed. Disallowance of publicity expenses, wrongly considered as bad debts and advances written off by the Assessing Officer - A perusal of Schedule-17 shows that against bad debts and advances written off no amount is mentioned either in the year ended 31/03/2011 or for the year ended 31/03/2010. The Assessing Officer has disallowed bad debts and advances written off to the extent of Rs.5,97,35,213/-. The aforesaid amount is mentioned in Schedule -17 against the Publicity Expenses . The Assessing Officer patently erred in mentioning the amount of Publicity Expenses against Bad Debts and advances written off . Disallowance has been made by the AO on wrong appreciation of facts. We further observe that the assessee s submissions dated 20/01/2014 made before the AO had categorically mentioned Nil against Details of Bad Debts and Advances written off during the year. After examining the facts and documents on record, we find merit in ground No.4 of the appeal. Hence, the assessee succeeds on same. AO is directed to delete the disallowance made in respect of Bad Debts and Advances written off. The ground of appeal No.4 is thus, allowed.
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2022 (12) TMI 1215
Determination of undisclosed business turnover, arbitrary application of net profit rate at 8% - HELD THAT:- As assessee has stated to be a commission agent for selling fish imported from M/s. Babul Enterprises of Bangladesh and copy of consignment agreement has also been filed before the ld. CIT(A). Assessee was to get commission at 1% of the sale value. Application of net profit rate at 8% on the total undisclosed business turnover would be excessive and higher, which will hit the assessee. We, therefore, in order to bring an end the controversy and also in the interest of justice and being fair to both the parties and also considering the fact that there was undisclosed sales prior to 1.8.2014, the assessee himself has offered the N.P rate at 2.03% on the disclosed turnover also, estimating the net profit @ 4% will meet the end of justice. Thus, the estimated net profit on undisclosed business turnover, will works out at Rs.50,56,562/- and the same stands confirmed and remaining addition stands deleted. Thus, ground nos. 2 to 5 are partly allowed. Addition for undisclosed interest - HELD THAT:- We are of the considered view that since we have already estimated the business income of assessee for the year under consideration, we do not find any merit in the action of the ld. AO making the said addition. The same stands deleted. Ground no. 7 is allowed. Unexplained investment - HELD THAT:- We find that in the undisclosed bank account held with Axis Bank the initial funding towards investment was made. Considering the returned income and additions confirmed by us we are of the view that assessee has sufficient creditworthiness to explain the source of Rs.49,999/- and therefore, no addition is called for. Thus, finding of the ld. CIT(A) is reversed and ground no.8 is allowed. Credit of tax, which has been deducted at source from the assessee - HELD THAT:- We find merit in this ground of assessee and thus, restore this issue to the ld. AO, who shall examine the veracity of claim of assessee and if credit is not given for the tax deducted at source, the same should be allowed. Thus, ground no. 9 of assessee s appeal is allowed for statistical purpose. Not allowing proper opportunity of bearing heard - HELD THAT:- We fail to find any merit in this submission of assessee as S/Shri Deb Roy Sudeb Roy appeared and filed written submissions/explanation, which has been duly considered by the ld. CIT(A). Therefore, there is no merit in ground no. 6 raised by the assessee.
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2022 (12) TMI 1214
Disallowance of employees contribution to Provident Fund as well as ESIC - HELD THAT:- When the money is given by the employees, the employer is holding that money on behalf of the employees in the manner of good faith and trust. They are not part of the employers income, nor are they heads of deduction per se in the form of statutory pay out. In fact, they are others income, money, only deemed to be income with the object of ensuring that they are paid within the due date specified in that particular statute. Therefore, they have to be deposited in terms of such welfare enactment. It is open to deposit in terms of those statutes on or before the due date as mandated by such concerned law that the amount which is otherwise retained and is deemed income in the hands of the employer is therefore, treated as a deduction. Essentially the condition precedent for deduction is that therefore, such amounts which are held in trust for the employees should be deposited by the employer on or before the due date as prescribed under the relevant Statutes. The Hon'ble Supreme Court further held that if this approach and reasoning is adopted then the non-obstante clause u/s 43B or anything contained in that provision would never absolve the assessee-employer from its liability to deposit employees contribution on or before the due date as mentioned in the respective enactments as a condition for deduction. Reverting to the facts of the present case, it is an admitted fact that the payment of employees contribution to the provident fund was made before the due date of filing of return of income u/s 139(1) of the Act but beyond the due date as provided in the respective Statutes. Respectfully following the judgment of Hon'ble Supreme Court[ 2022 (10) TMI 617 - SUPREME COURT] we hold that the assessee-employer was duty bound to deposit the employees contribution to provident fund within the due date as mentioned in the respective Statutes. Since this was not done the assessee is not entitled for deduction u/s 36(1)(va) read with section 43B of the Act and the said amount has to be construed as deemed income of the assessee and added to his total income. We do not find therefore, any infirmity with the findings of the Revenue authorities and the appeal of the assessee is dismissed.
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2022 (12) TMI 1213
Late fee charged u/s 234E - time limit defined under rule 31A read with section 200(3) - Delay filling quarterly TDS statements - HELD THAT:- After hearing the Ld. DR, perusal of records and the impugned order, it is noted that by Board's Notification in 35/2020 dated 24-06-2020, the time limit for filing of 4th quarter TDS statements was extended only upto 31-07-2020 in view of COVID situation. Admittedly, it is not disputed that the CPC(TDS) had levied this fees for the delay beyond 31-07- 2020 only. CIT(A) has been justified in not accepting the argument that she was not a person responsible for deduction of tax. As per the provisions of sec 200(3), any person deducting tax in accordance with provisions of Chapter-XVII, shall after paying the tax deducted to the credit of the Central Government, required to submit the TDS statement within prescribed time. Thus, the appellant having deducted the tax has the obligation to file the quarterly TDS statements within the prescribed time limit which she failed to fulfill by filing the such statement with some delay as above. Therefore, CIT(A) was justified in confirming the finding of the CPC(TDS) in levying late fee u/s 234E as per law. Assessee s appeal is dismissed.
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2022 (12) TMI 1212
Addition made on account of payment of labour charges paid - AO found that the assessee inflated expenditure without obtaining bills - HELD THAT:- Admittedly, the assessee is a Civil Contractor and undertaken contract work from PWD, Zila Parishad, Municipalities, MIDC and State transport during the year under consideration, it is not disputed by both the authorities below as it was stated before the CIT(A) as well as the AO. We note that both the authorities below disallowed the said amounts only on the ground that they disbelieved the contention of the assessee. Admittedly, all the details relating to the said payments pertaining to the assessee, Malati V. Deshpande and Sumati D. Patil were not furnished before the assessment proceedings as well as in the First Appellate proceedings, even actual performance of road construction work for Government Department. It is also not disputed that furnishing of PAN, copies of Income Tax Return of Malati V. Deshpande before the AO. Both the authorities below examined all the said details but however rejected the same for not having sufficient evidences. Admittedly, the Malati V. Deshpande did not appear before the AO and the AO held that she did not offer the labour payment receipt in her return of income. There was no evidence to show the same has been recognized in the account of Malati V. Deshpande brought on record by the assessee. No infirmity in the order of CIT(A) in confirming the additions made by the AO on account of labour charges paid to labour contractors - Thus, ground Nos. 2 and 3 raised by the assessee are dismissed. Disallowance on account of supervision charges - According to the AO that the assessee conveniently paid supervision charges to each person below Rs.20,000/- and the said payment made to various persons i.e. 36 persons - HELD THAT:- We note that the assessee did not file any evidences rebutting the finding of AO and the CIT(A) before this Tribunal. The assessee filed written submissions before the CIT(A) inter alia stating that the receipts under the contract works is of Rs.9,00,00,000/- and supervision charges paid to 36 persons on different sites required to be allowed on the basis of above said work done involving Rs.9,00,00,000/-. AO and the CIT(A) was of the opinion that the assessee made these payments only to avoid TDS as well as rigors of the provisions u/s. 40A(3) of the Act and no evidences showing establishing the assessee paid such amount to 36 persons on different locations. Therefore, as discussed above, we find no evidences in respect of the contention raised by the assessee before the AO and the CIT(A) even before in support of grounds raised in Form No. 36. Therefore, we find no infirmity in the order of CIT(A) in confirming the addition made on account of supervision charges. Thus, ground No. 4 raised by the assessee fails and it is dismissed.
