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TMI Tax Updates - e-Newsletter
December 29, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Articles
News
Notifications
Highlights / Catch Notes
GST
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Detention of goods and vehicles while in transit with valid invoices - Onus on the purchase to prove the genuineness of transaction - High Court has held that, In essence, the petitioners (purchaser) have to establish their own credentials but not the 4th respondent (supplier of goods). - SLP filed by the revenue dismissed - SC
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Validity of SCN - justifiabilty of demand - non-reversal of excess ITC availed - This Court hopes and trusts that the authority concerned shall address on the issues raised in the reply/ additional reply and pass an order with due advertence to the record keeping in mind the provisions of GST Act maintaining judicial discipline. - HC
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Seeking grant of anticipatory bail - scam of availing bogus input tax credit on the basis of forged documents - To be noted that, this is an economic offence having huge magnitude needs to be viewed with different approach and to be considered seriously, as it is eroding economic death of the country. - petitioner cannot be released on pre-arrest bail - HC
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Validity of SCN issued u/s 73 of the CGST Act, 2017 - Demand of GST - The Show Cause Notice, from the plain reading, seems to be one which has been issued in a mechanical manner without application of mind and without any cogent sufficient materials available or even the basic scrutiny or the investigation which were required for the authority concerned in reaching to the conclusion that certain transactions which have been carried on by the respondents appear to have been the transactions where there is evasion of tax or where there is suppression of material facts or atleast there was reasonable suspicion on the transactions so made by the petitioner. - HC
Income Tax
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Gain on sale of land - nature of land - assessment order passed by treating the land as capital asset as it falls in the City limit - Assessee has filed sufficient evidence in the form of Land Revenue Record that said land was used for agricultural purposes by the certificate of Land Revenue Authority. Further, the assessee has filed certificate of Gram Panchyat that village Lajpore is not under the area of Surat Municipal Corporation. - AT
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Best judgment assessment u/s 144 - additions towards unexplained money u/s. 69A r.w.s.115BBE - - In no case can the Tribunal be taken as a forum for an appellant who, as per his volition, had either adopted an evasive or lackadaisical approach before the lower authorities and not participated in the assessment or appellate proceedings to come up with its case for the first time before the Tribunal and, as a matter of right seek restoring of the impugned order to the file of the lower authorities for fresh adjudication. - AT
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Compounding of case u/s 279(2) - offences u/s 276C and 277 - Assessee would be entitled to the benefit of Section 279(1A) of the Act and the judgment of Supreme Court in Prem Dass case in view of reduction of penalty from 300% to 100% by the appellate authority, the failure of the appellant to challenge, in our view, would prove fatal, to any attempt by the revenue to contend to the contrary.- HC
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CIT(A) admitting additional evidence and deleted addition - Best judgment assessment - addition were made u/s 69B based on unexplained investment in time deposits - since the CIT(A) has returned a finding of fact with regard to the source of funds that were found deposited in the period in issue, no interference is called for as these findings have been affirmed by the Tribunal as well. - HC
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Exemption u/s 11 - Application for condonation of delay in filing Form 10B u/s 119(2)(b) rejected - the provisions under Section 119(2)(b) has been enacted with a specific purpose empowering the authorities concerned to condone the delay on the part of the assessee in furnishing or in submitting of the returns or an appropriate application within a reasonable period of time. The said provision of law does not provide for any specific period of time within which the application for condonation of delay needs to be filed. - In case of genuine hardship, delay is required to be condoned - HC
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Validity of reopening of assessment u/s 147 - This Court is of the view that the show cause notice issued u/s 148 A (b) is not sustainable. So far as the sustainability of the impugned order on the limitation aspect is concerned, since the petitioner/assessee has taken steps to file returns by showing the source of income and the manner of utilization of sale proceeds of agricultural land, as the said issue pertains to the AY 2015-16, obviously, the period of limitation for the said assessment year has come to an end even for service of notice u/s 148A of the Act on 31st March, 2021, this Court is of the view that the impugned proceedings are not sustainable on limitation aspect as well - HC
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Exemption u/s 11 and 12 - charitable activities - Assessee is acting as bridge between the donor and the donee - CIT(A) observed that the assessee receives fees from the donors as well as the donees - The assessee had further given the donation to other trusts for the purpose of carrying out charitable work itself would not disentitle the assessee from denial of exemption. - the matter is being restored to the file of the AO to analyse the impact of the observations made by the Hon’ble Supreme Court in the decision of AUDA - AT
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TP adjustment - royalty paid by the assessee to its AE - selection of MAM - The method of the assessee can be pigeonholed in the “other method” provided in Rule 10AB r.w.s. 92C (1) and in our opinion this is the MAM in the peculiar facts of the Assessee. Accordingly, we hold that “other method” would be a good substitute for CUP as there is lack of reliable comparables and looking to the fact that the royalty payments have been made for unique intangibles, therefore, we direct the ld. TPO to adopt “other method” as the Most Appropriate Method. - AT
Customs
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Liability to pay Court fees - The reasoning adopted by the appellant that it is not a case of demand of duty is basically frivolous - Once the duty is paid ‘under protest’ and the party challenges the same by filing an appeal, it necessarily implies that demand of duty is disputed and consequently the case would fall under section 129A (6) of the Act and the party would be liable to pay the court fees on such appeal being filed. - AT
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Valuation of imported goods - glass chatons - The NIDP data gathered by the Appellant for such identical/similar goods shows that the price adopted by the Appellant is actually more than the price at which the other importer has imported the goods. - Demand set aside - AT
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100% EOU - Recovery of duty foregone - tandard input output norms (SION) - Diversion of polyvinyl chloride (PVC) resin, procured from abroad and sourced indigenously, without payment of duty - A case of diversion cannot be made out without reference to the movement of the goods alleged to have been diverted. - AT
Corporate Law
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Oppression and Mismanagement - The Appellants are Shareholders of the Respondent No. 1 Company and are family members of the other Shareholders. They are concerned with the affairs of the Company and their arraignment as party to the proceedings would facilitate an effective, efficacious, just and fair adjudication of the case. It is held that they are proper and necessary party and their impleadment will assist in arriving at the correct decision pending with NCLT. - AT
IBC
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Initiation of CIRP - authentication of default - there are no substance in the submission of the Appellant that since Financial Creditor has not filed the record of default from an information utility, Section 7 deserves to be rejected - the Adjudicating Authority has correctly repelled the contention of the Appellant that in absence of a record of default recorded by information utility, the application filed u/s 7 may not be admitted. - AT
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Initiation of CIRP - NCLT admitted the application - No outstanding dues - The intent of IBC is not to facilitate recovery for creditors - it is agreed that once all outstanding dues have been paid by the Corporate Debtor to the Respondent Shankar Khandelwal, disputed claims if any, can be raised in suitable other legal forum and IBC can not be used for such recovery proceeding. - AT
Case Laws:
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GST
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2023 (12) TMI 1201
Detention of goods and vehicles while in transit with valid invoices - Onus on the purchase to prove the genuineness of transaction - Revenue initiated proceedings against seller / supplier of goods - suspension of registration of the supplier - High Court has held that, In essence, the petitioners (purchaser) have to establish their own credentials but not the 4th respondent (supplier of goods). In that view, the 1st respondent (GST Department) is not correct in roping the petitioners in the proceedings initiated against the 4th respondent without initiating independent proceedings U/s 129 of CGST/APGST Act against the petitioners. - However, liberty was granted to initiate proceedings against the petitioners U/s 129 of CGST/APGST Act, 2017. Held that:- Having heard learned counsel for the petitioner(s), we are not inclined to interfere in the matter. The Special Leave Petitions (SLP) filed by the revenue dismissed.