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2022 (12) TMI 1211
Addition u/s 69A - receipt of credible information that the assessee and another were indulged in illegal storage and selling of banned noxious tobacco products at the premises of assessee, police authorities reached spot and found certain tobacco in the racks of shop and also cash - assessee did not respond to any of the notices and hence, the AO completed the assessment inter-alia by making an addition - HELD THAT:- On categorical enquiry by the Bench from the ld.AR whether he had appeared on behalf the assessee or any other counsel appeared on behalf of the assessee to pursue the matter before the ld.CIT(A). To which, the ld.AR replied that he was not the person who appeared before the ld.CIT(A) and some other counsel represented the matter before the ld.CIT(A). Though, the earlier AR was not the counsel before us, however, no reasons were brought on record, substantiating his absence during the appellate proceedings before the ld.CIT(A). It is a serious misconduct on the part of the earlier ld.AR for which necessary remedial action should be taken by the concerned authority. However, on account of the fault of authorised representative / chartered accountant / advocate of assessee, the assessee should not be made to suffer and more particularly, when the assessee happened to be a senior citizen and is not conversant with the digital communication. Therefore, we deem it appropriate to restore the appeal for afresh adjudication before the ld.CIT(A) and hereby direct the ld.CIT(A) to grant one opportunity only to the assessee. Assessee is also directed to appear for the hearing in time before the ld.CIT(A) for afresh adjudication. The assessee shall file all the documents at the first instance and shall not any adjournment before the ld.CIT(A). In light of the above, the appeal of the assessee is allowed for statistical purposes.
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2022 (12) TMI 1210
Reopening of assessment u/s 147 - new material and evidences available with the assessing officer to arrive at the reason indicating escapement of income - independent application of mind v/s borrowed satisfaction - addition made by the AO u/s 68 - As argued income has escaped assessment in the case of the assessee by trading in the bogus penny stocks of Splash Media was based entirely on the satisfaction of the Directorate of Investigation, Kolkata, and there was no independent application of mind on the part of the AO - HELD THAT:- In the present case, it is pertinent to note that no scrutiny assessment was conducted in the case of the assessee and therefore the only data available with the AO was the data provided along with the income tax return and the report/information received subsequently from the office of Directorate of Investigation, Kolkata. The said information constitutes new and tangible material for initiating the reassessment proceedings in the case of the assessee. Though this information was received from Investigation Wing, Kolkata but the AO applying his mind extracted the relevant details pertaining to the assessee. In the first paragraph of the reasons, information of penny stock was noted. Based on this in second paragraph, relevant details about the alleged bogus transaction of the assessee were identified. In the third paragraph, the AO has clearly identified the escapement of income and in the last paragraph, the satisfaction of the AO is recorded. Thus, there was a tangible material on which the AO applied his mind independently. Hence, it is not correct to state that reopening has been made on the basis of borrowed satisfaction. Also undisputed that the assessee has transacted in shares of Splash Media and earned Rs. 14,91,646.90 and has declared an amount of Rs. 13,93,293 as a long-term capital gain on the sale of shares in its return of income. Thus when new and tangible material in form of a report from the Directorate of Investigation, Kolkata was received, reassessment proceedings were initiated. The expression reason to believe imports the cumulative presence of the following four elements viz. some tangible material or materials to establish that income has escaped assessment; nexus between such material and the belief of escapement of income from assessment as envisaged under Section 147; application of mind by the Assessing Officer to such material; and an inference, based on reason, drawn tentatively by the officer that income has escaped assessment. The application of mind by the AO to the new and tangible material has to be discerned from the reasons recorded in each case and from the perusal of the reasons recorded for reopening the assessment in the present case, we are of the considered view that all the aforesaid conditions are fulfilled and the AO has rightly initiated the reassessment proceedings under section 147 - Decided in favour of revenue.
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2022 (12) TMI 1209
Taxability of search fees - DRP/AO held that a sum received by the appellant towards executive search fees is taxable as fees for technical services under section 9(1)(vii) of the Income-tax Act, 1961 and under Articles 12(5)(a) and / or 12(5)(b) of the India-Netherlands tax treaty - AR submitted that in preceding assessment years Advance Pricing Agreement ( APA ) was entered by the Indian subsidiary of the assessee company, which covered the transactions with assessee - HELD THAT:- The year under consideration is not covered by the APA. From the perusal of aforesaid order passed by the coordinate bench of the Tribunal in assessee‟s own case for preceding assessment year, we find that the issue of taxability of search fees was decided in favour of assessee in assessment year 2011 12 also and the coordinate bench, in aforesaid decision, supported the findings rendered in preceding year as well as its conclusions, by reference to benchmarking agreed between Indian subsidiary and CBDT vide APA dated 30/08/2016. Therefore, we are of the considered view that findings rendered in preceding assessment year are equally applicable to the year under consideration even though it is not covered by the aforesaid APA. Thus, respectfully following the order passed by the coordinate bench of the Tribunal in assessee‟s own case cited supra, we uphold the plea of the assessee and direct the AO to delete the addition on account of search fees. As a result, grounds No. 1 9 raised in assessee‟s appeal are allowed. Taxability of management fees - AO treated management service fees as fee for technical services‟ under Article 12(5)(b) / 12(5)(a) of India Netherlands DTAA, in line with its findings rendered in respect of taxability of search fees - HELD THAT:- As is evident from the record, lower authorities have not examined any of the services and by following its findings rendered in respect of search fees taxed management service fees also as fee for technical services‟ under Article 12 of India Netherlands DTAA. Thus, in view of above, we deem it appropriate to remand the issue of taxability of management service fees to the file of AO for de novo adjudication, as per law, after necessary examination of relevant agreement. The AO is also directed to examine each and every service in respect of which assessee has received management service fees, while deciding this issue. The assessee shall be at liberty to furnish all the evidences in support of its claim. Needless to mention that no order shall be passed without affording reasonable opportunity of being heard to the assessee. As a result, grounds No. 10 17 are allowed for statistical purpose. Taxability of reimbursement of expenses - HELD THAT:- This issue is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of Tribunal for preceding assessment years. Thus, respectfully following the order passed by the coordinate bench of the Tribunal in assessee's own case [ 2022 (9) TMI 1403 - ITAT MUMBAI] we uphold the plea of the assessee and direct the AO to delete the addition on account of reimbursement of expenses. As a result, grounds No. 18 20 raised in assessee's appeal are allowed.
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2022 (12) TMI 1208
Re-opening assessment u/s 147 by issuing notice u/s 148 - disallowance on account of bogus purchase - HELD THAT:- A three Judges bench of Hon'ble Gujarat High Court in the case of A.L.A. Firm [ 1991 (2) TMI 1 - SUPREME COURT ] after an elaborate discussion of the subject opined that the jurisdiction of the Income Tax Officer to re-assess income arises if he has in consequence of specific and relevant information coming into his possession subsequent to the previous concluded assessment, reason to believe, that income chargeable to tax and had escaped assessment. It was held that even if the information be such that it could have been obtained by the I.T.O. during the previous assessment proceedings by conducting an investigation or an enquiry but was not in fact so obtained, it would not affect the jurisdiction of the Income Tax Officer to initiate reassessment proceedings, if the twin conditions prescribed under Section 147 of the Act are satisfied. As observed earlier not only there existed new information with the AO from the credible sources, but also he had applied his mind and recorded the conclusion that the purchases claimed were non-genuine and therefore bogus, (clearly meaning that what was disclosed was false and untruthful). The requirements of section 147 r.w.s. 148 have clearly been met; and the reopening is held justified and legal. Therefore, we dismiss ground no.1 and 3 raised by the assessee. Estimation of income on bogus purchases - We notice that the issue is squarely covered by the decision of the Coordinate Bench of Surat in the case of Pankaj K. Choudhary [ 2021 (10) TMI 653 - ITAT SURAT ] and there is no change in facts and law, therefore respectfully following the binding precedent, we direct the Assessing Officer to sustain the addition at the rate of 6% of bogus purchases.