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2023 (12) TMI 1197
Validity of SCN - jurisdiction of the assessing officer - justifiabilty of demand - non-reversal of excess ITC availed - HELD THAT:- Once petitioner has subjected itself to jurisdiction of the authority by filing reply, it is not deemed proper to address on the contentions raised by the petitioner touching the jurisdiction as well as merits of the show cause notice. Petitioner if so advised, may file additional reply incorporating the submissions as advanced before this Court. This Court hopes and trusts that the authority concerned shall address on the issues raised in the reply/ additional reply and pass an order with due advertence to the record keeping in mind the provisions of GST Act maintaining judicial discipline. The writ petition disposed off.
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2023 (12) TMI 1196
Seeking permission to travel abroad for a period of 12 months - HELD THAT:- This Court deems it appropriate to modify the condition (i) of order dated 07.07.2022 to the extent, that instead of prior permission to be obtained from the I.O., the same be read as prior permission of the Trial Court . Accordingly, the applicant/ petitioner is granted permission to travel abroad i.e. Dubai, UAE, for a period of two months, on the same terms and conditions imposed vide order dated 31.12.2022 by the learned Trial Court, to the satisfaction of the learned Trial Court. Application allowed.
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2023 (12) TMI 1195
Levy of penalty and interest without any jurisdiction - extension of time limit - HELD THAT:- The time limit fixed by the learned Judge for filing appeal with required pre-deposit, is extended by further period of eight weeks, which will take effect from today. Accordingly, the appellant shall file an appeal before the first respondent along with pre-deposit of 10% of Rs. 14,88,370/-, as directed by the learned Judge in the impugned order passed in the writ petition, within the time extended today. On filing of such appeal, the first respondent shall consider the same, without raising any issue relating to limitation, if any and pass appropriate order, on merits and in accordance with law, after affording an opportunity of hearing to the appellant, as expeditiously as possible. Appeal disposed off.
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2023 (12) TMI 1194
Seeking grant of anticipatory bail - scam of availing bogus input tax credit on the basis of forged documents - HELD THAT:- The public exchequer has been cheated. It also appears that upon documents of some other persons registration of the GST has been made to avail false input tax credit. Bogus bills are also prepared for the same and thus the present applicant has played an important role in commission of the offence of economic nature. It also surfaces that money is transferred from one account to another account and such huge loss has been caused to the government exchequer by the petitioner. Hence, serious economic offence is made out against the petitioner, which has wide effect on the society. Thus, the petitioner has failed to make out a case to allow this application and grant of pre-arrest bail. No case is made out to exercise the judicial discretion in favour of the applicant-accused. There is no whisper to indicate that petitioner has been falsely implicated in the offence. To be noted that, this is an economic offence having huge magnitude needs to be viewed with different approach and to be considered seriously, as it is eroding economic death of the country. Without expressing any opinion on the merit of the case, this Court is of the view that petitioner cannot be released on pre-arrest bail - Petition dismissed.
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2023 (12) TMI 1193
Validity of SCN issued under Section 73 of the CGST Act, 2017 - Non-application of mind - respondent authorities have alleged that there appears to be non-payment of tax by the petitioner @ 28% and for which also, the explanation has been sought for by the petitioner - violation of principles of natural justice - HELD THAT:- A plain reading of the Show Cause Notice itself would give a clear indication that the Show Cause Notice lacks necessary information, source and the materials on the basis of which the authority concerned found the necessity for issuance of the Show Cause Notice. The Show Cause Notice, from the plain reading, seems to be one which has been issued in a mechanical manner without application of mind and without any cogent sufficient materials available or even the basic scrutiny or the investigation which were required for the authority concerned in reaching to the conclusion that certain transactions which have been carried on by the respondents appear to have been the transactions where there is evasion of tax or where there is suppression of material facts or atleast there was reasonable suspicion on the transactions so made by the petitioner. This Court also finds sufficient force in the submissions made by the learned counsel for the petitioner when they say that since the proceeding has been initiated under Section 73 of the Act, the very provision of Section 73 of the Act starts with the words where it appears to be for the authority concerned which by itself means that at the time where the authority appears to found it necessary for initiating the proceedings, there ought to had been some material, information or even sort of a complaint available with them as regards the suspicious transactions or the alleged evasion of tax made by the petitioner. Ex. P1 Show Cause Notice, dated 30.09.2023 would not be sustainable as they are bereft of facts and materials and the same deserves to be and is accordingly set aside/quashed - petition allowed.
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2023 (12) TMI 1192
Maintainability of petition - availability of alternative remedy - non-constitution of the tribunal - HELD THAT:- Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd Appellate Tribunal, which has not yet been constituted, as an interim measure subject to the petitioner depositing entire tax demand within a period of fifteen days from today, the rest of the demand shall remain stayed during the pendency of the writ petition. The I.A. stands disposed of - List this matter along with W.P.(C) No.6684 of 2023 on the date fixed therein.
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2023 (12) TMI 1191
Maintainability of petition - availability of alternative remedy - non-constitution of the tribunal - HELD THAT:- Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd Appellate Tribunal, which has not yet been constituted, as an interim measure subject to the petitioner depositing entire tax demand within a period of fifteen days from today, the rest of the demand shall remain stayed during the pendency of the writ petition. The I.A. stands disposed of - List this matter on 31st October, 2023.
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Income Tax
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2023 (12) TMI 1200
Validity of AO s order with no DIN number mentioned - Communications emanating from the revenue - HELD THAT:- A perusal of the AO s order shows that it is clear in the body of AO s order, no DIN number is mentioned nor there is any reason of not mentioning the DIN number in order of the AO. In such a situation, the AO order will lose its validity. Subsequent separate communication of DIN is a superfluous exercise. As regards, reference to the decision of Hon ble Madras High Court by the ld. DR for the Revenue, we find that Hon ble Supreme Court in the case of CIT v. Vegetable Products Ltd. ( 1973 (1) TMI 1 - SUPREME COURT] has held that if two views are possible one in favour of the assessee is to be adopted. In this regard, we are referring to the decision of the Hon ble Delhi High Court in the case of CIT vs Brandix Mauritius Holdings Ltd. [ 2023 (4) TMI 579 - DELHI HIGH COURT] as held that no communication shall be issued by any income tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etcetera, to the assessee or any other person, on or after 01.10.2019 unless it is allotted a computer-generated DIN. Decided against revenue.