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2022 (12) TMI 1207
Revision u/s 263 - LTCG - Nature of land sold - distance of the land in question from the outer limit of the Indore Municipal Corporation - assessee sold the land jointly with a co-owner - assessee claimed exemption of half share of long term capital gain claiming that the said land was an agricultural one and situated outside the definition of capital asset under Section 2(14) - whether SDM is not a competent authority for the distance certificate rather than PWD department is authorized for the same? - HELD THAT:- We find that the original assessment order has been passed under Section 143(3) of the Act by the Ld.AO after due verification of the issue raised in the order impugned passed under Section 263 of the Act and that too upon causing exhaustive enquiry and finalising the same after taking a possible view, the invocation of provision of Section 263 of the Act on the basis of change of opinion is, thus, not found to be sustainable. We have also found substance in the arguments advanced by the Ld. AR that the original order needs not to give detailed reason. Further that when one possible view has been taken by the Ld AO the said cannot be treated as erroneous and prejudicial to the interest of the Revenue. In this regard, we are also inspired by the ratios laid down in the judgment passed in the matter of CIT vs. Nirma Chemicals Works (P.) Ltd [ 2008 (2) TMI 373 - GUJARAT HIGH COURT] and CIT vs. Kamal Galani [ 2018 (6) TMI 1052 - GUJARAT HIGH COURT] Under this circumstance, we find the order passed by the Ld PCIT under Section 263 of the Act is not sustainable and thus quashed. Interest amount as received by the assessee from Gujarati Samaj, Indore - PCIT was of the view that the assessee has unaccounted money and out of books the same has been given to Gujarati Samaj - Since, the buyer could not make payment in due time as agreed upon the interest on delayed payment was made to the assessee. Therefore, such interest has been paid not on any amount of money borrowed from the assessee by the said party rather for non-fulfilment of the commitment of making timely payment in respect of sale of agricultural land. In view of the matter, there was no disclosure of any advance in the financial statement when the source of interest amount was asked by the Ld.AO. The above narrated facts were duly placed by the assessee to him and finally the Ld. AO accepted the said interest income made by the AO.. No contrary document, however, is forthcoming from the Revenue which could justify that the order passed by the Ld. AO in this count is erroneous so far as it is prejudicial to the interest of the Revenue. Hence, the condition prescribed under Section 263 of the Act has not been fulfilled in issuing the order under Section 263 of the Act by Ld. PCIT as impugned before us. Hence, the same is found to be not sustainable and thus quashed. Assessee s appeal is allowed.
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2022 (12) TMI 1206
Rectification of mistake u/s 154 - Delayed Employees contribution to the Employee Provident Fund and Employee State Insurance Fund - addition u/s 2(24)(x) r/w s. 36(1)(va) - amount being deposited before the due date of filing the return of income u/s. 139 (1) - scope of amendment - HELD THAT:- In view of the foregoing, no question of the said Explanations being read as retrospective, so as to apply for the relevant year, sustaining the impugned additions, which therefore fail. This is, however, subject to any decision/s by the Hon'ble jurisdictional High Court, which would, where so, hold, even justifying a rectification u/s. 154/254(2), even where rendered after the date of the order sought to be rectified. See SAURASHTRA KUTCH STOCK EXCHANGE LTD [ 2008 (9) TMI 11 - SUPREME COURT] and SMT. ARUNA LUTHRA. [ 2001 (8) TMI 84 - PUNJAB AND HARYANA HIGH COURT] No such decision has been found, or otherwise pointed out by the parties, as was the case before the Tribunal in Nikhil Mohine [ 2021 (11) TMI 927 - ITAT JABALPUR] any such decision, even if discovered later, may operate to amend this order, or the order giving appeal effect thereto, to bring it in conformity or agreement with the said decision/s, of course, after allowing a fair opportunity of hearing to the assessee. The impugned additions, therefore, could not have been made under the given facts and circumstances of the case, and are directed for deletion. Decided in favour of assessee.
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2022 (12) TMI 1205
TP Adjustment - unauthorized reference to TPO u/s 92CA(3) - HELD THAT:- AO in the instant case, made a reference to the TPO for computation of Arms Length Price with reference to the impugned domestic transactions entered into by the assessee as defined u/s 92BA - An order from the TPO was obtained u/s 92A(3) of the Act in pursuance of such reference. It is the case of the assessee that reference made to the TPO in the instant case without fulfilling the conditions of threshold of Rs.5 crore monetary limit is without the sanction of law in view of the Section 92BA - This being so, the assessee is not entitled for extension of time limit provided u/s 153(4) by extended period of another one year which is applicable only where the reference to the TPO has been validly made within the frame work of law. We find palpable merit in the plea expounded on behalf of the assessee. It has been demonstrated in the instant case that the threshold monetary limit of Rs.5 crore was not available to the Assessing Officer to characterize the transactions with AE as SDT to enable him to make a reference to the TPO. The order of the TPO u/s 92CA(3) is thus a nonest and a nullity in the eyes of law. Consequently, the extension of time under erstwhile provisions of Section 153 for passing the assessment order based on such nonest order from TPO is not available to the AO in the instant case. AO thus could not legitimise the assessment order passed beyond the ordinary time limit of 31.12.2016 available under Section 153 of the Act. The impugned assessment order passed is barred by limitation and hence bad in law and thus requires to be quashed - Appeal of the assessee is allowed.
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2022 (12) TMI 1204
TP Adjustment - determination of the arm s length price of deemed international transactions of television content production fees received from the broadcasters - HELD THAT:- For determination of arm s length price of the deemed international transactions, it is important to go through the agreement entered between the AE and domestic third-party. The said agreement and confirmation have been filed for first time before us, which being crucial and important for adjudicating the issue dispute, same are admitted as additional evidence in terms of Rule 29 of ITAT Rules, 1963 and issue-in-dispute involved in relation to adjustment to the deemed international transactions is restored back to the file of the Ld. AO/TPO for deciding afresh after providing adequate opportunity of being heard to the assessee. The ground of the appeal of the assessee accordingly allowed for statistical purposes.
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2022 (12) TMI 1203
TP adjustment made in respect of interest on delayed receivables - As submitted that the assessee has received advances from the AE in some cases, which should have been netted off - HELD THAT:- We are of the view that there is merit in his contentions. As rightly submitted by Ld A.R, the Arm s Length Price of transactions have to be determined by following any one of the methods prescribed under the Income tax Rules. Admittedly, the TPO/DRP, in the instant case, has not followed the same. Accordingly, we deem it proper to restore this issue to the file of AO/TPO for determining the ALP, i.e., interest on delayed receivables by following the rules. The assessee is free to raise all the contentions before the AO/TPO. Appeal filed by the assessee is treated as allowed for statistical purposes.
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Customs
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2022 (12) TMI 1178
Application has been filed for out of turn hearing of Appeal - HELD THAT:- In view of the submissions made in the application, the same is allowed and the Registry is directed to list the appeal for hearing on 12.12.2022. In the meanwhile, the department is directed to file application stating the fact when the Order-in-Original was sent and served upon the applicant along with supporting document, if any.
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Corporate Laws
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2022 (12) TMI 1179
Application for amendment in the plaint by deleting the name of the defendant no. 1 by substituting the name of the Liquidator of the defendant no. 1 in the cause title as well as in the plaint - overriding provisions of IBC over other laws - Section 238 of the Insolvency and Bankruptcy Code 2016 - HELD THAT:- In the instant case, one of the financial creditors of the defendant had initiated proceeding under Section 7 of the Insolvency and Bankruptcy Code 2016 against the defendant and the Tribunal had admitted the application and appointed Liquidator. The Liquidator had made Public announcement calling upon all the stakeholders of the defendant company for submission of their respective claim, if any, and the plaintiff has lodged its claim before the Liquidator but the same was rejected on the ground of limitation but in appeal the Learned Tribunal had admitted the claim of the plaintiff and admittedly the same is to be adjudicated by the Liquidator. As Section 238 of the Code is having the override effect in any other law for the time being in force and thus the suit cannot be proceeded further as the claim made by the plaintiff in the instant suit is similar to the claim raised before the Liquidator - Section 61 of the Code provide for an appeal. In case the Liquidator rejects the claim of the plaintiff, the plaintiff is having remedy of an appeal. This Court held that the suit filed by the plaintiff is cannot be proceeded further and thus CS No. 1 of 2016 is dismissed. The Registrar, Original Side of this Court is directed to release the Bank Guarantees submitted by the defendant no.1 in terms of the order passed by this Court in favour of the Liquidator Shri Krishna Kumar Chhaparia - Application disposed off.
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Insolvency & Bankruptcy
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2022 (12) TMI 1202
Grant of ad interim order restraining the respondent company who is in liquidation from taking possession or control of the pledge shares or to interfere with the possession of the physical share certificates of the petitioner - HELD THAT:- NCLT and NCLAT are constituted under Section 408 and 410 of the Companies Act, 2013 but without specifically defining the power and functions of NCLT. Section 408 of the Companies Act states that the Central Government shall constitute a National Company Law Tribunal to exercise and discharge such powers and functions as are or may be conferred on it by or under the Companies Act or any other law for the time being in force. The matters fall within the jurisdiction of the NCLT, under the Companies Act, 2013 lie scattered all over the Companies Act, therefore, Section 420 and 424 of the Companies Act, 2013 indicates in brought terms, merely the procedure to be followed by the NCLT before passing any order. There is no separate provision in the Companies Act exclusively dealing with the jurisdiction and powers of NCLT. In Sub-Sections (4) and (5) of Section 60 of the IBC, 2016 give an indication respectively about the powers and jurisdiction of the NCLT. Sub- Section 4 of Section 60 of IBC, 2016 states that the NCLT will have the powers of DRT as contemplated under part III of the Code for the purpose of sub Section (2). Sub Section (2) deals with situation where the Insolvency Resolution or Liquidation of Bankruptcy of the corporate guarantor or personal guarantor of a Corporate Debtor is already pending before the NCLT - In the present case, the petitioner though had filed the civil suit praying for decree as well as the declaration with respect of the equity shares of the respondent and subsequently the petitioner has invoked the provisions of Section 7 of IBC which was duly admitted by the NCLT and the petitioner has filed the similar claim before the Liquidator. As per Section 238 of the IBC, 2016 is having override effect in any other law for the time being in force. In view of my prima facie findings that this Court cannot pass any interim order at this stage. This Court is of the view that the matter in issue in the suit can be more appropriately and effectively decided and adjudicated by the NCLT. In the present case, Section 430 of the Companies Act, 2013 itself provides an additional bar by stating that no injunction shall be granted by any civil court in respect of any action taken or to be taken in pursuance of any power conferred on the NCLT by the Companies Act, 2013. This Court finds that the petitioner is not entitled to get an ad interim order - Application disposed off.
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2022 (12) TMI 1201
Permission to Liquidator of the respondent Company to withdraw a sum of Rs.15,55,290.10 which is lying to the credit of Application No.3703 of 2019 - whether the proceedings initiated under Insolvency and Bankruptcy Code, 2016 can replace the execution of the arbitral awards? - HELD THAT:- Admittedly, the appellant finance company herein is an unsecured creditor. As per Section 53(1) of Insolvency and Bankruptcy Code, 2016, the priority to distribute the proceeds from the sale of the liquidation assets to the unsecured creditors shall be after distributing of workmen dues, wages and unpaid dues to employees. The Hon'ble Apex Court in the judgment in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT ] had upheld the validity of Section 53(1) of Insolvency Code, which prescribes priority of distribution of assets in liquidation. In the present case, the respondent has submitted its proof of claim in the capacity as the Liquidator of the respondent Company claiming (i) principal amount of Rs.1,27,77,777.05 in terms of the Trip Loan agreement dated 17.4.2018; (ii) Legal charges of Rs.24,135/-; and (iii) Additional Financial charges of Rs.77,56,165/- in respect of the very same claim. Therefore, the Liquidator of the respondent Company seeks to recover its dues qua the applicant/respondent Company in accordance with the procedure envisaged under Insolvency and Bankruptcy Code, 2016 - a recovery certificate issued in respect of the same claim, which is essentially a crystallization of the claim through the process of adjudication, had also be classified as a financial debt under Insolvency and Bankruptcy Code, 2016. Consequently, the nature of the underlying claim of the creditor, would determine the categorisation of the amount payable under the final decree passed adjudication of the same claim. The liability arising out of an arbitral award or a court decree would be categorised as either financial or operational debt depending on the nature of the underlying claim which stands crystallised through the arbitral or court proceedings. The appellant, as per Section 9 of Insolvency and Bankruptcy Code, 2016, is a Non Banking Finance Company and admittedly an unsecured financial creditor. As per the decisions laid down by the Hon'ble Supreme Court cited supra and Section 53 of Insolvency and Bankruptcy Code, 2016, the financial debts owed to unsecured creditors have to be distributed by the liquidator as per the preference set out under Section 53(1) of Insolvency and Bankruptcy Code, 2016 i.e after distributing the workmen dues, wages and unpaid dues to the employees - there are no reason to interfere with the decision of the learned Single Judge, hence, the instant appeal challenging the said order of the learned Single Judge is liable to be dismissed. Appeal dismissed.
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2022 (12) TMI 1200
Scope of the IBC - CIRP - Effect of moratorium - proceedings where both the parties may gain out of the agreement/contract. - Dishonor of cheque - Time-lines for completion of the insolvency resolution process by the Adjudicatory Authority - delay in completion of the proceedings otherwise - Prayer to consider the issue in the public interest so that the object and purpose of the Code of 2016 is served and at the same time Sections 12 and 14 of the Code of 2016 are given effect to for the purpose sought to be achieved therein - HELD THAT:- The issue therein was in reference to the proceedings under Section 138 of the Negotiable Instruments Act, 1881, which was alleged to be outside the scope of Section 14 of the Code of 2016. The argument was not accepted by the Apex Court despite the proceeding not being exactly of civil nature, but having impact on the corporate debtor for a monetary obligation and it was held that such proceedings would come under the prohibition of Section 14 of the Code of 2016 - The primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting it from its own management and from a corporate death by liquidation. The time-lines given therein have also been referred by the Apex Court as a measure to protect all its creditors and workers by seeing that the resolution process goes through as fast as possible. The reference of Section 85 of the Code of 2016 in Chapter II in Part III of the Code of 2016, has also been given to show the effect of admission of application, i.e., on the date of admission of the application, the moratorium period shall commence in respect of all the debts. The provision aforesaid does not refer to any other proceeding than in reference to the debts. Section 14 of the Code of 2016 is meant to refer those proceedings where even the corporate debtor would be a gainer, apart from third party, because third party would not fall under the definition of creditor . The bankruptcy proceedings remains generally to secure the institution by applying the measures given under the Code of 2016 and it is mainly in reference to the debt liability of the company and not to apply during the period of moratorium. It does not exclude application of other provisions to be given effect to and as the petitioner illustrated, in regard to the exclusion of the decree for specific performance where even a corporate debtor would be receiving the monies. The issue that now remains is about the maintainability of the public interest litigation. The writ petition has been filed showing it to be in public interest, but other than to refer to the work of research by the petitioner, who is pursuing her studies in Post Graduation, no other reason has been given to indicate the public interest. The purpose of public interest litigation is quite different than as construed by the petitioner - We, therefore, do not find the writ petition to be maintainable as a public interest litigation, but appreciating the work undertaken by the petitioner to seek interpretation of the provisions, this court has summarized the issue and made clarification of the issue by giving interpretation of the provisions therein. The writ petition is disposed of.