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2023 (12) TMI 1199
Gain on sale of land - nature of land - assessment order passed by treating the land as capital asset as it falls in the City limit - HELD THAT:- We find that Assessing Officer made reference for DVO for valuation of assets on the date of transfer however, report of DVO was not received, the Assessing Officer brought the surplus earn to taxation under the head short term capital gains . The Ld.CIT(A) on filing detailed written submission, though called the remand report on various submissions and evidences of the assessee, however, still the action of the Assessing Officer was confirmed. We find that the main contention of assessee right from the beginning is that the impugned land situated in rural area of village Lajpore, which does not fall within the limit Surat Municipal Corporation. Merely, State Government declared the area of village Lalpore for industrial use would not if so facto will not bring the area in a Municipal limit. Assessee before us has explained that the AO picked up the word shehri sankul aavali chhe , the real meaning of such words is that land falls in urban development area. On appreciation of such contention, we find merit in the submission of Ld. AR for the assessee that mere falling of land within the urban development area or notified area for industrial development of said area would not automatically bring the area in municipal limit unless and until a separate notification is not issued by State Government for including a particular area within municipal limit. No such material was brought on record by AO and he simply assume the jurisdiction on the basis of certain recital in the sale deed and formed his opinion that the impugned land falls in city limit. Assessee has filed sufficient evidence in the form of Land Revenue Record that said land was used for agricultural purposes by the certificate of Land Revenue Authority. Further, the assessee has filed certificate of Gram Panchyat that village Lajpore is not under the area of Surat Municipal Corporation. The assessee has also filed notification of State Government about extension of limit of municipality from time to time, copy of which is available at page No.72 to 81 of paper book, wherein the village Lajpore is not included in Surat Municipal Corporation. The assessee has also filed extract / details from the website of Home Department of Government of Gujarat, wherein the village Lajpore is administered under Panchayat Raj Act and administered by Sarpanch, meaning thereby the provision of Village Panchayat is not ceased to exist. The population of village is less than 10,000 as per Population Census,2011, copy of such details are available on page No.82 to 84 of the paper book. The assessee has also filed notification of Revenue Department of State Government, wherein the land of village Lajpore (Lajpore) is declared as reserve for non-agricultural and industrial development. As recorded above, that by mere declaration of area under industrial development, it would not be automatically include in municipal limit. For bringing the area in municipal limit a separate notification of State Government is required. In the notification placed on record about extension of Municipal limit of Surat Municipal Corporation, the area of village Lajpore is not included in municipal limit. Thus on the basis of the various evidence filed thus concluded the a ssessee has sold agriculture land which cannot be considered as capital asset and the surplus earned on its sale would not be taxable. So far as reliance by ld CIT(A) on the case law of Sarifa Bibi Mohamed Ibrahim Other (supra) is concerned, we find that the facts of said case are different with the facts of the case in hand. Thus, the ground of the appeal is allowed.
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2023 (12) TMI 1198
Best judgment assessment u/s 144 - treating cash deposits in the assessee s bank account as its unexplained money u/s.69A r.w.s.115BBE - HELD THAT:- We find that it is not a case where the CIT(Appeals) had discarded any material available on the record and summarily dismissed the assessee's appeal in limine for want of prosecution. Instead, it is a case where in the absence of any evidence whatsoever, whether documentary or otherwise, which would substantiate that the A.O was unjustified in treating the cash deposits in the assessee s bank account as its unexplained money u/s.69A of the Act, the CIT(Appeals) had sustained the addition made by the A.O u/s 144 of the Act, dated 11.12.2019. Now, when the assessee society, as per its volition, had not filed any return of income for the year under consideration A.Y 2017-18, i.e., either u/s 139 or in compliance to notice u/s 148 of the Act; or appeared before the A.O during the assessment proceedings or placed on his record any written submission or filed replies to the queries that were raised vide notice(s) issued u/s.142(1) of the Act; nor despite sufficient opportunities participated in the proceedings before the CIT(Appeals), then, in the absence of any evidence whatsoever, whether documentary or otherwise, which would reveal that there was no justification for treating the cash deposits in the assessee s bank account as its unexplained money u/s.69A of the Act, we are of a firm conviction that no infirmity emerges from the order of the CIT(Appeals) who had rightly approved the order passed by the A.O u/s 144. Although Section 253 of the Act, inter alia, vests with an assessee a statutory right to assail before the Income-Tax Appellate Tribunal an order passed by the Commissioner (Appeals), but a careful perusal of the aforesaid statutory provision reveals that the same can be triggered only where the assessee appellant is, inter alia, aggrieved with any order of assessment . Thus, considering the scope of Sec. 253 of the Act, it transpires that the same lays down as a pre-condition a grievance of the assessee appellant arising from the order passed by the Commissioner (Appeals). Apropos, the claim of the Ld. A.R. that the matter in all fairness be restored to the file of the A.O. for fresh adjudication, the same does not favor us. As observed by us herein above, the grounds based on which the order of the CIT(Appeals) has been assailed before us are devoid and bereft of any merit; therefore, the appeal is liable to be dismissed on the said count itself. Apart from that, we are of a firm conviction that the right vested with an appellant to approach the tribunal by preferring an appeal before it is for a limited purpose, i.e. a grievance that the assessment framed by the AO, or for that matter, order of the CIT(Appeal) were not according to law. In no case can the Tribunal be taken as a forum for an appellant who, as per his volition, had either adopted an evasive or lackadaisical approach before the lower authorities and not participated in the assessment or appellate proceedings to come up with its case for the first time before the Tribunal and, as a matter of right seek restoring of the impugned order to the file of the lower authorities for fresh adjudication. Assessee appeal dismissed.
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2023 (12) TMI 1190
Income taxable in India - Fees for Technical Services (FTS) and hence exigible to tax u/s 44DA and Section 115Aof the Income Tax Act, 1961 - PE in India - whether Section 44BB of the Act would be applicable to the respondent/assessee, who is a second line contractor? - HELD THAT:- Delay condoned. We are not inclined to interfere in the matter. The Special Leave Petition stands dismissed. However, liberty is reserved to the petitioner to raise the issue which arises in this Special Leave Petition, in the event any adverse final order is passed by the High Court against the petitioner herein. Pending application(s) shall stand disposed of.
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2023 (12) TMI 1189
Compounding of case u/s 279 (2) - alleged offences under Sections 276C and 277 of the Act - Ld' Judge after finding that the Contempt Petition had no merits, proceeded to direct the authority to re-examine the application filed by the respondent herein, in the light of the fresh circular dated 14.06.2019, which provides for a more liberal policy - HELD THAT:- The order of the learned Single Judge insofar as it remits the matter back to the 4th appellant to compound the case by fixing the compound fee, does not warrant interference. We say so, inasmuch as we find that the learned Judge [ 2019 (9) TMI 59 - MADRAS HIGH COURT] even while remanding the matter, had made it clear that the judgment in Prem Dass case [ 1999 (2) TMI 6 - SUPREME COURT] would apply to the respondent, and further, the respondent herein is entitled to the benefit of Section 279 (1A) of the Act. The revenue having failed to challenge the above order is bound by it. Ld' Judge had found that the Respondent herein was entitled to compound in terms of Section 279(1A) of the Act, which provides that the assessee would be entitled to compound if the penalty stood reduced or waived under Section 273A of the Act. Importantly, the Supreme Court in Prem Dass case [ 1999 (2) TMI 6 - SUPREME COURT] while construing Section 279(2) of the, Act had rejected the argument that the reduction of penalty by an appellate authority not being an order under Section 273A of the Act, the assessee/applicant would not be entitled to the benefit of Section 279(1A) of the Act and it was held that it may not be appropriate to adopt a literal construction of provisions of Section 279(1A) of the Act. Respondent would be entitled to the benefit of Section 279(1A) of the Act and the judgment of Supreme Court in Prem Dass case in view of reduction of penalty from 300% to 100% by the appellate authority, the failure of the appellant to challenge, in our view, would prove fatal, to any attempt by the revenue to contend to the contrary.