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FEMA
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2022 (12) TMI 1199
This Court jurisdiction to entertain the execution petition of a foreign decree - Summary judgement - execution proceeding emanates from the letter which respondent/DH demanded repayment from the appellant/JD the amount paid to the lender bank as Guarantor of the loan obtained by the appellant/JD; which was refuted by the appellant/JD - HELD THAT:- Upon going through decision in Renusagar Power Co. Ltd. Vs. General Electric Co [ 1993 (10) TMI 232 - SUPREME COURT] and applying it to the facts of the present case, we find that no doubt in view of said decision ex post facto permission can be obtained from the RBI to remit the funds, however, when the decree itself is found to be vitiated, being against the prescribed procedure of law recognized in India, the occasion for obtaining ex post facto permission from RBI by the decree holder in respect of awarded amount, does not arise at all. We have already observed that the decree passed by the Court in UK is without any merit and abrogative. Also, in the present case the respondent/DH was the Guarantor to the lender located in a foreign country. We also find that once a conditional permission has been granted by the RBI, any claim beyond the said conditions is contrary to law. A careful evaluation of afore-noted statements made on behalf of appellant/JD s witness as well observations of the UK court shows that the pleas raised by both the sides are on triable issues. However, without granting an opportunity to leave to defend to appellant/JD, the UK court has passed the Summary Judgment, enforcement of which is sought in India. It is an admitted position that on one hand appellant/JD filed its leave to defend and on the other, respondent /DH sought passing of Summary Judgment by the Court. It is also not disputed that at the time of passing of the impugned judgment and decree, leave to defend filed by the appellant/JD was not granted and it is on the basis of documents placed on record the Summary Judgment was passed. In BL Kashyap v. JMS Steels and Power Corporation [ 2022 (1) TMI 1311 - SUPREME COURT] it has been held that while dealing with the application seeking leave to defend, the Court has not to proceed as if denying the leave is the rule and it is only to be granted in meritorious cases, rather the Court has to ensure that where triable issues are raised, leave to defend be granted and even the Court can grant conditional leave to defend. This Court had specifically put a query to appellant/ JD, why it did not file an appeal before the UK Court? - The learned senior counsel appearing on behalf of appellant replied that when the respondent/DH sought a Summary Judgment from the Court at UK to get the decree enforced in India, that too without affording an opportunity to leave to defend to the appellant/JD, which is against the procedure followed under Indian Law, there was no ground to file an appeal against the said judgment in UK or in India. We find that since the foreign decree was not executable in India, in such circumstances there was no occasion for appellant/JD to file an appeal against that and it is only when its executions is sought in India, the appellant/JD has filed its objections. The present case has not been filed under Order und 14 RSC and after passing of Default Judgment, respondent/DH sought Summary Judgment under Rule 24.2 of the UK Civil Procedure Rule, 1998, which is completely different than the other provisions of law and so, the decision in Navin Khilani [ 2007 (5) TMI 686 - DELHI HIGH COURT] is not applicable to the facts of the present case. We find that the setting aside of default judgment and passing of summary judgment by the same court at UK, is not recognized under the prescribed procedure of law in this country. Moreover, the disputes between the parties are triable issues and denial of leave to defend to the appellant/JD is against the interest of justice.
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PMLA
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2022 (12) TMI 1198
Money laundering - loans were fraudulently obtained by KSBL from banks/Financial Institutions by declaring clients shares as its own shares - Direction to grant extension of time to the petitioners to prepare a reply to the show cause notice, for a further period of two months and consequently exclude two month period from the computation of 180 days under Section 5(3) of the Prevention of Money Laundering Act, 2002 - HELD THAT:- No doubt that the adjudicating process as envisaged under Section 8 of the Act is time-bound process. Timelines are mentioned therein. Therefore, in view of the said discussion, according to this Court, the petitioners are entitled to grant of extension of some reasonable time to submit reply to the show cause notice, dated 19.09.2022. According to this Court, two months time from today is reasonable. According to Sri Avinash Desai, learned counsel for the petitioners, the petitioners have to get information and submit explanation effectively. Unless and until the said defendants submit explanation, 1st respondent/ Adjudicating Authority will not be in a position to pass an order in terms of Section 8(3) of the Act. Therefore, no prejudice would be caused to 2nd respondent. For the purpose of computing the time period of 180 days, the period during which the proceedings were extended shall be excluded in terms of proviso 3 to Section 5 of the Act - It is relevant to note that this Court vide Common order dated 10.08.2022 in W.P.No.30753 of 2022 granted two months time to submit explanation to the show cause notice dated 22.04.2022 issued in respect of PAO therein. There is no challenge the said order and it attained finality. There is no allegation that petitioners did not comply with the said order. This court is also inclined to extend time to the petitioners - this Writ Petition is disposed of granting two months time from today to the petitioners to submit their explanation/reply to the show cause notice dated 19.09.2022.
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2022 (12) TMI 1197
Seeking grant of anticipatory bail - money laundering - scheduled offences - ponzi companies - petitioner is alleged to be instrumental in facilitating co-accused Pranjil Batra for purchasing/acquiring 10 dummy/paper/fictitious companies in cash consideration to the tune of Rs.42 crores through 'accommodation' entries - HELD THAT:- The role of the petitioner when examined make it clearly apparent that he has indulged into money laundering by way of facilitating co-accused in execution of the fraud through dubious modus-operandi. Money laundering criminals use shell companies because shell companies are commercial companies that appear legitimate but are actually controlled by criminals. These shell companies mix illegal funds with legitimate funds to hide unfair income. Front companies are not only aiming to make a profit but also to protect illegal funds. By using shell companies and other investments in legitimate companies, money laundering proceeds are used to control industry or other sectors leading to monetary instability due to improper distortions in asset prices. It also provides a way to avoid taxation and, thus, deprive the country of income - the PMLA was promulgated to check money laundering and stringent provisions have been incorporated therein as money laundering cripples the economy of a nation. Section 24 of the PMLA provides that when a person is accused of having committed the offence under Section 3, the burden of proving that 'proceeds of crime' is untainted property shall be on the accused. Section 44 of the PMLA is another section in the string of strict provisions which provides for continuity of commission of offence as long as all the 'proceeds of crime' are not recovered and empowers the investigating agency to file supplementary complaints upon surfacing of any fresh evidence and such complaint is to be tried along with the initial complaint. The fetter imposed by Section 45 of the PMLA in the matter of grant of bail, having been restored, as is evident from the judgments referred to above and also that the said fetters are equally applicable while considering grant of anticipatory bail, it goes without saying that the twin conditions as regards the Courts satisfaction that there are reasonable grounds for believing that the accused is not guilty and also that the accused, if granted bail is not likely to commit similar offence again is sine-qua-non in the matter of grant of bail. At this stage, there is nothing to show that the petitioner is innocent or that in case granted bail, he will not flee from justice or that he will not commit similar offences again. As such, having regard to the facts and circumstances of the case, as discussed in earlier portion of this order, particularly the enormity of the scam wherein a substantial part of proceeds of crime is yet to be located and recovered, the custodial interrogation of the petitioner would be indispensable. Thus, no special case for grant of anticipatory bail to petitioner is made out. Petition dismissed.
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2022 (12) TMI 1196
Seeking return of amount given to plaintiff - Defendant contested the plaintiff's claim by filing his written statement submitting inter alia that he was never in need of money and has never taken any amount from plaintiff and had not executed any promissory note in his favour - claim barred by virtue of Section 269SS of the Income Tax Act and is also barred by the provisions of the Money Lending Act or not - HELD THAT:- It is a solitary instance of advancement of loan by plaintiff to the defendant for which no license under the Money Lending Act was required by plaintiff. There is no evidence adduced by defendant to show that plaintiff is in the business of money lending and had advanced similar loans to different persons hence his contention that plaintiff was required to be registered under the Money Lending Act is without any merit. Likewise it was not mandatory for plaintiff to have advanced the sum to the defendant by way of cheque alone and it cannot be said that he could not have done the same by way of cash. The provisions of Section 269SS of the Income Tax Act are not applicable to the present facts. In any case, the defendant upon receiving loan amount from plaintiff cannot take shelter of such a hyper technicality. A perusal of proceedings of the trial Court shows that the defendant ever since the very inception had been totally negligent in prosecution of his case and had been taking repeated adjournments firstly for filing of the written statement and thereafter for cross-examining plaintiff's witnesses. His right to cross-examine plaintiff's witnesses was eventually closed by the trial Court on 21.06.2018 observing that last opportunity on imposition of costs had already been granted to him earlier hence no further opportunity can be granted to him. It cannot be said that the trial Court has committed any illegality in closing the right of defendant to cross-examine plaintiff's witnesses. There are no illegality committed by the Courts below in decreeing the claim of plaintiff. The findings arrived at by them are based upon due appreciation of the oral as well as the documentary evidence available on record and no error or perversity in the same is found. The findings being findings of facts are not liable to be interfered with at the second appellate stage - appeal dismissed.
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Service Tax
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2022 (12) TMI 1195
Voluntary payment pursuant to declaration in SVLDRS-1 in 12 equal monthly installments - Circular 1071/4/2019 dated 27.08.2019 - contravention of Section 73 of the Finance Act - HELD THAT:- The notice issued by the respondent No.2 under Section 87, according to the petitioner, is in contravention of Section 73 of the Finance Act since there is a mandate to adjudicate and the amount declared as voluntary disclosure of the petitioner cannot be taken as a final amount without any adjudicatory process. Mr.Hemani assisted by the learned advocate, Ms.Vaibhai Parikh, who has drawn our attention to the Circular 1071/4/2019 dated 27.08.2019 to say that in case of the voluntary disclosure of duty not paid, the full amount of disclosed duty would have to be paid. However, there is nothing to say that the interest and penalty would be automatic and any recovery can be made without adjudication. Issue Notice and Notice as to interim relief as well, returnable on 22.12.2022.
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2022 (12) TMI 1194
Maintainability of appeal - appropriate forum - classification of services - Business Auxiliary services or not - HELD THAT:- The issue, therefore, that arises for consideration is essentially within the realm of valuation of services rendered by the respondent in booking Cargo on a commission basis under the head Business Auxiliary Services . The issue is thus of valuation and the remedy in terms of Section 83 of the Finance Act, 1944 read with Section 35 (G)(1) and Section 35 (L)(1)(b) of the Act, would not lie before this Court, but would be by way of an appeal before the Hon ble Supreme court. We are fortified, in taking this view by a judgment of this Court rendered in THE COMMISSIONER OF SERVICE TAX, MUMBAI VII, MUMBAI VERSUS M/S. GREENWICH MERIDIAN LOGISTICS (I) PVT. LTD. [ 2018 (9) TMI 1893 - BOMBAY HIGH COURT ] which holds that the remedy in a matter concerning the issue of valuation is by way of filing an appeal in terms of the above provisions of law before the Hon ble Supreme Court. The appeal before us is therefore not maintainable. The appeal is dismissed for want of maintainability.
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2022 (12) TMI 1193
Refund claim - rejection on the ground that the input services are not approved as per the approval list by the approval committee of SEZ - N/N. 15/2009- ST dated 20.05.2009 - HELD THAT:- As per the facts of the present case the refund claim is pertaining to the period March to May, 2009 and the appellant had applied and the approval was given by the Approval Committee in September, 2009. Even though belatedly the facts remains that the input services were approved by the Approval committee. Without prejudice, it is found that this issue is no longer res- integra as in various judgments this Tribunal has expressed clear view that the approval of input services by the approval committee is only a procedural requirement and due to this procedural lapse refund cannot be rejected. The issue is no longer res-integra in as much as it was held that due to non approval of input services refund cannot be rejected under Notification No. 15/2009 ST dated 20.05.2009. Accordingly, the refund is not liable to be rejected on this ground. As per the learned AR Commissioner (Appeals) has not given finding on the time bar therefore for this purpose the matter is remanded to the Commissioner (Appeals) to give finding on the issue of time bar. The appeals are allowed by way of remand to the Commissioner (Appeals).
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2022 (12) TMI 1192
Refund claim - rejection of claim on the ground of nondisclosure of availment of Cenvat Credit in ST-3 Returns - Rule(5) of Cenvat Credit Rule, 2004 read with Notification No. 27/2012 CE(NT) dated 18/06/2012 - HELD THAT:- Time and again in series of decisions this Tribunal has repeatedly held that non-mentioning of the credit availed in ST-3 return is only a procedural lapse for which the substantial relief cannot be denied to the assessee but despite that the lower authorities seem to be adamant in not taking cognizance of the views of the Tribunal. In the instant matter, when the appellant realized their mistake they immediately, vide letter dated 16/06/2017, intimated the said mistake / discrepancy to the authority before whom the refund claim was filed by them and requested the said authority to accept the duly corrected/ rectified ST-3 returns manually for the period April, 2016 to September, 2016 but the said authority vide letter dated 16/06/2017 turned down the said request and rejected the refund claim merely on the basis of non-disclosing the availment of credit in ST-3 returns. Learned Commissioner also followed the same without applying his independent mind to the issue and without looking into the settled legal position as laid down by this Tribunal in number of decisions. In the instant matter, the mistake committed by the appellant is merely a procedural lapse which they tried to rectify immediately thereafter but were not permitted and substantial relief was denied to them, which is not permissible in law. Admittedly the ST-3 Returns manually filed by the Appellants were not verified as the same were not accepted by the authority below - the justice demands that the impugned order be set aside and the matter be remanded to the Original Authority for deciding the issued afresh after verification of ST-3 returns filed by the appellant manually. The matter is remanded to the Original Authority in order to decide the issue afresh - Appeal allowed by way of remand.
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2022 (12) TMI 1191
Levy of penalty - discharge of entire service tax liability prior to the issuance of any show cause notice and the appellant - reverse charge basis in respect of business auxiliary services received from abroad - HELD THAT:- If Commissioner (Appeals) is correct in his observation As mentioned in the Show Cause Notice. was only after verification of the details submitted by the Appellants, the short payment of Service Tax liability was detected, which otherwise would have gone undetected which takes the colour of malafide intent and not a voluntary payment , then penalty should have been imposed under Section 78 of the Finance Act, 1994. Hon ble Supreme Court has in the case of UNION OF INDIA VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS AND COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VERSUS M/S. LANCO INDUSTRIES LTD. [ 2009 (5) TMI 15 - SUPREME COURT] specifically held that if the ingredients for invocation of extended period are present, then mandatory penalty as provided under Section 11AC of the Central Excise Act, 1944 (corresponding to Section 78 of the Finance Act, 1994) should have been imposed. Section 78 also provides that if the penalty under Section 78 is imposed, no other penalty under Section 76 could have been imposed on the appellant. Accordingly the contention raised by the learned AR that there was malafide intention to evade payment of duty cannot be upheld. Secondly, Section 73(3) clearly provides that payment of tax could have been on own violation or on being pointed out by the department. Then also no notice could have been issued. Appeal allowed.
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Central Excise
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2022 (12) TMI 1190
Maintainability of appeal - appropriate forum - classification of services - rate of tax - appellable before this court or under section 35L of the Excise Act which appeal would need to be filed before the Apex Court - HELD THAT:- The Apex Court in the case of NAVIN CHEMICALS MFG. TRADING CO. LTD. VERSUS COLLECTOR OF CUSTOMS [ 1993 (9) TMI 107 - SUPREME COURT] has decided that classification issue is an issue of rate of duty and /or value of goods for the purposes of assessment. The Hon ble Supreme Court having decided that classification issue in Navin Chemicals Manufacturing and Trading Company Limited Vs. Collector of Customs in an issue of rate of duty and for value of goods for the purposes of assessment, the same is binding on us. Therefore, in view of section 35G(1), which specifically prohibits an appeal being entertained by this Court, if it is an order of the Tribunal relating amongst other things to the determination of any question having arisen on account of rate of duty or the value of goods for the purposes of assessment, this Court would not have jurisdiction. This appeal is not maintainable before this court and the course of action available to the appellant is to file an appeal before the Supreme Court under section 35L(1)(b) of the Excise Act - Appeal disposed off.