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2023 (12) TMI 1188
TP Adjustment - International transaction or not? - AMP expenses - HELD THAT:- As we had taken recourse to the decision rendered in Sony Ericsson Mobile Communications India Pvt. Ltd. v. CIT ([ 2015 (3) TMI 580 - DELHI HIGH COURT] and Maruti Suzuki India Ltd. [ 2015 (12) TMI 634 - DELHI HIGH COURT] Thus, having regard to the aforesaid position, the appeal is closed. We are told that the appellant/revenue has preferred an appeal against the decision rendered in Sony Ericsson Mobile Communications India Pvt. Ltd. v. CIT. [ 2015 (3) TMI 580 - DELHI HIGH COURT] Thus as made clear that if the appellant/revenue were to succeed in the pending Special Leave Petition, it would have liberty to approach the court for revival of the instant appeal. Registry will dispatch the copy of the order passed today to the respondent/assessee via all modes, including email.
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2023 (12) TMI 1187
CIT(A) admitting additional evidence and deleted addition - Best judgment assessment - addition were made u/s 69B based on unexplained investment in time deposits - CIT(A) carried out an inquiry in the matter by exercising his powers under Section 250(4) of the Act and evidence was sought with regard to remittances made to the NRE Account maintained with the Canara Bank - Tribunal dismissed the appeal preferred by the appellant/revenue and CIT(A) had exercised his powers u/s 250(4) of the Act which was co-equal to that of the AO. It also took note of the fact that notice was issued to the concerned branch of Canara Bank under Section 133(6) of the Act and it was only after information was received from Canara Bank and material evidence furnished by assessee, that the addition was deleted HELD THAT:- According to us, the Tribunal has reached the correct conclusion. Appellant cannot but accept that the CIT(A) has co-equal powers as that of the AO. The enquiry carried out by the CIT(A) revealed a grave factual error committed by the AO, in noting the figure with regard to the time deposits. In our opinion, since the CIT(A) has returned a finding of fact with regard to the source of funds that were found deposited in the period in issue, i.e., Rs. 9.50 crores, no interference is called for as these findings have been affirmed by the Tribunal as well. Thus, according to us, no substantial question of law arises for our consideration. No substantial question of law arises for our consideration.
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2023 (12) TMI 1186
Exemption u/s 11 - Application for condonation of delay in filing Form 10B u/s 119(2)(b) rejected - non-filing of the audit report in Form 10B would not be so fatal requiring initiation of proceedings so far as denial of exemption u/s 11 - contention of petitioner all along was that filing of the audit report in Form 10B is only a directory and not mandatory in nature and non-filing of the same cannot be fatal to the exemption which the petitioner is otherwise entitled under Section 11 - HELD THAT:- A plain reading of Section 119(2)(b) clearly indicate that the intention of the framers of the law was to provide a liberal approach where there is a delay occurred. What is necessary to be considered at this juncture also is the fact that the petitioner is a registered establishment u/s 12A - Section 12A of the Act provides tax exemption to charitable trust that is registered with the Income Tax Department. So far as registration is concerned, there no quarrel on the same. The dispute in the present case is only in respect of the assessment order for the Assessment Year 2017-18. The admitted factual matrix from the facts of the case is that the return of income was filed by the petitioner for the Assessment Year 2017-18 on 02.11.2017. Before filing of the said return itself, the accounts of the petitioner were got audited and the audit report was prepared well in time on 20.09.2017. The due date for filing of the return was on or before 31.10.2017 and the petitioner herein did file his return on 31.10.2017. However, on account of certain defects detected, the same was returned and revised return was filed on 02.11.2017. Thus, the return stands submitted within the time. However, there was a requirement for uploading of the audit report. The audit report meanwhile was uploaded though at a belated stage on 21.02.2019, nonetheless the uploading of the audit report was much before (before 2.5 years) the assessment order dated 24.09.2021 was passed. It is in this factual backdrop that the application for condonation of delay filed by the petitioner ought to have been decided by the authority concerned. Now if we look into the statutory provisions, what is reflected is that the provisions under Section 119(2)(b) has been enacted with a specific purpose empowering the authorities concerned to condone the delay on the part of the assessee in furnishing or in submitting of the returns or an appropriate application within a reasonable period of time. The said provision of law does not provide for any specific period of time within which the application for condonation of delay needs to be filed. The said provision has also been enacted to ensure that genuine hardship which an assessee may face can be avoided by condoning the delay if any that has occurred and an appropriate application seeking for condonation of delay is filed. We are inclined to allow the writ petition setting aside the impugned order - consequential order passed subsequent to the rejection of the application under Section 119(2)(b) of the Act would also get automatically quashed and the application of the petitioner for condonation of delay stands allowed. Wherefore the respondent No. 3 would be required to pass an appropriate consequential order in accordance with law.