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2022 (12) TMI 1189
Refund claim of the amount of pre- deposit under section 11 B read with section 35 F of the Central Excise Act 1944, instead of availing credit suomoto under Cenvat Credit Rules, 2004 - HELD THAT:- The appellant have suo-moto re-credited an amount of Rs 3,75,000/- for which the appellant had given the bank guarantee at the time of provisional release of the seized goods. This amount was subsequently appropriated against confiscation of the seized goods ordered by the Assistant Commissioner vide OIO dated 30.09.2005 therefore, the amount of bank guarantee has been converted to redemption fine against the confiscation of the goods. On succeeding in the appeal before the Tribunal the appellant was supposed to file a refund claim for refund of the amount of redemption fine. Whereas the appellant have taken the suo-moto re-credit as cenvat credit. As per the cenvat credit rules, an assessee can take the cenvat credit of any duty paid on the inputs used in the manufacture of final product cleared on payment of duty - In the present case the amount of redemption fine is not eligible as cenvat credit as the same is not a duty which was paid on any input received by the appellant. The right course of action about refund of the amount of bank guarantee adjusted against the redemption fine is to file a formal refund claim. The appellant is otherwise eligible to claim the refund of Rs 3,75,000/- from the department in terms of section 11 B of the Central Excise Act,1944. Since the appellant have followed the wrong procedure by re-crediting the amount of cenvat credit but otherwise the appellant is prima facie eligible for refund, The period involved in the present proceeding right from taking re-credit till the filing of refund claim is reduced for the purpose of limitation as prescribed under section11 B. The appellant has liberty to file a formal refund claim under section 11 B within three months from the date of this order. Appeal disposed off.
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2022 (12) TMI 1188
Utilization of CENVAT Credit - basic excise duty for payment of education cess and secondary and higher education cess - HELD THAT:- The issue is no longer res-integra in the light of the various judgments cited by the learned counsel for the appellant. Particularly in view of the judgment of Jurisdictional High Court of Gujarat in the case of COMMISSIONER, CENTRAL EXCISE, CUSTOMS SERVICE TAX, VAPI VERSUS M/S MADURA INDUSTRIES TEXTILES [ 2013 (1) TMI 352 - GUJARAT HIGH COURT] wherin it was held that the benefit of utilization of credit of basic excise duty for payment of education cess is to be allowed. The utilization of cenvat credit of basic excise duty for payment of education cess and secondary and higher education cess is correct and legal. Appeal allowed.
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2022 (12) TMI 1187
Wrongful availment and utilization of CENVAT Credit - recovery alongwith interest and penalty - process amounting to manufacture or not - HELD THAT:- As no manufacturing activity was undertaken by them, their premises was simply a godown used for dispatch of the finished goods. The only activity that was being undertaken in the said godown is repacking and relabeling of excisable goods and dispatch thereof. These activities undertaken in respect of the goods of Chapter 39 40 did not amount to manufacture. Accordingly the appellant was neither required to pay any central excise duty nor entitled to any Cenvat credit in respect of these goods. The contention as raised by the Revenue that the activities undertaken by the appellant do not amount to manufacture, but still undisputedly the appellant has paid the duty in respect of the finished goods. Having accepted the payment of duty, Revenue could not have denied the Cenvat credit availed by the appellant. Appeal allowed.
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2022 (12) TMI 1186
Rejection of refund claim - time bar under the provisions of Section 11 (B) of the Central Excise Act - HELD THAT:- The appellant has attempted to increase their refund claim pursuant to remand in the first round by the Commissioner (Appeals) in February, 2019. It is held that the claim had become time barred for the period 1.7.2012 to 30.06.2013, as has been held by the Commissioner (Appeals). Thus, there being no merits in this appeal, the same is dismissed.
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CST, VAT & Sales Tax
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2022 (12) TMI 1185
Validity of a circular dated 29th March, 2016 issued by the Transport Commissioner-cum- Chairman, State Transport Authority (STA) - direction to collect tax from the dealers/manufacturers of motor vehicles on the basis of total number of vehicles possessed and registered during the entire year by the dealer - Section 2 (8) of the Motor Vehicles Act, 1988 - HELD THAT:- There is merit also in the contention of the dealers that if the interpretation placed by the Transport Commissioner on Section 5 of the OMVT Act, as accepted by the learned Single Judge, were to be affirmed, then the requirement under Rule 7 of the OMVT Rules, 1976 of the dealers having to give a declaration regarding the number of vehicles possessed under the TC would become entirely redundant. Likewise, the declaration in Form-XIV of the OMV Rules 1993 which also contains a similar declaration would become redundant. The learned Single Judge does not appear to have, while upholding the circular dated 29th March, 2016, discussed either Rule 7 of the OMVT Rules 1976 or Form-XIV of the OMV Rules, 1993. The concept of a TC is that it can be used on several vehicles of the same make and model which are possessed by the dealer under the TC limited to the purposes specified in Rule 41 of the MV Rules. Since the purposes for which the vehicles are used is clearly specified in Rule 41 of the MV Rules, there can be no apprehension of misuse by the dealer of such vehicles for purposes other than Rule 41 of the MV Rules. It will have to be found as a fact that there has been such misuse for which there would have to be an enquiry of some sort preceded by a notice to the concerned dealer. This Court is unable to subscribe to the view of the learned Single Judge that the interpretation placed on Section 5 of the OMVT Act through the impugned instruction is correct and in consonance with the legislative intent behind Section 5 of the OMVT Act and the scope and ambit of that provision. In other words, this Court is of the considered view that the instruction dated 29th March, 2016 is ultra vires Section 5 of the OMVT Act and therefore cannot be sustained in law. Accordingly, this Court quashes the impugned instruction dated 29th March, 2016. Validity of the demand notices issued by STA to each of the Appellants on the basis of the impugned instructions dated 29th March, 2016 - HELD THAT:- The TC fees can be collected strictly only in terms of Rule 81 of the MV Rules and only in respect of the vehicles which the dealer has in his possession under the TC. Accordingly, all the impugned demand notices issued to the respective Appellants both for TC tax and TC fees in respect of vehicles possessed and registered in excess of the vehicles covered by the TC issued, are hereby quashed. Refund of the excess TC tax and TC fees collected by the STA on the strength of the interim order passed by this Court - HELD THAT:- The question of refund of this excess amount to the dealer would arise only where that burden has not been passed on by the dealer to the customer. It is for this reason, this Court had in its order dated 18 th October, 2022, called for an affidavit from the dealers. The affidavit filed by the dealers is not categorical in this regard. It merely states that some dealers may have passed on the additional incidence to the customers whereas the others have paid it from their own resources - it is not possible for this Court to direct refund of excess TC tax and TC fees collected by virtue of the impugned instruction issued by the STA to the RTOs. However, what is clear is that the collection hereafter of TC tax and TC fees on the basis of the impugned instructions dated 29th March, 2016 will have to cease forthwith. Section 5 is both the charging Section as well as the machinery provision . It indicates that TC tax will become payable in respect of the vehicles possessed by the dealer under the TC certificate and also specifies what is the tax payable if the number of vehicles found in possession under the TC certificate exceeds that number. It also clearly specifies that the tax is to be collected at an annual rate and in advance - Appeal allowed.