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2023 (12) TMI 1185
Validity of reopening of assessment u/s 147 - Shorter period to reply notice - it is the contention of the petitioner that the notice issued under Section 148 A (b) dated 23.03.2022 by post was received by the petitioner only on 28.03.2022 i.e. one day, prior to the time fixed for filing reply/objection and therefore, according to the petitioner, in terms of the said provision, notice granting 7 days' time has not been provided - HELD THAT:- Unable to accept the contention of respondent, for, the terms ' Notice has been Issued'' attains finality only when the notice has been issued/served on the assessee. In the present case, though the show cause notice calling forth petitioner's reply within 29.03.2022 was dated 23.03.2022, unfortunately, the said notice was received by the petitioner/assessee only on 28.03.2022. Therefore, from 28.03.2022, the period of 7 days has to be reckoned, whereas, in the present case, the respondent has not considered the said aspect and proceeded to pass orders by stating that the petitioner failed to respond to the notice dated 23.03.2022 and hence, the proposals contained in the show cause notice dated 23.03.2023 is confirmed. Therefore, as rightly pointed out by petitioner, the impugned order suffers from violation of principles of natural justice, since it blatantly violates the provisions of Section 148 (b), AO has to give time not less than seven days but not more than 30 days to the assessee for furnishing his explanation and further, the respondent, despite knowing fully well that the notice served on the petitioner by post was received by him only 28.03.2022, ought to have granted further time, in terms of Section 148 (b) of the Act of not exceeding 30 days, and waited for the petitioner's reply and before passing the impugned order, heard the petitioner and in the absence of same having been failed to be done by the respondent, not only the impugned Notice dated 23.03.2022 has to be quashed and entire proceedings, initiated in furtherance of the same are also to be quashed. Therefore, the contention of respondent that notice served on the petitioner through e-portal on 23.03.2022, and the same has to be deemed to be sufficient service and the period of 7 days has to be reckoned from such date of issuance has to be brushed aside, since, in terms of Section 282 (1) notice can be served only by adopting the mode of service by post or such other courier service and notice sent by adopting the mode of service by e-mail or e-portal and the same can be considered and adopted in addition to the service effected by physical mode. This Court is of the view that the show cause notice issued u/s 148 A (b) is not sustainable. So far as the sustainability of the impugned order on the limitation aspect is concerned, since the petitioner/assessee has taken steps to file returns by showing the source of income and the manner of utilization of sale proceeds of agricultural land, as the said issue pertains to the AY 2015-16, obviously, the period of limitation for the said assessment year has come to an end even for service of notice u/s 148A of the Act on 31st March, 2021, this Court is of the view that the impugned proceedings are not sustainable on limitation aspect as well, inasmuch, as the Department failed to take appropriate action at the appropriate time within the limitation period of six years, which is not directory in nature but mandatory, and the respondent-Department having failed to do so, they cannot, all of sudden, on one fine day, attack the petitioner/assessee. This Court would like observe herein that the Income Tax Department cannot always have the sword of Damocle's dangling over an assessee all the time. Accordingly, this Writ Petition is allowed, the impugned order dated 23.03.2022 is quashed
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2023 (12) TMI 1184
Reopening of assessment u/s 147 - bogus purchases - case reopened after four years - competent jurisdictional Assessing Officer to issue notice - AO received information from DDIT(Inv.) Mumbai as well as DDIT(Inv), Unit-VI, Jhandewalan, New Delhi and thus made his belief that income of assessee as escaped assessment as recorded above. HELD THAT:- We find merit in the submission of assessee that all the material relating to assessment was available with the Assessing Officer in the original assessment completed u/s 143(3) - AO has nowhere recorded that he obtained any sanction/ approval from Joint-Commissioner of Income-tax as mandated u/s 151(2). We further find merit in the submission of assessee that jurisdictional AO in case of assessee lies with Assessing Officer at Surat. However, notice under section 148 was issued by AO i.e., ITO Ward-33(2), New Delhi. Thus, the reopening is not only suffering by satisfaction from proper approval by competent person as well as the notice under section 148 was not issued by a competent jurisdictional Assessing Officer. Therefore, the reopening as well as issuance of notice under section 148 is bad-in-law. Since the re-opening u/s 147 and issuance of notice under section 148 is bad-in-law, subsequent action initiated thereto have become ab initio. Considering the fact that we have held the validity of re-opening and issuance of notice under section 148 had invalid, therefore, subsequent action has become ab initio and the ground of assessee succeeds on primary contention raised - Appeal of assessee is allowed.
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2023 (12) TMI 1183
Exemption u/s 11 and 12 - exemption denied as assessee is not engaged in charitable activities - CIT(A) held that the Assessee is a facilitator for arranging funds for charitable organisations, and that the assessee receives fees from the donors as well as the donees - assessee submitted that the activity of the assessee is that it acts as a bridge between the donor and the donee i.e. the activity of the assessee is that on receipt of donation, the assessee identifies suitable recipients, who are not the direct beneficiaries of such donation but are usually other trusts who are engaged in conducting charitable activities. The role of the assessee is to identify such genuine organizations / trusts which are engaged in carrying out charitable activities in the form of giving relief to the poor etc. HELD THAT:- The assessee had further given the donation to other trusts for the purpose of carrying out charitable work itself would not disentitle the assessee from denial of exemption. Before us, we observe that it is not the case of the Department that the trusts / organisations to whom the assessee had given the donations for carrying out charitable activities had not in fact carried out any charitable activities in the first instance. Secondly, it would be useful to reproduce the relevant extracts of the decision rendered by Hon ble Supreme Court in the case of the Ahmedabad Urban Development Authority[ 2022 (10) TMI 948 - SUPREME COURT] as held that while carrying out charitable activities, the assessee trust may also collect nominal cost / consideration with the objective to effectuate the carrying out of the charitable activities. However, this is subject to the condition that such charge is only confined to the extent the same is required for the purpose of carrying out charitable activities and should not take the colour of professional fees / business income. Thus in interest of justice, the matter is being restored to the file of the AO to analyse the impact of the observations made by the Hon ble Supreme Court in the decision of AUDA [supra] more specifically on the observations made by the Hon ble Supreme Court with regards to incidental earning of income, in the light of the assessee s set of facts. AO after considering of the facts of the assessee s case may then decide whether, looking into the assessee s facts, the assessee is engaged primarily in rendering of services for consideration (retained earnings) or whether looking into the totality of facts of the assessee s case, it could be inferred that such retained earnings are only kept by the assessee to the extent of facilitating the above activities. Assessing Officer may also analyse the impact of decisions which have held that the assessee acts as a bridge between the donor and the recipient, even then, looking into the particular facts of assessee s case, it may be inferred that the assessee is carrying out charitable activities within the meaning of Section 2(15) - Accordingly, looking into the totality of facts of the assessee s case, the Assessing Officer may also analyse whether the aforesaid decisions have a bearing on the assessee s set of facts. In the result, the primary matter involved in all the Assessment Years under consideration before us is restored to the file of the Assessing Officer for carrying out the analysis as directed above. Issue raised by the assessee is allowed for statistical purposes.
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2023 (12) TMI 1182
TP adjustment - royalty paid by the assessee to its AE - selection of MAM - Whether CUP is the most appropriate method for benchmarking the royalty payment made by the assessee to its AE; Or Other Method can be treated as MAM on the facts of the present case? - HELD THAT:- The method of the assessee can be pigeonholed in the other method provided in Rule 10AB r.w.s. 92C (1) and in our opinion this is the MAM in the peculiar facts of the Assessee. Accordingly, we hold that other method would be a good substitute for CUP as there is lack of reliable comparables and looking to the fact that the royalty payments have been made for unique intangibles, therefore, we direct the ld. TPO to adopt other method as the Most Appropriate Method. However, the working given by the assessee before us as incorporated above needs to be examined afresh by identifying the costs and profits attributable to manufacture and sales to the non-AE and to find out appropriate allocation of the costs and what could be the profits on account of royalty which can be stated to be attributable on account of royalty. The assessee is directed to substitute the working on the basis of other method . The method of the assessee can be pigeonholed in the other method provided in Rule 10AB r.w.s. 92C (1) and in our opinion this is the MAM in the peculiar facts of the Assessee. Accordingly, we hold that other method would be a good substitute for CUP as there is lack of reliable comparables and looking to the fact that the royalty payments have been made for unique intangibles, therefore, we direct the ld. TPO to adopt other method as the Most Appropriate Method. However, the working given by the assessee before us as incorporated above needs to be examined afresh by identifying the costs and profits attributable to manufacture and sales to the non-AE and to find out appropriate allocation of the costs and what could be the profits on account of royalty which can be stated to be attributable on account of royalty. The assessee is directed to substitute the working on the basis of other method . With this direction, all the grounds raised by the assessee are allowed for statistical purposes.