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2022 (12) TMI 1184
Principles of natural justice - service of SCN - impugned order assailed on the ground that it has been made without giving notice to the writ petitioner-dealer and without affording an opportunity of personal hearing - HELD THAT:- A comparison of the signatures in the postal acknowledgement card and writ affidavit/vakalatnama reveal even to the naked eye that they are completely different. Therefore, in the considered view of this Court, there is nothing before this Court to demonstrate that the writ petitioner was put on notice before making of the impugned order. It is settled law that an impugned order cannot be improved by way of a counter affidavit or by production of records, more so in matters of this nature. Therefore, as the impugned order does not say that a personal hearing has been afforded, which is held to be statutorily imperative by this Court in STATE BANK OF INDIA OFFICER'S ASSOCIATION (CC) SBIOA VERSUS THE ASSISTANT COMMISSIONER (ST) [ 2019 (9) TMI 698 - MADRAS HIGH COURT] case in a legal drill under Section 22(4) of erstwhile TNVAT Act, this Court is convinced that the impugned order deserves to be set aside on this ground. Impugned order is set aside solely on the ground that personal hearing has not been afforded though the impugned order says that it is a legal drill under Section 22(4) of erstwhile TNVAT Act - Petition disposed off.
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2022 (12) TMI 1183
Assessment of tax - calculation and clubbing of turnover of two units - sister concern or independent entities - rejection of calculation on the ground that the Registration Certificate, which was applied for Sri Annapoorna Sweets, a sister concern of Tirupur Sree Annapoorna Hotel was not accepted for registration - HELD THAT:- A perusal of the assessment order unravels the fact that the dealer, namely, Tirupur Sree Annapoorna Hotel had, though, maintained separate accounts for sweet stall and hotel, there was no set up of detached kitchen and even both concerns were functioning in the same site. There was no proof adduced regarding disbursement of salary to the employees under different salary slips and on scrutiny of bills, it came to light that bills for common telephone expenditure and electricity charges were raised. Above all, there was a common cash counter for collection of sale amount in respect of both sweets and hotel. There is not even an iota of material evidence adduced to establish that Sree Annapoorna Sweet stall is the sister concern of the petitioner herein. The act of the petitioner herein is an attempt to swindle exchequer's money by evading payment of tax and if the contention of the petitioner that Tirupur Sree Annapoorna Hotel and Sree Annapoorna Sweets are independent entities is accepted, then the term sister concern will become diluted and all the firms will adopt the same tactics of creation of one or more sister concerns under one umbrella with different names and claim the benefit of tax. In that event, it will defeat the real intention of the legislature. The Assessing Authority, in support of his assessment by clubbing both units as one, had stated that based on the divulgence of the petitioner that Sree Annapoorna Sweet Stall got merged with Tirupur Sree Annapoorna Hotel with effect from 01.04.1997, common assessment was made by branding them as a single unit. Even prior to that, the petitioner was not in possession of valid registration certificate and therefore, it cannot be contended that the petitioner is entitled to the tax benefit for the previous year. The petitioner herein deserves no leniency from this Court, as the Tribunal has rightly analyzed the evidence on record and restored the findings of the Original Authority. Since there is a finding of fact and no question of law is involved, we are of the view that there is no perversity in the findings of the Tribunal, warranting interference by this Court - Petition dismissed.
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2022 (12) TMI 1182
Refund of Excess ITR certified by the Auditor - Input Tax Rebate (ITR) - in the VAT Tax report, 75 mismatches were found - unverified ITR - Impugned order passed without application of mind without granting any justification - non issuance of show cause notice by Assessing Officer - Best judgment assessment under section20(5) of the VAT Act - non provision of report in Form 75-76 to Appellate containing details of turnover of Selling Dealers is denial of natural justice or not - failure by the Appellate Authorities to call remand report from the Assessing Officer regarding correct status and credentials of the selling dealers and merely confirming the rejection of ITR based on mismatch as per Form 75 is a correct procedure as per law - non- provision of reasons of reduction of ITR in the proceedings in assessment - increase in pecuniary liability. HELD THAT:- Section 20 (1) of the M.P. VAT Act says that the assessment of every registered dealer shall be made separately every year. Sub-Section (4) of Section 20 provides that Commissioner shall serve on a registered dealer who is not eligible for assessment in the prescribed form, to appear in person or by an agent or to produce evidence or to produce accounts, registers, cash memoranda or other documents. Sub Section (b) provides that the Commissioner after hearing the registered dealer or his agent examined the evidence produced with requirement of section (2) and (3) of Clause (a), he may require shall assess or reassess to the tax. Therefore, proceedings under Section 20 (4) in respect of assess and re-assess is up to. All the authorities/ Tribunal has rightly held that under proviso (6) (a) of Section 14 of the M.P. VAT Act if a registered dealer (Selling dealer) has furnished a return of a period, the tax in respect of purchase made from the registered dealer, the selling dealer ordinarily deem to have been paid for the purpose subsection unless it is found otherwise. VAT Tax report has disclosed that certain entries are not matching with the return of the selling dealer, therefore, the appellant was called upon under Section 20(5). Then under Section 15, the burden of proving that any sale or purchase effected by a dealer is not liable to tax under Section 9 or Section 10 as the case may be, or that he is eligible for an input tax rebate under Section 14 shall be on the dealer, therefore, the burden was on the appellant to satisfy that the Input Tax Rebate for which he claimed the rebate was duly paid by the selling dealer before the sale of the goods. The authorities have recorded the satisfaction that those selling dealers did not show these sales to the appellant in their VAT Tax Return. So far as the contention of the learned counsel of the appellant is that no details of the disputed sale were given to the appellant by the Assessment Officer is concerned all the purchases were in the knowledge of the appellant on which he claimed input tax rebate and appellant was called to produce all the details of sale and purchase for that relevant year and after examining all the record, the authorities have recorded its satisfaction that, the appellant is not liable to be given a rebate of Rs.15,44,226/-. The concurrent findings of the three authorities are not liable to interfered as we do not find any substantial questions of law involved in this appeal. Appeal dismissed.
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2022 (12) TMI 1181
Attachment of bank account of petitioner - recovery of outstanding taxes of a Company from the accounts of its individual Directors - HELD THAT:- Admittedly, the assessment in the present case is in the name of the Company and throughout, it is the Company which has been treated as the Assessee and demands raised against it. While the impugned order notices that there is nothing wrong in the attachment of the Company s account, the grievance of the Petitioner that as an individual Director who has already resigned much prior to the impugned attachment, his individual account could not have been attached was not even addressed in the impugned order. Section 51 of the OVAT Act read with Rule 55 of the OVAT Rules provides a special mode of recovery of outstanding amount of tax, interest and penalty. Even these provisions do not authorize recovery of outstanding taxes of a Company from the accounts of its individual Directors. This Court is unable to sustain the impugned order in so far as the said order confirms the attachment of the Petitioner s individual Bank account notwithstanding his having ceased to be a Director of AEPL whose tax dues were sought to be recovered - impugned attachment order and the corresponding order of the Commissioner of Sales Tax, Odisha affirming it are hereby set aside - petition is disposed off.
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Indian Laws
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2022 (12) TMI 1180
Dishonor of Cheque - legally enforceable debt - insufficiency of funds - condonation of delay to file a complaint beyond time by the complainant - HELD THAT:- The provision of Section 142 (b) of Negotiable Instruments Act, 1881 cannot be considered to be effective with retrospective effect. Therefore, learned trial court has wrongly passed the order for condontion of delay in filing the complaint by the complainant and, moreover, when the objection was raised before the revisional court, it did not consider it and has rejected the objection. Learned revisional also ignored the provision as contained under section 142(b) of the Negotiable Instruments Act, 1881 and did not give the benefit of the provision to the respondent. Therefore, it is observed that the complaint filed by the revisionist barred by limitation. That so far as the nature of transaction is concerned, learned revisional court on the basis of evidence produced by the revisionist observed that cheque was given by the respondent to the revisionist for collateral security not as discharge to any of debt or other liability. Revisional Court after appreciating the material available on record rightly observed that the cheque was given as collateral security to the amount given by the revisionist to the respondents. There is no illegality in observation and conclusion drawn by the learned trial Court. The criminal revision is dismissed.
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