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Customs
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2023 (12) TMI 1181
Seeking immediate release of the goods without charging any demurrage or rent charges - goods were detained and re-valuation was done - petitioner deposited custom duty on the declared transaction value to take release the goods - HELD THAT:- Since the issue in hand is not res judicata and the same has already been decided by the Division Bench of this Court in the case of M/s Continental Carbon India Ltd. [ 2015 (10) TMI 2131 - ALLAHABAD HIGH COURT] where it was held that the respondent was not entitled to charge any demurrage charge from the goods so detained by the custom authorities. Learned counsel for the respondent heavily relied upon the recent judgement of Delhi High Court in the case of Bhavik S. Thakkar [ 2023 (2) TMI 681 - DELHI HIGH COURT] . The case is of no help to the respondent as in the aforesaid case, the goods were seized and detained and at the time of confiscating the goods, time was granted to pay the dues but the same was not paid thereafter order was passed by the Settlement Commissioner imposing the penalty of Rs. 2 lakh and fine of Rs. 1 lakh in lieu of confiscation of imported goods. On the said premise, it was held that Settlement Commissioner is not the Court and the order was passed holding that the waiver cannot be granted to the parties therein. However in the case in hand, the appellate court specifically passed the order in favour of the petitioner holding that the disclosed value was correct - the respondent authority cannot charge the demurrage charges, therefore, no demurrage charges can be charged or demanded from the petitioner. The petitioner is granted relief to the extent that it would be open for the petitioner to clear off the goods without payment of demurrage charges subject to payment of other charges subsequent to the period of 17.9.2020 till the date of actual clearing off the goods in question - Petition disposed off.
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2023 (12) TMI 1180
Nature of transaction - classification of goods or refund of excess maount - Liability to pay court fees on all the 4191 appeals in terms of section 129A (6) of the Customs Act, 1962 - aggrieved by reassessment, the appellant filed 4191 appeals before Commissioner of Customs (Appeals) who confirmed the assessments in respect of the said bills of entry. Whether the present appeal relates to the classification of the goods in question or is a simple case of refund of the excess amount? - HELD THAT:- On perusing, the statement of facts in the appeal memorandum, it is found from paragraph 4 that the order of assessment on the bill of entry were challenged in an appeal before Commissioner of Customs (Appeals) challenging the classification concluded by the respondent - Further, in the memo of appeal, the appellant explained the manufacturing process and the use or purpose of the back covers, front cover and the middle cover. Had it been a simple case of refund, there was no scope for urging these facts - Considering the statement of facts as well as the grounds of appeal, the only logical conclusion is that the challenge in the present appeals relates to the issue of classification only and there is not a whisper of the refund claim. The present appeals have not arisen out of the rejection of any refund claim applications. In fact as appears, no such application for refund has been filed by the appellant. Liability to pay Court fees - HELD THAT:- The provisions of section 129A (6) makes it mandatory for the appellant to deposit the court fees where the demand has been disputed or challenged arising out of assessment or reassessment. The only exception as per the Proviso is where under subsection (2) the Committee of Commissioners decides to file an appeal against the order of the Commissioner (Appeals) or a memorandum of cross objections as provided in subsection (4) is filed. Needless to mention that section 129A (7) even where an application for rectification of mistake (ROM) and restoration of an appeal (ROA) is filed the party has to deposit Rs 500/- as court fees and the only exception is where an application has been filed by or on behalf of the Principal Commissioner of Customs or Commissioner of Customs no such fee shall be payable. Reliance placed on the decision of this Tribunal in the case of E-BIZ. COM PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [ 2008 (9) TMI 55 - CESTAT NEW DELHI ], where the controversy related to the provisions of Section 86(6) of the Finance Act, 1994 which are pari-materia to the provisions of section 129A (6) of the Act and hence it squarely applies to the present case. Once the duty is paid under protest and the party challenges the same by filing an appeal, it necessarily implies that demand of duty is disputed and consequently the case would fall under section 129A (6) of the Act and the party would be liable to pay the court fees on such appeal being filed. The reasoning adopted by the appellant that it is not a case of demand of duty is basically frivolous as had it not been so there was no scope to file the present appeals challenging the impugned order. The objection raised by the Registry of the deficit court fees in filing the present appeals is justified. The appellant is, accordingly directed to deposit the requisite court fees in terms of section 129A (6) of the Act within a period of two weeks from the date of the order. Application disposed off.
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2023 (12) TMI 1179
Benefit of concessional rate of CVD as per Notification No. 12/2012 dated 17.03.2012 - Polyester Staple Fibre (PSF) recycle - HELD THAT:- The appellant has declared the goods as Polyester Staple Fibre recycled which indicate that the goods are manufactured from waste. However, the plea of the appellant whether they are eligible for Notification No. 12/2012-CE dated 17.03.2012 has to be verified. It is opined that the matter can be remanded to the original authority who is directed to verify whether the appellant is eligible for the benefit of Notification No. 12/2012 dated 17.03.2012. The original authority shall also consider the decisions relied upon by the appellant which have considered the very same issue and noted the retrospective application of Notification No. 12/2012. The impugned order is set aside. The appeal is allowed by way of remand to the adjudicating authority.
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2023 (12) TMI 1178
Valuation of imported goods - glass chatons - rejection of value in terms of Rule 12 of the Customs Valuation Rules, 2007 - enhancement of value - contemporaneous imports as well as NIDP data not considered - HELD THAT:- First of all, the Appellant has not been put to notice as to why the transaction value cited by him is not acceptable to the Department. After this, Rule 4 to Rule 12 of CVR, 2007 have to be followed sequentially to arrive at the value of the imported consignment. In this case, this procedure also was not followed. The NIDP data gathered by the Appellant for such identical/similar goods shows that the price adopted by the Appellant is actually more than the price at which the other importer has imported the goods. It is not found that the value arrived at by the Revenue is a realistic and legally sustainable value - impugned order set aside - appeal allowed.
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2023 (12) TMI 1169
100% EOU - Recovery of Customs Duty, Central Excise Duty alongwith interest and penalty - standard input output norms (SION) - Diversion of polyvinyl chloride (PVC) resin, procured from abroad and sourced indigenously, without payment of duty in terms of notification no. 52/2003-Cus dated 31st March 2003 and notification no. 22/2003-CE dated 31st March 2003. HELD THAT:- The question that begs answer is the extent to which the norms , borrowed for its empirical acceptability and contextual validity, can be stretched to presume inclination to misuse exemption intended for fulfillment of net foreign exchange (NFE) earning. As it is noticed, standard input output norms (SION) , designed for another and later scheme in the Foreign Trade Policy (FTP), was grafted into the already existing export oriented unit (EOU) scheme in the same policy without any alterations in structuring. Again, the grafting narrowed down the existing latitude in empowering of customs authorities to track usage of duty exempt materials and even to the extent of prescribing tolerance for waste arising in the production process. Once again, as we have noticed supra, the distinction lay in employing of the norms to limit import of raw materials physically at the threshold for the purpose of export promotion scheme while employing it as a template for determining deviations when raw materials are not physically available any longer and, consequently, cannot be accorded the rigour, by subsequent adoption, for presumption of diversion with penal consequence in the case of export oriented units (EOU) in the Foreign Trade Policy (FTP). A case of diversion cannot be made out without reference to the movement of the goods alleged to have been diverted. Recovery, intended by the impugned notifications, of duty liability, for non-conformity with the standard input output norms (SION) , on post-procurement evaluation - HELD THAT:- The norms are an estimate of most commonly used raw materials for a specific product; its utility did not lie in mathematical precision which was not sine qua non for authorization of quantity limits for duty exempt imports. Such precision, therefore, is not to be presumed for monitorial oversight and, concomitantly, such intra mural correlation, between enumerations on one side of the norms , cannot also be insinuated for any purpose whatsoever - recovery of duty in the event of excessive usage in comparison with actual production is also limited to each of the raw materials on the logical premise of non-optimal deployment which the exchequer is not obliged to subsidize. The ascertaining of compliance with the second limb, of condition 3(d) of first paragraph of notification no. 52/2003-Cus dated 31st March 2003, as well as in condition 4(a) of first paragraph in notification no. 22/2003-CE dated 31st March 2003 is limited to each of the raw materials in isolation from the rest of the mix. That, then, should be the test for allowing the relief sought by appellant-Commissioner. The adjudicating-Commissioner has, on the other hand, noted that plasticizer imparts flexibility to products of resinous origin and that the manifold variations of goods, within the product groupings, manufactured by the appellant does not lend itself to acceptance of the proposition in the show cause notice that consumption of plasticizer should govern restrictions on use of polyvinyl chloride (PVC) resin for determining recovery of duty foregone at the time of procurement. The grounds enumerated for relief sought by appellant-Commissioner have not put forth any contention to override this conclusion. Mere reproduction of extracts from the notification coupled with reiteration of the proposition in the notice is not tenable surrogate either - there are no valid ground to hold that any part of duty foregone is recoverable for the reasons offered in the appeal of jurisdictional Commissioner of Customs. There is no evidence available, even remotely proximate, to suggest that polyvinyl chloride (PVC) resin procured by the appellant-assessee had reached any user/trader. There is no ground to infer that polyvinyl chloride (PVC) resin has been used in excess of that indicated in the norms , as adopted, for monitorial oversight of actual user access to duty exempt privilege. The pleas of appellant-Commissioner fail - appeal of M/s Responsive Industries Ltd is allowed.
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Corporate Laws
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2023 (12) TMI 1177
Oppression and Mismanagement - shareholding slightly less than the threshold of 10% shareholding required for filing Petition under Sections 241 242 as per provisions of Section 244 of the Act - HELD THAT:- It is apparent that each branch of the family is represented in the Company and for resolution of any dispute, it will be better that each branch of the family is represented in the proceeding and is heard. We feel no prejudice shall be caused to anyone if the impleadment application is allowed. Wherever the Court is of the opinion that by adding any party, it would be in a better position to effectually and completely adjudicate upon the controversy, it is proper to exercise judicial discretion in impleading the said party. The Appellants herein are daughters of late Mr. Tarsem Singh and sister of Respondent No. 3, against whom allegations of Oppression and Mismanagement have been made. The Appellants have a defined subsisting, direct and substantive interest in resolution of the controversy and are necessary and expedient to be impleaded in the said Petition. The Appellants are Shareholders of the Respondent No. 1 Company and are family members of the other Shareholders. They are concerned with the affairs of the Company and their arraignment as party to the proceedings would facilitate an effective, efficacious, just and fair adjudication of the case. It is held that they are proper and necessary party and their impleadment will assist in arriving at the correct decision in C.P. No. 129/ND/2019 pending with NCLT. Appeal allowed.
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Insolvency & Bankruptcy
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2023 (12) TMI 1176
Maintainability of section 7 application - nearly two years have gone by in the interregnum - HELD THAT:- After the application under Section 7 is heard and disposed of on merits, should it become necessary to do so, the parties would be at liberty to take recourse to all appropriate proceedings in accordance with law. At that stage, should it become so necessary, this Court will enquire into both the merits and maintainability. However, we also clarify that the issue of maintainability shall stand concluded by the impugned order dated 17 November 2023 insofar as the National Company Law Tribunal NCLT and NCLAT is concerned. Since the application under Section 7 is pending for over two years, the NCLT is requested to take up the application at the earliest possible date and to endeavour an expeditious disposal within two months. Appeal dismissed.
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2023 (12) TMI 1175
Deed of Compromise/settlement dated 04.10.2023 entered into by respondent no. 1 Rustagi Projects Pvt. Ltd. and the appellant Anuj Sharma, is taken on record - Parties will be bound by the terms and conditios mentioned in the Deed of Compromise/settlement dated 04.10.2023. However, the appellant Anuj Sharma/respondent no. 1 Rustagi Projects Pvt. Ltd. shall pay the Corporate Insolvency Resolution Process (CIRP) costs, as may be determined by the National Company Law Tribunal. In the event the costs are not paid, it will be open to the adjudicating authority/NCLT to take appropriate steps for recovery of the amount in accordance with law. Appeal allowed in part.
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2023 (12) TMI 1174
Liquidation Order - whether issuance of Form-G decision cannot be taken by CoC to liquidate the Corporate Debtor? - HELD THAT:- On looking into the resolution passed by the Committee of Creditors, CoC has given reasons as to that there are no employees, no business, no registered office, no filing of annual account of the MCA since 31.03.2011, no returns and no transactions since 2017. The scheme of the IBC as delineated by Section 33 sub section 2 empower of Committee of Creditors to take a decision to liquidate after constitution of Committee of Creditors. It is true that the decisions of the CoC to liquidate has to be with reasons and that cannot be arbitrarily done but in the present case when looked into the resolution of the CoC it is clear that there was objective consideration by the CoC for taking a decision to liquidate. Since SLP having been dismissed and review having also dismissed on the said submission the hearing of the appeal cannot be adjourned. It goes without saying that any order passed by Hon ble Supreme court is binding by this tribunal and Adjudicating Authority, in event any such order is passed in the Curative Petition - in view of the order which we are passing in this appeal the subsequent application has become infractuous and has to be closed. The order passed by Adjudicating Authority dated 31.08.2023 is set aside - appeal allowed.
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2023 (12) TMI 1173
Seeking issuance of fresh Form G - Resolution Applicant has submitted his revised plan - Resolution Professional in the Information Memorandum has also mentioned about dispute regarding the property - HELD THAT:- The Adjudicating Authority has taken in consideration the fact that properties shall come to the kitty of the Corporate Debtor, whose value is much more than the entire plan value submitted by the Resolution Applicant, hence, order was issued for issuance of Form G - the observation of the Adjudicating Authority as made in Para 19, 20 and 21 of the impugned order, agreed upon, which was sufficient reason for issuance of fresh Form G. However, we are of the view that some time ought to have been fixed by the Adjudicating Authority for completion of the entire process - while affirming order of the Adjudicating Authority, further direction is given that entire process including consideration of Resolution Plan shall be completed within a period of three months from today. The present is not a case where the Adjudicating Authority has directed for any valuation of the assets of the Corporate Debtor. Present is a case where during the CIRP process under the orders of the High Court of Delhi properties worth value of approx. Rs.3 Crores have been added to the assets of the Corporate Debtor on basis of which the Adjudicating Authority took the view that fresh Form G should be issued so that interested Resolution Applicants may know that the value of the Corporate Debtor has increased. It goes without saying that the Appellant shall be entitled to submit his Expression of Interest in response to Form G issued by the Resolution Professional - appeal disposed off.
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2023 (12) TMI 1172
Initiation of CIRP - authentication of default as contemplated in Regulation 21, not taken - information of default not filed with the information utility - HELD THAT:- In the present case no authentication of the default having been obtained by the Financial Creditor, application under Section 7 was not liable to be admitted. The Adjudicating Authority committed error in admitting Section 7 application without there being any authentication of default as per Regulations 2017. Whether application filed by the Financial Creditor deserves to be rejected on account of non-filing of record of default with information utility? - HELD THAT:- Regulation 20(1A) cannot be read to mean that after the said amendment brought in regulation w.e.f 14.06.2022 an application filed under Section 7 which is not supported by information of default from an information utility is to be rejected and if the Financial Creditor has filed other evidence to prove default which is contemplated by the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the said application has not to be considered - even after amendment of Regulation 20 by insertion of Regulation 20(1A) w.e.f 14.06.2022, Financial Creditor is entitled to file evidence of record of default as contemplated by Regulation 2A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 r/w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - there are no substance in the submission of the Appellant that since Financial Creditor has not filed the record of default from an information utility, Section 7 deserves to be rejected - the Adjudicating Authority has correctly repelled the contention of the Appellant that in absence of a record of default recorded by information utility, the application filed under Section 7 may not be admitted. Nidhi Kumar was fully empowered to nominate, constitute and appoint any one as lawful attorney of the bank at New Delhi. Pawan Sharma himself was Senior Manager, Zonal Stressed Assets Recovery Branch - there are no error in filing the application duly signed by Pawan Sharma supported by Affidavit of Pawan Sharma and submission of the Appellant that NCLT has no jurisdiction to entertain application filed by Pawan Sharma is to be rejected. There are no substance in any of the submissions raised by the Counsel for the Appellant to interfere with the impugned order of the Adjudicating Authority - There is no merit in the Appeal - appeal dismissed.
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2023 (12) TMI 1171
Initiation of CIRP - NCLT admitted the application - No outstanding dues - Squaring off of loans - case of appellant is that entire outstanding duty along with unsecured loans belonging to Shankar Khandelwal, his wife Guman Khandelwal and their concerns were squared off against outstanding debts and adjustment paying off balance outstanding in terms of LLP Agreement - HELD THAT:- From the LLP Agreement dated 31.12.2015, it becomes clear that the Respondent Shankar Khandelwal resigned on 31.12.2015 to be effective from 01.04.2016 and the balance sheet of Corporate Debtor LLP was necessary to be drawn accordingly to settle his dues. It is also noteworthy that all outstanding of Guman Builders and Developers Pvt. Ltd and Guman Furniture Services Pvt. Ltd., was agreed to be adjusted to the account of outstanding partner i.e., the Respondent Shankar Khandelwal. The Respondent Shankar Khandelwal filed an application under Section 7 of Code alleging non-payment of financial debt of Rs. 38,73,94,501/- which has been disputed by the Appellant stating this to be highly inflated amount due from the Corporate Debtor whereas the only Rs. 5,16,55,842/- was due and payable to the Respondent Shankar Khandelwal by the Corporate Debtor at the time of his retirement from the LLP - the pleadings of the Appellant is accepted that based on combined examination of Ledger and balance sheet it is proven that all dues towards the Respondent Shankar Khandelwal stand settled. It is also noted that the allegations of the Appellants that the Respondent Shankar Khandelwal is allegedly attempting to recover tainted money from Corporate Debtor, which is forming a part of the proceeds of crime. Even if the alleged loan is found to not be a part of the proceeds of crime, any attempts towards recovery of the amount would have to be adjudicated by a civil court under a recovery suit. The intent of IBC is not to facilitate recovery for creditors - it is agreed that once all outstanding dues have been paid by the Corporate Debtor to the Respondent Shankar Khandelwal, disputed claims if any, can be raised in suitable other legal forum and IBC can not be used for such recovery proceeding. The main basis contained in the Impugned Order for admission of the Application under Section 7 of the Code is that the Corporate Debtor failed to show any valid proof that debt due and payment to the Respondent Shankar Khandelwal was paid in his individual capacity - No amount of financial debt was due to the Respondent Shankar Khandelwal on the date of filing of the Application under Section 7 of the Code before the Adjudicating Authority. Therefore, the Adjudicating Authority has patently erred in admitting the Application filed by the Respondent Shankar Khandelwal vide its Impugned Order dated 13.10.2021. The Adjudicating Authority erred in passing the Impugned Order dated 13.10.2021 admitting application under Section 7 of the Code and therefore Impugned Order deserves to be set aside accordingly - Appeal allowed.
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PMLA
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2023 (12) TMI 1170
Seeking enlargement of petitioner on bail - siphoning of government funds - played an active role in floating shell companies in the said process - HELD THAT:- A perusal of the provision of Section 19 and 45 of PMLA goes to show that the Public Prosecutor has to be given an opportunity to oppose the application for bail, and where the Public Prosecutor opposes the application for bail, duty cast on the Court is that it should be satisfied whether there are reasonable grounds to believe that the person accused is not guilty of such offence and that he is not likely to commit any offence while on bail. The said provision is analogous to Section 37 of the NDPS Act, 1985 - if the Court comes to conclusion that there are reasonable grounds for believing that the person accused is not guilty of such offence and the second condition is that he is not likely to commit any offence while on bail. In the aforesaid identical case in Sanjay Raghunath Agarwal s case [ 2023 (4) TMI 874 - SUPREME COURT] , lodging of the prosecution complaint is sequel to the registration of the FIR in the predicate offence way back in the year 2021. In the present case on hand also, no charge sheet has been filed in the predicate offence for the last more than 15 months. The petitioner has been in jail from 04.03.2023. It is the first offence insofar as the petitioner is concerned. There are no other complaints registered as against him. The said argument gives room to say that second condition in clause (2) of sub-section (1) of Section 45 of the PMLA would be satisfied. In the aforesaid circumstances, continued incarceration of the petitioner, is not justified. In respect of a query raised by the investigating agency, the petitioner herein gave response to each and every question that has been asked for. Prosecution complaint was also filed on 01.05.2023. The petitioner was arrested on 04.03.2023 and since then he is in judicial custody. Time and again, petitioner is continuously attending before the investigating agency and co-operating with the investigation. This Court is of the opinion that it is not necessary to detain the petitioner in jail further. In view of the aforesaid facts and circumstances, this Court feels that request of the petitioner for grant of bail can be considered, however, on certain conditions. The petitioner shall be enlarged on bail on his executing a personal bond for a sum of Rs. 50,000/- with two sureties each for the like sum to the satisfaction of the I Additional Sessions Judge-cum- Metropolitan Sessions Judge, Visakhapatnam. On release, the petitioner shall co-operate with the investigating agency and shall attend before the investigating agency once in a week i.e. on every Friday between 10.00 AM and 5.00 PM. The Criminal Petition is allowed.
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